Friday, July 26, 2013

Tankus, Marx and Ireland.

Skibbereen, by James Mahony (1847) [A]

Nathan Tankus (INET profile, student and research assistant at the University of Ottawa) explains the two notions of surplus population, as applied to Ireland during the Great Potato Famine of the 1840s:
"According to the Malthusians (as seen by Marx) absolute overpopulation [i.e. absolute surplus population] means that there are too many people no matter how society is organized. In contrast, Marx argued that the starving, under/unemployed and emigrating were only superfluous 'relative' to the demand for labor by Capitalists, rentiers, (especially in the Irish case) Landlords etc. [i.e. relative surplus population]". (See here)
Leaving aside the question of the degree of the catastrophe, Tankus quite correctly draws a parallel between the events in Ireland then, and now. I'd extend that to Southern Europe.

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But let's explore the theoretical matters in a little more detail.

According to Malthus, the supply of means of subsistence was, to all practical purposes, more or less constant, while population's demands increased much more rapidly, due to natural population increase.

Eventually, even without a fall in production (or employment), demand would exceed supply and prices would rise beyond labourers' reach: employed or not, a part of the population would lack the wherewithal to acquire their means of subsistence, due to the high (and rising) food prices and the low (and falling) wages. That part of the population was called "absolute surplus population".

And their fate was grim: either through starvation, disease, war or emigration, eventually population and labour supply would fall, only to re-start the cycle once again. Malthus' version of the Invisible Hand was much more ruthless than Adam Smith's and during the early 19th century many decision makers in London believed in it, as shown by history (I've written about a closely related subject).

Astute readers will observe that, while for Malthus the labour market adjusts through (ominously) quantity changes, mainstream economists nowadays predicate a much less lethal adjustment: a wage adjustment. Both, Malthus and mainstream economists, however, agree that the labour market will clear.

To this Marx opposed his own view: unlike Malthus maintained, the demand for labour is variable; at any time, a part of the labour supply may become unemployed, even with a stationary or falling population: it's enough that labour demand falls. Because the surplus is relative to something (i.e. demand), Marx called this "relative surplus population". And there is no need for the labour market to clear: the reserve army of the unemployed.

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You would have thought that self-proclaimed experts on Keynes (and pretty much everything else besides) would find Marx's views, at least in this point, quite congenial. After all, it's all about labour supply and demand, market equilibria (or their lack)

Alas, you would be mistaken.

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I recommend Tankus' essay (as a bonus, he provides some very interesting links!) and congratulate Naked Capitalism for gaining yet another good guest blogger. Until recently, they had a few really shitty ones.


Image Credits:
[A] From a series of illustrations by Cork artist James Mahony (1810-1879), commissioned by Illustrated London News 1847. Public Domain. Wikipedia.

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