Circular Flow and Social Class

Malthus, like most economists from Smith to Marx, grouped economic actors by their factor of production. The workers, unskilled and oversupplied, receive relatively low pay that does not permit of parsimony. Even their money wages must be informally uprated with grain prices so as to keep their real wage high enough for them to be adequately nourished and able to work. Economic growth would improve the standard of life of the working class but in the short-run labour will remain a spending interest. The middle class is, however, a saving class with a high propensity to bequeath uninvested capital to their children who in that way will inherit their achieved status. Sharing some insights with Lauderdale and a small number of heterodox thinkers, Malthus believed that thrift could go too far. The landowners might be able to fill the gap, both because they are not abstemious and because they tend to spend on services which do not form part of the national wealth.