The Optimum Theory Of Population

 

Introduction

Criticizing the approach of the Malthusian Theory of Population, modern economists Edwin Cannan and Carr Saunders of London School of Economics have developed a new theory known as Optimum Theory Of Population.

It is also called modern theory of population. In recent years, Prof. Robbins, Dalton and Carr - Saunders have refined and polished the theory and put it in a more presentable form. 

This theory is an improvement over the Malthusian Theory. 

Statement of the Theory:

The founder of the theory state it as "Given  the natural resources, stock of capital and the state of technical knowledge, there will be definite size of population with the per capita income. The population which hasas the highest per capita income is known as Optimum population. "

Optimum Population:

The economist like Carr Saunders considered 'optimum population' as that which produces maximum welfare. On the  other hand , Prof. Cannan defined this theory in terms of ' return to labour '. He remarked, "Knowledge and circumstances remaining the same, there is what may be called maximum return when the amount of labor is such that both an increase and decrease in it would diminish proportionate return." Similarly, Bounding has rightly observed, "Optimum population is that at which standard of living is maximum.

1) Under Population

If the actual population in a country is less than the optimum or ideal population, there will not be enough people to exploit all the resource of the county fully. Thus, the population and the per capita will be lower. 

2) Over Population 

If the actual population is a above the level of optimum population, there will be too many people to work efficiently and produce the maximum goods and the highest per capita income. As a result, the per capita income became poorer than before. This is the stage of over population. In other words, if the per capita income is low due to many people, the population under these circumstances would be over population. 

Assumption: 

The Optimum theory is based on two important assumption:

1) The proportion of working population to total population remains constant as the population of the country increases.

2) As the population of a country increases, the natural resources, the capital stock and state of technology remain unchanged. 

Diagrammatic Representation of the theory:

In the diagram, volume of population is shown along OX axis and income per head along OY- axis. OS is the income per head which gives only subistence wage rate to the population. This level of wages puts the minimum limit to the income per head. 

The subistence income per head can prevail with two levels of population:

1) When population is too small to exploit the country's resources with minimum efficiency. This is the level of OA population. 

2) When population is too large and the efficiency falls to give only a subistence income to the labour force. This is the level of OC population. 

OB shows optimum population which uses the available resources to give itself the maximum income per head. For a population less than OB, income per head increases with the increase in population.  For a population higher than OB, income per head can increase with the decrease in population through preventive checks.

The dotted curve in the diagram shows the level of income per head with an improvement in technology or expansion of foreign trade. This will help to raise the income curve and generate population growth until wages are once again equal to subistence level.

Daltons Formula:

Prof. Dalton expresses the theory in the form of a formula which is given below;

If M is zero, population is optimum, when M  is  positive, it is over population, when M is negative, it  is under population. Therefore, optimum population is not fixed and a rigid one. It is rather variable and relative to resources and technology. Optimum population is not just an economic concept but qualitative in nature. Prof. Cannan has  correctly remarked, " It  is being perpetually altered by the progres of knowledge and other changes affecting the economic system. It is, thus, a dynamic concept. It may be higher or lower as different methods of production are used."

Demerits or criticism :

1) Difficult to Determine Optimum population:

It  is extremely difficult to know the optimum population of a country at any time. Many factors like technical knowledge, stock of capital, per capita income and natural resources etc have to be taken into account for this purpose.

2) A Static Theory:

The Optimum theory is criticized as a static short period theory. It ignores changes in natural and human resources which affect per capita income. This theory is also silent about the important questions of the determinants of population growth.

3) Neglects Biological and Sociological Factors:

Some critics also agrue  that this theory has not taken into account the biological and sociological factors which govern the  size and growth population. Strictly speaking, this theory is not a theory of population. It simply explains the state of population with reference to per capita income.

4) Not a Realistic Theory:

It is pointed out that two assumptions on which  the theory has been based, are not realistic. So, the pratical value of this theory is reduced. In fact, natural resources, technical knowledge and production methods are generally changeable.