Diminishing Returns

We may visualize this as follows. In Figure 4, the marginal and average product of labor are shown by the deep red lines, while the horizontal blue line is the subsistence income per person. The downward slope of these lines expresses the "law of diminishing marginal productivity:" the larger the population, the lower the marginal and average productivity.

Malthus regarded the use of contraceptives as a sin, and didn't consider that as a remedy for the growth of population. Abstinence from sex and postponement of marriage he considered OK, but didn't think most human beings would be strong enough to live that way. So he felt that people would have more children than are required to replace themselves whenever the wage would be high enough to allow them to.

That would mean that population growth would continue as long as the wage was above subsistence, i.e. the population would grow to L in the figure. But no further. At that point population growth and the growth of "the wealth of the nation" would stop.

Figure 4: Diminishing Returns

We notice that, at L, the average product of labor is still above subsistence. The incomes of landlords and other rich people would come out of that difference, and might be used to sustain large households of servants or in other "unproductive" activities. But what if these unearned incomes were to be used to feed the working class? According to Malthus, that would just mean that the population would grow beyond L until the average product of labor was no more than subsistence -- and a larger population of working people would be just as badly off.

Malthus did allow for one possible "out." He said that improvements in agricultural technology could offset the falling wage level, since that would make it possible to feed more people with the given supply of land. But Malthus thought improvements in technology would be unique historical events that would only put off the inevitable "stationary state" of no growth and subsistence incomes for a limited time.