These are serious perils: but yet it remains true that the collective efficiency of a people with a given average of individual strength and energy may increase more than in proportion to their numbers. If they can for a time escape from the pressure of the law of diminishing return by importing food and other raw produce on easy terms; if their wealth is not consumed in great wars, and increases at least as fast as their numbers; and if they avoid habits of life that would enfeeble them; then every increase in their numbers is likely for the time to be accompanied by a more than proportionate increase in their power of obtaining material goods. For it enables them to secure the many various economies of specialized skill and specialized machinery, of localized industries and production on a large scale: it enables them to have increased facilities of communication of all kinds; while the very closeness of their neighbourhood diminishes the expense of time and effort involved in every sort of traffic between them, and gives them new opportunities of getting social enjoyments and the comforts and luxuries of culture in every form. No doubt deduction must be made for the growing difficulty of finding solitude and quiet and even fresh air: but there is in most cases some balance of good.(3*)Taking account of the fact that an increasing density of population generally brings with it access to new social enjoyments we may give a rather broader scope to this statement and say: -- An increase of population accompanied by an equal increase in the material sources of enjoyment and aids to production is likely to lead to a more than proportionate increase in the aggregate income of enjoyment of all kinds;provided firstly, an adequate supply of raw produce can be obtained without great difficulty, and secondly there is no such overcrowding as causes physical and moral vigour to be impaired by the want of fresh air and light and of healthy and joyous recreation for the young.
The accumulated wealth of civilized countries is at present growing faster than the population: and though it may be true that the wealth per head would increase somewhat faster if the population did not increase quite so fast; yet as a matter of fact an increase of population is likely to continue to be accompanied by a more than proportionate increase of the material aids to production: and in England at the present time, with easy access to abundant foreign supplies of raw material, an increase of population is accompanied by a more than proportionate increase of the means of satisfying human wants other than the need for light, fresh air, etc. Much of this increase is however attributable not to the increase of industrial efficiency but to the increase of wealth by which it is accompanied: and therefore it does not necessarily benefit those who have no share in that wealth. And further, England's foreign supplies of raw produce may at any time be checked by changes in the trade regulations of other countries, and may be almost cut off by a great war while the naval and military expenditure which would be necessary to make the country fairly secure against this last risk, would appreciably diminish the benefits that she derives from the action of the law of increasing return.
NOTES:
1. In an article on "The Variation of Productive Forces" in the Quarterly Journal of Economics 1902, Professor Bullock suggests that the term "Economy of Organization" should be substituted for Increasing Return. He shows clearly that the forces which make for Increasing Return are not of the same order as those that make for Diminishing Return: and there are undoubtedly cases in which it is better to emphasize this difference by describing causes rather than results, and contrasting Economy of Organization with the Inelasticity of Nature's response to intensive cultivation.
2. There is no general rule that industries which yield increasing returns show also rising profits. No doubt a vigorous firm, which increases its scale of operations and obtains important (internal) economies which are peculiar to it, will show an increasing return and a rising rate of profit; because its increasing output will not materially affect the price of its produce. But profits tend to be low, as we shall see below (VI, VIII, sections 1, 2), in such industries as plain weaving, because their vast scale has enabled organization in production and marketing to be carried so far as to be almost dominated by routine.
3. The Englishman Mill bursts into unwonted enthusiasm when speaking (Political Economy, Book IV, ch. VI, section 2) of the pleasures of wandering alone in beautiful scenery: and many American writers give fervid descriptions of the growing richness of human life as the backwoodsman finds neighbours settling around him, as the backwoods settlement develops into a village, the village into a town, and the town into a vast city. (See for instance Carey's Principles of Social Science and Henry George's Progress and Poverty.)End
