As an attack on the Malthusian theory, Professor Norton's argument is of the same character as that which reasons that since big fish eat little fish, and since, as a consequence, every time a big fish is caught the lives of a great many little fish are saved and they are thus allowed to grow to maturity, therefore the more people there are catching and eating big fish the more abundant will fish become, because, for every big fish which is caught, a large number of little fish will be enabled to grow to bigness. ∴ If we will all become ichthopophagi, an inconceivable number of people can subsist and we need not concern ourselves with the law of Malthus.—Q. E. D.
The real conclusions to be drawn from Professor Norton's preliminary analysis, which is really a valuable piece of work if he had not spoiled it by trying to base false conclusions upon it, are as follows: (1) An increasing population may, by reason of the enhancing value of every productive improvement, increase in general prosperity and well-being, provided it is not hindered by too great a scarcity of the other necessary factors of production, such as land and capital. (2) In spite of such scarcity, and the consequent operation of the law of diminishing returns, the prosperity may increase, provided the arts of production improve rapidly enough to more than counterbalance these disadvantages.
The facts cited by Professor Norton regarding interest rates can all be accounted for without calling in this supposititious "law of progress." A time of rapid invention is naturally a time of great demand for new capital, because an invention is a new opportunity for the use of capital. Therefore, men who see these new opportunities bid high to get possession of capital. This, however, is not a complete explanation of interest. Professor Norton would have difficulty in explaining why an appliance embodying one of these new inventions would sell for less than its anticipated product, without recourse to some of the "agio theories" which he dismisses so slightingly. In new countries, where land is abundant and opportunities are many, there is likely to be an increase of population, because men like to go to such countries. Such countries also furnish abundant opportunities for the use of capital, and men bid high for it in order to attract it. In old and worn-out countries, where opportunities for both men and capital are few, there are likely to be a stationary or decreasing population and low rates of interest.
In conclusion let me say that, though these criticisms seem severe, they are aimed at some of the conclusions which Professor Norton bases upon his analysis rather than upon the analysis itself, which is, let me repeat, an admirable piece of work and destined to increase the already high esteem in which Professor Norton is held by students of economics everywhere.
