Why Adamalthus?

Adamalthus is the con­cate­na­tion of the first name of ‘Adam’ Smith and the Last name of Thomas Robert ‘Malthus’ two of the most influ­en­tial thinkers of their time whose ideas still res­onate nearly three cen­turies later.

You can read their exten­sive biogra­phies here for Smith and here for Malthus.

Smith is rec­og­nized as the father of mod­ern eco­nom­ics and specif­i­cally one of the first the­o­rists in polit­i­cal economy.

He out­lined two cen­tral propo­si­tions in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

The first of these propo­si­tions is the ‘Pin Fac­tory’ a device Adam’s uses to explain that increas­ing spe­cial­iza­tion and divi­sion of labor leads to ever greater economies of scale which are ulti­mately lim­ited by the “Extent of the market.”

Smith’s sec­ond propo­si­tion was the ‘Invis­i­ble hand’ which is more abstract but can be under­stood as the self cor­rect­ing nature of mar­kets where the actions of ‘Self interested’ individuals trad­ing in a free mar­ket lead to a per­fect equi­lib­rium between prices and the amount of goods produced.

With these ideas Smith laid the foun­da­tions for mod­ern mar­ket economics.

In his excel­lent book Knowl­edge and the Wealth of Nations David Warsh points out that Smith’s two cen­tral ideas are essen­tially in con­flict. Increas­ing improve­ments in effi­ciency and economies of scale in the ‘Pin Fac­tory’ would tend to lead to the for­ma­tion of monop­o­lis­tic posi­tions for first movers. Yet self inter­est and com­pe­ti­tion inher­ent in the ‘Invis­i­ble hand’ will tend to keep prices at the low­est pos­si­ble level and will pre­vent any man­u­fac­turer from achiev­ing an advan­tage in the mar­ket. The ‘Invis­i­ble hand’ will tend to limit the sup­ply of goods to per­fectly match the demand for those goods. As Warsh elo­quently explains it would take nearly three cen­turies for econ­o­mists to under­stand how that con­flict is resolved in the real world.

The Revd. Thomas Robert Malthus was ten years old when Smith pub­lished The Wealth of Nations. He became a highly influ­en­tial scholar in the fields of eco­nom­ics, sci­ence and social issues.

He is most influ­en­tial for his writ­ing and ideas on pop­u­la­tion growth and is rec­og­nized as one of the first demog­ra­phers. Where Smith saw a soci­ety ben­e­fit­ing from eco­nomic growth dri­ven by spe­cial­iza­tion and free mar­kets, Malthus had a con­trary view.

In his book An Essay on the Prin­ci­ple of Pop­u­la­tion Malthus pre­dicted that the power of pop­u­la­tion growth would out­strip the abil­ity of agri­cul­ture to pro­vide enough food for the expand­ing pop­u­la­tion. This sim­ple, but highly influ­en­tial idea has been expanded over time into the broader con­cept of a Malthu­sian cat­a­stro­phe where eco­nomic or nat­ural resource lim­its are seen as plac­ing an ulti­mate bound­ary on the growth of the human population.

It is rel­e­vant that both Smith and Malthus’ ideas were put for­ward dur­ing an early stage of the indus­trial rev­o­lu­tion. Not surprisingly, their var­i­ous the­o­ries do not inter­nal­ize the pro­found effect that tech­no­log­i­cal improve­ment would have on economies and societies.

Mathus’ the­o­ries about expo­nen­tial pop­u­la­tion growth were cor­rect; the global pop­u­la­tion has grown expo­nen­tially since his time. How­ever, tech­nol­ogy lead improve­ments in crop yields and agri­cul­tural pro­duc­tion have enabled us to con­tinue to pro­duce enough food to feed this grow­ing pop­u­la­tion (Not with­stand­ing the fre­quent famines wit­nessed in Africa that have more to do with our abil­ity and will­ing­ness to make sure that sur­plus food pro­duc­tion is dis­trib­uted effec­tively around the world.) In this regard his the­ory that lin­ear improve­ments in agri­cul­tural pro­duc­tion would place lim­its on an expo­nen­tially grow­ing pop­u­la­tion proved to be false.

It has now been rec­og­nized that the pro­duc­tion and dis­tri­b­u­tion of ‘Knowl­edge’ increas­ingly aided by tech­no­log­i­cal improve­ment was the key to resolv­ing the con­flict in Smith’s two great propo­si­tions. Ulti­mately the thing that enables one man­u­fac­turer to gain advan­tage over another even in a mar­ket with per­fect com­pe­ti­tion is ‘Innovation’.

The ideas of Smith and Malthus still define the great­est chal­lenge fac­ing our global soci­ety. Can we con­tinue to chase growth as an eco­nomic ideal with­out exceed­ing the car­ry­ing capac­ity of the planet; trig­ger­ing the ulti­mate Malthu­sian catastrophe?

Grow­ing up as a child of the late 60s — watch­ing the moon land­ings and being the first gen­er­a­tion to have access to a per­sonal com­puter — I have always had an opti­mistic view about technology’s ulti­mate abil­ity to help us inno­vate our way out of dan­ger. With matu­rity and the expe­ri­ence of trav­el­ing around the world for the last 25 years see­ing the com­plete range of eco­nomic, social and envi­ron­men­tal chal­lenges I am no longer so sure.

Per­haps the most sig­nif­i­cant influ­ence on my per­sonal phi­los­o­phy was a chance meet­ing with the renowned polit­i­cal econ­o­mist John Zys­man at a Euro­pean Com­mis­sion fore­site con­fer­ence back in 2005 (I now count John as one of my clos­est friends.) It was John that helped me to under­stand that society’s abil­ity to tap technology’s full poten­tial is ulti­mately con­strained by polit­i­cal and cul­tural frame­works and deci­sion making.

The human race has faced its share of chal­lenges. The Toba Cat­a­stro­phe The­ory pro­poses that a super vol­canic erup­tion some 70,000 years ago ini­ti­ated a ‘Nuclear win­ter’ which lead to an extended period of global cool­ing. It is pro­posed that this event had the effect of reduc­ing the total global hominid pop­u­la­tion to no more that 10–15,000 indi­vid­u­als. From that group the human race evolved into what it is today. Creativity and inno­va­tion were the keys to their sur­vival and the cre­ation of our opportunity.

The chal­lenges fac­ing the human race today are pro­found: Cli­mate change, fresh water sup­plies and nuclear pro­lif­er­a­tion amongst many. My inter­ests lie in how we will, or will not, inno­vate our way through these chal­lenges, tech­no­log­i­cally, socially and politically?