Popular Science Monthly/Volume 80/May 1912/A Bugbear of Reformers


By Professor T. N. CARVER


TO the commonly accepted belief that water tends to flow down hill, a certain type of visionary would object that though such a statement might be true as an abstract principle, dissociated from the real world of human achievement, yet it is not true as a matter of actual economic fact because men have invented pumps and pipes which make water flow up hill. His position would then be precisely like that of Professor Miller in his recent attack upon the law of diminishing returns.[1] His argument is, briefly, that improvements in productive processes, combined with increasing accumulations of capital, may and do enable us to get larger products than formerly, in spite of what is generally called the law of diminishing returns. If our supposed visonary were asked why pumps and pipes were necessary, he could only answer: because water tends to flow down hill. Similarly, if Professor Miller were asked why inventions and improvements in production were necessary in order to enable increasing populations to maintain their standard of living, his only reply, did he not dodge the question, would be: because of the law of diminishing returns.

Professor Miller further suggests that the law of diminishing returns "closes the door of hope" because "hopelessness is inherent in a world of diminishing returns." Now the law of diminishing returns closes the door of hope only in the sense that gravitation closes it, and hopelessness is no more inherent in a world of diminishing returns than it is in a world of gravitation. Gravitation has closed the door of hope to many a visionary inventor who could not get his device to work because of the stubbornness of this law, but it has not closed the door to those who took it into account and adjusted their plans to it. Gravitation doubtless closed the door of hope to Darius Green, but not to the Wright brothers. Similarly, the law of diminishing returns, and its companion, the law of population, most effectually close the door of hope to the Darius Greens of economic reform, but not to those reformers who take these laws into account and plan in conformity with them.

Even though, as Professor Miller remarks, capital may take the place of land in a growing population, he overlooks one rather important fact, namely, that this substitution of capital for land on a large scale is the accompaniment of a change from agriculture to manufacturing and commerce, and that it applies only within certain limited territories and does not materially affect the problem if we consider the world at large. Because several million people happen to make a living on Manhattan Island by substituting capital for land, it does not follow that the whole world could do the same, nor would it follow even if two hundred million people could make a living in a similar way within the present boundaries of the United States. Our country would not then be truly self-supporting, in any large and complete sense, any more than the Island of Manhattan, or the Island of Great Britain, or Belgium now is. All urbanized populations bring in the products of the soil from regions where soil is abundant, work them over in industries which require much labor and little land, and send them out again to exchange for raw materials, living all the while on the profits of this class of transactions. As these urbanized populations grow, it is necessary to send farther and farther, to wider and wider fields for the products of the soil. Why is this necessary? Why should not England get all her agricultural products from her own area? Merely because of the law of diminishing returns. To double the produce of the English farms would not double, but treble or quadruple, the cost of cultivation. That is what the law of diminishing returns means, and it never meant anything else. Because of this law England finds it cheaper to send to distant countries for her wheat and beef, paying the cost of transportation, than to cultivate her own farms with a sufficiently high degree of intensity to enable her to live off her own soil.

To be sure, the available waste land of the world is not all in use yet, and our increasing urban populations will be able, for many years to come, to thrust their transportation systems out farther and farther in order to secure these products which require land—space—superficial area for their efficient production. Therefore we need not worry about the food supply for a long time to come. It may, however, surprise some of our urban economists to learn how little modern science has enabled us to economize land, our inventions and machines having in the main, increased the product per unit of labor rather than the product per unit of land. So little has it increased the latter that, taking into account the rise in the standard of living, it is probable that it takes as much land to support the average family in any part of the civilized world to-day as it did when Malthus wrote his epoch-making work on population. By support I mean support in a complete economic sense. I mean that it probably takes as much land to supply all the things actually consumed by the average family to-day as it did then.

We could, to be sure, if we chose to do so, consume more of those crops which respond to intensive culture, such as corn, potatoes, bananas, etc., and less of those which yield their best results under extensive culture, such as wheat, beef, etc. This would mean a change in the standard of living. Possibly it might be a good thing to make this change in our habits; but why should it be necessary? Simply because of the law of diminishing returns. That is to say, in order that increasing populations may have plentiful supplies of bread and beef from the same areas, these crops would have to be cultivated more and more intensively. These crops do not respond readily to this method, and the cost per unit rises very rapidly, which, again, is due to the law of diminishing returns. Other crops respond somewhat better, but they also come under the same law, and eventually the point would be reached when more land would be better than less land, even for the growing of these crops. Wherever that is true, the point of diminishing returns has been reached. Wherever agricultural populations tend to spread as they are doing out west to-day, rather than to concentrate, it is a sign either of general insanity on their part, or of diminishing returns from land. I am one of those who believe that it is a sign of diminishing returns, that is, that these increasing populations find it more advantageous to spread over more land than to concentrate on the land already in their possession and try to get their living from those limited areas. That, again, means diminishing returns. Increasing the number of men working on a given area of agricultural land will not proportionally increase the products. That means a smaller product per man, though it may mean a larger product per acre.

The law of diminishing returns as ordinarily stated is, really, nothing more than a technically specialized statement of the fact that land is a limiting factor in production. A limiting factor is merely a factor upon whose quantity depends, in some degree, the quantity of the product. Wherever it is true that more land is better than less land, or where one can say, "more land more product, less land less product," there land is a limiting factor and the law of diminishing returns is in operation. From a narrow and piecemeal view, it sometimes appears that a manufacturing and commercial policy frees a nation from this limitation, because, so long as an abundance of raw materials can be brought in from the outside, and all the finished products of the manufacturing industries can be marketed somewhere else, there seems to be no assignable limit to the amount which a nation can manufacture, if it only have labor and capital enough. That is to say, there always seems to be room enough for manufacturing and business sites. Land, from the national point of view, does not seem to be a limiting factor in these industries, though occasionally, in the narrower limits of a single city, land becomes scarce even for these purposes. But, as suggested above, this is a piecemeal view of the problem, for economic laws and principles are no more confined within national boundaries than they are within city walls. If all the industries, both rural and urban, which are necessary for the full economic support of a self-sufficing population are considered without respect to national or municipal boundaries, it will be found that land is, in all civilized countries, a real limiting factor of production, which is the same as saying that the law of diminishing returns is everywhere in operaton where these conditions are considered.

Is there any occasion for alarm in this situation? Certainly not for us in the immediate future. From a scientific point of view, however, there are two things which ought to be said. In the first place, time is an element which may be left out of account. Whether the difficulties inherent in this situation will become acute in a hundred, a thousand or a million years, is not a matter of such importance as the question, are these difficulties inherent? In the second place, while we may not have any immediate cause for alarm, certain other people have, though that may not be our concern. The people of western Europe may not have had any cause for alarm in the days of Malthus, for the whole American continent lay before them. But the American Indians had ample cause for alarm had they understood the situation. Similarly, the civilized races of to-day may be at ease in Zion, their temporal salvation being assured, since South America and Africa lie open before them. But certain other races already in possession of those alluring Canaans may well be on the anxious seat, for their temporal damnation is imminent. It will be so easy for us to take these lands that, doubtless, it would be very foolish for us to worry about the land question. Fortunately, we are not the people who have to do the worrying, and doubtless a merciful providence has rendered the people who ought to worry incapable of seeing anything to worry about.

Since our growing agricultural population is showing a tendency, as all agricultural populations of the Occident have shown for thousands of years, to spread rather than to remain pent up in their national boundaries, one of three things must happen if our population should continue to increase: (1) We must become more and more a manufacturing and commercial people, depending more and more upon the outside world for our agricultural produce, and joining in the general scramble of the commercial nations for outside markets; (2) we must restrain our people at home by force to prevent their emigration until the pressure of population upon subsistence becomes strong enough to check further increase and restore an equilibrium; or, (3) our people will spread over the territories occupied by inferior races, dispossessing them of their lands and sending them the way the Tasmanians have gone and the American Indians are going. Why are we compelled to face these alternatives? For no reason in the world except the law of diminishing returns, which, by the way, is reason enough.

  1. See The Popular Science Monthly, for December, 1911.