Modern Theory of Population: The Optimum Theory (Explained With Diagram)

Modern economists have rejected the Malthusian theory of maximum population, which, if exceeded, will spell misery in the country.

Instead of the maximum population, the modern economists have substituted the idea of the optimum population.

Meaning of Optimum Population:

By optimum population is meant the ideal number of the population that a country should have, considering its resources. The optimum means the best and the most desirable size of a country’s population consistent with its resources. It is the right number. When a country’s population is neither too big nor too small, but just that much which the country ought to have, it is called the optimum population.

Given a certain amount of resources, state of technical knowledge and a certain stock of capital, there will be a definite size of the population at which real income of goods and services per capita will be the highest. This is the optimum size. The optimum number can, therefore, be defined as the one at which per capita income is the highest.

Under-population and Over-population:

If the population of a country is below the optimum, i.e., below what it ought to be, then the country is said to be under-populated. The number of the people is insufficient to take the fullest possible advantage of the natural and capital resources of the country. This is what happens in a new country.

The resources are vast; much can be produced; but there are not men enough to carry on the work of production efficiently. Under such conditions, increase in population will be followed by an increase in the per capita income. But this increase cannot go on indefinitely. When the shortage of man-power has been made up, the per capita income will reach the maximum, and we shall say that the optimum has been reached.

If, however, the population still goes on increasing and the optimum is exceeded, then we shall have a state of over-population. There will be too many people in the land. The resources will not be sufficient to provide gainful employment to all. They will be thinly spread over the teeming millions. Per capita income will diminish; the standard of living will fall; war, famine and disease will be constant companions of such a people. These are the symptoms of over- population.

Movement towards the Optimum:

Let us suppose that the stock of natural resources, capital equipment and state of technology remain fixed in a country. Now assume that population, which is initially very small relative to these other resources, begins to increase. With the increase in population, the labour force of the country will also increase. As more and more labour is combined with the fixed amount of these other resources, output per capita or real income per head will rise. Why?

The output per capita will increase, because the increase in the quantity of labour will make possible .greater degree of specialisation and more efficient use of natural and capital resources of the country. With a very small population or labour force, there is only a limited scope for specialisation, for each labourer is required to do all sorts of jobs. But as population, and, therefore, the number of workers increase, specialisation becomes possible.

Each man then need not do all the jobs or make all parts of a good. Everybody can concentrate on the job for which he is best suited. Division of labour among the different workers, which is made possible by the increase in population, greatly increases the efficiency and productivity of labour. An increase in population will also permit a fuller utilisation of the natural resources and capital equipment. If the number of workers is small relative to the natural resources, then even the resources actually available will remain under-utilised.

Moreover, the capital equipment is not fully and effectively utilized if there is shortage of labour. If the population increases and more labourers become available to be combined with the given stock of the natural resources and capital equipment, output per capita will no doubt rise.

There is another related factor due to which production greatly increases as population expands in the initial stages. When population of a country is small, market for the products of industry is-also small. With this limited market for goods, producers are forced to produce on a small scale. They are thus unable to take advantage of the economies of large-scale production. As population increases, the market for goods expands; large-scale production becomes possible which adds greatly to the productivity of the economy.

For all these reasons, output per capita, will rise for a time as pupation increases. As the population continues to increase, a point will finally be reached when capital and natural resources are fully utilized and, therefore, output per capita will be the highest. The level of population at which per capita output or real income is the maximum is called the optimum population.

Movement Away From the Optimum:

If, however, population still goes on increasing, that is, crosses the optimum point, output per capita will start declining. The economy would then become over-populated. Why does the output per capita fall when optimum point is exceeded? This is because there are now more men in the economy than are needed by it. A given amount of capital and natural resources have to be shared among a larger number of workers with the result that each of them has a smaller amount of equipment, materials and natural resources to work with. For this reason, the average productivity declines.

It is very likely that many people may not get employment and, therefore, add nothing to production. Pressure of population on land increases. But the additional men, who get employment in agriculture, add nothing to total production. In other words, marginal productivity of these extra men in agriculture is zero or nearly zero. This is what is commonly known as the phenomenon of disguised unemployment. Disguised unemployment exist s in over-populated agricultural economics from where even if some workers are withdrawn, total production does not fall.

Thus, low standard of living, open and disguised unemployment, and food problem are all signs of over-population.

It is clear that both under-population and over-population-have disadvan­tages. In both cases, the per capita income is lower than it would be in the case of optimum population. It is the optimum population with the highest per capita output which is the best for a country to aim at.

Diagrammatic Representation:

The concepts of optimum population, under-population and over-population are represented in the figure given below:

In this figure, size of population is measured on X-axis and output per capita on Y-axis. It is evident from this figure that in the beginning as copulation increases, output per capita also increases. Output per capita goes on increasing with every increase in population till OM is reached. At OM level of population, output per capita is the highest and is equal to MP. If population now increases beyond OM, output per capita falls. Therefore, OM is the optimum population.

If the actual population of a country is less than OM, it will be under-populated and if the actual population is more than OM, it will be a case of over-population. But it may be noted that optimum population is not a fixed and rigid number but is a moving figure. As explained above, optimum population is relative to resources and technology. Given the amount of capital and natural resources and the state of technology, there will be a definite size of population at which the output per capita is maximum. But the quantity of capital and natural resources and the state of technology are subject to changes.

In fact, changes in them often take place. When there is any change in them, the optimum level of population will also change. For instance, when either there is increase in the quantity of capital equipment and available natural resources or the country makes. Progress in technology, per capita output curve will shift upward and to the right, with the result that the optimum level of population will increase.

The changes in the per capita output curve, as a result of increase in resources or progress in technology and their effect on optimum population, are shown in the Fig. 14.2. With certain given resources and technology, per capita output curve is AR and the level of optimum population is OM at which output per capita is MP, which is the highest under the given circumstances.

When the quantity of capital and natural resources increase or technology makes an advance, output per capita curve shifts upward and to the right and is shown as A’R . With per capita output curve A R’ optimum population is OM’, which is greater than OM. Now, if the resources further increase or technology makes further advance, the per capita output curve shifts to A “R”.

With per capita output curve A “R “, optimum population is OM”, which is greater than both OM and OM’.

Thus, we see that with different resources or different technology, there will be a different level of optimum population.

Dalton has given a formula by which we can judge the extent to which the actual population of a country deviates from the optimum population. The extent of the deviation is called maladjustment. The formula seeks to measure the degree of this maladjustment. It is:

M = A-O/0/where

M stands for maladjustment.

A stands for actual population.

O stands for optimum population.

If M is negative, the country is under-populated and if M is positive, the country is over-populated. For instance, if the actual population of a country is 50 crores and its optimum population is 35 crores, then that country is over-populated to the extent of

50-35/35 = 15/35 = 3/7

Malthusian Theory and Modern Theory Compared:

The following are the main differences between the Malthusian Theory and the Optimum Theory:

(a) Malthus focussed his attention on land and food production, whereas the optimum theory takes into consideration all the resources and economic development in all its aspects, i.e., all types of production.

(b) Malthus seemed to be thinking of a maximum number for a country which, if exceeded, would spell misery. According to the optimum theory, there is no rigidly fixed maximum.

(c) To Malthus, famine, war and disease were the signs of over-population. But the optimum theory tells us that, even in the absence of such distressing phenomena, there can be over-population, provided it can be shown that per capita income has gone down, or that with a decrease in population, per capita income will go up.

(d) The modern theory is optimistic, whereas the Malthusian theory is pessimistic in outlook. Malthus was haunted by the fear that population would outstrip food supply. The modern economists do not suffer from any such apprehensions. “Malthus was obsessed by the fear of an impending economic Hell: the profounder of the optimum theory are elated with the hopes of a coming paradise.”

Population Growth and Economic Development:

There is a mutual and close relation between the growth of population and the economic development of a country. One affects the other and is, in turn, affected by the other. This is brought out by the Theory of Demographic Transition.

Effect of Growing Population on Economic Development:

Rapid growth of population promotes rapid economic growth, on the one hand, and retards it, on the other. Large population produces an urge for economic development as an escape from poverty and low standard of living. It offers a big market for goods and as such attracts prospective industrialists. It compels the fullest possible use of the available resources by means of better techniques.

In this way, a growing population may accelerate economic growth. Japan is a shining example of an overcrowded country advanced economically with a high standard of living. But in a country like India growing population has proved to be the greatest curse and the biggest obstacle in economic growth in a number of ways:

(i) It has created a serious food shortage and necessitated the importation of huge quantities of food-grains. Thus, valuable foreign exchange has been squandered. This could have been better used for importing capital goods, e.g., plant, machinery and equipment and accessories, and essential raw materials. This would have resulted in rapid economic growth.

(ii) It has burdened the country with a large unproductive population (e.g., children) who make no contribution to production. The average expectation of life being low, there is a large number of aged persons who form another set of unproductive consumers. The number of unproductive consumers has been estimated in India at 250 million nearly. How can a country carry such a heavy burden and still make economic progress?

(iii) A large number of women involved in frequent maternity are disabled from any productive occupation. This also results in a waste of human resources and hampers economic development

(iv) A fast-growing population aggravation the unemployment problem. Disguised unemployment in rural areas and a large-scale unemployment in urban areas is a common phenomenon in over-populated but under-developed economies. This means that a large number of people have to be fed and clothed, but who make no addition to the country’s output. This leads to the diversion of the country’s resources away from economic development.

(v) Over-population means low per capita income which, in turn, results in a low standard of living and low labour efficiency. This also hinders economic growth.

(vi) The most serious consequence of the fast growing population is that it reduces the country’s capacity to save and to invest. This is a crucial factor which checks economic growth.

On the whole, a fast growing population acts as a drag on economic growth.

Effect of Economic Growth on Population Growth:

Now let us see the other side. Prior to economic development, a country has high birth rates and high death rates. The birth rates are high owing to universal and early marriages, social beliefs, customs and religious attitudes and, above all, from economic necessity for supplementing the family income by children’s earnings.

The death rates are high owing to poor diet, bad sanitary conditions and absence of adequate preventive and curative medical facilities.But when a country enters the era of economic growth, the situation improves, with better and more food, improved medical facilities and better standard of living. The medical innovations coupled with more abundant supply of food bring down the death rate. But with economic ease, the birth rates continue to rule high.

The result is that the population growth becomes still more rapid and there is a serious and alarming situation caused by ‘population explosion’. However, when the country attains a high degree of economic develop­ment, the birth rates start falling.

People realise the advantages of small families and have the knowledge and the means to plan their families. The children are regarded more a burden than an asset. Small families and low mortality become a typical pattern. This, in short, is the Theory of Demographic Transition.