Infinity of resources vs speed of action or Malthus against Ricardo

This is how this story goes: once upon a time, between the eighteenth and the nineteenth century, there were two gentlemen. Their names were Thomas Malthus and David Ricardo. Both became economists but they saw the world differently. Malthus believed that resources are finite while Ricardo…thought the opposite. From the point of view of our life and its quality as well the future existence of the civilization, organizations and individuals, the issue of the infinity of resources is of key importance. 1/2020(30)

Polska wersja artykułu: http://szafranskimaciej.com/nieskonczonosc-zasobow-a-szybkosc-dzialan-czyli-malthus-kontra-ricardo/

Will resources end?

Malthus is the creator of the theory of finite resources also known as the theory of overpopulation or Malthusianism. He described its presumptions in An Essay on Population (Malthus 2007). According to this theory, our population and thus the demand for food grows faster than the means of subsistence. Therefore, it is unavoidable that in the end resources, especially food, will run out in the amount expected by the population. Malthus’ theses were based on two assumptions:

  • “food is necessary for the existence of humanity;
  • mutual passions between sexes are unavoidable and necessary” (Landreth, Colander 2005, p. 122).

Malthus’ theory…

has not become a thing of the past

It has been developed since the 20th century as Neo-Malthusianism.  P.R. Ehrlich’s The Population Bomb is one of the more popular books written in that area. In it, the author points out to a too-fast growth in population, limitation of resources, in particular food, and the risk of a global catastrophe connected with depleted resources.  He believes that the antidote to a demographic disaster and starvation can be provided by… pay close attention: birth control, sterilization and limitation of natural population growth by fiscal measures.

Analyses concerning the finiteness of resources are also carried out in the political dimension.  In 1972, the Club of Rome developed a report analyzing the possibility of depletion of resources due to the growth in population. The report pointed out factors such as population, production of food, industrial production, pollution, use of unrenewable natural resources (Meadows, Meadows, Randers, Behrens 1972). The report was verified many times and 2012 saw the publication of forecasts regarding another 40 years of civilizational development, i.e. until 2052 (Randers 2012). It is worth reading them.

Perhaps resources will not run out?

The theory of infinite resources stands in opposition to the theory of finite resources.  Its originator Ricardo was in a continuous dispute with Malthus. Ricardo believed that (natural) resources are infinite and unlimited in terms of amount (and at the same time they are inhomogeneous, i.e. better and worse) with only the knowledge about their acquisition and use being limited (Rechul 2004).

He pointed out that technological progress is a condition for access to new resources and the technological progress rate needs to be higher than the decreasing value of growth in the work product and capital used in agriculture and industry (Landreth, Colander 2005). In plain albeit short words, it means that knowledge about how to acquire resources needs to grow faster than the resources are being used.

The economy should become more and more resource-efficient, new resources need to be discovered within it and the phenomenon of substitutability, i.e. replacing some resources with other needs to be capitalized on.

Supporters of the theory of infinite resources included J.L. Simon who criticized the theory of finite resources in his 1981 book The ultimate resource, republished in 1996 (Simon 1996). With that respect, he remained in an intellectual dispute with the aforementioned P.R. Ehrlich. According to J.L. Simon “technological progress was usually preceded by population growth; […] it is dependent on innovation and the growth in the population […] improves […] the chance for progressive innovation” (Landreth, Colander 2005, p. 124). In his book, Simon pointed to factors which protect civilization against resource depletion.  He attributed a special role to economic growth factors such as science (Simon 1996, p. 380-381) and education (Simon 1996, p. 391-398). He compared the concept of dependency between the population growth and access to food authored by Berett, Boserup, Clark-Schultz and Simon with Malthus and Ehrlich’s concept, pointing out that according to the first of them, although the growth in the amount of food changes over time, the speed of that growth in the long term will exceed the speed of the growth in population (Simon 1996, p. 377). We can partially starve to death periodically but in general, as humanity, we are going to survive.

Finiteness of resources vs our needs

The question about the finiteness of resources is philosophical.  First, one needs to ask the question whether matter is finite or, even wider, whether the Universe is finite. We do not know this and unfortunately, we will never find it out. Physicists are racking their brains about it and many of them probably had mental breakdowns due to that.

The economist discussion about the finiteness of resources is justified only if we assume that the Universe is infinite because if it is finite, resources are inevitably also finite. That would mean that the range of our possibilities is also finite and that human development has it natural, luckily, distant end.

For the purposes of further deliberations, I need to assume that the Universe is infinite. Now the question about the finiteness of resources makes sense.

In one of my previous articles, I referred to resources as part of the reality to which we attribute value. An item, an activity, an idea has value when we notice that we can use it for something. Speaking about resources, we take into account only that which we perceive as possibly useful to us. If the Universe is infinite (by definition), potential resources are also infinite. Potentially, everything can be of some use to us, therefore potentially the entire Universe is a resource and since it is infinite, potential resources are also infinite.   Actual resources are finite for two reasons:

  1. the needs of humanity are finite; 15 years ago nobody felt the need to have a tablet because there were none, today few people feel the need to have a typewriter because we have computers; needs come and go; on top of that due to the limitation of our lives and most importantly our limited population, theoretically it is possible to classify all the needs of all the people at a given moment and monitor them in time; since they could be counted, it means that they are finite; for the time being, we do not have the tools for that and nobody feels the need for such monitoring; if the set of types of our needs is finite, it means that to satisfy all of them we need only part of the infinite Universe, i.e. part of potential resources;
  2. in a given period, some needs might be felt by such a big number of people with such intensity that a specific resource becomes scarce in that particular period; therefore resources can be finite in a particular time bracket but not in general; to put it in more precise words, they are infinite but limited.

How does the speed of action fit into that?

Assuming that the Universe is infinite, the human being struggles not so much with the finiteness of resources but with their limitation. As Ricardo pointed out, it is not finiteness that is a problem, it is the lack of the ability to reach for those parts of the Universe which are of value to us.  Knowledge is needed for that purpose. The bigger the knowledge the more effective and speedier the action and the faster the reaching for the resources – solution to point 2 above.

Obviously, thanks to bigger knowledge we perceive more possibilities and things that were not valuable to us becomes of value. We start treating more things as resources. Let us imagine that we have two needs: we want to eat and drink. We look for parts of the Universe which will allow us to satisfy our needs and we find apples, pears and water. We have two needs satisfied by three resources. After we have eaten, we want to have fun. We find stones which we can throw, grass which we can braid and a feather on the ground on which we can blow. Now, we have three needs and six resources. So we were throwing those stones and suddenly we hit a rabbit and not knowing what to do with it, we ate it. It turned out better than the apples and the pears so we stopped eating fruit and the following generation forgot that they can be eaten. Therefore, we have three needs (to eat, drink and have fun) and five resources (water, rabbits, stones, grass and feathers). And when we start feeling the need to be superior and we want to have more grass braids than others, then we will start competing with the others as to who has more grass braids and then grass might run out which does not mean that there is plenty of it on another planet.  It can be cut but first, we need to know how to get to that planet. Those who get there first will be able to cut the grass. But why would we have so many grass braids since all of them will rot anyway?

Sources:

Ehrlich P.R. , The Population Bomb, Buccaneer Books Cutchougue, New York 1968, 1971.

Landreth H., Colander D.C. (2005), Historia myśli ekonomicznej, Wyd. Naukowe PWN, Warszawa.

Malthus T.R. (2007), Prawo ludności, Jirafa Roja, Warszawa.

Meadows D.H., Meadows D.L., Randers J., Behrens III W.W. (1972), Limits to Growth: a Report for the Club of Rome’s Project on the Predicament of Mankind, Universe Books, New American Library, New York.

Randers J. (2012), 2052: A Global Forecast for the Next Forty Years, Chelsea Green Publishing, Chelsea.

Rechul H. (2004), Zasoby naturalne – jak bliska jest bariera dostępności?, „Wokół Energetyki”, nr 2, wydawnictwo elektroniczne.

Simon J.L. (1996), The Ultimate Resource 2, Princeton University Press, Princeton–New Jersey.

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