Malthusian economics

Before we achieved sustainable economic growth, the economies of the countries were in the Malthusian trap. Productivity growth led to population growth, while GDP per capita did not increase: productivity growth did not overlap population growth. The logic is this: food productivity growth -> income growth -> acceleration of population growth -> growth in gross consumption, income decline to the subsistence level. Simply put, output growth is an arithmetic progression, while population growth is a geometric progression. Sooner or later, income fell to the subsistence level.

The paradox of this situation is that the decline in population led to an increase in per capita income.

You can see it all in these two graphs: income growth after the Black Death, stagnation until the middle of the 17th century, transition to modern growth. This happened when productivity growth began to offset population growth. This required not only capital, but also innovation.

Grigory Bazhenov 2022-05-30