Schools of Thought

How well have institutions helped societies adjust to rapid change? Scholars disagree. Beginning around the late 1960s, neo-Malthusians‹analysts and commentators who share the notion expressed by 18th century economist Thomas Robert Malthus that population growth inevitably collides with limiting resources‹projected a pessimistic view of the coming impacts of population growth. They asserted that society¹s institutions would be unable to adjust economies to the changes and pressures that rapid population growth and high human density would ultimately wreak on the environment and social fabric.²⁵ The opposite view, that institutions can faultlessly handle these changes if allowed to operate without restriction, is shared by two groups of scholars, neoliberals and distributionists,²⁶ whose opinions are otherwise separated by the width of the political spectrum. Neoliberals‹Julian Simon is among the most prominent‹argue that population growth is not a problem and that discussion of it only distracts attention from real problems. A narrow set of evolved institutions--the market, private property rights and supportive laws--coupled with technological progress and creativity, provide all the necessary tools for adjusting. Distributionists, too, argue that concerns about population growth distract from the critical issues. Distributionists maintain that state institutions promoting poverty alleviation and equity are the key to successful adjustment. Both schools assert that the positive economic outcomes resulting from their own brand of institutional mediation reduce the demand for children.

In the midst of this debate the revisionists emerged during the 1980s. Revisionists conclude that to adjust adequately to population growth, populous countries must have a broad array of functional modern institutions. Institutions that function smoothly make it possible for some of the initial adverse effects of population growth to be "ameliorated or even reversed in the long run."²⁷ But when institutions function poorly, revisionists warn of the likely economic risks population growth can pose. Such risks‹including depressed levels of output per worker, failures to meet society¹s goals for allocating goods and services, and stagnation or deterioration of assets‹occur in the poorest countries where institutions have yet to reach maturity. Regardless of national income, population growth can degrade renewable natural assets where property rights are inadequate or nonexistent. For revisionists, the institutional thesis just described explains much of what economists have been observing over the past four decades of rapid population growth in the developing world.

In the following sections we argue that revisionism itself can be revised, or at least fine tuned. We do not challenge the revisionists¹ basic claim that institutional development is a key determinant of how well an economy can adjust to population growth. Social scientists, however, have long been engaged in research to discern how institutions work and for whom they work best. Their conclusions have implications for the ways in which key aspects of population growth--family size, increments of young people, human density and contributions to aggregate demand for goods and services--affect the way in which societies manage productive assets and allocate the goods and services derived from them.