The Optimum Theory of Population became fashionable in the 1930’s. It was worked out mainly by Edwin Cannon and Carr-Saunders of the London School of Economics.
The Optimum Theory does not deal with the laws of population growth or food-supply. It is only an attempt to find the relationship between population and wealth production.
The Optimum Theory has been described by Cannon as follows:
“At any given time (in a country) there is what may be called a point of maximum return when the amount of labour is such that both an increase and decrease in it would diminish proportionate returns. If population is not large enough to bring all industry up to this point returns will be less than they might be and the remedy is increase of population; if on the other hand, population is so great that the point has been passed, returns are again less than they might be and the remedy is decrease of population”.
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The Optimum Population:
The Optimum Theory is based on the concept of Optimum Population. The Optimum Population is that number of people which is necessary to exploit the resources of the country in the best possible way. It is defined as the population just sufficient to get the maximum output with the capital, natural resources and techniques available at the time under consideration. If the actual population is less than the optimum size, then population increases to match the output level of the country and the per capita income increases.
When population exceeds the optimum, total output does not increase proportionately, while the number of shares in the output increases. Hence, per capita income falls. The ideal situation is that in which the actual population is equal to the optimum population.
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If A is the actual population and O the optimum, then (A – O) + O measures the degree of population maladjustment. If A is less than O, the country is under populated. If A is greater than O, the country is overpopulated.
Whether there is population maladjustment or not can be found out by calculating the per capita income of the country over a number of years. A falling per capita income is the sign of overpopulation. A rising per capita income shows either that the country is under populated or that the population maladjustment is becoming less.
Criticism:
The Optimum Theory was very popular at one time. It is, however, full of difficulties and has been more or less discarded at present. The principal criticisms of the theory are summed up below.
1. A static concept:
The concept of optimum population is a static concept inapplicable and irrelevant to a dynamic world. The size of the optimum population depends on the capital resources, the techniques of production, the modes of business organisation and the rate of investment.
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As all these factors are constantly changing, the optimum must be a fluctuating figure. The invention of labour saving machinery, for example, would immediately convert a country with optimum population to overpopulation. Converses, the discovery of a new economic resource (a new mine, for example) would make the same country under populated.
2. Not measurable:
It is impossible to measure the optimum population and the degree of population maladjustment. In fig. 3, the curve PP’ shows the real income (or the product) per head, the line A/A/, shows the maximum income and OM is the optimum population. Unfortunately the curve cannot be plotted with accuracy.
3. It is materialistic:
The theory is materialistic because it concentrates attention on the maximization of the real income per head of the population. But the real income constitutes a large number of goods and services, some of which do not bring the welfare of the people. (See ‘The Measure of Economic Welfare’).
4. Not useful:
For the reasons stated above the optimum theory cannot be used for the purpose of formulating a population policy. The theory “is a speculative figment of the mind without any real connection with the world”.-Myrdal.’ The population policy should take into account the different aspects of the people, namely, economic, political and the psychic well-being of the people.
Conclusion:
The Optimum Theory is valuable in so far as it enables us to overcome the bogey of Malthusianism. Increase of population is not to be feared if there is simultaneous increase of productivity.
The theory also gives us a test of progress (viz., the per capita income). So long as the per capita income is rising there is no danger from increasing population. But the theory is useless as a guide to economic policy.