DP20765 The Third Check: Surplus Extraction, Malthus, and the Origins of Agrarian Civilization
The paper analyzes the economic basis of agrarian civilizations. These had an agricultural part that produced food and a non-agricultural part that was supported by food from the countryside. The agricultural surplus was necessary for these cities but not sufficient. The technology (domestic seed, the plough) that generated the surplus was created by foragers and hoe cultivators who held the land in common. Their technology is modeled with engineering production functions derived with linear programming. Had they exploited the advanced technology, the result would have been a large population of cultivators living at subsistence and consuming the entire ‘surplus.’ This Malthusian nightmare was avoided by landlords who privatized land and organized it to maximize their income. Taxation could have a similar effect but less precisely. The rent proceeds supported the city. Theoretical analysis and simulation show that the effect of private property was to reduce the total population (the third Malthusian check) and to reduce the agricultural population even more. The difference was the urban population. In equilibrium the urban and rural labourers were at subsistence, the landowners were rich, Gini coefficients were high, and GDP per capita was greater than subsistence.
