Question

Limitations of malthus theory
Ans.plz

Answer 1

Malthus theory has certain weaknesses:

1. Negativity View of Capital Accumulation:

Capital accumulation leads inherently to secular stagnation is not correct. In reality, capital accumulation does not lead to a reduction in demand for consumer goods and fall in profits. When capital accumulation increases, the share of wages, profits and aggregate national income increases and so does the demand for consumer goods.

2. One Sided Saving Base:

Like Smith, Malthus has also one side base of savings. He believed that it is the only landlords who save. But this is an absurd because the main source of savings in society is the income earners and not profit earners.

3. Commodities do not Exchange For Commodities:

Malthus denies the Say’s argument that commodities are not exchanged for commodities but for labour. In fact, labour is not correct measure of commodities. In fact, commodities are measured by real tangible prices and not by labour.

4. Secular Stagnation not Inherent in Capital Accumulation:

Malthus argues that process of capital accumulation leads inherently to secular stagnation and this wrong notion that arises from the interpretation of Say’s law. For Malthus, there is possibility of permanence under consumption of all commodities. But the fact is that the under consumption is not permanent phenomenon. Therefore, secular stagnation is not inherent process of capital accumulation.