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 founders of the theory state it as “Given the natural resources, stock of capital and the state of technical knowledge, there will be a definite size of population with the per capita income. The population which has the highest per capita income is known as optimum population”.

Optimum Population:

The economists 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 labour 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 resources of the country fully. Thus, the population and the per capita income will be lower. In other words, if the per capita income is low due to too few people, the population is then under population.

2. Over Population:

If the actual population is 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 becomes poorer than before. This is the stage of over population. In other words, if the per capita income is low due to too many people, the population under these circumstances would be over population.

Assumptions:

The optimum theory is based on two important assumptions:

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

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

1. When population is too small to exploit the country’s resources with maximum efficiency. This is the level of OA population.

2. When population is too large and the efficiency falls to give only a subsistence 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 subsistence level.