THE ECONOMIC EFFECTS OF A DECLINING POPULATION By FRANCOIS LAFITTE Itstroduction I5-64) will grow older. Between I89I and AWELL-CONCEIVED population I937 its average age rose by 24 years, from policy cannot be elaborated unless 34-3 to 36-9 years. In the coming forty the most careful and objective assess- years Glass's projections suggest a further ment of the consequences of present popula- ageing of between 3j and 6 years. Wil this. tion trends is first attempted. If we wish to affect the productivity of the worker ad- modify the British demographic situation versely ? We do not know, but, since the' we have to know why it needs modifying, whole trend of industrial technique is away and in what direction it should be guided. from types of work involving great physical The consequences of differential fertility strength, I doubt whether any possible and mortality are the main concern of deterioration of productivity due to ageing eugenists, and less attention has been of the working population could not be made devoted to the possible effects of changes in up for by improvements in health and work- age composition and total numbers. The ing conditions. In any case, productivity present article is limited to a discussion of per operative employed in Britain rose by the latter in relation to Britain's economic 7 per cent in I924-30 and by at least 20 per future, and is written in lieu of a review of cent in I930-35, whilst in the U.S.A. physical W. B. Reddaway's The Economics of a output per man-hour in industry rose by 27 Declining Population (I939)*, the first sys- per cent in I929-35. The advances in tematic study technique which made possible such stupen- of the subject in England. dous progress in productivity are far more important than any adverse effects which Human Needs and Resources might result from the ageing of the working If we ignore the existing economic arid population. social system, population trends down to The objective needs-resources situation is, I980 give no cause at all for alarm. Smaller therefore, reassuring. Why worry about numbers mean more material resources per population trends at all ? Because between head, the ratio of active workers to depen- human needs and their satisfaction by use of dants does not deteriorate, and there is no the available human and material resources danger of increasing average age affecting there stands a complex system of economic the productivity of labour. The new pro- and social relations which must be taken into jections into the future of population trends account. Thus, in I93I there were 23-l in England and Wales made by Glass (1940) men aged 2I-54 per I00 of the population, suggest that the ratio of men aged 20-54 to but I2 per cent of the men in these age the total population to be maintained is groups were available for work but could hardly likely to vary at all in the four de- find no one to employ them. While the effect, cades that lie ahead of us. If the war kills of population trends upon the primary off a proportion of this labour force, it is relationships between our society and our equally likely to bring about a corresponding material resources may be insignificant in reduction of dependants, young and old one or two generations, their effects upon alike. the superimposed economic and social rela- But the working population (age groups tionships within our society may be of great * Allen & Unwin, 8s. 6d. importance. 121 122 THE EUGENICS REVIEW It is, therefore, necessary, as Reddaway Reddaway, requires the intervention of a argues, (a) to make an analysis of the third factor, " something which will create economic system, and (b) to assess the im- extra incomes and so extra demand, without portance of population trends as one of providing a simultaneous increase in the many factors which influence the working volume of goods to be bought." Expansion of the economic system, on the assumption of the production of producers' goods fulfils that the system will continue more or less this function. as at present. This assumption is necessary, But capital outlay is not undertaken by although we may be certain that the system business men unless they expect an adequate will change, because we cannot predict such level of profits. Economic recovery, in our changes, and because only thus can we see the present economic system, thus depends upon general shape of coming problems and the the foresight, imagination and " confidence " sort of changes we ought to welcome and of a numerically small but economically all- work for. important group of people known as entre- preneurs. Their " confidence " is a fragile The Economic System thing, (a) because no one can forecast (I) Capital Outlay and Economic Progress business conditions more than a year or Following Reddaway and Keynes, I take two ahead, (b) because they depend for their the view that capital outlay (the " propensity capital on banks, and on the " investing to invest ") plays a key role in the economic public" who may be even more influenced system. Economic depression may be re- by short-term considerations than the busi- garded typically as a state of affairs in which ness men. Unfortunately for the mass of the level of consumers' demand anticipated ordinary folk, the " confidence " of entre- by entrepreneurs appears too low to inspire preneurs is exposed to a constant tendency in them confidence in the profitability of new for the " marginal efficiency" of capital- net capital outlay, which, if undertaken, i.e. the profitability of investment-to would, by the mechanism of the " multi- decline. The accumulation of capital itself plier," expand production approximately tends ultimately to diminish the " marginal to conditions of full employment. Instead, efficiency" of capital. The more plentiful capital and labour remain unemployed capital becomes, the lower tends to be the because entrepreneurs do not anticipate any net yield which the next capital goods pro- profit from expanding production. Although duced will give to the entrepreneur, unless there are many methods of effecting the counteracting forces simultaneously create a economic expansion necessary for recovery, new and proportionate demand for net addi- the surest, indeed, the classical method (as tional capital outlay. " Capital has to be kept Reddaway points out) has been a direct scarce enough in the long period," says expansion of the production of capital goods, Keynes (I936), " to have a marginal effi- producing an additional flow of wages and ciency" sufficient to induce entrepreneurs a rise in demand for consumers' goods to to continue producing new capital goods. which the consumption goods' industries then He points out that respond. Expansion of the consumers' goods industries depends on the level of consumers' " of two equal communities, having the demand, which can, of course, be raised by same technique but different stocks of an expansion of the consumers' goods in- capital, the community with the smaller dustries themselves. But recovery on these stock of capital may be able for the time lines would be slow and uncertain, since some to enjoy a higher standard of living than of the additional purchasing power would be the community with the larger stock; saved and the expansion in expenditure though when the poorer community has would be less than the expansion in produc- caught up the richer . . . then both alike tion of consumption goods which generated will suffer the fate of Midas." it. A really convincing advance, argues Thus, although from the objective needs- THE ECONOMIC EFFECTS OF A DECLINING POPULATION I23 resources point of view, a greater quantity of " In circumstances of such rapid techni- socially useful capital is invariably prefer- cal progress accompanied by a demand able to a smaller quantity, man-made which is no greater than can be met by an obstacles to consumption may convert this unchanged value of plant, it is probable, accumulation of material wealth into a cause both here and in America, that the deprecia- of poverty. tion allowances currently set aside by Hitherto there have been counteracting manufacturers are sufficient to pay for all, forces which succeeded in keeping capital or nearly all, of the cost ofnew plant without scarce enough in the long run-by expanding requiring to be supplemented out of current the demand for it-to maintain its " mar- net savings. This factor is a further aggra- ginal efficiency." These forces were (a) vation of the contemporary problem of technical advance (i.e. new knowledge em- finding a volume of profitable new net bodied in inventions, improved organization investment sufficient to maintain equili- of production and in a labour force trained brium with the readiness to save.... It to apply new methods) ; (b) steady and rapid is certain that in the last quarter of a growth of the home population (i.e. ex- century such a state of affairs has never pansion of the internal consumers' market); existed, apart from very brief periods in (c) expansion of foreign trade (i.e. expansion abnormal conditions, in any industrial of the number of overseas consumers em- country in the world, except perhaps in braced in the British economic system as the United States in i928." customers or as borrowers) ; and (d) the rise Similarly Cohn Clark (I937) has shown in the standard of living (i.e. rise in the level that " of the remarkable gains in productivity of consuming power per head. This factor which have been made since I9I3, nearly the was largely a function of the first three). whole has been lost" [in the form of increased Prolonged stagnation of any one of these unemployment]. forces of expansion would, if the other factors continue to expand demand for net Even if new big capital-absorbing indus- additions to capital no faster than before, tries do develop, in itself the net additional have a depressing effect on capital outlay. capital outlay involved would not suffice to What has happened to them ? get us out of Joan Robinson's vicious circle: " The accumulation of capital is always (2) The Forces of Expansion tending to bring itself to an end, while at There is little doubt that technical advance the same time generating the need for a will continue, but there is much dispute greater rate of investment to keep up among the experts about whether it will employment." require large volumes of new net capital outlay comparable to those needed in the The number of consumers in the domestic nineteenth century for heavy industrial market increased by I-Ij per cent annually equipment. Pigou (I936) and Hicks (I936) from i8oi to I9II, by i per cent from I9II are optimistic, but Harrod (I939) and to I93I, and by j per cent from I93I to Keynes* are less hopeful. At any rate, there I937. Keynes (I937) makes the following are no important signs at present of the rough estimates for I860-I9I3: emergence of new major capital-absorbing (a) Real capital increased by I70 per cent. industries. Recent technical trends have (b) The long-period average rate of interest been mainly in the direction of reducing the was constant. amount of capital per unit of output. Dis- (c) The technical period of production cussing the British and American produc- lengthened by at most I0 per cent. tivity trends referred to above, Keynes (d) Population increased by 50 per cent wrote: and the population served by British (I938) industry and investment by much * For example in his Galton Lecture, EUGENICS REIEvw, April I937. more. 124 THE EUGENICS REVIEW (e) The standard of living rose by 6o per no more than I per cent since the last cent. war. According to this estimate the demand for In the inter-war period overseas invest- net additions to capital arose very little from ment gradually dried up as a source of technical changes which required " increas- demand for new net capital outlay. Is it ing capitalization per unit of consumption " therefore " played out " because " no fresh (say g per cent), but mainly from increasing continents remain to be discovered " (Joan population (say 4I per cent) and from Robinson, I937), or because " the channels increasing consumption per head (say 50 per of overseas investment are closed and are cent). Somewhat less than half of the addi- not likely soon to be reopened" (Harrod, tional home investment arose from expansion I939) ? There are immense possibilities of of population; substantially more than half new demands for capital, not only in countries of additional overseas investment was made like China and India, not only to restore the possible by expansion of the number of over- colossal destruction of real capital that will seas consumers served by the British econo- result from the present war, but in South mic system. Over two-fifths of the additional America, Australia and even in Central and stock of capital would not have been required Eastern Europe. Enormous obstacles, even if the same improvement in the standard of before the outbreak of war, prevented this living and the same lengthening of the latent demand from becoming effective in period of production had not been accom- backward countries and no change for the panied by any increase in population. better after the war is likely in the absence The new capital outlay necessitated by the of planned international action to raise nineteenth century expansion in the number consumption on a world scale. Harrod is of consumers was not necessarily devoted to therefore probably right, if, but only if, direct production of their basic needs. Much " nothing is done about it." It is impossible of it was used to foster production of food- henceforth to count on overseas investment stuffs and raw materials in " new " countries, to stimulate the demand for new capital in (a) by direct exports of capital or (b) by the absence of deliberate measures to promote producing industrial exports to exchange for it. " new " country products. Man-power was If 50 per cent of the net additions to also exported in the form of emigrants. Britain's stock of capital in I860-I9I3 arose Exports of capital on this basis can continue from the rising level of consumption per head, to expand, (a) as long as Britain's effective the standard of living is in any case a prime consuming power for " new " country pro- factor in keeping the economic system ducts continues to expand (which depends functioning healthily. But it has not hitherto on continued growth of our population and/ been an independent factor of economic or on a continued rise in consumption per expansion, but rather a function of the other head of such products), and (b) as long as the factors we have discussed. Raising the " new " countries continue to need to borrow standard of living depends in the long run on additional capital from Britain to increase technical advances making possible a higher total output and productivity per worker. output per man-hour. But in the short run the Just as cessation of population growth will actual level of demand may be well below remove one source of demand for net the upper limits imposed by the state of additional home investment and depress the technique. Short-term changes in the level total demand for new net investment (unless of consumers' demand depend upon the counterbalancing changes in other sources state of employment of capital and labour, of demand occur), so it may be a cause of which in turn depends upon the " marginal decline in overseas investment of the tra- efficiency" of capital. Within a trade cycle ditional pre-I9I4 type. For example, the the standard of living is not the agent of annual increase in British food imports has change but the subject affected. Because in fallen steadily from 8 per cent in I86o-73 to the short run the standard of living depends THE ECONOMIC EFFECTS OF A DECLINING POPULATION 125 upon the " marginal efficiency " of capital, investment to private entrepreneurs, may a rise in the level of demand has traditionally not the cessation of population growth make been not a cause of economic recovery, but it more difficult to avoid unemployment of a result of it. If population increase dis- men and resources than in the past ? On this appears as a source of demand for net issue there are optimistic and pessimistic additional capital outlay, if the prospect of schools of thought. I follow Reddaway in future demand for additional investment giving the benefit of the doubt (but not more) arising from technical advance and overseas to the pessimists, providing nothing is done borrowing is uncertain, then a further long- to alter the working of our present economic term rise in the standard of living (generated system. In a progressive economy technical by technical progress) may not materialize. advance continually reduces the number of Instead- the prospect for the post-war years workers employed by a given quantity of ahead of us may quite well be one of pro- capital. To maintain full employment and longed economic depression with a steadily prosperity, sustained cumulative annual rising volume of output per man-hour additions to our stock of capital are therefore counterbalanced by a formidable increase in necessary; that is to say, economnic progress the proportion of workers left unemployed. depends on continually increasing the stock The problem of bridging the gap between the of capital employed by maintaining the standard of living technically possible and demand for net additional capital outlay, that actually achieved is no new one. It was which means, at present, maintaining its not engendered by population trends, but profitability to entrepreneurs. Keynes (1937) cessation of population growth is likely to has estimated that, since 8-I5 per cent of accentuate it in the future. the national income is saved in conditions of With two expansive factors ruled out and full employment, " with our existing organi- with uncertainty about a third, profitability zation, and in conditions of full employment, and " confidence " may disappear and the we shall have to discover a demand for net prospect may be one of prolonged economic additions to our stock of capital amounting to depression, relieved only by fresh booms in somewhere between 2 per cent and 4 per cent production when future wars break out. annually. And this will have to continue year Economic recovery and progress in the future after year indefinitely." would therefore appear to be bound up with Uncertain about the future effects of advances in the standard of living, which technical change on the demand for net will only be achieved if the trend of the additional capital outlay, gloomy about the standard of living can be made to cease prospects of overseas investment, pessimistic being dependent upon the effects on capital economists are inclined to argue that cessa- outlay of population expansion, technical tion of population growth will remove one advance and overseas investment. major source of demand for new net invest- ment and will exert a chronic depressing The Employment of Capital and Labour effect on investment, employment and the * Provided we avoid under-employment of standard of lving. A cautious expression of caPital and labour at least as well as in the past, this view is given in the League of Nations Reddaway argues that projections of popu- World Economic Survey, I938-9: lation trends in the next four decades suggest an economic situation that is potentially " In past decades, in Western and highly favourable, since the ratio of workers Northern Europe and in Northern America, to total population would remain satis- a great deal of capital construction has factory and smaller numbers imply greater been necessitated simply by the growth of amounts of natural resources per consumer, population.... Even the demand for of industrial capital per worker and of social ordinary industrial capital equipment may capital per citizen. But in an economy the be diminished when the number of new mainspring of which is the profitability of consumers of the product of industry I26 THE EUGENICS REVIEW ceases to grow. . . . The incentive to This is a fair statement of the problem posed borrow savings for capital development by our economic system. I do not however may be depressed below the funds which agree that a solution can only be found by people wish to save, so that unemployment somehow " convincing entrepreneurs that and trade depression result from the there is a reasonable prospect of demand reduction of activity in the construction remaining at a prosperity level." This could industries." be achieved by mass hypnosis of business To this the optimist can make many replies, men, but the issue is not in fact a psycho- chief among them being the argument that logical one. An economic system does not the pessimist is really assuming a close have to depend on the " confidence" of relation between the number of consumers business men, although our present system and the total consumers' demand. Yet the cannot work well without it. level of demand per head (or standard of A second argument of the pessimist is that, living) may be far more important than the because in a stationary or declining popula- total number of heads. Thus New Zealand tion total demand will depend far more than with two million inhabitants imported 87,000 hitherto on the standard of lving, expansion road motor vehicles in I935-7, while India, of demand in future may be far less " auto- with 360 million people, imported only matic," far more uncertain than in the past. 72,ooo. But I agree with Reddaway's This may generate a general mood of caution, summing up of the debate between optimist if not of pessimism, among business men and and pessimist: undermine their " confidence " and eagerness " The optimist's arguments fundament- to undertake new production. ally amounted to saying that openings for Hicks (I936) in particular has used this capital outlay arise out of the need for argument, but I feel that this is too specula- more capital to provide a rising standard tive a question to argue about, and would of consumption for a constant or even a say with Jewkes (1939): declining population, as well as out of the " I am not convinced that, in fact, the need for more capital to provide the same tendency mentioned above is particularly standard for larger numbers. Previously likely to become actual since possible we have had both factors at work; now counteracting forces cannot be ruled out." our stock of capital is larger, our standard of consumption already higher, and our But again the pessimist may quite well be population no longer expanding. There is right if " possible counteracting forces" are no theoretical impossibility about the not consciously brought into play. maintenance of the level of capital outlay, A third argument of the pessimist, especially if we visualize a great wave of favoured by Harrod, is that, if we avoid inventions; but the probabilities are aU economic depression as well as in the past against it, unless conscious measures are (and once we recover from the effects of war), taken to secure it." real income per head is likely to continue to Reddaway's conclusion is grow. The number of dependants per income " Unless we do succeed in avoiding receiver will also diminish. The effect will catastrophic slumps, and in convincing be that an increasing proportion of expendi- entrepreneurs that there is a reasonable ture will be available for consumption of prospect of demand remaining at a pros- non-essentials. As Reddaway says, perity level, then it will seem very risky " Catering for a rise in the standard of to undertake capital outlay which will consumption is almost bound to be a only be justified if the average person's riskier business than extending existing consumption rises-and not, for example, industries to provide for more consumers. if real wages are high for those in work, but Demand is more fickle as between one 25 per cent are unemployed." semi-luxury and another." THE ECONOMIC EFFECTS OF A DECLINING POPULATION I27 I accept this argument as, on the whole, Malthusian Devil of Population does give probably valid, but it is possible to place too us a chance of increasing economic welfare much emphasis upon it. It is however true all round, but only on condition that " the that capital and labour will have to be more increase in resources or in consumption . . . mobile and adaptable in a diversified economy which the stationariness of population makes producing a large volume of " tertiary" possible, does actually take place." For the consumption goods and services, because of Devil of Unemployment, " escaping through increasing likelihood of shifts in demand due the breakdown of effective demand," to changes in tastes and fashions. threatens us. A fourth undoubtedly correct argument of " When Devil P. of Population is chained the pessimist (which again is commonly up, we are free of one menace; but we are over-emphasized) is that a stationary or more exposed to the other Devil U. of declining population will engender a greater Unemployed Resources than we were amount of structural unemployment. In- before. . . . With a stationary population creasing fickleness of demand would increase we shall, I argue, be absolutely dependent the number of necessary readjustmetits in the for the maintenance of prosperity and civil supply of capital and labour, and increase peace on policies of increasing consumption the risk of loss of productivity through by a more equal distribution of incomes temporary unemployment of specific types and of forcing down the rate of interest. of material and human resources. A shift . . .If we do not, of set and determined in demand, when population is declining, purpose, pursue these policies, then with- may involve actual contraction of the total out question we shall be cheated of the output of the industry concerned, which benefits which we stand to gain by the would involve physical transfer of capital chaining up of one devil, and shall suffer and labour to new employments, with un- from the perhaps more intolerable depre- employment in the interim; whereas in a dations of the other." period of population expansion a fall in demand for capital and labour of a specific The National Income type (e.g. horse transport) might more We must turn from considering whether commonly be met simply by ceasing to a declining population will mean more or expand production of that type. Structural less employment to examining whether more readjustments of this character might also or less income will accrue from employment. be more difficult than hitherto, since an older On this question I follow Reddaway's views working population is inevitably less mobile closely. In the past the amount of capital' and adaptable than a younger one. Once increased much faster than the population, again I give the pessimist the benefit of the and most of the additional capital that was doubt unless special measures are taken to not needed for satisfying the needs of the counteract these tendencies. additional population was available for In general, what are we to conclude? raising the level of consumption per head. Within the framework of our present The advent of a stationary or declining economic system, I have no doubt that the population makes it possible to raise the conclusions of Keynes in his Galton Lecture standard of living even faster than in the I937) are broadly valid (although the war past, since there will be little use for savings may disturb these basic trends for a number merely to duplicate existing industrial equip- of years). He doubted whether even the ment to provide for new demand resulting 2 per cent minimum annual net addition to from growth of population, and more savings our stock of capital, postulated by him as will be available to raise the level of output necessary to maintain the " marginal efficien- and consumption per head. Moreover the cy" of capital (and so prosperity) -in future, abundance and cheapness of capital would would be possible " if things go on as they make it possible to stimulate a rapid rise in are." He argued that the chaining up of the the amount of capital per worker employed 128 THE EUGENICS REVIEW and hence in productivity, (a) by further Consumers' demand need only be determined mechanization of production, (b) by facilitat- by the number of consumers in the case of ing the expansion of highly capitalized commodities such as bread, the demand industries relatively to those in which the for which is inelastic. In any case, even ratio of capital to labour is low. Reddaway admitting that a smaller population may therefore concludes: involve a shrinking demand for theproducts "Unless people become less successful of a whole series of significant industries, it in using them [capitalequipment andland], is difficult to think of a single important we shall expect the real income per person industry in which a falling off of demand employed also to rise more rapidly than would not raise productivity by eliminating in the past." the least efficient productive enterprises. Thus the physical output of British mines Real income per person occupied (i.e. and quarries fell by I4 per cent betweeri including the unemployed) may not however I924 and I935, but physical output per rise as rapidly as real income per person employee rose by no less than 3I per cent. employed, and the divergence between these Much of this rise in productivity was due to two curves may be greater than at present. improvements in technique, but undoubtedly The difference between them is due to the an important proportion resulted simply extent of unemployment. We have assumed from the that general unemployment will be no more closing down of inefficient pits and prevalent than at present, but we have seen quarries. Diminishing returns would of that structural unemployment is likely to be course inevitably set in if our population were to fall from 40 millions to IO millions. somewhat more prevalent. But structural Such a nightmarish trend is not impossible, unemployment need not be of great import- but it is futile and idle to speculate about ance if there is no general unemployment. It what may happen in A.D. 2IO0. It is never- is the latter which is the real problem. theless theoretically true that population Reddaway sums up his discussion: decline will have to be slowed down and " If we consider the whole field of halted before the point of diminishing returns economic activity, the changed age com- is reached. position of the employed population may The whole of the foregoing discussion on balance be favourable, even if some of depends on the overriding proviso that the elderly are not really up to standard; general unemployment is avoided as well in for there will be a smaller proportion of the future as in the past. If it is, the poten- boys and learners to pull down the tialities of the demographic situation are average."9 very favourable. Whether we seize the The pessimists have several arguments chance given us by the chaining up of the which must be considered. Harrod (I939) Devil P. of Population, to chain up once and states that for all the Devil U. of Unemployment is another matter. It will not be done without " dwindling numbers would lead to a net planning. If it is not done, "redundancy" loss of production per head. The economies of of large scale production have not yet capital equipment and productive capacity reached their limit in this country and a are more likely than any advance in prosper- contraction of the market would lead to ity. Population trends are not the cause of in this problem (nor of the mental laziness of diminished efficiency many fields." those who call it a " redundancy " problem), This pessimism is really rooted in a general but they are going to make the problem more pessimism about the future of the standard acute. of living, which, we have argued, is quite unjustified except on the assumption that the International Trade economic system is simply to be allowed to In this sector of the battlefield the pessi- flounder on from crisis to crisis as in the past. mists are well entrenched. Their first THE ECONOMIC EFFECTS OF A DECLINING POPULATION 129 argument has been well stated by Dr. Snow materials until we are a much better clothed, (I935): housed and materially equipped nation than " In the pre-war period we adjusted our at present. The raw-material countries could commercial and industrial machinery to be kept busy at full producing capacity if the provide [by means of exports] for an international and internal barriers to food annual increase of about 2 per cent in consumption could be overcome. our total food supplies, and this necessi- Another form of Dr. Snow's argument is tated an annual increase of about 5 per the assertion that cessation of population cent in our imports of foodstuffs. Between growth is a cause of the world agricultural I9II and I926, however, our total consump- crisis. The League of Nations World tion (by weight) of foodstuffs increased Economic Survey, I938-9, for instance, by less than i per cent per annum, and the states: highly complicated commercial and indus- " With a cessation of population growth, trial machinery which we set up on the basis the demand for agricultural products will of requiring an increase of 5 per cent per cease to grow or at least will grow at a annum in our imported food supply is only very much slower rate. If agricultural required to produce an annual increase of inventions and improvements in agri- less than i per cent. This simple fact seems cultural technique continue at their present to me to be at the bottom of many of the rate, this may mean that agriculturists world's economic troubles. Australia and will be threatened with serious over- Argentina, for example. . . have organized production and a serious excess of pro- themselves in the post-war period to ductive capacity, which can no longer be expand their production more or less at remedied simply by waiting for a growth the same rate as in the pre-war period. of population to bring forth a new and . . . The cause for the slowing up of increased demand." international trade since the war is, to a The answer to this is that the main barrier large extent, due to the change of [demo- to feeding the malnourished half of the graphic] circumstances in this country." human race is not cessation of population Yes, declining numbers of home consumers growth in one part of the world, but lack of does mean a falling demand for " inelastic " " effective demand " in all parts. Another commodities such as cereals and sugar, but League of Nations publication, the Interim why for anything else ? Unless the standard Report of the Mixed Committee on Nutrition, of living ceases henceforth to rise, a declining Vol. I (I936), makes this clear: population simply does not of necessity " The dislocation of international trade imply any fall in the demand for most raw which resulted from the crisis [after I930] materials. League of Nations nutrition fell with exceptional severity upon agri- surveys have repeatedly shown tremendous cultural exporting countries. One of the world under-consumption of most foodstuffs outstanding features of the depression was except perhaps basic energy-yielding foods the disproportionate fall in the prices of (cereals, rice, sugar, etc.). Even in Britain agricultural products, leading to a restric- Orr (I936) estimated that increases of 29 per tion of purchasing power in agricultural cent in the consumption of meat, 8o per communities and, consequently, to a cent for milk, 4I per cent for butter, 55 per limitation of the intake of industrial cent for eggs, 124 per cent for fruit (money products. In three years the price of value) and 87 per cent for vegetables other leading products in the world market fell than potatoes (money value) were needed to from the 1929 level by more than 50 per raise food consumption generally to the level cent, a development which might at first of the best fed class. Nor need there be any blush appear an ideal one for securing an falling off in the demand for cotton, wool, abundant food supply through inter- leather, timber and almost all other raw national trade. But, in fact, many indus- 130 THE EUGENICS REVIEW trial communities were unable to purchase (£ millions) their necessary supplies offoodstuffs owing Widows to their inability to sell their products to the Old Age' and War Total impoverished agriculturists. Industrial 65-70 70 Orphans workers fell into unemployment; agri- I936-37 20 46 24 40 I30 cultural produce went into stocks, not (actual) into consumption." I945-46 24 56 28 32 I40 It is perfectly true that less foodstuffs might I955-56 25 67 3I 2I I44 have gone into stocks and more might have I965-66 28 76 33 I0 I47 been sold if the populations of the advanced At first sight this appears to justify Harrod's industrial countries had been growing more alarmism. But Reddaway goes on to point rapidly. But it is equally clear that we shall out a factor which all the pessimists have get nowhere by blaming on to population hitherto overlooked: the future yield of trends the crazy and tragic effects of inter- death duties. The rapid fall of death rates national economic anarchy. in the past has-by postponing the demise Another argument of the pessimists is that of many owners of property-deprived the cessation of population growth, by stopping Chancellor of the Exchequer of much income expansion of demand for certain foodstuffs from death duties. Even a continued fall in and raw materials, is undermining inter- age-specific death rates will not however in national investment. The declining tendency future avert a steady rise in the total number of the Western populations, writes Hender- of deaths of elderly people whose estates will son (I937), "greatly diminishes, in my come under the axe, simply because the judgment, the opportunity for sound inter- proportion of elderly people with one foot national investment; and large-scale inter- in the grave is increasing every year. This national investment was an integral part of will gradually raise the proportion of capital the old system of international economic which is taxed for death duties each year. intercourse." We have already dealt with Reddaway estimates the future yield of this argument in another form. Even death duties (assuming no change in the rate admitting that there is a large grain of truth of taxation) as follows: in it, such a trend would only imply the Death Rate Yield drying up of overseas investment of this (per I,000) ( milions) type-i.e. to facilitate expansion of produc- I935-39 IX29 8o tion of various raw materials. Other types I940-44 I3.7 85 of overseas investment are easily conceivable. I945-49 I4.5 90 I950-54 15.3 95 Public Finance I955-59 i6*i Ioo The favourite argument of the pessimists I960-64 I6*9 I05 in this field is that of Harrod (1939): The rise in the yield of death duties would " In the coming decades we shall have continue for some time after I965. By I965 a rapidly ageing population and the main- we might thus expect an increase in pensions tenance of the older members will be an expenditure of about £I7 millions to be increasing burden on those actively em- balanced by an additional income from death ployed." duties of about £25 millions. This was the likelihood if war had not broken out. But Taking the average of Charles's two most increased pensions expenditure due to war important projections of population trends, losses and higher pension rates may be Reddaway makes the following estimate of counterbalanced by a higher yield from death the order of magnitude of future expenditure duties resulting from war-time deaths and on pensions: heavier taxation. At any rate there is little THE ECONOMIC EFFECTS OF A DECLINING POPULATION justification for gloomy talk about the course there may be plenty of other increasing financial burden of old people. reasons for wanting to do it. But what a The changing age structure of our popula- commentary on the ingenuity of homo tion will however transform the nature of sapiens! That he should be reduced to the dependency problem. In I89I children laboriously increasing the number of under I5 constituted no less than 35 per cent children born in order that we may keep of the population of England and Wales, up the level of capital outlay, and so avert while old people over 64 were less than 5 per a slump, by making it attractive to build cent. To-day children have fallen to under houses for them to live in! In view of the 22 per cent and old people have increased to large gap between what so many of us about 9 per cent. Glass's first estimate actually get with our incomes and what suggests that by I985 old people will slightly we would like to have, surely we can devise outnumber children, but his second estimate (and carry out) some better policy for (continuance of present trends) reaches this ' maintaining employment' than that? " situation about I965, and by I980 shows a population in which children are only I2 per I have also tried to show-following Redda- cent and old people amount to 20 per cent. way to a considerable extent-that if our The dependency problem of the past has been economic structure persists without con- mainly a children's problem; in future an siderable readjustments it is going to en- old people's problem is going to be added. counter worse and worse difficulties as a The children's problem has not yet been result of present demographic trends. I do, solved, and its solution may require large- however, hold that, in the short run (i.e. scale readjustments in our social and speaking in terms of decades) the influence of economic life. If such readjustments are economic trends on the demographic situa- embarked upon, they will, in future, become tion far outweighs the influence of demo- increasingly complicated by the need for graphic trends on the economic situation, another set of readjustments to tackle the although this may not be so true in the long old people's problem. run (i.e. speaking in terms of centuries). In this respect there is an analogy between Conclusions: Is a Population Policy population trends and war. The outbreak of Necessary? a major European war for the second time in I have endeavoured to show that many of one generation has brought to a head all the economic arguments currently put forward those economic problems the solution of as grounds for stimulating the birth rate are which was easier, but less urgent, as long as ill-conceived, and that others are really peace was preserved. In the same way the arguments for dealing with our economic cessation of population growth is bringing lack-of-system rather than with population to a head all those economic problems the trends. I am strongly in sympathy with solution of which was easier, but less urgent Reddaway's general conclusion: and evident, in the period when population "The problem is essentially a ' man- was still steadily expanding. But these made ' one, which human ingenuity should economic problems arise in the main from be capable of solving. Our difficulty is not the economic system itself. Their existence to overcome the niggardliness of nature, is independent of whether we are in a state but so to organize ourselves that we can of war or peace, or whether the population is make use of the (relative) abundance which young and expanding or ageing and dwind- should be available, but seems likely some- ling. It is futile to blame either war or how to elude our grasp. . . . Suppose it population trends for this situation. They were possible, by elaborate action, to raise cannot be isolated from other factors as the birth rate by an appreciable amount; fundamentally to blame, although they make -would this be a sensible thing to do? a solution at once more urgent and more Failing all else, perhaps it would, and of difficult. As Reddaway says: 132 THE EUGENICS REVIEW " If there is to be an 'economic should be done in the meantime. But in fact verdict,' then, on the population changes the achievement of stationariness by about which we are to expect in the next I980 involves action now, and not forty twenty-five or thirty years, it must be years hence, as Harrod (I940) makes clear couched in much the same terms as those in his rejoinder to Jewkes. With age- used for the outlook as a whole. They put specific death rates as they were in I935-6, us collectively on our mettle. If we can maintenance of a stationary population at show sufficient social resourcefulness and the I935-6 level would require immediately adaptability to solve various problems of a Net Reproduction Rate of less than unity, adjustment, then they will give us a good though it would have to rise gradually to reward; if we cannot, then they will unity. This is because the proportion of prove a curse instead of a blessing." women of child-bearing age in our population is at present " inflated," and this factor has Reddaway believes that future economic staved off population decline so far, in spite policy will have to aim (a) at stimulating of a N.R.R. below unity for nearly two consumption up to the limits technologically decades. A N.R.R. of unity at present, if possible, (b) at stimulating the employment maintained, would mean population growth of capital and labour (by reduction of for some time, because .xeplacement of the interest rates, etc.), (c) at increasing the present generation of potential mothers by mobility of capital and labour. (His book a generation of future mothers of equal size should be consulted for a discussion of at present implies a somewhat larger total possible ways of achieving these ends.) I population (about 46 millions, according to would add that (a) and (b) can probably only Glass and Blacker, I938). Kuczynski (1938) be achieved by releasing over an ever- gives stationary death rates for I935 and widening sector the employment of material I936 as I6-02 and i6-o8, compared with and human resources from their present crude death rates of II*75 and I2*I4. dependence on the profitability of investment Following Harrod's method, these rates to private persons; and that all such imply that to maintain a stationary popula- measures are not likely to succeed unless they tion at the I935-6 level, a N.R.R. of are fitted into the framework of a general programme for peaceful world (European, I6 72 = 0*73 was needed in I935, compared Empire) economic reconstruction. with an actual N.R.R. of 0-76, and in 1936 There are nevertheless sound reasons for hoping that the demographic situation will a N.R.R. ofI-04 = 0-75 was needed, com- be kept in the forefront of any post-war pared with an actual N.R.R. of 0-77. plans for social and economic reconstruction. Continued maintenance of the population at If population decline goes too fast and too the given size would involve gradual raising far, most of the pessimists' gloomy prog- of the N.R.R. to unity, which should be nostications may come true . . . ultimately. attained by the time when the age-composi- The outbreak of war may bring this dooms- tion day measurably nearer. In my opinion the of the population becomes "normal" desirable trend would be one of slow popula- (i.e. that required by a stationary popula- tion decline (since some decline cannot be tion), perhaps in fifteen or twenty years averted) reaching ultimate stationariness of ahead. Thus the present N.R.R. of about numbers and stability of age structure by 0-75, if it rises over the next two decades the end of the century. The I980 level of to unity, should suffice to keep our 33-36 millions for England and Wales numbers up to the present level. If the indicated by Glass's projections would be achievement of unity were to take twice as adequate, provided we achieve replacement long we should attain a stationary population of numbers by about the same period. about I980 only two or three millions smaller Jewkes (I939) sees no reason why anything than its present size. THE ECONOMIC EFFECTS OF A DECLINING POPULATION Supposing now we take Jewkes's advice Thus action now involves gradually raising and do nothing until I980. Let us assume the Net Reproduction Rate from its present also that fertility and mortality persist un- level to unity over a period of forty or fifty changed at the I935 level. According to years. This would ensure us a stationary Glass the position in I980 would be: a total population a little smaller than to-day. The population of 36 millions, 38 per cent of all achievement of this trend would have been females would be in the child-bearing age no easy matter even if war had not broken groups (compared with 46.7 per cent in out. But it is a hundred times easier than 1935), the crude death rate would have risen Jewkes's alternative of waiting (say) until to i8-90 (because of the greater age of the I980. Action in I980 means at best an population), and the stationary death rate immediate raising of the N.R.R. by 58 per would, -of course, still be i6 o02 as in I935. cent, from 076 to about I 20, and then To maintain the population stationary at the allowing a gradual fall to unity. It might I980 level would require a N.R.R. of mean an immediate doubling of a N.R.R. fallen as low as o *55, which is an evident ii6i8 *0o292 II i8, compared with an actual impossibility. Clearly Jewkes's alternative N.R.R. of o'76 (as in I935), so that a group would run us into the very real risk-brought of potential mothers constituting a propor- nearer by war-of a nightmarish future in tion of the total female population smaller three or four generations, not so much by one-fifth than the present generation of because of changes in the size of the popula- potential mothers would each have to tion, but because of the changes in age com- produce about three children for every two position that are indissolubly wedded to now needed to maintain a stationary popu- changes in size. lation. To avert further decline of numbers Indifference to the birth rate is not there- this N.R.R. of I *i8 in I980 would have to be fore, in my opinion, justifiable. The right achieved immediately, after which the N.R.R. time to gain a hearing for the adoption of a could be allowed to fall gradually to unity population policy will come in the immediate by the time when the proportion of potential post-war years when, assuming the destruc- mothers in the population had been raised tion of the Nazi and Fascist systems, there to the level required by a stationary popula- will undoubtedly arise in Britain a ferment tion. The N.R.R. would actually have to be of new ideas about social policy and a general a little higher than I *i8, since the age atmosphere favourable to proposals for distribution of women of child-bearing age social reconstruction. Economic measures themselves will have to be included in any birth-rate would be less favourable to policy which is intended to succeed. Opti- fertility than to-day. In I935 5I.4 per cent mists will do well to admit that reform of the of potential mothers were under 30; in economic system in itself will not solve I980 (on the above assumptions) only 47'9 everything and that measures to encourage would be. If fertility and mortality continue parenthood are also desirable. Pessimists to fall from the I935 level, the position in will do well to admit that many features of I980 would be much more difficult. The our economic system are not sacrosanct and population would be about 33 millions, the that no substantial and sustained rise in the crude death rate i8 88, the proportion of birth rate is likely to be achieved in the women in the child-bearing age groups would absence of far-reaching economic reforms. be 35-3 per cent, of whom only 42'3 per Both optimists and pessimists would do cent would be well, in the field of economic policy, to under 30. The actual N.R.R. advocate measures intended to raise the birth would be about o-55; the N.R.R. required rate which are at the same time acceptable for a stationary population at that level as part of a programme of reform which is would have to be at least double, falling desirable in itself. Reddaway's book con- gradually to unity. tains a host of ideas on this subject although THE EUGENICS REVIEW no reference is made to eugenics. It should J. Jewkes: " The Population Scare," The Manchester School, October 1939. be read and pondered over by all eugenists J. M. Keynes (1936): The General Theory of who are in the habit of attempting to Employment, Interest, and Money. strengthen their case for a population policy (I937): " Some Consequences of a Declin- by the use of non-eugenic arguments about ing Population," Galton Lecture, EUGENICS the effects of population trends in the future. REVIEW, April 1937. (I938): Letter of Times, October 3rd. R. R. Kuczynski: " The Analysis of Vital References Statistics, II Birth and Death Statistics," Econom- Cohn Clark (I937): National Income and Outlay. ica, August 1938. D. V. Glass (I940): Population Policies and League of Nations: The Problem of Nutrition, Movements. Vol. I. Interim Report of the Mixed Committee on D. V. Glass and C. P. Blacker (I938): Population the Problem of Nutrition (1936). and Fertility. World Economic Survey, 1938-9 (1939). R. F. Harrod: " Modern Population Trends," J. B. Orr (1936): Food, Health and Income. The Manchester School, April I939. Prof. Pigou: Economica, May I936 (Review of "The Population Problem: A Rejoinder," Keynes). ibid., April I940. Joan Robinson (I937): Introduction to the H. D. Henderson: " Economic Consequences and Theory of Employment. Problems," Sociological Review, July I937. E. C. Snow (I935): " The Limits of Industrial J. R. Hicks: " Mr. Keynes' Theory of Employ- Employment," II. Journal of Royal Statistical ment," Economic Journal, June 1936. Society, II. 1935.

PHYSIOLOGICAL ZOOLOGY Articles appearing in forthcoming issues: REACTIVITIES OF COLPODA DUODENARIA TO ENVIRONMENTAL FACTORS. II. FACTORS INFLUENCING THE FORMATION OF RESTING CYSTS. By C. V. TAYLOR and A. G. R. S ,ucKLrm, Stanford University. RETARDATION OF EARLY CLEAVAGE OF URECHIS BY ULTRA-VIOLET LIGHT. By ATHmUR C. GmsE, Stanford University. ON THE KILLING ACTION OF OPTICALLY ISOMERIC NICOTINES IN RELATION TO PROBLEMS OF EVOLUTION OF THE NERVOUS SYSTEM IN ANIMALS. By G. F. GAUSE and N. P. SMARAGDOVA, Institute of Zoology, University of Moscow. THE PRODUCTION OF DUPLICITAS CRUCIATA AND MULTIPLE HEADS BY REGENERATION IN EUPLANARIA TIGRINA. By ROBERT H. SILBER and VIKTOR HAMBURGER, Washington University. Edited by W. C. ALLu, Professor ofZodlogy, The University of Chicago. Published Quarterly by the University of Chicago Press. Subscription: 353. 2d. per year. EnglishJghets: CAMBRIDGE UNIVERSITY PRESS Eugenics Review, Vol. XX , No. 4.