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Environmental Despair Springs Eternal, Part 4: The Invisible Hand’s Green Thumb

In 1968, urban theorist Jane Jacobs (1916-2006) reminded readers of her book The Economy of Cities that “[w]ild animals are strictly limited in their…



This article was originally published by EconLog

In 1968, urban theorist Jane Jacobs (1916-2006) reminded readers of her book The Economy of Cities that “[w]ild animals are strictly limited in their numbers by natural resources, including other animals on which they feed. But this is because any given species of animal, except man, uses directly only a few resources and uses them indefinitely.” Fortunately, once humans “stopped living like the other animals, on what nature provided us ready-made, we began riding a tiger we dare not dismount, but we also began opening up new resources – unlimited resources except as they may be limited by economic stagnation.”

Jacobs rejected any analogy between “human population growth [and] animal population growth, based on the relation of population to current resources.” She even stated that the “idea that, under sensible economic planning, population growth must be limited because natural resources are limited is profoundly reactionary” for it was not “planning for economic development at all,” but rather “planning for stagnation.”

Fortunately for our species, economic and environmental indicators unmistakably convey that, at least in the context of market economies, Jacobs and other past Promethean writers proved much more right than their opponents. This is not to say that environmental challenges are non-existent, but that their root causes are more ideological and institutional than to be found in some immutable natural laws that constrain human actions.

Although these facts are insufficiently appreciated, the eco-optimistic narrative is ultimately based on the observation that humans have developed at two unique abilities. The first is the trading of physical goods. As the economist Adam Smith (172?-1790) wrote over two centuries ago, the “propensity to truck, barter, and exchange one thing for another” is “common to all men, and to be found in no other race of animals.” Because of this ability, individuals increasingly came to specialize in what they did best and traded over ever longer distance with others, in the process producing far more, both in terms of quantity and quality, than if each individual or family had remained self-sufficient.

Humans have also developed, or perhaps more accurately taken to a new level, the ability to address problems by continuously (re)combining existing things in new ways. More people who specialize in ever narrower pursuits can therefore create ever more advances. A young Friedrich Engels (1820-1895) thus stood Malthus on his head in 1844 when he wrote that the “productive power at mankind’s disposal is immeasurable” and the “productivity of the soil can be increased ad infinitum by the application of capital, labour and science.” A key problem with Malthus, Engels argued, is that he did not understand that science also increases “in a geometrical progression” under “the most ordinary conditions.”

A century later, the American economist Clarence Ayres (1891-1972) explained the exponential growth of technical devices because “the more devices there are, the greater is the number of potential combinations.” New and better technology, in turn, meant that natural resources were really “materials” that could become ever more abundant as “natural resources are defined by the prevailing technology” rather than what nature had made available to humanity.

The Progressive historian Charles Beard (1874 –1948) similarly observed at the time that there can never be anything final about technological advances for the “solution of one problem in technology nearly always opens up new problems for exploration” and “activities in one specialty produce issues for its scientific neighbors.” Beard saw no end to this process, at least as long as humans remained “passionate” in their quest for “physical comfort, security, health, and well-being”. Indeed, until “people prefer hunger rather than plenty, disease rather than health, technology will continue to be dynamic.”

What critics of market economies like Engels, Beard, and Ayres failed to understand, however, is that the price system was always the best way to factor in innumerable trade-offs in order to achieve a rational (i.e., economic) allocation of scarce resources out of an incredibly large number of possible combinations. In short, when the price of a commodity increases, market actors look for more of it, use it more efficiently and develop substitutes. As a result, resources for which there is a sustained demand have become more abundant while their inflation-adjusted prices have decreased.

While some environmentalists grudgingly acknowledge the virtues of this feedback system, they remain systematically blind to two additional ways through which vigorous economic growth has made possible a significant greening of our planet.

The first is the substitution of resources produced or harvested from biomass on the surface of the planet by subterranean substances. This idea is now generally associated with the late historical geographer and demographer E. A. Wrigley (1931-1922), but it is older. For instance, the geologist Kirtley Fletcher Mather (1888-1978) noted approvingly in 1944 that one “hundred years ago, nearly 80 per cent of all the things men used were derived from the plant and animal kingdoms, with only about 20 per cent from the mineral kingdom. Today only about 30 per cent of the things used in industrialized countries come from things that grow; about 70 per cent have their sources in mines and quarries.”

In the last two centuries, carbon fuels and the synthetic products made from them, along with various metals and other substances such as sand, clay, silicon, potash, and phosphate, progressively reduced overall demand for wild fauna such as whales (e.g., whale oil, baleen, perfume base), birds (e.g., feathers), elephants, polar bears, alligators and countless other wild animals (e.g., ivory, fur, skin); trees and other plants (e.g., lumber, firewood, charcoal, rubber, pulp, dyes, green manure); agricultural products (e.g., fats and fibers from livestock and crops, leather, dyes and pesticides from plants); work animals (e.g., horses, mules, oxen); and human labor in various forms (e.g., lumbering, weeding).

Although not perfect, these substitutions resulted in the creation of lesser problems than those that existed before and made possible an otherwise unthinkable level of material abundance, along with the abandonment and eventual rewilding of much marginal agricultural land. Unfortunately, the current emphasis on decarbonisation and net zero, with its short-sighted promotion of wind turbines and solar panels and the banning of plastic products, can only reverse past achievements and result in the sacking of biodiversity on our planet.

Market processes also spontaneously improved the state of our environment through the large-scale creation of lucrative by-products out of production residuals. As an anonymous contributor to the Illustrated Magazine of Art observed in 1853, the “operations of chemistry have brought into employment a thousand substances which had otherwise been useless or pernicious.” Some of these had at first been dissipated through the erection of huge chimneys, but as “the best way of destroying an enemy is to make him a friend, so the best way of getting rid of a noxious gas is to find a method by which it may be retained in a useful form.” Once this had been accomplished, “those old chimneys remain[ed] as so many huge monuments of the ignorance of the past.” An 1886 encyclopedia entry similarly described how “in the earlier days” of many manufacturing branches “certain portions of the materials used [were] cast aside as ‘waste’.” Over time though, “first in one branch and then in another, this ‘waste’ material has been experimented upon with a view to finding some profitable use for it; and in most instances the experiments have had more or less satisfactory results.” Writing in 1904, the American industrial chemist Leebert Lloyd Lamborn observed: “If there is one aspect more than any other that characterizes modern commercial and industrial development. . . it is the utilization of substances which in a primitive stage of development of any industry were looked upon as worthless.”

To give but one illustration: Petroleum extraction was first pursued to produce kerosene as a substitute to whale oil in lighting. Most of the raw material was at first wasted, but by the mid-1860s a few by-products had been created out of the liquid residue that proved superior substitutes to substances created from animals and plants, including lubricating oils, greases, paraffin, petrolatum (better known by the trademark Vaseline), candles, insect repellents and solvents. Although gasoline found a limited market in paint and varnish production, it was too flammable and volatile for household lighting and heating. Needless to say, the development of the internal combustion engine eventually turned it into the main product of petroleum refining.

After writing that over 5000 different products had been developed from crude oil, the geographer Joseph Russell Smith (1874-1966) and his collaborators observed over sixty years ago that the “meat-packing industry has long boasted that it uses all parts of a pig except the squeal. The petroleum industry sometimes adds the odor of oil to odorless gas to help detect leaks in pipelines. The petroleum industry claims that it uses everything in crude oil, including the smell.”

As was once better understood, the profit motive rewarded manufacturers who turned freely available polluting emissions into marketable by-products. The business and technology journalist Peter Lund Simmonds (1814-1897) thus observed a century and a half ago that “as competition becomes sharper, manufacturers have to look more closely to those items which may make the slight difference between profit and loss, and convert useless products into those possessed of commercial value.”

Instead of focusing only on the latest scenarios of imminent environmental doom then, let us celebrate and learn from the achievements of past generations of creators and innovators who, by using ever larger quantities of carbon fuels and turning polluting residuals into valuable by-products, gave us an ever more prosperous, greener and cleaner world. Environmental despair needs not spring eternal in market economies.

Pierre Desrochers is Associate Professor of Geography, University of Toronto Mississauga.



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