Contrary to what economists believe, there are no scarce resources. The public debt is a “social convention” as are government deficits. The physical world, however, is not infinite, and constitutes the sine qua non condition of mankind’s existence. There is one scarce resource: the earth. Preserving mankind from climate change is thus the supreme goal, to which all necessary resources must be sacrificed. Such are the essential arguments of Le Monde columnist Stéphane Foucart (see “La dette, une simple convention sociale, est perçue comme plus dangereuse que la détérioration irréversible des conditions de vie sur Terre” [“Debt, a Mere Social Convention, Is Seen as More Dangerous than the Irreversible Deterioration of the Conditions of Life on Earth”], Le Monde, June 3, 2023).
It does not help the author to invoke John Kenneth Galbraith, a now forgotten dirigiste economist from around the roaring 1960s.
Much is missing in the journalist’s reasoning. A condition for the survival of mankind, otherwise than in small numbers in caves or in hunter-gatherer tribes, is that individuals cooperate efficiently. Consent is an essential component of the economic concept of efficiency. In market exchange and other voluntary relations, consent is easy to reach: he who doesn’t want to participate in an exchange just has to decline. Political relations are different, and there is no justification for part of mankind to impose on the rest its predictions or fears. Environmental models just provide predictions—as shown by the old Malthusian fears and the 1970’s scares, which did not materialize. In a liberal perspective, any collective action must be founded on some sort of presumptive unanimity, and there can be unanimity only on general rules, not on ad hoc acts of regimentation.
Think of one implication of rejecting this liberal principle. The supreme goal to be imposed, by believers on non-believers, would be the salvation of immortal souls created in the image of God. Infinite bliss for eternity has an infinite value. Even the disbelievers will he happy, during all eternity, to have been forced to obey God.
Except for those who have infinite faith in the environmentalists’ predictions (the new religion), trade-offs still have to be made. For example, is it the current environmentalists through their taxes (and other forms of conscription), or their children by reimbursing the public debt, who will have to pay to save the earth?
Something else is also missing: understanding what “the finitude of the physical world” can actually mean. There is only so much land to grow food, yet 1.5% of the American labor force produce today much more food for much more people than did 84% of workers at the beginning of the 19th century. Physical resources are certainly finite: there is just so much land, steel, or aluminum right now to build apartment blocks or wind turbines. But one resource is potentially quasi-infinite: human ingenuity, inventiveness, and entrepreneurship. As Julian Simon argued, man is the ultimate resources, and “man” means the several individuals rather than bureaucratic structures and state coercion (see Simon’s The Ultimate Resource, 1981). This is why the earth barely fed 220 million of inhabitants, nearly all poor, in year zero of our era, and we are now 7.9 billion, of which a large proportion are well fed and comparatively rich.
On dangerous environmental scares, allow me to quote a recent Regulation article of mine:
Since the 1970s, environmentalists have been recycling Thomas Malthus’s arguments to claim that population stagnation or decline would be good because it would prevent or reverse environmental catastrophes. In his 1968 book The Population Bomb, Stanford biologist Paul Ehrlich warned that an exploding world population was hitting resource constraints and that, within a decade, food and water scarcity would result in a billion or more people starving to death. Governments, he opined, should work toward an optimal world population of 1.5 billion, a goal corresponding to 57 percent less than the actual population in 1968 and 81 percent less than today’s 7.9 billion. In 1965, the New Republic announced that the “world population has passed food supply,” and that world hunger would be “the single most important fact in the final third of the 20th Century.” The “freedom to breed is intolerable,” ecologist Garrett Hardin pontificated.
The “carrying capacity” of the planet is a fallacy or a hoax. In his book Capitalism, Alone (2019), Branko Milanovic gives many illustrations of the fallacy over the past two centuries. One example involved British economist Stanley Jevons (1835-1882), who reasoned that the price of paper would soon explode given the diminishing number of trees. He hoarded paper in such quantities that, 50 years after his death, his children had not used up all his stock. Milanovic adds (p. 200-201):
We are no smarter than Jevons. We, too, cannot imagine what might replace fuel oil or magnesium or iron ore. But we should be able to understand the process whereby substitutions come about and to reason by analogy.
Resources, including those diverted by political authorities through deficits (or inflation), are real resources, not “social conventions.” They are no more social conventions than finite physical or human resources that serve to satisfy virtually infinite human desires. Considered together, resources are limited, but substitutable and augmentable. Those that become relatively scarcer are economized as their prices increase, and other resources, including human ingenuity, are substituted for the scarcer ones.
If, and only if, institutions favorable to individual liberty and prosperity are maintained or improved, we can expect that (except perhaps for catastrophes such as asteroid hits or nuclear war) human ingenuity will continue, with limited resources, to produce more and more income and wealth, which means increased possibilities of consumption or leisure as each individual chooses; and, if need be, more resources to address, or adapt to, climate modifications.
All that does not necessarily mean that nothing should be (prudently) done now, but it does mean abandonning a mushy view of society and the economy.