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David Henderson on the Jevons Fallacy

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David Henderson, over at EconLog, fruitfully explores the Jevons Fallacy [2].

Everyone who worries that we will run out of this or that natural resource should read (in addition to David’s post) Julian Simon’s magnum opusThe Ultimate Resource 2 [3] (1996).  The fact is that, while the amount of matter in the universe is fixed, the quantities of resources in the universe (and even on earth) – being a function of human creativity combined with innovation-encouraging institutions – are not fixed.

Atoms are created and made into matter by the impersonal forces of nature (or, if you are a theist, by God).  In contrast, matter is made into resources only by human creativity, especially when this creativity is unleashed and directed by markets.  So more humans – and more markets – quite realistically (and, so far, historically) mean an increasing, not a decreasing, supply of resources.

The universe is really big.  It contains between 100 billion to 200 billion galaxies [4].  The size of the universe is inconceivably – truly inconceivably – large to our ape brains which are evolved to comprehend and deal only with the time and space and quantities that we typically encounter in daily life on our small planet.  But we know that there is a great deal of matter – raw material – in the universe outside of our tiny-speck-of-universe-dust planet.  So in principle, matter not only in the depths of the earth’s oceans or on earth’s moon is potentially transformable into resources; so, too, is matter on Mercury and Venus and Mars potentially so transformable.  So, too, is matter in each of the countless other solar systems in our galaxy.  So, too, is matter in each of the billions of other galaxies.

I’m not here saying that humanity is today on the verge of transforming Martian (or other extraterrestrial) matter into resources useful for satisfying human desires (although it would be foolish to predict that humans will never figure out how to economically gain access to matter that is not now on earth).  What I am saying is that constraints on human creativity, not the earth’s or the universe’s limited amounts of physical matter, are the constraints on resources [5]. As long as humans are reasonably free, and as long as the bourgeoisie continue to enjoy dignity [6], the likelihood is that supplies of resources – even misnamed “natural resources” – will continue to grow rather than shrink.  With freedom and bourgeois dignity, we will, as a practical matter, never experience increased economic hardship because we’ve run out of some resource.

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