The Critical Rationalist Vol. 01 No. 02 ISSN: 1393-3809 26-Nov-1996
(1) How is it possible for a resource to be both scarce and infinite?
Most philosophical treatments begin their discussions of global problems by taking the finite-resource view for granted. I contend that economic raw material resources are in an important sense infinite in the long-run. With the invention of the rocket and nuclear power, we may have already created the theoretical knowledge that will make economic resources infinitely expandable. Like all theoretical knowledge, these inventions have unfathomable economic potential and instead of showing diminishing returns (like a piece of land), show increasing returns. Just think how more more useful a transistor is now than it was 50 years ago when first invented. How much more useful are the natural numbers now than they were when first invented simply for counting? But this marvelous quality of abstract knowledge needs a philosophical explanation. A combination of Julian Simon's analysis of the concept of a natural resource (Simon 1981) plus Popper's Worlds 1, 2 and 3 (Popper 1993), helps us to understand the nature of a resource and, as a bonus, helps to explain how natural resources might be both scarce and infinitely expandable.
(2) I argue, along with Simon, that the conventional notion of a natural resource is profoundly misleading. It implies that resources are simply portions of matter/energy just waiting to be discovered. On the contrary, even "natural" resources are created by an interaction between the human mind, theories and the physical world. In a sense, all resources are created, artificial. Seen from this angle, the issue of the finite/infinite extent of resources solicits a very different sort of answer. But we may consider that even Simon's notion of a resource needs to be extended to more accurately describe the multifaceted nature of a resource, taking into account its physical, psychological and logical (or abstract) character.
(3) The growth of knowledge or World 3 in general impacts on economic growth and the scarcity of resources through the affect it has on the rate of invention. F. Machlup's suggestion (Machlup 1962) that the opportunity for new inventions increases geometrically with the number of inventions at hand is criticised for its conservative position. Frank Tipler's fascinating argument for indefinite economic growth (Tipler 1994), is reinforced by my argument by making a distinction between information in the engineer's sense and the infinite potential "information" in our scientific knowledge.
(4) My thesis is that at any given time, raw material resources are scarce in that humans have more uses for them than they are able to satisfy (for the most in-depth criticism of the possibility of eliminating scarcity in this traditional economic sense, see Steele 1992). However, the flow of services from raw material resources is in principle infinitely expandable over time without diminishing returns. This is made possible by the infinite potential of our theoretical understanding of a resource. A piece of copper may be used over and over again indefinitely without diminishing its quantity. But this does not capture its full potential as a useful item. To capture this you need to examine the theories we use in our use of the copper.
(5) Popper divides all that exists into three domains: World 1 (the world of physics, chemistry and biology), World 2 (the world of psychological states, dispositions and processes), and World 3 (the sum total of the objective abstract products of the human mind). The purpose of the theory of World 3 was to account for the objectivity of scientific criticism, creativity and the relationship between the mind and the body. Both Popper and Eccles see World 3 as containing such things as theories, numbers, and even tools and institutions considered as abstractions (Popper & Eccles 1977). They are our products, but once created they have autonomous existence, properties and relations that go beyond our expectations and intentions, indeed beyond any psychological states. The natural numbers were created by us but we then discovered, as an unforeseeable and irrevocable consequence, that this sequence has odd and even numbers. Through a sort of plastic control, world 3 is able to affect and constrain our thought and, only through our thought, influence World 1. The invention of numbers, for example, enabled us to develop counting and calculating methods such as calendars, balances and computers that in turn greatly changed the physical world.
(6) I argue that inventions and, less obviously, natural resources have three ontological aspects: a World 1 aspect, a World 2 aspect and a World 3 aspect.
Previously useless physical substances become resources, created by our valuations, intentions and imagination with respect to their physical properties. Copper became a new economic resource when people placed various portions of it within new means-end schemes. There was a time when humans had no use for copper, but now it can be used in copper wiring in TV sets etc. At this level of analysis, a resource is a World 2 object.
(7) That a natural resource such as copper is a World 1 object might seem obvious. But every resource is not simply a portion of matter or energy, but becomes a resource on account of being interpreted (correctly) as part of a theoretical means-end relationship. (This means-end scheme may be a rather complex cluster of technical and social hypotheses). For it is the services we can obtain from a natural resource that we are interested in when we speak of a natural resource.
(8) A similar point has been made about other "objects" of social science: money, for example, is not money until it is interpreted and valued as money (cf. Searle 1984). Such thinking can, I think, be traced back to the marginalist revolution in economics, inaugurated by Menger (1871), Walrus (1874) and Jevons (1871). This placed a general theoretical emphasis on the importance of subjective factors in social science. To reinforce the point made by Searle and others, it might be said that these interpretive theories may only become conscious when something goes wrong and they are refuted. For example, during a hyperinflation money ceases to be money because people no longer see it as money, i.e., each person no longer entertains the theory that most other people think that it is valuable to most other people. My point is that just as there is no chemical or physical analysis alone that will determine what makes money money, so there is no chemical or physical analysis alone that will determine what makes a resource a resource.
(9) On the other hand, I want to say that because of the, in many ways laudable, emphasis on subjective factors instigated by the marginalist school of economics, there may be a tendency to overlook the part played by the objective content of our theories and other abstract products of our minds. This is easily done without the distinction between Worlds 1, 2 and 3. Theories, considered as objective knowledge, have a special economic status that makes them quite different to, say, a piece of land. Economic knowledge may be divided into the unspecifiable personal knowledge of circumstances and skills (such as the ability to ride a bicycle or use a tool or machine) stressed by Hayek (1945) and Polanyi (1958) and the specifiable objective knowledge (such as scientific theories) stressed by Popper (1972). Popper argues that objective knowledge, the kind we find represented in books, tapes, computer memory, has an autonomous existence from the psychological or physical states that produced it and in which it may be represented. I would like to suggest that focusing on the World 2 psychological aspects of economic knowledge obscures the interesting ramifications that flow from the infinite content of the theories that interpret sections of World 1 to make resources. Therefore, some economic knowledge has a special metaphysical status. The special autonomous properties of this domain of economic knowledge has interesting implications and ramifications for the nature of scarcity and the power of the inventions we use to reduce scarcity.
The Critical Rationalist Vol. 01 No. 02 ISSN: 1393-3809 26-Nov-1996
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TCR Issue Timestamp: Tue Nov 26 17:14:18 GMT 1996