Introduction

Engel's law is the first of the explanatory models to be examined in these lectures. Needless to say, the Engel I have in mind is the statistician, Ernst, from Saxony, not the manufacturer-radical, Friedrich Engels of Barmen in the Ruhr; his law, derived from budget studies, states that as income grows, the consumption of food grows less than proportionately per capita. I propose to claim, not on the basis of budget studies, or of archival research, but rather of casual empiricism, that Engel's law is much more general, and intrinsically is related to the Gompertz or S-curve, or the law of material transformation. In its limited form, associated with food, it provides powerful insight into the course of economic history. Generalized, it requires economists and economic historians to be wary of relying upon what Rostow calls the “imperatives of geometric growth”. Nothing grows geometrically at a steady rate for very long. Growth begins slowly, picks up speed, rockets along, and then slows down. Discontinuity is endemic, if only in the second derivative. The case of food will be discussed first.

Engel's law and growth

Engel's law expressed diminishing returns in utility to consumption of food in the 132 Belgian families whose budgets had been gathered by LePlay. The law has the corollary that as productivity increases, resources must be shifted out of agriculture into manufacturing or services, in order to provide the appropriate balance in consumption. Poor countries maintain most of their labour, land and other factors in the production of food in agriculture.