Malthus' revenge

Thomas Malthus must be one of the most cited economists of all times. His theories were once summarily panned across the political spectrum. The Marxists had their own reasons behind their dislike of Malthus. First, if one were a believer of an impending doom because of resource crunch, there would be all the more reason to hold on to the feudal and bourgeois order. Second - Malthus' theories ran counter to the Marxist promise of plentiful supply of goods and services.

Later on, the Marxists changed their tack. They realized that Malthus' ideas can actually help their propaganda. Since resources are scarce, a few individuals must not be allowed to hog them.

Thus while on one hand the socialists had hijacked it for their nefarious purposes, a new breed of Environmentalists and "Good Earth" people were using these ideas to further their own agenda. At least the core Marxists were consistent in their approach. The crypto-commies (essentially a rabid bunch of identity mongers who call themselves liberals these days) on one hand want to preserve the good earth while violently opposing any cut on subsidies and doles based on identity politics, even when the latter result in greater strain on the good earth.

The capitalist opposition to Malthusian doomsday scenario is based on a few important assumptions, the most important being the perfect liquidity and tradability of all goods and services. The second assumption is that people will be indifferent to everything else other than direct economic consequences. The experience of recent history reinforced the core capitalistic belief - industrial revolution and post WWII reconstruction proved that the world has virtually unlimited potential.

It is easy to see how both these assumptions miserably fail under certain circumstance.

Malthus believed that after a certain threshold of population growth, the world will run out of food. This has proved to be largely false, due to technological advances, globalization and maturity of financial markets, there is no shortage of food supply. The supply shocks that do occur are sporadic and only affect victims of large Governments. The world can easily feed four times the current world population.

However, not all resources are like food that can be produced almost everywhere in some form or the other and can be packaged and sold at any retail store thousands of miles away from the place of production.

One of the primary resources that is running out fast is land. Land resources are neither particularly liquid, nor are they perfectly tradable in the sense that one acre of land in Bombay is not equivalent to another acre in say Kandhamal district in Orissa. More worrying still, the mega cities themselves are fast becoming scarce resources. Simply living in one city versus another can create a huge economic difference. Entire books have been written on this topic.

A lot of this scarcity is created by ludicrous Government policies. The Indian Government has done virtually everything to exacerbate the apparent scarcity of land resources.

The biggest worry however is demographics. Malthus' idea is as much about actual scarcity as it is about perception. As far as perception goes, India Inc. is looking straight down the edge of precipice. The number of young men and women below the age of 25 is growing at a very fast pace. In the next few decades, our megacities can degenerate into virtual war zones where armed young men and women will go on rampage. The demographic hotspots like Kandhamal will turn into infernos. The forces that are waging a virtual war against India are not likely to let go anytime soon.

The optimists point out the demographic trends which show that population growth slows down with the growth in prosperity . Under these projections the world population will stabilize around 2050. These do not take into account the asymmetrical population growth in different societies not do they factor in the competition for resources based on identity politics.

Unless things are drastically changed and a level of sanity restored, India Inc. may not even survive till 2050.