Malthus Gets Fat: The Beginnings of Income Growth in Britain and Beyond

Abstract

The first part of this paper develops a simple dynamic model to examine the takeoff, or breakout, from a Malthusian economy to a modern growth regime. It finds that several factors, most notably the rate of technological progress and the economic structure, determine the fastest rate at which the population can grow without declining living standards; this is termed maximum sustainable population growth. It is only when this maximum sustainable rate exceeds the peak rate at which a society expands that takeoff can occur. I also investigate the effects of trade and international income transfers on the ability to sustain takeoff, and find that the results are not what might be expected. In particular, it is shown that present income growth is not necessarily indicative of the ability to sustain takeoff and that factors which increase current income growth may actually inhibit takeoff, and vice versa.

The second part of this paper applies the sustainable population growth framework to Britain during the Industrial Revolution. The model shows a dramatic increase in sustainable population growth at the time of the Industrial Revolution, well before the beginning of modern levels of income growth. The main contributions to the British breakout were technological improvements and structural change away from agricultural production. At least until the middle of the 19th Century, coal, capital and trade played a minor role.

Keywords: Industrial Revolution, Malthusian Dynamics, Maximum Sustainable Population Growth, Development, Demographics

JEL Classification: N13, N33, O1, O41, O52