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Published online by Cambridge University Press: 11 June 2009
In an essay on “The Ricardian Theory of Value and Distribution,” Stigler, commenting on Malthus' example of a geometrically increasing population and arithmetically increasing output, states the following:
“… Malthus' ratios implicitly assumed sharply diminishing returns, for his numbers define the production function,
L = 2p-1
where L is labor (proportional to population) and P is produce. With this production function, indeed, if workers received a wage equal to their marginal product, the aggregate wage bill would be independent of the size of the labor force, and population simply could not grow!”
1 Stigler, G., “The Richardian Theory of Value and Distribution,” The Journal of Political Economy, Vol. LX (06 1952)Google Scholar. Reprinted in Stigler, G., Essays in the History of Economics, Chicago: The University of Chicago Press, 1965.Google Scholar