Malthus and Ricardo, a Comparison and Contrast of their Views Development and Population
Research ascertains that most of the economic theories that were developed in the 19th and 20th centuries were focused on the way the market economies functioned during that period. Among the prominent economic theorists during this period were David Ricardo and Robert Malthus. Ricardo and Malthus are widely known for their work on the population and economic development of countries. Malthus is widely recognized in economics for his 1798 work titled, “Essay on the Principle of Population”. In the essay, Malthus was concerned about the impacts of the supply of basic goods on the growth of the population and vice versa.
Based on a mathematical computation, he concluded that the supply of food in an economy rises in a simple arithmetic progression; the rise of the population grows by geometric progression. The result of this observation is that the growth of the population by all means supersedes the supply of food in the economy and the shortage of food supply. On the other hand, David Ricardo is widely recognized for his works titled, “The Principles of Political Economy and Taxation” and later the theory of comparative advantage. Of greater interest by Ricardo was the balance between value and the distribution of resources in an economy (Alberich para. 1-3).
According to Barbier (4), both economists expound on the issue of scarcity of natural resources in the economy and its impact on the supply and growth of population. In his argument, Malthus pointed out that the unevenness and limits in terms of the size and supply of land as a natural resource is a determinant of the rent that is set by the landlords in an agricultural society. According to Malthus, population growth in an economy often supersedes the subsistence growth (Barbier 6).
According to Ricardo, land is a relative factor; the relativeness of land is based on the different levels of fertility that determine the rent and the prices of commodities that are produced. Therefore, it can be said that the arguments of the two economists focus on the role of natural resources in determining the distribution of supplies in the economy and the growth of the population. It is important to note that Ricardo highly borrowed his argument form Malthus, only that he did not pay attention to the issue of absolutism in terms of the supply of natural resources (Barbier 10).
According to Briggs (208), both Malthus and Ricardo converged on the basic economic thoughts. However, they greatly diverged on the interpretation and further developments on their economic concepts. The divergence was based on the manner in which they viewed the interplay of factors in the economy and its impacts on the growth and development of the economy. For instance, Ricardo asserted that the future of Britain depended on capital development and not agriculture. He further argued that rent did not result from wealth creation, but it came from the deduction of wealth from other people through tariffs and taxes that were imposed on people by the landlords.
However, Ricardo agreed with the Malthusian observation that the state of poverty in the economy was promoted by the people because market pressures that emanated from the population pressures that were brought about by the working class determined the fixation of wages. On the other hand, Malthus backed agricultural protectionism by arguing that Britain was a purely agricultural society and the rent was a vital form of surplus that was being created by the society (Briggs 208).
Ricardo and Marx on the theory of value and the origin of profits
According to Dooley (1), the labor theory of value was dominant in economics research in the last two centuries. Contrary to the argument that was presented by Ricardo, the Marxist argument focuses on the argument that the value of labor is determined by the benefits of labor. Ricardo reiterated the essence of classes in the society by arguing that the society was divided into three main classes: landlords, capitalists, and the laborers.
Dooley (1) noted that the main concern of Ricardo was to ascertain that income was distributed among the three classes through the application of regulation laws in the political economy. Income in this case was denoted by rent, profit, and wages. He noted that the changes in the income earned by each class were determined by capital accumulation and population growth. Ricardo separated himself from the philosophical abstractions, despite the fact that he agreed with the concept of labor as the main origin of value. This is depicted by his choice to focus on the mechanisms that can be used to regulate and measure prices in the market (Dooley 1).
According to Ricardo, the value of goods in the market is regulated by capital and labor. He further argued that profits and wages are components of the price of commodities in the market. He believed that the cost of production is reflected by a process in the long run, which he called the Natural Price. This resulted in the Theory of Profit. According to the Ricardo’s theory of profit, an increase in real wages results in a decline in real profits. The reason for such a trend is that revenues that are generated from the sale of manufactured commodities are divided between profits and wages. Therefore, profits in an economy depend on the distribution of wages (SCARLETT para. 2-3).
Contrary to the argument presented by Ricardo, Marx argued that the production price was equal to dead labor plus living labor. Therefore, it has been observed that the labor theory of value, as expounded by Marx, utilizes the simplest explanation to bring out the issue of origin of profits. Rather than bringing out the difference between the various types and qualities of labor, Marx concentrated on the abstract labor and reduced skilled labor to different types of unskilled labor in what is referred to as homogenous labor. He further made a suggestion that production prices would eventually align with the natural market equilibrium prices as competition would result in the equalization of profits. This implies a redistribution of the surplus values generated in the economy (SCARLETT para. 4).
SCARLETT ( para. 5-6) observed that contrary to the argument by Ricardo who noted that the rate of profits was equal to net profits, Marx insisted that the rate of profit could be represented by, r = s/v/(c/v + 1). The expansion and accumulation of capital resulted in an increase in organic composition, c/v, because of the deployment of machinery in the manufacturing of commodities. This would further result in a fall in the profit rate if it was not offset by an increase in surplus value caused by the decline of wages from trade, the exploitation of labor, or the reduction in the cost of capital. Thus, according to Marx, the profit rate declined over time as the organic composition (c/v) accelerated at a quicker pace than the rate of surplus value (SCARLETT para. 6).
Bentham and Mill on the role of the government
Engelmann (para. 4) observes that both Mill and Bentham were theorists of government who were interested in exploring the principles that guided the functioning of economies. In this sense, the roles that are played by governments in determining the way the economies function are explored by both philosophers. Mill notes that the government crafts the rules of property that determine the production and distribution of resources in the economy. In his explanation of the social and political philosophy, Mill argues that the government has a responsibility of ensuring that individuals exercise their own capacities. In other words, the government has to ensure that a liberal environment is enhanced where each individual is free to engage in practices that denote liberty. This is based on the supposition by Mill that among the most critical human rights is liberty.
Based on the utilitarian assertion, Mill argues that individuals have to grow and develop at the same pace that the society develops in order to realize the benefits of development. Therefore, the other role of the government, according to Mill, is to enhance the capacity of individuals to develop. The capacity of individuals to grow depends on the incentives that are offered by the government or the people in command in a given society. For instance, governments can offer a number of economic incentives like loans and grants, thus enabling individuals to invest and gain profits and increase their income (Behrouzi 116).
According to Engelmann (para. 3), Mill comprehends the government as an agency that intervenes in a field that is quite dynamic using its own lawful natural rhythms. However, Bentham views the government as being construed and a cause of the poor construction of human relations. He argues that the laws that are developed by the government are not pegged on nature, but on human constructs. This cancels out the probability of attaining social, political, and economic order in the society.
Therefore, it is worthwhile to argue that Mill views the government from an optimistic point of view, while Bentham views the government from a pessimistic point of view. Contrary to Mills who views the government from the liberal eye, Bentham largely views the government from the utopian eye by pointing on the negative constructs that prevent the government from fostering the growth and development of the citizens in different realms (Engelmann para. 3).
Mill argues that the government should be at the center stage when it comes to the establishment of institutions and the enhancement of an ethical background on which the character and actions of individuals are modeled. Therefore, science can play a great role in the enhancement of logic in the art of governance. Bentham focuses on social science as a basis on which the positive constructs of behavior and actions in the society are developed. This is to say that Bentham negates the possibility of integrating social science with the art of government. Bentham continuously avoids criticizing the character of the government; instead, he focuses on the society as a myogenic organ. He defines and determines its functionality through the absence of the specific center of control, which would refer to the government in this case (Engelmann para 16).
Alberich, Joan. The historical debate on the population growth and the natural resources. From Malthus to the Rio Summit, n.d. Web.
Barbier, Edward B. Economics, Natural-Resource Scarcity and Development: Conventional and Alternatives. New York: Routledge, 2013. Print.
Behrouzi, Majid. Democracy As the Political Empowerment of the People: The Betrayal of an Ideal. Lanham, MD: Lexington Books, 2006. Print.
Briggs, Vernon M. “Malthus: The Economist.” The Social Contract 8.3(1998): 206-216. Print.
Dooley, Peter C. The Labour Theory of Value: Economics or Ethics? Discussion Paper 2002-2. 2002. Web.
SCARLETT. Comparison Of Marx’s Versus Ricardo’s Labor Theory. n.d. Web.
Stephen G. Engelmann. “Mill, Bentham, and the Art and Science of Government.” Revue d’études benthamienneas, 2008. Web.