The Ricardo-Malthus Debate on Underconsumption: A Case Study in Economic Conversation

The debate between Thomas Robert Malthus and David Ricardo on the underconsumptionist thesis provides a valuable case study for researchers interested in the questions of how economists communicate and why even honest, intelligent efforts to persuade sometimes fail. One reason for its value as a case study is its completeness. Malthus devotes a large chapter of his Principles ([1836] 1964) to the underconsumptionist question; Ricardo, in his Notes on Malthus (1951–73), responds with a detailed paragraph-by-paragraph rebuttal; and, in their lengthy correspondence, they continue the argument even further. Another reason their debate makes an excellent case is the apparent absence of any agenda other than the disinterested pursuit of truth. Their exchanges are free from the disingenuous rhetorical tactics that so often crop up in pursuits of anything other than the truth.

But the most compelling reason to study the case is that Malthus and Ricardo are both highly talented representatives of two very different “styles” of economic argument. Ricardo is a model builder: beginning with just a few simple axioms, he develops an ingenious system through which definite conclusions can be deduced logically. Malthus, in contrast, employs what some economists today pejoratively refer to as a “journalistic” style. While lacking generality and elegance, his theories have the virtues of common sense plausibility and apparent consistency with the observed facts. ¹

Tensions have persisted between the practitioners of these two styles in economics, and today the rift is perhaps as deep as it has ever been. ² The now ascendant Ricardian style, characterized by a devotion to explicitly mathematical models that yield exact results, repeatedly comes under attack by modern day Malthusians who question the realism of the assumptions and, hence, the relevance of the conclusions. The Malthusians, in turn, are criticized by the other side for failing to be sufficiently “rigorous,” that is, for not deriving their conclusions deductively from explicitly stated assumptions.

By looking back and examining an old debate, it might be possible to understand more deeply the role played by these sorts of methodological differences in disputes about practical economic matters. Our case study might throw some light on the question of whether the difference in style is merely a superficial matter reflecting only a difference in emphasis, or whether something more fundamental is at stake. It might also illuminate the related issue of whether the difference constitutes a necessary barrier to communication.

1. The Debate

The essence of Malthus’s position is his objection to the supposed generality of Adam Smith’s ([1776] 1937, 324) proposition that “every prodigal appears to be a public enemy, and every frugal man a public benefactor.” Malthus’s point is not that saving is always harmful, but that it cannot be thought to be always beneficial. His position on underconsumption is consistent with the wariness he expresses about any definite generalizations in economics. In his Principles ([1836] 1964, 8), he writes: “there is no truth of which I feel stronger conviction than that there are many important propositions in political economy which absolutely require limitations and exceptions; and it may be confidently stated that the frequent combination of complicated causes, the action and reaction of cause and effect on each other, and the necessity of limitations and exceptions in a considerable number of important propositions, form the main difficulties of the science, and occasion those frequent mistakes which it must be allowed are made in the prediction of results.” Ricardo, in contrast, reveals a very different methodological bias in the following passage. He writes to Malthus: “Political economy you think is an enquiry into the nature and causes of wealth—I think it should rather be called an enquiry into the laws which determine the division of produce of industry among the classes who concur in its formation. No law can be laid down respecting quantity, but a tolerably correct one can be laid down respecting proportions. Every day I am more satisfied that the former enquiry is vain and delusive, and the latter the only true object of the science” (Ricardo 1951–73, 8...