Theory of Optimum Population - Macroeconomics | Macro Economics - B Com PDF Download

The optimum theory of population was propounded by Edwin Cannan in his book Wealth published in 1924 and popularised by Robbins, Dalton and Carr-Saunders. Unlike the Malthusian theory, the optimum theory does not establish relationship between population growth and food supply. Rather, it is concerned with the relation between the size of population and production of wealth. The Malthusian theory is a general theory which studies the population problem of a country in keeping with its economic conditions. Thus the optimum theory is more realistic than the Malthusian theory of population.

Definitions:

But what is optimum population? The optimum population is the ideal population which combined with the other available resources or means of production of the country will yield the maximum returns or income per head. The concept of optimum population has been defined differently by Robbins, Carr- Saunders and Dalton. Robbins defines it as “the population which just makes the maximum returns possible is the optimum population or the best possible population.” Carr-Saunders defines it as “that population which produces maximum economic welfare.” To Dalton, “Optimum population is that which gives the maximum income per head.” If we were to examine these views, we find that Dalton’s view is more scientific and realistic which we follow.

Statement:

The optimum population is that ideal size of population which provides the maximum income per head. Any rise or diminution in the size of the population above or below the optimum level will diminish income per head. Given the stock of natural resources, the technique of production and the stock of capital in a country, there is a definite size of population corresponding to the highest per capita income.

Other things being equal, any deviation from this optimum-sized population will lead to a reduction in the per capita income. If the increase in population is followed by the increase in per capita income, the country is under-populated and it can afford to increase its population till it reaches the optimum level. On the contrary, if the increase in population leads to diminution in per capita income, the country is over-populated and needs a decline in population till the per capita income is maximised.

But the optimum level is not a fixed point. It changes with a change in any of the factors assumed to be given. For instance, if there are improvements in the methods and techniques of production, the output per head will rise and the optimum point will shift upward. What the optimum point for the country is today, may not be tomorrow if the stock of natural resources increases and the optimum point will be higher than before. Thus the optimum is not a fixed but a movable point.

According to Cannan, “At any given time, increase of labour up to a certain point is attended by increasing proportionate 5 returns and beyond that point further increase of labour is E attended by diminishing proportionate returns.” The per capita —income is the highest at the point where the average product of labour starts falling. This point of maximum returns’ is the point of optimum population. This is illustrated in Figure 17. 2.

The size of population is measured on the horizontal axis and the average product of labour on the vertical axis. AP is the average product of labour or income per head curve. Up to OP level, increases in population lead to a rise in the average product of labour and per capita income. Beyond OP, the average product of labour and per capita income fall. Hence when population is OP, the per capita income is the highest at point L. Thus, OP is the optimum level of population. To the left of OP, the country is under-populated and beyond OP, it is over-populated.

However, OP is not a fixed point. If due to inventions there are improvements in the techniques of production, the average product of labour might increase and push the level of per capita income upward so that the optimum point rises. This is shown in the figure where the AP₁ curve represents the higher average product of labour and point L₁ shows the maximum per capita income at the new optimum level of population OP₁.

Dalton’s Formula:

Dalton has deduced over-population and under-population which result in the deviation from the optimum level of population in the form of a formula. The deviation from the optimum, he calls maladjustment. Maladjustment (M) is a function of two variables, the optimum level of population О and the actual level of population A. The maladjustment is M= A – 0/0

When M is positive, the country is over-populated, and if it is negative, the country is under-populated. When M is zero, the country possesses optimum population. Since it is not possible to measure O₁ this formula is only of academic interest.

Its Superiority over the Malthusian Theory:

The optimum theory of population is superior to the Malthusian theory on the following grounds.

(1) The Malthusian law is a general study of the population problem because it is applicable to all countries irrespective of their economic conditions. The optimum theory is superior to the Malthusian theory because it studies the population problem in relation to the economic conditions of a particular country.

(2) Malthus had a narrow vision. He related the growth of population to food supply. Cannan, on the other hand, had a much wider outlook. He related the problem of population to the total production of the country, both industrial and agricultural.

(3) The Malthusian theory is a static concept which applies to a period of time. The optimum theory is a dynamic one because over a period of time the per capita income may rise with the expansion in output due to improvements in knowledge, skill, capital equipment and other elements in production. This may raise the optimum level of population. Thus the optimum theory is more realistic.

(4) The Malthusian doctrine is simply theoretical and is devoid of all practical considerations. It regards all increases in population bad, for they bring untold miseries to the people. Malthus wrote, “The table of nature is laid for a limited number of guests and those who come uninvited must starve.” On the other hand, the optimum theory is very practical because it regards an increase in population not only desirable but also necessary for the maximum utilisation of the country’s natural resources.

(5) The Malthusian theory of population is based on the unrealistic assumption of the niggardliness of nature. This belief arises from the operation of the law of diminishing returns in agriculture. But the optimum theory takes a realistic view when according to this the law of diminishing returns does not operate in agriculture immediately but after the optimum point is reached. In other words, first the law of increasing returns operates up to the optimum point and the law of diminishing returns after it.

(6) Malthus was so much obsessed by the fear of over-population that he ignored a fundamental fact that a newly born child ‘comes not only with a mouth and a stomach but also with a pair of hands’. The optimum population theory allays all such fears of the Malthusians by stressing the fact that increasing population increases the labour force which helps raise the optimum expansion of the country’s natural resources.

So long as the actual population is less than the optimum, the increase in population is safe and good. It is only when the actual population exceeds the optimum that the increase in population needs control Thus unlike the Malthusian theory which necessitates the use of preventive checks all the time for fear of the country being over-populated, the optimum theory is free from all such taboos and is silent about any type of checks to control population.

(7) Malthus was essentially a pessimist who portrayed a gloomy picture about the future of mankind which was full of misery, vice, floods, droughts, famines and other natural calamities. The optimum theory; is superior to the Malthusian theory because it does not suffer from any pessimism, rather it adopts an optimise and realistic attitude towards the problem of population when it relates population to the wealth of the country.

Its Criticisms:

Despite the superiority of the optimum theory over the Malthusian theory of population, it has serious weaknesses.

(1) No Evidence of Optimum Level:

The first weakness of the optimum theory is that it is difficult to whether there is anything like an optimum population. There is no evidence about the optimum population level in any country. In fact, it is impossible to measure it. For optimum population implies a qualitative; well as a quantitative ideal population for the country. The qualitative ideal implies not only physique knowledge and intelligence, but also the best age composition of population. These variables are subject change and are related to an environment. Thus the optimum level of population is vague.

(2) Correct Measurement of Per Capita Income not Possible:

Another difficulty pertains to the measurement of per capita income in the country. It is not an easy task to measure changes in the per capita income. The data on per capita income are often inaccurate, misleading and unreliable which make the concept of optimum as one of doubtful validity.

(3) Neglects the Distributional Aspect of Increase in Per Capita Income:

Even if it is assumed that per capita income can be measured, it is not certain that the increase in population accompanied by the increase in per capita income would bring prosperity to the country. Rather, the increase in per capita income and population might prove harmful to the economy if the increase in per capita income has been the result of concentration of income in the hands of a few rich. Thus the optimum theory of population neglects the distributional aspect of increase in the per capita income.

(4) Optimum Level not fixed but oscillating:

The concept of the optimum population assumes that the techniques of production, the stock of capital and natural resources, the habits and tastes of the people, the ratio of working population to total population, and the modes of business organisation are constant. But all these factors are constantly changing. As a result, what may be the optimum at a point of time might become less or more than the optimum over a period of time. This is illustrated in figure 17.3.

AP₁ is the average product of labour or per capita income curve. Suppose there is an innovation which brings a change in the techniques of production. It shifts the per capita income curve to AP₂. As a result, the optimum level of population rises from OP₁ to OP₂ with the increase in per capita income E from P₁M₁ to P₂M₂. If the per capita income rises further due to a change in any of the above assumed factors, the AP₂, curve will shift upward. The AP₂ or AP₁ curve can also shift downward if, for instance, the capita income falls due to an adverse change in the given factors. If the locus of all such S. points like M₁ M₂ etc., are joined by a line, we have the PI curve which represents the path of the movement of the optimum population as a result of changes in the economic factors. If, however, the actual level of population is assumed to be OP₀ and the optimum level OP₁ then the country is over- populated. If OP₁ is the optimum level, then the country is under-populated. Thus the optimum is not a fixed level but an oscillating one.

(5) Neglects Social and Institutional Conditions:

The optimum theory considers only the economic factors which determine the level of population. Thus it fails to take into consideration the social and institutional conditions which greatly influence the level of population in a country. A lower level of optimum population may be justified from the economic viewpoint, but such a level may be harmful keeping into view the defence considerations of the country. For instance, economic consideration may prevent us from having a large population but the danger from foreign aggression may necessitate a very large population to safeguard our territorial integrity. Thus the optimum theory is imperfect and one-sided.

(6) No Place in State Policies:

The concept of optimum population has no place in the policies of modern states. While fiscal policy aims at increasing or stabilising the level of employment, output and income in a country, no reference is made to the optimum level of population. This theory is, therefore, of no practical use and is regarded as useless.