Academic journal article Economics & Sociology

Inequality and Wealth Creation in Ancient History: Malthus' Theory Reconsidered

Academic journal article Economics & Sociology

Inequality and Wealth Creation in Ancient History: Malthus' Theory Reconsidered

Article excerpt

Keywords: economic surplus, elite dominance, early civilizations, inequality, Malthus, property rights, wealth.

Introduction

One of the most controversial issues in economic history is about the population theory of Thomas Robert Malthus who in 1798 wrote An Essay on the Principle of Population. Implicitly or not, all economic studies on long-term economic development refer to Malthus' theory. For instance in his recent book, G. Clark stated that (2007, p. 1): "Before 1800 income per person - the food, clothing, heat, light, and housing available per head - varied across societies and epochs. But there was no upward trend. A simple but powerful mechanism explained in this book, the Malthusian Trap, ensured that short-term gains in income through technological advances were inevitably lost through population growth". According to this view, the crucial factor was the rate of technological advance. As long as technology improved slowly, material conditions could not permanently improve, even while there was cumulatively significant gain in the technologies. Thus, the average person in the world of 1800 was poorer than many of their remote ancestors and the quality of life also failed to improve on any other observable dimension.

Various criticisms (both on theoretical and/or empirical grounds) have been made, directly and indirectly, of Malthus' theory. One of our main criticisms of the Malthusian model is that it is inconsistent with the empirical evidence for the preindustrial world. Some authors1 believe that G. Clark's view about the applicability of Malthusian hypothesis of population growth holds for all human history, except for the last 200 years. Clark dismisses many empirical studies such as that of Angus Maddison (e.g. 2007) which provided an empirical basis for long-run income estimates as inconsistent with the logic of the Malthusian economy. Angus Maddison used information on real wages to infer changes in GDP per capita growth. As pointed out by Bolt, J. and J. L. van Zanden (2013, p. 12) who followed up A. Maddison's project: "The overall conclusion is however that those pre-industrial societies were able to achieve income levels that were much higher than subsistence", a conclusion that directly contradicts Malthus' theory.

Another criticism of Malthus' theory is about the role of inequality - mainly income inequality - because it was pervasive in the agrarian economies that dominated the world until 1800. Thus, a central concern is about the consistency of Malthus theory with the existence of inequality based on social classes. It is clear that the Malthusian trap belongs to social evolutionary theory. In Malthus' model, the economy of humans in the years before 1800 turns out to be just the natural economy of all animal species, with the same kinds of factors determining the living conditions of animals and humans. Therefore, it is assumed that mankind was subject to natural selection throughout the Malthusian era, even after the arrival of settled agrarian societies with the Neolithic Revolution. Since the struggle that shaped human nature did not end with the Neolithic Revolution but continued right up until the Industrial Revolution, one cannot avoid taking into account one of the results of this struggle, namely the existence of inequality. Milanovic, B., P. H. Lindert and J. G. Williamson (2007) have extensively studied inequality in 14 ancient pre-industrial societies. These societies range from early first-century Rome to India just prior to its independence from Britain. They demonstrated that while inequality in historical pre-industrial societies is equivalent to that of today's pre-industrial societies, ancient inequality was much greater when expressed in terms of maximum feasible inequality. More precisely, they emphasized the role of the elite in creating inequality. Indeed, they stated that (2007, pp. 28-29): "the extraction ratio - how much of potential inequality was converted into actual inequality - was significantly bigger then than [it is] now. …

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