Limits to Growth: An Inherent Flaw of Capital Accumulation and Wealth?

Photo by Yorgos Ntrahas on Unsplash

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Throughout history, food production has been at the center of economic growth. Trade and commerce only emerged once agricultural surpluses made it possible to invest in the infrastructure required to sustain economic growth.

During the 18th and 19th centuries, the Industrial Revolution transformed the role of agricultural production in European economies. Rather than relying on the bounty of one’s harvest to generate surplus, cunning capitalists could derive wealth from profit.

Since then, profit has been the primary motive driving business and innovation. While profit is important, its ability to lead to capital accumulation is more important.

Following Adam Smith’s publication of The Wealth of Nations in 1776, scholars across Europe began evaluating the nature of the economy and the role it played in organizing society for themselves. One of those scholars was Thomas Malthus.

Malthus is famously known for his theory on population growth. While technological advancements in agricultural production mitigated some of the consequences of population growth, he raised an important question on the relationship between humans and their natural environment.

This essay will dive into Malthus’s contributions to economic thought. Specifically it will evaluate his theory on population growth. Malthus accurately identified there are natural limits to capitalism. As we enter the current AI revolution, it will be imperative that whatever economic system replaces capitalism bears this in mind.

Industrialization transformed the social and political order of Europe. This shaped Malthus’s view on the role of workers, industrialists, and property owners in the economy.

Capitalism wasn’t just the creation of a new economic system. It represents a fundamental shift in the balance of power in Europe.

Capitalists began to emerge as a result of mercantilism and the growth of trade. Merchants with the right relationships and market could trade products and pocket the difference. Over time, their profit turned into capital and these merchants grew into a new class – capitalists.

Prior to capitalism, Europe had been divided along the lines of property ownership. Either you owned property or you didn’t. Because the economy was intertwined with agricultural yields, those who owned land owned the means of production.

That changed when capitalism emerged. Capitalists didn’t own land and they didn’t work fields, but they still found a way to make money. As demand for manufactured goods increased, they saw a need for new centers of production – factories. Over time power shifted from rural estates to cities where capitalists had a monopoly on human labor.

The capitalists that emerged during this time represented the creation of an entirely new class – the middle class. This third class existed professionally above the general population – the peasantry – but they did not have the political power, status, or land to be considered members of the ruling elite.

As time passed and the Industrial Revolution took off, the capitalist middle class began to encroach on the power held by the landowning aristocracy. During the late 18th century this exploded in demands for political rights and representation. Revolution kicked off first in Britain’s American colonies, then in France.

This created a period of immense disruption. While the new capitalist middle class stepped into their newfound power, the workforce had to find new ways to adapt. Production continued to shift away from agricultural goods toward finished consumer goods. Laborers followed demand, leaving their rural farms to take jobs in factories in larger cities.

The transition changed the demographic composition of Europe. Dependent on selling their time in order to earn a wage that they could use to purchase food, workers were at the mercy of their employer. The average person was worse off than they had been a generation or two prior:

The working class lived near the subsistence level in 1750, and their standard of living (measured in terms of the purchasing power of wages) deteriorated during the second half of the eighteenth century….Throughout the period of the industrial revolution, there is no double that the standard of living of the poor feel precipitously in relation to the standards of the middle and upper classes. (Hunt and Lautzenheiser, 66)

When Adam Smith published The Wealth of Nations in 1776, the consequences of unrestrained capitalism were yet to be seen. His theories were just that – theories. Smith’s work was simply a framework for understanding how surplus value could be harnessed to build wealth.

In the century that followed, new economic theorists emerged to build off of and challenge the groundwork Smith had laid. Their contributions should be understood with the technological revolution that was underway and the political and social disruption that manifested from it.

Thomas Malthus published his theory on population growth in 1798. In it he argued that population growth would outpace the production of food.

As political and social changes unfolded in Europe, new challengers to Smith’s theories emerged. One of the first of these was Thomas Malthus. A professor like Smith, Malthus was a staunch defender of the old, aristocratic order.

While Malthus wasn’t explicitly opposed to workers, he certainly wasn’t an advocate for them either. Much of his work is underpinned by the belief that the European peasantry was morally inferior to those born to higher classes and one way or another, would inevitably live a miserable life.

One of Malthus’s most important contributions to economic thought was the relationship between population growth and the availability of resources. In An Essay on the Principle of Population published in 1798 he wrote:

Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio.¹

Malthus believed that the size of the population would double itself every 25 years. He argued that food production would not keep pace. By the end of a century of population growth, food production would only be able to support one-third of the population.²

When you look at his logic through the context of the world he was living in, you can see why this was a concern. Economic hardship and social inequality were two of the key drivers of revolution in France. The forfeiture of Britain's colonies in the Americas meant the loss of duty-free food imports. The British isles couldn’t possibly grow enough food to support its rapidly growing – and increasingly impoverished – base of industrial workers. While the rest of England’s intellectual elite were optimistic about the future, Malthus offered a less-than-rosy picture:

For what the essay on population said was that there was a tendency in nature for population to outstrip all possible means of subsistence. Far from ascending to an ever higher level, society was caught in a hopeless trap in which the human reproductive urge would inevitably shove humanity to the very brink of the precipice of existence. (Heilbroner, 78)

One of the central beliefs of Malthus’s theory is the role of morality in the exponential rise of the population. Malthus believed the wealthy were from better moral stock. They waited longer to get married and had fewer families – one of the reasons why they were able to protect their wealth.

The poor, on the other hand, had a rapacious sexual appetite and lacked discipline against their desires. They would continue producing children without regard for the consequences. If they couldn’t feed their families, surely a poor house would.

Malthus advocated for different ways to limit population growth. Birth control and sterilization were two options available in the 19th century and continue to exist to this day. Other options included natural checks on population growth such as famine, war, and disease. Malthus even went so far as to advocate for deliberate policies that would hasten death in the event of disease:

We should sedulously encourage the other forms of destruction, which we compel nature to use. Instead of recommending cleanliness to the poor, we should encourage contrary habits. In our towns, we should make the streets narrower, crowd more people into the houses, and court the return of the plague. (Hunt and Lautzenheiser, 77).

While Malthus accurately anticipated limits to growth, he failed to consider how concurrent technological advances could refute his hypothesis. Steam powered engines and the development of new transportation networks, for example, reduce the cost of transporting agricultural goods between cities like Manchester, Liverpool, and London.

At the same time, agricultural output increased. New land management practices, combined with the introduction of machinery, made farmers more productive. This meant farmers were able to generate higher yields from their land. Combined with food import policies,³ Britain was able to meet the needs of its growing population in the latter half of the 19th century.

Subsequent tests of Malthus’s theory confirm there are natural limits to growth in a capitalist economy. This reveals that profit-driven capital accumulation isn’t sustainable indefinitely.

Even though Malthus’s theory has yet to manifest, his introduction of demographics into economic conversations raises important questions about the limits to growth.

In 1972, the Club of Rome published a study titled The Limits to Growth. The study used computer modeling to mathematically evaluate the relationship between the earth’s finite resources and the growth of the population.

The original study found that if consumption patterns continued, humans would outstrip the earth of its resources by 2100. This would result not only in population decline but reduced industrial capacity, bringing economic growth to a grinding halt.

A follow up study was conducted in 2020. Using new data it revealed that the original study was on target. Unless there are major changes to our current consumption habits, we would reach a tipping point in 2040, at which point the economy would begin to decline.⁴

While the resource issue appears to be an inevitability, it’s unclear how unchecked population growth fits into the equation. Individuals like Bill Gates argue some parts of the world are overpopulated.⁵ Meanwhile, others like Elon Musk are concerned declining birth rates around the world could lead to a mass extinction event.⁶

This is one reason why the rapid pace of technological advancements is essential, necessary, and inevitable. Either technology will produce more resources to support a growing population or it will replace humans in the economy entirely. But unlike Malthus’s time, technology may not save us this time around.

Thanks to unfettered capital accumulation, profit-driven entities are not only consuming resources at an unsustainable pace, they’re eliminating any ability for those resources to replenish themselves in the future.

Soil depletion is a growing concern. Decades of industrial farming and the use of harmful chemicals and pesticides has stripped fertile soil of most – if not all – of its nutrients. According to the UN, there are less than 50 years left of farming using the topsoil we currently have.⁷

Another issue is the loss of farming knowledge and practices. In 1500, around 75% of England’s population worked in agriculture. By 1800, that number dropped to 35%.⁸ Today, only 10% of the U.S. labor force works in agriculture – including jobs at industrial farms – while farm families only constitute 2% of the population.

Workers today are not only disconnected from food production but they lack the knowledge and skills to produce food for themselves. Combined with the degradation of the natural environment, there’s growing concern that food security may become a pressing issue in the years to come. The global food supply is largely controlled by profit-driven monopolies that have little regard for human well-being or the state of the earth’s natural resources.

While Malthus’s morality-based argument for population growth isn’t founded, he understood that labor and food production were deeply correlated. Because profit-driven organizations don’t have an incentive to preserve the environment, much less its ability to generate food, they’re not going to take any action to protect it.

This reveals capitalism itself is not sustainable. At some point, capital accumulation will interfere with production, robbing capitalist enterprises of the means to continue producing entirely. Like a black hole, growth will exhaust resource availability, leading to inevitable collapse.

Final takeaway.

In today’s world of meteoric tech startups and flashy SaaS products, it can be difficult to imagine food being one of the most important economic issues of our time.

Food is something we take for granted. In most developed countries food is abundantly available at grocery stores and restaurants. It’s so abundant that chronic overnutrition rather than malnutrition is the greatest health concern facing the population.

Yet food is the primary thing driving all activity in our economy. Unless you grow your own food on a homestead, you have to work for a wage to be able to purchase food from your local grocery store.

Food production is increasingly concentrated in the hands of very few profit-driven companies. A study by The Guardian found that 40% of grocery store sales in the United States are generated by four companies.⁹ Meanwhile, more than half of the world’s seeds are also controlled by just four companies.¹⁰

These companies are driven by profit not sustainability. Their goal is to grow now, in the present, without regard for their ability to continue growing in the future.

Capitalism was a useful framework for bringing Europe out of feudalism but it’s not the gospel truth we hold it up to be today. While it gave rise to a new middle class who, for the first time, could own property of their own and achieve standing in society, it also gave rise to a new imperative to accumulate capital and hoard wealth.

While capitalism made sense during the Industrial Revolution, it hadn’t been fully tested yet. Malthus identified that excess capital accumulation could lead to adverse consequences. What he referred to as gluts we now recognize as recessions and depressions today.

Although Malthus’s theory on population growth did not lead to mass starvation in England, it did raise important questions on the relationship between people and the earth’s resources. The rate of growth between the population, capital, and the natural environment are not consistent. This creates an inevitable challenge with maintaining an equilibrium.

Just as capitalism represented a new economic system that emerged during the Industrial Revolution, a new system will inevitably emerge during the current AI revolution we’re in. It’s unclear what the new system will look like but whatever it is, it will have to strike a balance with the natural limits to growth.

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Notes

ChatGPT scored this essay as a B+ and provided the following feedback:

Understanding of the Reading: 4 Your essay demonstrates a strong understanding of Malthus' theory and how it relates to economic history. You incorporate historical context well, but some aspects of Malthus' argument—such as his stance on "moral restraint" and preventive checks—could have been explored further.

Critical Thinking: 5 Excellent critical evaluation. You engage deeply with Malthus' theory, connecting it to both historical and contemporary debates on sustainability, capitalism, and technological progress. Your analysis of capitalism’s limits is compelling and thought-provoking.

Clarity of Writing: 4 Your writing is generally clear and well-organized, with strong transitions and logical structure. However, some sentences are complex or could be streamlined for better readability. There are minor grammatical issues and occasional awkward phrasing.

Use of Evidence: 4 You provide strong evidence, citing historical trends, Malthus' own words, and contemporary studies like The Limits to Growth. However, some claims (such as those about capitalism’s inevitable collapse) would benefit from additional empirical backing. More direct engagement with 20th-century demographic transitions would strengthen your argument.

Reflection: 5 Outstanding reflection. You connect Malthus’ ideas to modern issues like AI, resource depletion, and food security in a meaningful way. Your insights on capitalism’s sustainability are particularly compelling.

Score: 22/25

Grade: B+

This is my sixth essay in the series. I started working on it at 6:50 am this morning and will be hitting publish a little after 4:00 pm in the afternoon. If I gave myself more time to sit on my draft and come back to it, I think this could have been much better.

This time around I also used ChatGPT to ask a theoretical question. Everything I’ve read up until this point comes from a European lens, specifically a British lens.

While a lot of things align with British values, some things don’t. America never had an aristocracy which means compensation for the use of land in Britain was very different than here in the United States.

In economics, there are three variables that inform prices: wages, profit, and rents. The idea of rent has been a bit confusing to me because I think of it in an American sense. Rent is something you pay to a landlord of a house or an apartment and there’s a market so you always have a choice to pay less rent.

For example, if you’re in an apartment building and your landlord increases your rent by 50%, you can just move. I take that for granted because that’s not necessarily the case in other parts of the world.

Rent can mean this in an economic sense but it’s not driven by a market. So I asked ChatGPT for an American equivalent to understand what all these economic theorists say when they refer to rent.

ChatGPT responded with four categories:

• Large-scale real estate investors like BlackRock

• Tech companies and hedge fund managers (deemed financial oligarchs)

• Owners of natural resources and utilities

• Political dynasties and heirs of old wealth

This was very clarifying for me. Rent isn’t generated by the market, it’s based on who has market share.

Google owns search. If you want to be discovered, you have to pay whatever price Google is charging. Utilities are monopolies. If Austin Electric tells me the price of electric is $100 then I have to pay $100.

This illustrates the value ChatGPT can provide in an educational context. Google is good for retrieving answers to questions from existing bodies of work, but it’s not good with theoretical questions like this.

ChatGPT didn’t just answer my question, it understood what I was trying to ask. I think this is very helpful if you’re studying something new and you don’t have access to an expert to ask your question to.

1. Thomas Malthus, An Essay on the Principle of Population, 5.

2. Thomas Malthus, An Essay on the Principle of Population, 15.

3. The abolition of the Corn Laws in 1846 – something Malthus had opposed – gave Britain access to grain imports from continental Europe.

4. Herrington, Gaya (June 2021).. "Update to limits to growth: Comparing the World3 model with empirical data". Journal of Industrial Ecology. 25 (3): 614–626.

5. https://www.weforum.org/stories/2018/09/africas-rapid-population-growth-puts-poverty-progress-at-risk-says-gates/

6. https://fortune.com/2024/05/07/elon-musk-birth-rate-milken-ceos-penny-pennington-edward-jones-customers/

7. https://www.scientificamerican.com/article/only-60-years-of-farming-left-if-soil-degradation-continues/

8. Leigh Shaw-Taylor (2009), The occupational structure of England and Wales, c.1750-1911, 3, https://www.repository.cam.ac.uk/bitstreams/834632a9-4f2f-4360-b10c-9de91d4d4c50/download#:~:text=By%201800%20England%20in%20particular,the%20least%20agricultural%20European%20economy.

9. https://www.theguardian.com/environment/ng-interactive/2021/jul/14/food-monopoly-meals-profits-data-investigation

10. https://www.dw.com/en/agriculture-seeds-seed-laws-agribusinesses-climate-change-food-security-seed-sovereignty-bayer/a-57118595#:~:text=For%20thousands%20of%20years%20of,future%20of%20all%20of%20us.%22&text=Not%20only%20are%20the%20channels,as%20the%20planet%20heats%20up.