Last
week we mentioned the Thomas Malthus in a posting or two in connection with the
reverend sir’s lamentable effect on economics — he is, after all, credited with
getting it labeled “the dismal science.”
Our comments last week, however, had to do with Malthus’s rejection of
Say’s Law of Markets, which brought forth Jean-Baptiste Say’s best explanation
of the “law” that bears his name . . . and that many people reject flat out
without knowing anything about it.
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| For those who have never seen him: here he is. |
Our
topic today, however, is the Malthusian confusion (Malthusian confusian? Malthusion confusion?) over the difference
between “economic scarcity” and insufficiency.
Strictly
speaking, economic scarcity says that at point x in time, y amount of
everything exists. It says nothing about
how much existed before, or will exist a moment later, or whether what exists
is sufficient to meet human wants and needs.
Malthusians
play on the confusion between the technical meaning of scarcity, and its
colloquial meaning as “insufficiency.” They
declare that because there is a fixed amount of everything, carefully omitting the
qualifier “at any point in time.”
They
also seem unaware of the human tendency to engage in what R. Buckminster Fuller
called “ephemeralization.” That is,
people by nature tend to try to “do more with less.” If you can’t, you find a substitute.
Now,
it is a true statement to say that only so much of everything exists . . . at
any point in time, we hasten to add.
Nobody disputes that, at least, nobody who knows what he is talking
about.
The
problem comes in when the Malthusians conclude that while human needs are
limited (true) human wants are unlimited (false), and therefore (a conclusion that follows from a false premise) the
human race is running out of resources and must reduce population growth,
possibly even start eliminating the unfit or undesirables.
Then
they contradict themselves by positing the theory of marginal utility. The theory of marginal utility is that, all
things being equal, each additional unit of something gives less satisfaction
or use. Being more or less rational,
human beings will satisfy their wants only up to the point where they receive
zero additional satisfaction or use, thereby limiting both needs and wants.
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| Schumpeter sneering at Malthus. |
When
we pointed this out to someone, we got the comment, “No wonder I was kicked out of my economics class for being ambivalent
about Malthus. I didn’t have the right
arguments to present to the teacher.”
We
told the commentator that he was handicapped by having common sense. Fortunately, common sense is the very thing
someone needs to lead him to the Just Third Way.
Of
course, if someone really wants an argument from an accepted authority (how
many people, after all, listen to common sense?), he can always go to Joseph A.
Schumpeter’s comments on Malthus in his History
of Economic Analysis. Schumpeter was
in the opposite camp, so to speak, on some issues regarding binary economics,
but that doesn’t matter for out purposes here — not when you can let loose with
zingers like this:
“The teaching of Malthus’ Essay became firmly entrenched in the
system of the economic orthodoxy of the time in spite of the fact that it
should have been, and in a sense was, recognized as fundamentally untenable or
worthless by 1803 and that further reasons for so considering it were speedily
forthcoming. It became the ‘right’ view on population, just as free trade had
become the ‘right’ policy, which only ignorance or obliquity could possibly
fail to accept — part and parcel of the set of eternal truth that had been
observed once for all. Objectors might be lectured, if they were worthy of the
effort, but they could not be taken seriously. No wonder that some people,
utterly disgusted at this intolerable presumption which had so little to back
it began to loathe this ‘science of economics’ quite independently of class or
party considerations — a feeling that has been an important factor in that
science’s fate ever after.” (Joseph A. Schumpeter, History of Economic Analysis. New York: Oxford University Press,
1954, 581-582.)
If
binary economics and the Just Third Way have done nothing else, they have
restored intellectual integrity to economics.
It has been turned from the “dismal science” to a way of delivering hope
to everyone.
#30#