Bryan Caplan makes a smart criticism of Gregory Clark’s Malthusian history of the Industrial Revolution– namely that population growth increases the supply and demand for goods, enables economies of scale and allows for greater specialization and efficiency gains from trade. Caplan contends that England’s population in 1800 of around 9 million, which was a 70 percent increase from the (estimated) 1700 population of 6.5 million, provided the spark or tipping point for the Industrial Revolution.
Once you accept the long-run benefits of higher population, praising the Black Death for raising the average standard of living is severely myopic. Halving the population may double the standard of living of the survivors in the short-run. But in the long-run, a smaller population delays the arrival of modernity. On Clark’s account, it took England about two centuries to return to its pre-plague population. On his own terms, then, it is entirely possible that - but for the plague - the Industrial Revolution would have begun two centuries earlier.
In fact, once you take the long-run benefits of population on living standards seriously, the “Malthusian trap” takes on an new cast. Perhaps the real trap is that you have to be pretty rich to keep a big population alive long enough to reap the long-run benefits of a big population. For the pre-modern era, this story fits the facts as well as Clark’s, but it has the added virtue that it fits the facts of the modern era as well.
Clark’s position: that the Black Death was sweet for the English standard of living and Caplan’s: that population growth is the only way to ensure innovation, are easily reconciled. Clark’s argument is that from about 100,000 BC to 1800, the world was stuck in a Malthusian trap — any population increases spurred by gains in efficiency would be brought back down by increased disease and decreased resources. For about 800 years, however, the rich were bearing more children, and having more children survive, than the poor. Clark’s theory is that the values of the rich — the survivors — of thriftiness, low discount rate, delayed time preference, good hygiene and the lot enabled the industrial revolution to finally take off in 1800.
But at the same time the Industrial revolution was taking off, England’s population was growing, so shouldn’t the Malthusian trap kicked in? Well, no, Clark argues, because finally England’s population was able to not squander efficiency and population gains and instead advance technological efficiency even further and continue with more technological innovation. What happened immediately after 1800 is amazing, the population absolutely skyrocketed. Ultimately, the two views can be reconciled pretty easily. England’s population was growing from 1700 to 1800, but as this chart shows, it increased by some 300 percent in the 19th century. What made 1800 special, in Clark’s view, is that there was sufficient downward movement of those traits that are amenable to industrialization and wealth creation, so that the efficiency and population gains of the 18th century weren’t brought back down by a Malthusian death check. Instead, England transitioned into the second stage of the “demographic transition”: when death rates fall precipitously, while birth rates monentarily remain at their preindustrialized rates, and then start a much slower decline — resulting in massive population growth:

This is where Simon’s model, reproduced below, comes in. With the population increasing as technological innovation and efficiency gains continued apace, the positive network effects of increased population on further technological development were able to take hold without a Malthusian check. In Clark’s approximation, you need a few hundreds of years of Malthusian dynamics to slowly transform the traits and values of a population before Simon’s model can apply.
