Donald Boudreaux wrote an article honoring Julian Simon five years ago and it’s just as relevant today as it was then. In it he notes that Simon was persuaded that there are no natural resources, save one: the human mind.
Simon’s most important contribution was to crystallize and explain an insight that even the best economists before him only glimpsed — namely, that human beings in free societies are “the ultimate resource.” Nothing — not oil, not land, not gold, not microchips, nothing — is as valuable to the material well-being of people as is human creativity and effort.
In this day of iPhones and fracking, the internet and hybrid automobiles, I think people take an awful lot of it for granted. We have enjoyed the benefits of freedom without understanding really how it works. We just expect it to continue.
What about petroleum?
What makes it a “resource”? It’s certainly not a resource naturally. If it were, American Indians would long ago have put it to good use. But they didn’t. I suspect that for Pennsylvania’s native population in, say, the year 1300, the dark, thick, smelly stuff that bubbled up in watering holes was regarded as a nuisance.
Petroleum didn’t become a resource until human beings creatively figured out how to use it to satisfy some human desires and other human beings figured out how to extract it cost-effectively from the ground.
For at least 80 percent of Homo sapiens’ time on earth, land was merely something to tread and hunt upon. Land had no special value as a resource until about 10,000 years ago when someone figured out how to cultivate soil and to plant, tend and harvest crops. Only then did land achieve the kind of status and value that we associate with a resource.
Boudreaux said that Simon was ahead of his time, providing us with insights that we hadn’t enjoyed before, like freedom: “He found that growing human populations in free societies produce net increases in resource supplies. Whether coming in the form of immigration or through reductions in mortality, growing populations in free countries [are] hugely beneficial.”
What neither Boudreaux nor Simon answered in this short article is “why?” What happened, starting around 1800, that allowed the economy to begin to grow at 2 percent per year compounded, whereas before such growth was stagnant? Gary North has asked that question often. North is giving a presentation at Cato in April in his attempt to try to answer that question. I wish I could be there to hear it.
Whatever it is, whatever North comes up with, it will confirm Simon’s view: there are no natural resources except the human mind, unleashed.