Question

What, according to Malthus, are market gluts? How and why do they come about? How can they be avoided? What is the significance of the corn laws to all of this? [10]

Answer 1

Answer -

a.) A theory of market gluts was introduced by Malthus in which an excess of supply over demand was seen as possible. The sum invested by the land-owning class was the key to avoiding these gluts, which would lead to unemployment, Malthus thought.

b.) If they spent freely, there would be sufficient demand, and unemployment would be weak.

c.) In his contribution to the debate on the Corn Laws, which levied tariffs on imports of cheap corn, Malthus argued that keeping certain tariffs was one way of ensuring this. This will raise the price of British agricultural goods, increase the wages of the landowners, increase their investment, and thus prevent a supply surplus from occurring. (Later, elements of this theory were resurrected as the Keynesian theory of the short-run position of fixed-exchange-rate tariffs.)