Economies prior to the late 20th Century
In our last chapter, we made some rough generalizations about the standard of living of five broad cultural groups. If we had to rank them in order of material prosperity, we might have a list like this: Pacific Coast peoples, Iroquoian agriculturalists, Woodland Hunters in southern regions, Bison Hunting Peoples, Woodland Hunters in northern regions, Inuit.
A copyrighted map in Treuer (2014) depicts the likely population density in pre-contact Canada, showing population densities that roughly correlate with the standards of living we have suggested. The most densely populated areas are the Pacific Coast near Vancouver Island and also inland from Haida Gwaai, a swath around Lake Superior including north of Lake Huron, and the north shore of Lake Ontario.
Some readers might be asking, “Why does it have to be this way? Cannot a smaller group in a less resource-rich environment attain the same standard of living as a larger group is a more resource-rich environment?”
That’s a good point. When the economy is based completely on natural resources, restricting population size means more resources per person. This is the classic Malthusian tradeoff.
The Malthusian Trade-off:
The model of Thomas Malthus (1798), incidentally the very first formal macroeconomic model and the very first formal model of demographic processes, presupposes an exclusive reliance on natural resources for earning income. It also presumes that any improvements in technology are random. In this model, when food per person rises, birth rates rise and death rates fall, so that population grows. And when population grows, food per person decreases, because Malthus assumes that food production cannot keep up with population growth.
Hence, according to the Malthusian model, the standard of living does not rise except temporarily, and population growth always comes back to zero percent.
The “Technology Schedule” diagram below shows the possibilities available to a Malthusian economy. For any given level of technology, the society can either have low population (N) and high food per person (FPP), or vice versa. If technology were to suddenly improve, a given size population could enjoy more food per person, but then population size would grow and move food per person back to the original level. Try tracing this out on the diagram, A→B→C.
One thing Malthus did not take note of is that, while population is growing and food per person is rebalancing, there is a time of prosperity and, I’m assuming, happiness which could result in better health, time to produce capital goods, and time to learn and generate new technology. So improvements in the standard of living are not useless, even though they are temporary, because they improve human happiness and because they offer a chance to build the technical capacity of the economy.
History has also shown that increases in the standard of living can lead to reductions in the desired number of children; this h