Malthus on the Mind

With food and energy prices continuing to race upward, the econ blogosphere sounds like a scratched Malthusian 45. Here is Bryan Caplan on Hitler’s justification for murdering Jews (for more read the excellent Wages of Destruction by Adam Tooze). Here is Brad DeLong picking out the Malthusian undertones of posts by Megan McArdle and Greg Clark.

The standard Economist’s response to Malthusian alarmists has to do with extensive vs. intensive growth. Extensive Malthusian growth is growth through the addition of inputs into production. Say it takes one monk two years to write out a bible. If we add another monk to the monastery we can complete the bible in one year. If we have a total of four monks we can finish the bible in six months, etc.

Intensive growth is about combining inputs in more productive ways. If we give the monastery a printing press, once the blocks are set one monk can complete a bible in only a few days time, for instance. This frees up the other monks to do some other productive task, meaning that we have increased our monastery’s production with the same amount of labor input. As long as intensive growth is fast enough, we can outrun the Malthusian constraints on food or other resources.

I am reading The Rise and Fall of the Soviet Economy by Philip Hanson. He repeatedly stresses that the incentives of the state planning system worked adequately for extensive growth, but were very poor at creating intensive growth. Soviet economic growth was driven by adding more inputs instead of by technological innovation.

I have sometimes wondered what would have happened to the Soviet Union in an international vacuum. Certainly the fall of the USSR had something to do with the arms race and the fact that the citizens of Western countries enjoyed comparatively higher standards of living and faster growth rates. Without a West to compete with, the Soviet Union could have lasted longer than it did. However, I suppose, the jaws of the Malthusian trap would have closed eventually.

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