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9 A Historical Perspective on Economic Aspects of the Population Explosion: The Case of Preindustrial England Ronald Demos Lee

9.1 Introduction

The preindustrial context offers particular advantages for the study of population change and its consequences. Over the course of centuries the effects of population pressure on resources have a chance to emerge and to dominate the more transitory influences. And other sources of long-run economic change, such as technology, capital accumulation, education, and institutional reorganization, were formerly weaker or absent. Thus history may provide us with an actual ceteris paribus situa- tion where statistical attempts to control for extraneous influences on contemporary development have failed. Of course there is always the risk that changing circumstances may have rendered the lessons of his- tory obsolete, but one has to start someplace; the drunk looks for his dime under the lamppost, though he lost it down the street.

There have been many studies of the effects of population growth on economic development, but only a few of these studies are empirical.

Ronald Demos Lee is associated with the Department of Economics and the Population Studies Center, the University of Michigan.

This research was funded by NICHD grant HD 08586-03. I am very grateful to Professor E. A. Wrigley and Professor R. Schofield of the Cambridge Group for the History of Population and Social Structure for making the aggregate parish data set available to me. Philip Mirowski provided valuable research assistance at all stages of this project, and I also profited from his knowledge of English history and his creative insights. Professors Gavin Wright, Gary Saxonhouse, C. K. Har- ley, and Albert Fishlow made helpful comments on earlier drafts. I am particularly indebted to Professor Marc Nerlove for his detailed comments and his solutions to some of the analytic problems.

517

518 Ronald Demos Lee

Theoretical studies, and the many simulation studies in the tradition of the classic work by Coale and Hoover (1958), can be queried on their premises (see Simon 1976). Cost-benefit studies of marginal lives, pio- neered by Enke (1960), are empirical only in appearance; their results can actually be derived a priori for virtually any country, regardless of its economic situation, as Ohlin (1969) has shown in an ingenious article. l Cross-national studies, seeking correlations of population growth rates and growth rates of per capita income (see, e.g., Kuznets 1967; Chesnai and Sauvy 1973; Easterlin 1972) have invariably found no significant association. 2 Leff's (1969) well-known article on savings rates and dependency rates has been so heavily criticized as to leave the results in serious doubt. So although most economists and almost all demographers believe high population growth rates are a problem, there is a surprising shortage of empirical evidence. A study of the conse- quences of population change in a historical context may help demon- strate the importance of the variable in at least the simplest case.

Historical studies may also aid our understanding of the causes of population change. It is sometimes suggested that until a couple of centuries ago the size of human populations in relation to resources was effectively regulated by socioeconomic institutions, but that in recent times these mechanisms have broken down under the influences of mor- tality decline, urbanization, technical change, and modernization in gen- eral. However, there is little understanding of how such mechanisms functioned in the past, how effective they were, and how they reacted to various kinds of external shocks. An examination of these historical mechanisms should help us understand to what extent modern and his- torical experience differ qualitatively, and should provide some perspec- tive on current high rates of population growth.

This paper has three major parts. The first discusses the consequences of population change in preindustrial England, concentrating on wages, rents, and the ratio of industrial to agricultural prices. A simple two- sector model is developed to organize the analysis. The second part discusses the cause of population change, focusing on the nature of the social mechanisms that controlled it and their reaction to variations in mortality and productivity. In the third part, a simple model of eco- nomic-demographic equilibrium is developed, in which steady shifts in labor demand are the main determinant of sustained population growth, while the equilibrium living standards maintained during expansion re- sult from the interplay of largely exogenous mortality and institutionally regulated fertility. These three parts are followed by a brief summary and conclusion. Appendixes describe the data sources and the formal development of the dual-sector model.

519 Perspective on Economic Aspects of the Population Explosion

9.2 Effects of Population Change

9.2.1 Overview

For those who care for the overmastering pattern, the elements are evidently there for a heroically simplified version of English history before the nineteenth century in which the long-term movements in prices, in income distribution, in investment, in real wages, and in migration are dominated by changes in the growth of population. [Habakkuk 1965, p. 148]

This "heroically simplified version" of English history, which gives the central role to population change, appears to be accepted by a ma- jority of economic historians. And since there was a rough synchronism of changes in population, wages, rents, and industrial and agricultural prices across Western Europe, many economic historians extend the same argument to the Continent as well. 3 The assertion is that when population grew, the additional labor that was applied to a relatively fixed amount of land brought diminishing returns, leading to falling real wages and rising real rents. Since industry's main input was labor, indus- trial prices closely followed the real wage. Thus a large population caused low prices for industrial goods relative to agricultural ones. Since, however, total agricultural incomes rose with population, so did the demand for industrial goods; thus industrial output-and with it urbani- zation-increased when population grew. This extension of the market encouraged specialization and trade.

Figure 9.1 shows the basic data series for England over the period 1250 to 1800. This analysis will focus on the latter part, from 1540 to 1800, for which better data are available; however, the earlier data help put this later period into perspective and strengthen the findings by sug- gesting their wider applicability. The data plotted in figure 9.1 are de- scribed in Appendix 9.1; however, the population series merits special mention. It is based on data from 404 parishes, collected and aggregated by the Cambridge Group for the History of Population and Social Struc- ture. Although the population estimates used here are still preliminary, they are far superior to the demographic data previously available.

The series in figure 9.1 shows that the population-induced changes in the preindustrial economy were not trivial; rather, they were of fun- damental importance to the people of the time. For example, the seg- ment of society dependent primarily on wage income was comfortably off at the end of the fifteenth century; after a century of population growth their wages had fallen by 60% and their situation was desperate. Landlords were enriched over this period; industry grew rapidly; and industrial prices plummeted in relation to agricultural prices.

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x

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x '""0 E

Industrial Price Divided by Agricultural Price

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Rent/Wage Ratio

x

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1200 1300 1400 1500 1600 1700 1800

Fig. 9.1 Basic data for England, 1250-1800. For a description of the data and sources, see Appendix 9.1.

541 Perspective on Economic Aspects of the Population Explosion

Deaths by Wages Rate of Natural Increase by Wages

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Fig. 9.7 Cross-spectral estimates of deaths and rate of natural in- crease in relation to real wages for England, 1539-1839. Phase estimates indicated by solid circles correspond to sig- nificant estimates of coherence-squared and are more ac- curate than the others. Estimates were made using a Parzen window with T = 301, M = 20. Deaths and wages were measured as residuals from the regression of the log of the basic series on time. Natural increase was used un transformed.

short-run relations also held over the long run, although these data provide no evidence on this point. Even in the short run, however, wages account for only about 15 % of the variance in growth rates, so that most of the variation is exogenous. Furthermore, inspection of long-run life-expectancy series, as in figures 9.1 and 9.4, suggests that long-run variation in population growth rates was also dominated by exogenous variation.

Under these circumstances, over the very long run, the average wage level will be an important determinant of average population growth rates. But even over the course of centuries, fluctuations of growth rates about that average level may be largely exogenous.

9.4 A Model of Economic-Demographic Equilibrium

At this point it will be helpful to introduce a simple equilibrating model relating fertility, mortality, wages, and population. Rent and terms of trade could also be added, but they play an essentially passive role and would only clutter the diagram.

The relation of fertility and mortality to wages, measured by their crude rates band d, may be plotted as in the top half of figure 9.8. The

542 Ronald Demos Lee

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w(N)

Fig. 9.8

Wage (w)

Economic-demographic equilibrium.

level and curvature of the birthrate curve are determined primarily by norms and institutions, although at very low wages biological consider- ations may become important. Some societies might have horizontal fertility curves, if neither nuptiality nor marital fertility depended on material well-being. Societies with institutional arrangements conducive to high fertility, such as the extended family system, would have higher birthrate curves than those with less pronatalist institutions, such as the nuclear family. The death-rate curve is primarily biologically deter- mined, although such additional factors as income distribution, central- ized famine precautions, and in some cases infanticide and geronticide are also important.

The population growth rate, equal to b - d, is given by the difference between the two schedules; where they intersect, the growth rate is zero and the population is stationary. The corresponding wage, w*, is vari- ously known as the "long-run equilibrium wage," the "natural wage," the "conventional standard of living," or "subsistence."

The lower half of the diagram shows the relation between the wage rate and the size of the population; it corresponds to the demand for labor, which I assume is fixed. Corresponding to the equilibrium wage is an equilibrium size of population, N*. There will also be equilibrium levels of rent and terms of trade, which are not shown. Evidently the

543 Perspective on Economic Aspects of the Population Explosion

equilibrium is stable; when population size is below N* its growth rate will be positive, and conversely.

Now consider the effect of a once-for-all shift in the demand for labor; this situation is shown in figure 9.9. When w(N) shifts out to WI (N), the wage will initially rise, inducing population growth until population attains its new equilibrium at the old wage level. Thus, over the long run, population responds passively to economic advance, while a roughly constant level of material well-being is maintained; this is the "iron law of wages."

Now consider the effect of a permanent exogenous decline in mortal- ity, shifting the schedule from d (w) to d 1 (w). This is shown in figure 9.10. 15 The decline in mortality lowers the equilibrium wage and popu- lation size; growth rates are initially positive until a new equilibrium is established with lower fertility and wages and larger population size. The point to note is that the equilibrium wage is not a culturally deter- mined parameter, as the classical economists thought; it depends also on a level of mortality that was subject to autonomous long-run change. It is this that gives population an independent role in history: within broad limits, the equilibrium population and living standard changed when mortality changed, even if institutions and the economic base of society remained completely unaltered.

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Wage (w)

544 Ronald Demos Lee

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Fig. 9.10 Exogenous mortality decline.

I have simplified here by ignoring the direct links of fertility to mor- tality; these would cause the fertility curve to shift in response to shifts in the mortality curve. However, such direct links were ver¥ weak (see Lee 1973, p. 598; 1978a, p. 167). Therefore it was only through long- run change in the norms and institutions themselves that society could maintain constant population and wages in the face of exogenous change in mortality. The automatic homeostatic mechanisms were not adequate in these circumstances.

In earlier papers (Lee, 1973, 1978a, b) I used estimated forms of this model to simulate the course of wages, population, and fertility, assum- ing that only mortality varied exogenously. These simulations fit the historical data remarkably well for 1250 to 1700 and 1705 to 1784.

The diagram can also be used to illustrate the effect of a steady rate of shift of the demand for labor, of the sort included in the equations estimated earlier. Suppose that this rate of shift is such that population growth at rate r leaves wages unchanged; the estimates suggested r = 0.4% per year. Then in steady state growth, population will grow at rate r, and the wage will be constant at a level such that b (w) - d (w) = r. This situation is shown in figure 9.11. Evidently the wage will have to be a bit above its "natural" level in order to induce growth. Exoge- nous change in mortality will alter the steady-state wage but will only temporarily affect the population's growth rate.

d(w)

b(w)

545 Perspective on Economic Aspects of the Population Explosion

Finally, consider a simultaneous decline in mortality and initiation of growth at rate r in the demand for labor. This situation is shown in figure 9.12. In this case we might observe constant fertility, low mortal- ity, and population growth with no diminution in wages. This is the situ- ation T. H. Marshall had in mind when he wrote of eighteenth-century England (1965, p. 248) :

The obvious temptation is to assert that the death rate was not only the variable, but also the determining, factor in the increase of popu- lation, and that, to understand the causes of this increase, we should study the deaths rather than the births. But, clearly, a horizontal line on a graph may be as dynamic as a diagonal; the forces that prevent a birth rate from falling may be as significant as those that make it rise.

Ordinarily, one would expect a fall in the death rate to be followed by a fall in fertility, as equilibrium is attained at a lower rate and larger population; if this does not happen, it suggests that the underlying cause of continuing population growth is economic progress, not the mortality decline.

Might this be similar to the situation in today's LDCs? We often observe exogenously declining mortality, relatively constant fertility and per capita income, and rapid population growth. Without the concurrent

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6 Wage (w)

Fig. 9.11 Labor demand increasing at a constant rate.

546 Ronald Demos Lee

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Fig. 9.12 Offsetting changes in growth of labor demand and mortality.

economic development, surely by now incomes and fertility would have fallen and mortality risen. It is not quite right to attribute the population growth to the mortality decline, although this may be the most conspicu- ous exogenous change; growth in the capacities of these economies to sustain population should perhaps be accorded the major responsibility.

A final comment on this model in relation to the LDCs is in order. Whatever the nature of the social mechanisms that may have regulated population in Asia, it is clear that a balance was reached at a much higher level of fertility and mortality than in Europe. Apparently life expectancy in China and India at the turn of this century was about 23 years (see Barclay et ai. 1976; Das Gupta 1971), versus perhaps 30 years in Europe; the total fertility rate must consequently have been about 6.5 versus 4.5 in Europe. The necessary change in fertility-regu- lating institutions, in response to declining mortality, is staggering.

9.5 Summary and Conclusions

For today's LDCs there is little empirical evidence on the economic effects of population change. For the economy of preindustrial England and perhaps Europe, on the other hand, population emerges clearly as the dominant cause of long-run change in wages, rents, industrial prices, and income distribution. The economy could absorb population growth