Markets & Malthusianism

Reading these posts by Kristian Niemietz and this from Don Boudreaux raises a question: why is it that  many advocates of free markets are anti-Malthusian optimists, in that they believe that innovation in response to market forces will overcome the scarcity of raw materials?
It’s not because they are generally optimists. Right libertarians tend to be pessimistic not only about the potential of state intervention, but also about human motivations -  stressing the importance of money whilst sceptical about altruism - and even about the potential for new forms of property; few take seriously Hayek’s words that “cultural and moral evolution do require further steps if the institution of [dispersed property ownership] is in fact to be as beneficial as it can be.” In all these regards, right libertarians’ mix of pessimism and optimism is the mirror image of leftists.
Nor, I think, is it because the facts justify such optimism. To believe that technical progress will continue to win the race against diminishing returns is to do exactly what Malthus did - it is to extrapolate past experience into the future. The difference is that, in 1798, Malthus had pretty much all history on his side whereas today’s anti-Malthusians have only a couple of centuries.  They might be right. Or wrong. But no-one can be sure.
Still less, I think, is it because such optimism is necessary to defend free markets. It’s not. It’s perfectly reasonable to argue for the many and great merits of free markets whilst at the same time being sceptical that human ingenuity will be so powerful as to continue to overcome diminishing returns. Just as no incentives are strong enough to get me to run a four-minute mile, so perhaps no (feasible?) incentives can unleash sufficient innovative activity to painlessly remove western economies’ dependence on oil. 
In fact, this pro-market pessimism was pretty much David Ricardo’s position - and to misquote the apocryphal club owner, “if it’s good enough for David Ricardo, it’s good enough for thee.”*
I suspect, then, that we can add anti-Malthusianism to Bryan Caplan’s “libertarian penumbra” - a belief which many libertarians hold but which is, in fact logically separate from libertarianism.
* In the early 70s, David Bowie was playing a grim northern nite spot. He asked the owner about toilet facilities. He nodded to a corner. Mr Bowie, in full Ziggy Stardust dress, replied: “You don’t expect me to piss in the sink, do you?” The owner replied: “If it’s good enough for Shirley Bassey, lad, it’s good enough for thee.”

Comments

[cerebus]

Tyler Cowen has recently been arguing for the importance of reading Ricardo and Malthus in the context of his "great stagnation" thesis.

[Luis Enrique]

yes, a very basic free-market-esque position is that everybody who possess fossil fuel deposits is going to take them out of the ground and burn them, and well meaning attempts to stop that will be brushed aside. Never yet has a country discovered a massive oil or gas deposit on its territory and announced they're leaving it where it is. If nobody did a damn thing about climate change, burning all the fossil fuels on the planet is about as bad as things can get, carbon wise.

The best we can hope for from the market is to engineer not too painful transitions when finite resources run out. I'm quite optimistic about that, myself. Another example, I suppose, of where I disagree with the majority of my fellow lefties.

[Nigel]

measured optimism about technical progress is perfectly compatible with pessimism about state intervention

both fall out from a limited and realistic view of human limitations

on the one hand, we're surely not such clever inventors to have discovered every good idea under the sun - there's almost certainly plenty more we'll stumble across and to the good of us all

on the other hand, we're all too human, complex and imperfect to implement grand schemes with more than partial success

the key difference is that implementing a new technology doesn't always require coordination - the better mousetrap just outsells the old one, if someone invents cheap fusion power then we will just all stop using so much oil

agree that nothing in the above justifies optimism that any transition will be painless or any new idea will come soon enough

[chris]

Thanks ceberus - I should have exempted Tyler from the association of libertarians with high optimism. I was thinking merely that there was a positive correlation between the two, not that the correlation was 1.0.

[Adam Bell]

It's worth pointing out that this 'resourceship' doctrine is an interesting conflation of economic theory with practical implementation. It claims that rising prices will cause the market to produce some kind of solution to scarcity, by virtue of making previously uneconomic ventures economic. This is clearly the case for particular situations, as demonstrated by e.g. the exploitation of the tar sands. In the event that all deposits of a particular resource are economically inaccessible regardless of the price, the market will provide a substitute.

The problem lies in the further assumption that the market will always provide this solution or substitute in a timely enough manner to avoid increased costs for the rest of the economy, and that the market is the only system that can achieve this. This is transparently ideological and non-pragmatic. The cost of fossil fuel extraction is higher than the price provided by the market, as it fails to factor in the cost of events with long lead-times. The market will not provide solutions to problems with which it is incapable of pricing in without external intervention.

TLDR; it's possible to be a high optimist about the market while simultaneously being optimistic about the role of the State.

[Jonathan Monroe]

Between 1989 and 2008, it wasn't possible to argue with a straight face that socialism produced faster economic growth than markets.

This meant that favouring socialistic economic policies naturally went along with a belief that continuing economic growth was either impossible or undesirable.

Similarly, a lot of people (including some lefties) supported free(er) markets on consequentialist grounds - this naturally went with a belief that continuing economic growth driven by technological improvements was both possible and desirable.

When people believed that ratioanl planning led to superior economic growth (which was normal even among intelligent conservatives immediately after 1945) techno-optimism was associated with socialism - the "white heat of the technological revolution" and all that.

[Lord]

It is not necessary to hold these ideas with free trade, but it is necessary if you oppose redistribution.

[BenSix]

I think there are some little, niggling biases at play here. Libertarians aren't optimists per se but they are optimistic about the products of unbounded human ingenuity. And while free markets may be no worse than the state in distributing limited resources ecological disasters - real or imagined - tend to be greeted with the insistence that human acts should be prohibited.

[Anarcho]

I prefer genuine ("property is theft") libertarians. Here is Proudhon on Malthus:

http://anarchism.pageabode.com/pjproudhon/the-malthusians

And Kropotkin did not rate his ideas much either:

http://anarchism.pageabode.com/anarcho/mutual-aid-an-introduction-and-evaluation

As for the so-called right-"libertarians" (better called propertarians), well, they remind me of Proudhon's comments on Malthus from 1846:

"The error of Malthus, the radical vice of political economy, consists, in general terms, in affirming as a definitive state a transitory condition, — namely, the division of society into patricians and proletarians; and, particularly, in saying that in an organised, and consequently interdependent [solidaire], society, there may be some who possess, labour, and consume, while others have neither possession, nor labour, nor bread."

[Stephen]

You say that Malthus had all of history on his side, whereas the optimists have only a couple of centuries. But in fact he wasn't a clear thinker about that history, and optimism about natural resources can be supported by all of human history. The hunter-gatherer cavemen might have worried about running out of firewood to keep themselves safe, never imagining that the very earth they built their hearth on was hiding the fossil fuels we use today. Similarly we cannot today imagine which natural resources will become available to us in the future through improvements in knowledge and technology. In fact, our knowledge is the only true resource, converting useless rocks into metal, fossil and nuclear fuel, computer and memory chips, etc. and making better use of metals and oils through alloys, plastics, carbon fibre, and so on.

Optimism about resources is based on the idea that our knowledge about the universe is increasing, and that increase will lead to the discovery of new resources.

Naturally such increase in knowledge is most rapid in open and free societies where no government or institution has the power to prevent enquiry and the dissemination of ideas for ideological reasons. So linked to libertarianism.