Adam Smith, Julian Simon, Pro-Natalism

Julian Simon is renowned for his arguments in favor of population growth. In the acknowledgments to The Ultimate Resource, he credited Adam Smith as a principal inspiration. So, what did Smith think about population?

Although Smith scholarship has blossomed over the last many decades, assessments of his big ideas tend not to mention his views on population. The editors of the Glasgow edition of The Wealth of Nations (WN) write: “Increasing population, whether a cause of economic growth, or as something to fear, was not highlighted” (Campbell and Skinner 1981, 48). Useful articles on Smith and population were, however, written by Joseph Spengler (1970; 1976).

Smith does not dedicate a chapter in either of his major works specifically to population. Nevertheless, he discusses population throughout WN. As for The Theory of Moral Sentiments (TMS), his discussion is more sparing but no less important, for Smith brings up population at key moments in TMS. I contend here that Smith was resolutely pro-natalist and that his sentiments closely resemble those of Julian Simon.

Smith’s general approach to population

The first reference to population in TMS comes in a footnote in which Smith declares that “self-preservation, and the propagation of the species, are the great ends which Nature seems to have proposed in the formation of all animals” (TMS 77.10n). Later, in the “invisible hand” paragraph of TMS, Smith refers favorably to population growth no less than three times. Smith writes that those pursuing honest income “are led by an invisible hand to… afford means to the multiplication of the species” (TMS 184-185.10, italics added).

TMS’s invisible hand paragraph shows how focal population was to Smith. If the invisible hand is Smith’s “central idea” and Smith “thought so” too (Klein and Lucas 2011, 44), the inclusion of population not once but three times in that paragraph should not be overlooked. Smith was highlighting the centrality of population as both a cause and consequence of his liberal plan. Maria Pia Paganelli (2021) has argued that Smith uses population in WN as a “proxy” for material betterment, analogous to how we now use Gross Domestic Product.

In WN, in the chapter on wages (82.1-104.57), Smith posits that population growth is regulated primarily by the growth rate in the demand for labor as reflected in wage rates. When demand for labor is growing, wage rates will rise to “encourage… the marriage and multiplication of labourers, as may enable them to supply that continually increasing demand by a continually increasing population” (WN 98.40). When the demand for labor falls, the reverse ensues. If there is a Smithian population principle, it appears to be the following: population growth moves with wage rates, which increase when there is growing demand for labor and decrease when there is falling demand for labor. High “liberal” wages would “encourage propagation… [and] increase the industry of the common people” (WN 99.44).

Thomas Malthus was concerned about the “constant tendency in all animated life to increase beyond the nourishment prepared for it” (1992 [1803], 14). Smith, however, diverged from such Malthusian pessimism. Smith conjectured that “Every species of animals naturally multiplies in proportion to the means of their subsistence, and no species can ever multiply beyond it” (WN 97.39). The demand for labor as reflected in wage rates provided a natural check to population growth. Smith, nonetheless, was more confident that sustenance and other “necessaries of life” could outpace population. His confidence arguably stemmed from his bullishness about the prospects of technological change and innovation (see discussion in Waterman 2012).

More people mean more discovery

Julian Simon (1996), Paul Romer (1990; 1994), Michael Kremer (1993), and Bryan Caplan (2011) have all been associated with the notion that population growth enables economic growth by adding to the stock of individuals hitting upon new ideas. Is that thesis present in Smith?

Smith declares in the title of the third chapter of WN “[t]hat the Division of Labour is limited by the Extent of the Market” (31). That claim implies one about population: “The extent of their market… must for a long time be in proportion to the… populousness of that country” (WN 34.4).

To increase the division of labor you need a larger population to fill jobs (WN 253.15) and to demand the added goods and services (WN 31.1). Population growth creates new demand and new production to pay for that increased demand—thereby making it worthwhile for firms to scale up their operations and extend the division of labor. The consequence thus of a larger population is a wider market and a greater division of labor.

Increased specialization yields for Smith three particular benefits: (1) workers become better skilled, (2) task switching, which prompts some to “saunter” and takes time even for those who don’t, is reduced, and (3) new machines and methods augmenting productivity are invented (WN 17.5-22.9).

The third effect of the division of labor—better production methods—approximates closest to later economists’ language about more people yielding more ideas. Smith seems to largely agree with that point: “The greater their number, the more they naturally divide themselves into different classes and subdivisions of employment. More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented” (WN 104.57). Smith understood that more people would mean the invention of new machines both by “common workmen” (WN 20.8) and by a newly established and growing class of researchers and inventors (WN 21.9).

Increasing returns, productivity boosts, and wholly new horizontal axes

Malthus’ chief fear was that population size would outstrip food supply because land is limited and there are decreasing returns to scale when attempting to expand the food supply (1992, 17). Smith seems to have been of the contrary view, that sustenance did not face a strict upper bound but rather could (perhaps continuously) be expanded upwards through innovation and economic growth. The conviction that increasing returns are perennially possible is at the heart of Smith’s pro-population growth rhetoric. As Smith writes, “The liberal reward of labour, by enabling [parents] to provide better for their children, and consequently to bring up a greater number, naturally tends to widen and extend those limits [of subsistence]” (WN 98.40).

Smith focuses in a particular way on agricultural innovation. He reflects on the auspicious arrival of the potato to Europe via the Columbian Exchange: “[T]he same quantity of cultivated land would maintain a much greater number of people” if potatoes are used compared to wheat (WN 176-177.39). Smith predicted “Population would increase” if potato cultivation became at least as common as wheat cultivation (WN 176-177.39). Nathan Nunn and Nancy Qian (2011) have estimated that “the introduction of the potato explains 25–26 percent of the increase in Old World population between 1700 and 1900” (643). The potato represents a new good, a new horizontal axis, and fresh blocks of consumer and producer surplus. As Smith says elsewhere, “It is the great multiplication of the productions of all the different arts… which occasions… that universal opulence which extends itself to the lowest ranks of people” (WN 22.10).

Julian Simon’s general approach to population was that when a soul is added to humankind, that soul, besides her own actualization of the blessing of life, is, in the long run, a net positive to the material well-being of others. In the short run, more people mean greater demand for goods and services which impels greater scarcity and price rises. But, assuming freedom and the profit motive, the short-run problem becomes an invitation for a solution. Rising prices evoke conjoining innovation; thus, the long-run consequence of population growth is new methods, new products, lower prices, and improved living standards for all. The creativity of the added soul may itself be a prodigious source of the improvements.

Smith’s ideas are compatible with Simon’s broad story. G.B. Richardson (1975) points out that “Smith presumed… that a sustained increase in the demand for a good would generally permit a realization of hitherto unexploited scale economies and thereby lower its price” (353).

Smith appears to have thought that the long-run supply curve slopes downwards: in the long run, lower prices come at higher quantities supplied. One passage in WN demonstrates the point aptly:

Thus, since population growth yields increased demand, the long-run effect of population growth is a net positive for Smith, as it is for Simon, in that it creates the incentive for innovations that “might never otherwise have been thought of.”

Notice that Smith speaks of improvements being “thought of.” Across WN and the Lectures on Jurisprudence, he uses the “thought of” formulation several times (DelliSanti 2021). If the uniquely human act of thinking is the fundamental ingredient for improvements in material prosperity, Smith is putting his finger on Simon’s most famous idea: the human being, specifically the human mind, as “the ultimate resource.”

The three benefits bred by the division of labor are themselves linked to human thinking. Smith's reverence for human thinking likewise shows in his remarks about “[t]he first invention of such beautiful machines” as clocks and watches: “the work of deep thought and long time, and may justly be considered as among the happiest efforts of human ingenuity” (WN 139–40.16). Smith similarly underscores how the source of the division of labor—the propensity to “truck, barter, and exchange”—is distinctly human. Smith’s claim that “a philosopher is not in genius and disposition half so different from a street porter” (WN 30.5), beyond what it says about the division of labor, can be read as an attempt to present the human category as sacred and distinct from all other categories of being, for “[n]obody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog” (WN 26.2).

Freedom and population growth

Simon argued that “[t]he world’s problem is not too many people, but lack of political and economic freedom” (1996, 11). Restrictions constrain people’s natural abilities, deactivate their incentives, and misdirect their effort to innovate when population size increases. There are several passages in WN that signal Smith would have likely been in Simon’s camp.

The clearest thread relates to free trade. Smith forewarns on import quotas: “To prohibit by a perpetual law the importation of foreign corn and cattle, is in reality to enact, that the population and industry of the country shall at no time exceed what the rude produce of its own soil can maintain” (WN 463.22).

James Buchanan and Yong Yoon (2000) argue that Smith’s view was that restrictions on free trade necessarily “reduce the potential for the exploitation of the inexhaustible advantages of specialization” (47). Restrictions obstruct the division of labor as do “natural boundaries,” such as “an arm of the sea or a ridge of high mountains” (WN 157.58). For Smith, unimpeded free trade enables “generalized increasing returns” to take hold because specialization is greater in such an environment (Buchanan and Yoon 2000, 47). Thus, Smith saw free trade as enabling a larger population and protectionism as dampening specialization that makes possible population growth.

Smith likewise condemned subsidies given to domestic wheat producers exporting to the foreign market. The goal of such subsidies was to enable domestic wheat producers to lower their prices in the foreign market and thus gain a competitive advantage. Smith explains that the subsidies were financed by imposing a considerable tax on wheat purchases within Great Britain. Smith speculates that such policy could have either of two effects—both bad for population: “So very heavy a tax upon the first necessary of life, must either reduce the subsistence of the labouring poor, or it must occasion some augmentation in their pecuniary wages, proportionable to that in the pecuniary price of their subsistence” (WN 508.8). In other words, the tax will (1) impoverish the laboring poor by increasing their costs, or it will (2) lead to higher wages (the increase corresponding to the tax) for the laboring poor. If (1) holds, the tax will “reduce the ability-of the labouring poor to educate and bring up their children, and must, so far, tend to restrain the population of the country” (WN 508.8). If (2) holds, the tax will “reduce the ability of the employers of the poor, to employ so great a number as they otherwise might do, and must, so far, tend to restrain the industry of the country” (WN 508.8).

For Smith, protectionist policies are generally harmful for population. Wheat subsidies had to be paid for somehow, and the effect of imposing an excise tax on wheat for British citizens was to hurt the poor above all. The effect of either bad outcome once again would be to depress population.

Love of life

Besides the economic reasons Smith favored population growth, he seems to have been a pro-natalist for at least one other reason: he thought human life was good and worthwhile in itself. An additional mouth means an additional person, and that means an additional soul, and an additional conscience, which Smith said was a “representative” of the impartial spectator (TMS 215.11). “The all-wise Author of Nature… has made man… the immediate judge of mankind; and has… created him after his own image” (TMS 130.31). In Smith, the good corresponds to what is pleasing to the universal beholder, who is benevolent toward his creatures. God’s attitude would seem to be: The more, the merrier.

One senses a satisfaction when Smith writes of the British colonies in North America: “Those who live to old age… frequently see from fifty to a hundred, and sometimes many more, descendants from their own body” (WN 88.23).

And Smith was optimistic about the life experience of humans:

Nicholas R. Swanson holds a B.A. in history and Hispanic studies, summa cum laude, from The Catholic University of America and an M.A. in economics from George Mason University, where he is now a doctoral student. He was recently recognized as an outstanding graduate student.

This essay is part of the AdamSmithWorks series Just Sentiments curated by Daniel B. Klein and Erik Matson. New essays will be published on the fourth Wednesday of most months. You can read more about the series in this Speaking of Smith post, "Just Sentiments- Welcome!". Klein and Matson lead the Adam Smith Program in the Department of Economics at George Mason University, in association with the Mercatus Center. In the program, they study big ideas in jurisprudence, politics, ethics, and economics as they were pursued during the original arc of liberalism, especially in the 18th century in Britain.


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