Thoughts on economics and liberty

Natural resources are not finite

Julian Simon explains in The Ultimate Resource why natural resources are not finite. The material here is actually not the complete book, and I had to scan and fill up the gaps in this very important part of the book. I've also done a little bit of reconstruction, and the results are in this Word document that (time – and health permitting) I'll complete in the future.

HERE IS WHAT JULIAN SIMON WROTE:

Incredible as it may seem at first, the term “finite” is not only inappropriate but is downright misleading when applied to natural resources, from both the practical and philosophical points of view. As with many important arguments, the finiteness issue is “just semantic.” Yet the semantics of resource scarcity muddle public discussion and bring about wrongheaded policy decisions.

The ordinary synonyms of “finite”, the dictionary tells us, are “countable” or “limited” or “bounded”. This is the appropriate place to start our thinking on the subject, keeping in mind that the appropriateness of the term “finite” in a particular context depends on what interests us. Also please keep in mind that we are interested in material benefits and not abstract mathematical entities per se. (Mathematics has its own definition of “finite” which can be quite different from the common sort of definition we need here.)
 
The quantity of the services we obtain from copper that will ever be avail­able to us should not be considered finite because there is no method (even in principle) of making an appropriate count of it, given the problem of the economic definition of “copper,” the possibility of using copper more effi­ciently, the possibility of creating copper or its economic equivalent from other materials, the possibility of recycling copper, or even obtaining copper from sources beyond planet Earth, and thus the lack of boundaries to the sources from which “copper” might be drawn. That is, one cannot construct a working definition of the total services that we now obtain from copper and that can eventually be obtained by human beings.
 
This is easier to see now than ever before. After centuries of slow progress and the use of mostly the familiar materials such as stone, wood, and iron, science is attaining undreamed-of abilities to create new materials. This in­cludes syntheses of known compounds and also “materials that do not exist in nature…. Instead of trying to modify existing materials, scientists now are learning to assemble atoms and molecules systematically into new materials with precisely the properties they need for designs too demanding for off-the­ shelf resources.The first auto engine parts made of silicon and carbon ­water-pump seal rings—are now being installed in Volkswagens, and engines could soon be made of silicon carbide, cutting weight and emissions in addi­tion to replacing metals. Palladium instead of platinum can now be used in auto exhaust emission systems.Organic plastics can now be blended with glass to yield a material as strong as concrete but flexible and much lighter. And a feasible way has been found to make heat-resistant plastics using gal­lium chloride. Ceramics engineering is exploding with new knowledge, fi­nally putting an end to past generations’ worries about running out of metals.
 
Plastics are now made only from fossil fuels or oils from plants grown in fields, but researchers have recently found ways to convert such agricultural products as potatoes and corn into direct sources of plastics by inserting special plastic-producing genes into them.
 
In light of these extraordinary developments—which continue the line of discoveries since humankind thousands of years ago found a way to convert iron into a resource by learning how to work with it—concern about running out of materials such as copper seems ever less sensible.
 
Consider this remark about potential oil and gas from an energy forecaster. “It’s like trying to guess the number of beans in jar without knowing how big the jar is.” So far so good. But then he adds, “God is the only one who knows—and even He may not be sure.” Of course he is speaking lightly but the notion that some mind could know the “actual” size of the jar is misleading, because it implies that there is a fixed quantity of standard-sized beans. The quantity of a natural resource that might be available to us—and even more important the quantity of the services that can eventually be rendered to us by that natural resource—can never be known even in principle, just as the num­ber of points in a one-inch line can never be counted even in principle. Even if the “jar” were fixed in size, it might yield ever more “beans.” Hence, re­sources are not finite in any meaningful sense.
 
The entire notion of the nonfiniteness of resources such as copper, energy, and living space may so boggle the mind of some readers as to turn them away from the rest of the book. If this is so for you, please notice that one can reach the same practical conclusions from current data and economic theory, with­out making the stronger argument about infinite resources, as long as one accepts that it is silly to worry now about any implications of the proposition that energy will run out in (say) seven billion years. If the notion of finitude is quite irrelevant for you, as it is for me, please skip the rest of the discussion on the subject. But for some other, I cannot leave out discussion of the issue, because it is the basis of their thinking.
 
Well-wishers have advised me to “admit” that resources are limited to the capacities of the planet, thinking that this will keep me from “losing credibil­ity.” And I seem pigheaded to them when I do not follow their advice. But this is why I continue to argue that these quantities are not finite: The rhetorical difficulty is that as soon as one would “admit” that there are only (say) seven billion years of energy, some doomsters begin to work backward to argue that the sun’s measurable size and rate of energy output means that the supply of energy is finite for next year. But that’s physical estimate—it’s not an eco­nomic definition of “energy,” any more than copper atoms in the Earth’s crust is a useful economic definition of “copper.”
 
Objections to the notion of nonfiniteness often come from a mathematical background. Yet there is ample justification even within mathematics itself for taking the point of view that I do, and mathematical statisticians such as Barrow and Tipler affirm this. As Tipler puts it, “The laws of physics do not forbid perpetual economic growth.”“
 
I continue to stand on the ground of nonfiniteness because I have found that leaving that ground leads to more bad arguments than standing on it, even though it seems so strange to many and I doubt that many people’s judgment will be affected by what I write on this particular issue. Hence there is little temptation to trim my sails to this wind, and do that which is offensive to me—to “admit” something that I do not believe is so.
 
But what if I am wrong? Certainly it is possible that the cosmos has a count­able amount of mass/energy. How should we continue with that line of thought?
 
We have seen that even if energy is the relevant constraint for fabricating new kinds of “raw” materials, one would need to take into account, at the very least, all the mass/energy in the solar system. This amount is so huge relative to our use of energy, even by many multiples of the present population and many multiples of our present rates of individual use, that the end of the solar system in seven billion years or whenever would hardly be affected by our energy use now This should be reason enough to ignore the issue of finitude.
Even if human population and the rate of using energy and materials should increase vastly so as to controvert the previous paragraph, there is the possibility that humans will come to exploit the resources of other parts of the cosmos, which is so huge relative to the solar system as to render calculations irrelevant under any conceivable rates of growth. If so, further discussion would see frivolous.
 
Physicist Freeman Dyson, in his book, Infinite in All Directions, takes this mode of thought much further and theorizes that even if the world were to get progressively colder forever, it would be possible for human beings to adapt in such fashion as to stay ahead of the cooling; consequently, he writes, “Boiled down to one sentence, my message is the unboundedness of life and the consequent unboundedness of human destiny.” And physicist Frank Tipler argues, on the basis of the established body of contemporary knowledge of physics, that the ultimate constraint is not energy but rather information. Because we can increase the stock of information without limit, there is no need to consider our existence finite.[1] Of course these arguments are exceed­ingly abstract, and far from contemporary concerns. I cite these ideas not as proof that the future of humanity is not finite, but rather as showing that the doomsayers’ arguments from physics that human existence is not finite are not consistent with a solid body of reasoning by physicists.
 
To restate: A satisfactory operational definition—which is an estimate—of the quantity of a natural resource, or of the services we now get from it, is the only sort of estimate that is of any use in policy decision. The estimate must tell us about the quantities of a resource (or of a particular service) that we can expect to receive in any particular year to come, at each particular price, conditional on other events that we might reasonably expect to know (such as use of the resource in prior years). And there is no reason to believe that at any given moment in the future the available quantity of any natural resource or service at present prices will be much smaller than it is now, let alone non­existent. Only one-of-a-kind resources such as an Arthur Rubinstein concert or a Michael Jordan basketball game, for which there are no close replace­ments, will disappear in the future and hence are finite in quantity
 
The term “finite” is not meaningful when applied to resources because we cannot say with any practical surety where the bounds of a relevant resource system lie, or even if there are any bounds. The bounds for Crusoes are the shores of their island, and so it was for early humans. But then Crusoes find other islands. Humankind traveled farther and farther in search of resources—finally to the bounds of continents, and then to other continents. When Amer­ica was opened up, the world, which for Europeans had been bounded by Europe and perhaps by Asia too, was suddenly expanded. Each epoch has seen a shift in the bounds of the relevant resource system. Each time, the old ideas about “limits,” and the calculations of “finite resources” within those bounds, were thereby falsified. Now we have begun to explore the sea, which contains amounts of metallic and perhaps energy resources that dwarf any deposits we know about on land. And we have begun to explore the moon. Why shouldn’t the boundaries of the system from which we derive resources continue to expand in such directions, just as they have expanded in the past? This is one more reason not to regard resources as “finite” in principle.
 
Why do we become hypnotized by the word “finite”? That is an interesting question in psychology, education, and philosophy One likely reason is that the word “finite” seems to have a precise and unambiguous meaning in any context, even though it does not. Second, we learn the word in the context of simple mathematics, where all propositions are tautologous definitions and hence can be shown logically to be true or false. But scientific subjects are empirical rather than definitional, as twentieth-century philosophers have been at great pains to emphasize. Mathematics is not a science in the ordinary sense because it does not deal with facts other than the stuff of mathematics itself, and hence such terms as “finite” do not have the same meaning else­where that they do in mathematics.
 
Third, much of our daily life about which we need to make decisions is countable and finite—our salaries, the amount of gas in a full tank, the width of the backyard, the number of greeting cards you sent out last year, or those you will send out next year. Since these quantities are finite, why shouldn’t the world’s total possible salary in the future, or the gasoline in the possible tanks in the future, or the number of cards you ought to send out, also be finite? Though the analogy is appealing, it is not sound. And it is in making this incorrect extension that we go astray in using the term “finite.”
 
I think we can stop here. I’m sorry to have taken up your time with this unless you were seriously worried beforehand about what will happen seven billion years from now

[1] The amount of knowledge would not be finite in any meaningful sense, because the stock of knowledge can grow at a faster rate than the stock of energy can decline, which would eventuate in a cushion much greater than necessary to accommodate the possible growth in human popula­tion. (I do not give the specifics of such a calculation because doing so would be a waste of time.)
 
In order to show that we ought to take account of finitude, one would first have to show that the previous issue—the eventual domination of knowledge rather than energy—is wrong. Then one would have to show that the probabilities of a nonfinite universe and the future exploitation of the cosmos outside the solar system are very low, then show some reasonable basis for saying that events beyond (say) a thousand or million or more years, all the way to seven billion years, would matter for our economic choices now, then show that the likelihood is low that our present understanding of the mass/energy relationship is wrong, then show that there is little likelihood that it is possible to get our needs serviced with ever-smaller amounts of energy. Without some reasonable argument about every link in that chain, discussion of the finitude of energy that will be available to humans seems misplaced.
 
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