Adam Smith
Smith’s thoughts on population have their roots in the late-Mercantilist tradition. Despite their dealing with similar themes, namely the identification of a “natural” propensity in humankind to reproduce according to immutable laws, and the recognition of a connection between population growth and the availability of means of subsistence for the working class, Smith differs from the population analysis that preceded him on two points: first, on the question of the migration of work that, unlike the mercantilists, he did not believe was as decisive a factor in the development of nations, and secondly, in the emphasis placed on the relation between natural wages and demographic dynamics.
The second point constitutes the heart of Smith’s theory on the issues of population, wages and economic development, in other words, his theory of accumulation.In the wage theory contained in chapter 8 of The Wealth of Nations, book I, Smith (1776 [1976]) explained the mechanism regulating demographic density and population growth rhythms in countries marked by different stages of economic development. For this purpose he used an effective analytical tool deduced from empirical observation: the subdivision of states into progressive, stationary, and regressive, applied to North America, China and Bengal respectively.
In Smith’s analysis labour supply varied depending on the difference between the natural subsistence wage (which could be expressed in terms of a basket of subsistence goods for the worker and his family) and the market wage. When the natural wage dropped below subsistence level, the labour supply was reduced. The effects of this process were an increase in mortality and/or a lowering of the birth rate, and at times a rise in the migration rate, in the case of wage differences between regions, although for Smith this hypothesis was quite remote.
If, by contrast, the market wage was above the subsistence wage, then workers’ living conditions could improve and the death rate, especially infant mortality, would fall. It needs to be pointed out, however, that in Smith’s thought and in that of his successors, the value of the market wage systematically differed from its natural level due to casual factors that could not be foreseen, such as fluctuations in the labour market or price variations for subsistence goods. But the level towards which the market wage headed was that of the natural subsistence wage. The component of the wage theory that enabled Smith to use the tool of the differentiation between different kinds of countries was the demand for labour. If the availability of food for the working class constituted the prerequisite and the maximum limit for the expansion of the working population, it was the demand for labour that “regulated” wages, according to the following argument:
The wages of the inferior classes of workmen... are every where necessarily regulated by two different circumstances; the demand for labour, and the ordinary or average price of provisions. The demand for labour, according as it happens to be either increasing, stationary, or declining, or to require an increasing, stationary, or declining population, regulates the subsistence of the labourer, and determines in what degree it shall be, either liberal, moderate, or scanty. The ordinary or average price of provisions determines the quantity of money which must be paid to the workman in order to enable him, one year with another, to purchase this liberal, moderate, or scanty subsistence. (Smith 1776 [1976]: 322)
From this it follows that the population grows only when the growing labour demand allows an increase in wages and a “liberal” level of subsistence. In thinking about this Smith had the case of North America in mind. In this situation there was no competition between workers, and wages were consequently on the increase (ibid.: 105).
As for the necessary condition of sustaining the growing demand for labour, for Smith “it is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour” (ibid.).In the progressive state a growing demand for labour corresponded to high wages and this did not necessarily mean a rising birth rate. Essentially, the population grew when there were the economic conditions to enable children to be brought up; the variation in population size was the result of a drop in death rates. In the stationary regime, labour demand is stationary, the level of wage and the level of population are constant, as in the case of China. Finally, in the regressive state of Bengal, the decreasing demand of labour is related to a decreasing level of wage and to a declining population.
In Smith’s analysis, it did not follow that there was a direct relation between wages and population, valid for all countries. In other words there was no formulation of a “population law”. This was because, especially in the progressive state, a wage increase and an increase in the means of subsistence could correspond not only to an increase in population but also, and at the same time, to a change in consumption habits which, once subsistence needs had been satisfied, would be directed towards the goods for which human desire “seems to have no limit or certain boundary” (Smith 1776 [1976]: 256). In conclusion, given an institutional context in which individual liberties were preserved, the human desire for improvement would not be threatened by an increase in population.