Application of Malthus Theory of Development in UDC

Malthus was one of the economists who wrote about poverty and under-development of UDC in his ‘Principles of Political Economy’.

He wrote about the economic backwardness of countries like Spain, Portugal, Hungary, Turkey, Ireland, together with nearly whole Asian and African as well as about Latin American countries.

Thus, this theory has more relevance to UDC of today than the theories of other classical writers.

Malthus’s main emphasis was on the development of secondary and tertiary sectors of the economy. No doubt, agriculture is the backbone of society because its development depends on the growth of population and labour force. But agricultural activities depend upon natural forces and agricultural production suffers from law of diminishing returns. Thus additional opportunities for investment and employment should be provided through industrialisation.

Backwardness of people is the main retarding factor in developmental process and this is due to the fact that the people do not have sufficient capital to make improvements in land. On the other hand, large land owners do not practise intensive cultivation due to small size of market. Since, bulk of population rests on labour intensive agriculture, it is poor and its demand for industrial output is low.

The industrial sector remains limited in size and fails to provide sufficient employment. Thus, each sector acts as a drag on the growth of the other. The factors like role of production, optimum distribution, capital accumulation, technological progress, good administration etc. which promote economic development are fully applicable in UDC.

Some of the policy measures such as balanced growth of agriculture and industry, expanding internal and external trade to widen market, equitable distribution of wealth and public work measures. These measures are found in development plans of UDC.

The relation which Malthus established between population growth and economic development is fully applicable to UDC. In countries where population alone increases, the increase in wealth is lowest and this has to be set true in Asian and African countries. But certain portions of Malthusian theory are not applicable to UDC. The theory of under-consumption has no relevance to such countries. Under-consumption implies an abundance of non marketable goods due to deficiency of effective demand but in case of UDC, it refers to low level consumption due to low level of production.

Malthus maintained that lack of effective demand was due to parsimony of capitalist and the remedy for this was unproductive consumption and all this is not applicable in prevailing conditions of UDC. In such countries income level is low, propensity to consume is very high and savings are negligible. Here, the problem is not of raising the effective demand through increased consumption, for it will lead to inflation. The problem is to raise the level of employment, income and savings for development.