Resource Conservation and the Market Mechanism

Abstract

‘Then you keep moving round I suppose,’ said Alice. ‘Exactly so,’ said the Hatter: ‘as the things get used up.’ ‘But when you come to the beginning again?’ Alice ventured to ask. ‘Suppose we change the subject,’ the March Hare interrupted, yawning. ‘I’m getting tired of this …’

The Treasury Paper on Economic Growth* is a reasoned and reasonable document designed perhaps to take some of the heat out of current debate on the subject of the world’s dwindling resources. It may, however, incline the non-specialist reader towards the acceptance of at least two arguments which are both false and more than potentially damaging. The first of these arguments claims that ordinary market forces will automatically take care of all necessary rationing of scarce raw material much more effectively than any government could. The second proclaims that, if problems do arise, we can always rely upon technological advance to solve them. The market forces argument goes something like this.