Thursday, February 08, 2007

Malthus meets the Greens

Greens' co-leader Russel Norman (left) has been reading Thomas Malthus (right). Who exactly is Thomas Mathus, I hear you ask?
Economist Thomas Robert Malthus, in his Principles of Population, forecast that with unchecked population growth, the demand for food would inevitably become greater than the food supply. “Population increases in a geometric ratio, while the means of subsistence increases in an arithmetic ratio” were his words. War, pestilence, vice and crime were the inevitable checks on population growth. It was a grim prediction of catastrophe for mankind.
Thomas Malthus was writing in 1798. But here's Russel writing yesterday afternoon on the Greens' blog, channeling Malthus and pointing out what he says are
obvious problems with exponential growth in a finite world and the problems that we humans seem to have understanding what it means.
Russel's problem is the same 'problem' identified by Malthus, ie., "“Population increases in a geometric ratio, while the means of subsistence increases in an arithmetic ratio,” or in Russel's words:
[If] we reached LabNats' nirvana of 4% GDP growth then the economy would be 16 times larger at the end of just one human lifetime, which just could have very significant resource implications!
Wow. What a deep thinker is Russel. Thomas Malthus can perhaps be forgiven for being so egregiously wrong -- he was after all writing before the agricultural revolution and the industrial revolution that followed, which together proved conclusively that production is not a zero-sum game, and that, as everyone from Julian Simon to Bjorn Lomborg to George Reisman has pointed out, the ultimate resource is not what we dig out of the ground -- the ultimate resource is the human mind. But Russel has no such excuse. He's watched the progress from Stone Age to Silicon Age, with all the production along the way, and he's still at a loss to explain how we're all still here.

As they say, the reason for the end of the Stone Age was not because we ran out of stones, it was because someone produced better things to use than stones. It was the human mind applied to production that produced those better things; it isthe human mind applied to production that is the reason we're all still here.

The human mind applied to production has refuted Thomas Malthus, Stephen Schneider, Paul Erlich, The Club of Rome, Jared Diamond, the Four Horsemen of all the various enviro-Apocalypses all predicting disaster ... and unless Russel Norman and Al Bore and Nicholas Stern and their colleagues succeed in shackling producers as they're trying to, the human mind applied to production will have no trouble refuting Russel Norman.

Let me explain why.

The human mind when it's left free to produce is an astonishing thing. Understanding why Uncle Tom Cobley and all keep predicting catastrophe for mankind, and why they keep getting it so wrong, is because they lack the understanding of the capacity of the human mind to produce when left free and unfettered, and because they lack the understanding of how the dynamic system of capitalism works to make scarcity a thing of the past. As I've said before:
What they got wrong of course was not just their arithmetic, but their whole understanding of the role of price signals and entrepreneurialism -- indeed of the capitalist economy as a dynamic rather than a static engine of production. The capitalist engine of creation is a supple beast when left free and unshackled, allowing human minds to read price signals and opportunities, and to adapt their own resources to suit. The results are astonishing.

They are. True. Our world and everything that it provides is limited -- though as George Reisman points out, hardly as limited as you might think -- but the 'tragedy of the commons' argument strongly advocates private property in order to internalize the costs of using resources, and strongly advocates the system of capitalism to produce ever-new resources.

How do we "produce new resources"? Because, as Reisman explains, it is the human mind applied to resources that transforms what nature provides into "goods" for human use.
The goods-character of natural resources... is created by man, when he discovers the properties they possess that render them capable of satisfying human needs and when he gains command over them sufficient to direct them to the satisfaction of human needs...

Nature’s contribution to natural resources is much less than what is usually assumed. What nature has provided... is the material stuff and the physical properties of the deposits in these mines and wells, but it has not provided the goods-character of any of them. Indeed, there was a time when none of them were goods.
Indeed, there was a time when these things were just trees, rocks and mud puddles. Reisman explains how these things provided by nature acquire what he calls "goods-character":

If a thing is to become a good, or in other words, if it is to acquire goods-character, all four of the following prerequisites must be simultaneously present:

    1. A human need.
    2. Such properties as render the thing capable of being brought into a causal connection with the satisfaction of this need.
    3. Human knowledge of this causal connection.
    4. Command of the thing sufficient to direct it to the satisfaction of the need (p. 52).

The last two of these prerequisites, it must be stressed, are man made. Human knowledge of the causal connection between external material things and the satisfaction of human needs must be discovered by man. And command over external material things sufficient to direct them to the satisfaction of human needs must be established by man. For the most part, it is established by means of a process of capital accumulation and a rising productivity of labor.

All this has immediate bearing on the subject of natural resources. It implies that the resources provided by nature, such as iron, aluminum, coal, petroleum and so on, are by no means automatically goods. Their goods-character must be created by man, by discovering knowledge of their respective properties that enable them to satisfy human needs and then by establishing command over them sufficient to direct them to the satisfaction of human needs.

For example, iron, which has been present in the earth since the formation of the planet and throughout the entire presence of man on earth, did not become a good until well after the Stone Age had ended. Petroleum, which has been present in the ground for millions of years, did not become a good until the middle of the nineteenth century, when uses for it were discovered. Aluminum, radium, and uranium also became goods only within the last century or century and a half.

Summarises Benjamin Marks in 'The Malthusian Trap,' it's possible to take seriously Malthus's warning, but as Reisman and Ludwig von Mises point out, "it comes true only under socialism" -- only under a system in which private property has not been introduced and the tragedy of the commons is still in effect, and under a system of (non)production where the human mind is not able to read price signals and opportunities, and to adapt their own resources to suit.
Only can a society based on private ownership of the means of production harmonize the number of births with the limitations of the means of subsistence. The Malthusian problem is one that economics solves. No wonder the Malthusians want to get rid of economics. Their rule only applies in noneconomic "societies." And, even then, only in its abridged Misesian form. The environmental movement of today is aiming toward living in a non-economic "society" by showing why it would be unpleasant to live in. It is staggering how a movement like this could amass such a following.
LINKS: Exponential growth - Russel Norman, Frog Blog
Selling disaster: The four horsemen of the modern apocalypse - Not PC (Nov, 2006)
Environmentalism refuted - George Reisman, Mises Institute
The Malthusian trap - Benjamin Marks, Mises Institute
The doomslayer - Wired
Why are we so afraid of the future? - Reader's Digest

RELATED: Politics-Greens, Environment, Conservation, Economics, Politics, Tragedy of the Commons

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