Alfred Marshall on the Growth of Population

Classical views of population, as expounded in the works of Smith, Malthus, and Mill, retained their influence through the nineteenth century and into the twentieth—until sidelined, many would argue, by the marginalist revolution in economics. Oddly, Alfred Marshall (1842–1924), the major figure in that revolution, was, when it came to population, himself firmly in the classical tradition. He diverged from it in two main respects. Writing in the late nineteenth century he had of course to take account of Darwinian theory, with the potential implications it suggested for differential fertility. And, deriving from his interests in industrial organization and efficiency and in biological analogies in economics, he gave greater attention than his forebears to the possibility that returns to labor could routinely be increasing as well as diminishing. Marshall, the preeminent economist of his time, was for most of his career professor of political economy at the University of Cambridge. His major work, Principles of Economics, was first published in 1890, and then in a series of revised editions over the rest of his life. The final—8th—edition appeared in 1920. (A “ninth” variorum edition was issued in 1961.) The Principles has been described, by G. J. Stigler, as the second greatest work in the history of economics. The contributions to theory and method warranting such praise, however, are chiefly in the later parts of the volume. Up to and including Book IV (The Agents of Production: Land, Labour, Capital and Organization), the reader is given the impression, according to Keynes, of “perusing a clear, apt and humane exposition of fairly obvious matters.” Certainly in comparison to the rest, these early sections were left fairly intact in their 1890 form over subsequent editions. But Keynes also remarks, in his lengthy obituary of Marshall, how deceptive that surface smoothness could be—and notes that Marshall “had a characteristic habit in all his writings of reserving for footnotes what was most novel or important in what he had to say.” The excerpts below are taken from Book IV, Chapters IV (§§1–2, 4–5) and XIII (§3), of the 1890 edition of the Principles. In the first, Marshall presents a brief, selective history of population doctrines up to Malthus, and then the doctrine “in its modern form”; in the second, from the concluding chapter of Book IV, he explores the applicability of the law of increasing returns—stated, earlier in the chapter, as: “An increase of labour and capital leads generally to improved organization, which increases the efficiency of the work of labour and capital.”