Although Malthus is mostly remembered from his seminal work on population growth, he was also interested of more extensive questions in economy. Like Ricardo, Malthus followed on the tradition of Adam Smith, and indeed, he engaged in dialogue with Ricardo, often criticising details of latter’s work.
An important point of contention between Ricardo and Malthus was the question of measure of value. Of course, they shared a lot of common conceptual ground in their notions of value. By value of thing both writers meant the so-called exchange value or value measured in relation to something. In other words, when thing A is exchanged for certain quantity of B, then the value of A could be said to be this quantity of B. Usually some goods - at the time, gold - is chosen as a general measuring stick for all other goods.
Now, it is common knowledge that exchange values of goods change, depending on how much demand there is for it and how much supply there is to satisfy this demand. Even the conventional measure of value or gold has a variable value. Ricardo had suggested that despite this variation, there is some natural measure for value of different goods, namely, the amount of labour required for their production. This value was natural, according to Ricardo, because if left unregulated, prices of good would tend to move toward this natural value.
In a sense, Malthus agrees with Ricardo. He admits that goods do have a natural price, which is partially defined by the labour used for their production. Yet, firstly, this natural price is said by Malthus to be determined by other things beyond labour, such as cost of manufactures required for the production - in other words, this natural price is just the lowest price, which would take care of the costs of the goods and especially keep the labourers and people selling goods fed. Secondly, Malthus notes that despite this naturalness, there is no guarantee that prices would universally tend to move toward this point. Indeed, one might well imagine that two items, with equal productions costs, would still never have the same price, if the demand for one would always higher than the demand for the other. Thus, Malthus is more willing to admit that e.g. differences in quality might affect prices of goods. Instead of Ricardo’s measure, Malthus then suggests his own: value of a good should be measured by the amount of labour one could hire with it. Malthus’ suggestion seems believable, when one considers what we usually mean by value - things are more valuable, if we could get more goods and services with the money we could get by selling them.
Just like Ricardo, Malthus still considers mostly agricultural products, which indeed were the most important factor in the economy of the time. Thus, following Ricardo’s example, Malthus is eager to study the relations of three different classes - the landlords, who live by renting their land to farming, labourers, who live by the wages they get from working in the farms, and capitalists, who live by the profits they get from farming. Now, Ricardo thought that the rents, the wages and the profits should be measured by the proportion all the classes receive from the total amount of the produce. Malthus noted quite correctly that at least in case of rents and wages this style of measurement makes no sense, since it assumes that landlords, labourers and capitalists are playing a zero-sum game, where the gain of one means loss for others. Thus, if the total amount of agricultural produce would rise, but the rents of the landlords would remain equal or even rise in lesser quantity, Ricardo’s theory would assume that landlord would have lost something, although he would get the same or even bigger quantity of the products as a rent. Malthus instead suggests, more naturally, that rents and wages should be measured simply by the quantity of the products landlords and labourers receive. The profits of capitalists, on the other hand, should be measured, according to Malthus, in relation to the original capital they have spent for getting the products.
With these measures in hand, Malthus goes on to discuss in what manner each class involved in agricultural production could optimise the value they get from their efforts. The case of landlords is simplest, since practically any permanently positive effect on agricultural produce eventually raises the rents. Thus, in complete opposition to Ricardo, who noted that in poor countries landlords get a larger share of agricultural produce, Malthus notes that in developed countries landlords still fare better, since they get more of that produce, although their proportional share of the whole might be lower. Similar considerations apply to optimising the profits of agricultural capitalist - the more she can produce with less costs, the better. The case of labourers is somewhat more complicated, since rise in production of food, says Malthus, tends to incite population growth, which in the long run lowers wages of labourers. Thus, following his population studies, Malthus suggests that general avoidance of early marriages - the only form of birth control Malthus allows - would be beneficial for all labourers, because it would keep the wages steady.
Like Ricardo, Malthus is careful to distinguish wealth or richness from value - a society with abundance of goods would be immensely rich and wealthy, but the goods would be of no value, since everyone had what they wanted. The more interesting question for Malthus concerns then the means for making a state wealthier. We can at once note some clear deficiencies in Malthusian notion of wealth. He defines wealth as the sum of all material goods, which could be used in exchange. This definition, as Malthus himself notes, at once precludes all immaterial goods, such as skills and cultural artifacts, from entering into account of wealth. Malthus himself notes the unfairness, which leads to giving no value to the work of teachers and artists, since their work does not directly lead to the production of material goods. Still, Malthus says, this restriction must be made for theoretical purposes, because it would be enormously difficult to quantify the immaterial goods. A more important point of criticism is that Malthusian theory gives no value to leisure, which is seen as a mere detriment for development of state. One might speculate that the overall happiness of a state would at some point not be helped by increasing the production of new goods, but by decreasing the amount of work.
Malthus suggests two principles for the progression of national wealth. Firstly, the quality of soil gives a natural limit to what can be produced - lands of certain quality just won’t give enough agricultural produce to make investing in them useful. Although Malthus is again speaking from the standpoint of mostly agricultural society, his point can be clearly extended to an industrial society: the efforts required for finding the necessary raw materials put an ultimate limit to production. Secondly, the interplay of demand and supply regulates the rate at which the potentials of the production can be actualised - if there’s no demand for certain products, capitalists do not have any incitement to sell them. With his regulating principle Malthus does away with an idea common at the time that any supply of goods would just create its own demand. On the contrary, Malthus notes, there might well be times with too many products with not enough buyers. While this state of affairs might at first seem good for the labourers, who could buy things cheaply, it would in time affect them adversely, because there would eventually be no incitement to hire workers for farms and factories, leading the state to a further depression. Thus, Malthus notes, while parsimonious lifestyle of citizens is sometimes good for the society, because it creates more capital that can be used for investments, it might also lead to such a state of too few buyers of goods.
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