“If resources are not fixed but created, then the nature of the scarcity problem changes dramatically. For the technological means involved in the use of resources determines their creation and therefore the extent of their scarcity. The nature of the scarcity is not outside the process (that is natural), but a condition of it.”
– Tom DeGregori (1987). “Resources Are Not; They Become: An Institutional Theory.” Journal of Economic Issues, p. 1258.
The confounding of physics with economics has plagued a real-world understanding of mineral resource development. The phenomenon of entropy and the laws of thermodynamics rule in their domain. But there is no economic law analogous to the physical conservation of matter. There is no law of conservation of value; value is continually, routinely created by the market process.…
“Running out of resources” has been a common refrain among the intellectual class and policymakers since the beginning of the oil industry. L. C. Gray (1913) and Harold Hotelling (1931) cemented the fixity-depletion view of minerals that swept the economics profession; so did the presidency of Jimmy Carter, in the (regulatory-induced) troubled 1970s.
Remember the lament of James Schlesinger, the first energy secretary for Carter’s new Department of Energy: “We have a classic Malthusian case of exponential growth against a finite source.” And the confident conclusion of Amory Lovins:
All oil and gas resources should be carefully husbanded—i.e. extracted as late and as slowly as possible. Our descendents will be grateful. We, too, shall need a long bridge to the future.
The free-market energy blog MasterResource turns three years old today. On December 26, 2008, the blog started on the strength of several noted free market scholars buying into a ‘movement’ blog instead of an institution-specific one. A thank you at this reflective time goes to Ken Green (AEI), Marlo Lewis (CEI), and Jerry Taylor (Cato), in particular.
MasterResource views stand at 1.1 million. While not a megablog, ours is a high-quality contribution to the current energy debate–and a resource for the historical record (our extensive index categories number 380).
We have published approximately 914 posts from approximately 115 authors. Some are widely published; others are talented amateurs who have chosen to do what the ‘experts’ choose not to do: uncover the problems of politically correct energies. Comments from our loyal, sophisticated readership add substance to many of the in-depth posts.…