What is the ultimate resource?

This original article by Dan Polansky examines what, if anything, is the ultimate resource. It is inspired by the books by Julian Simon, disagreeing with them.

For a start, the phrase "the ultimate resource" is not perfectly clear, but we can understand it intuitively as the most essential, the most indispensable, the most valuable or the most decisive resource. These different interpretations lead to different analyses.

The key theses defended in this article are as follows:

There is no single category or type of the ultimate resource; "the ultimate" is misleading.
Natural resources are one class of ultimate resources, e.g. water resources and land.
Among natural resources, fertile land can perhaps be singled out, for reasons that will be explained.
Humans are one class of ultimate resources in that a female is indispensable for a male to have a child and vice versa.
Human ingenuity or inventiveness is not an ultimate resource in that it is not indispensable to support human population on Earth.
Human ingenuity or inventiveness is a decisive resource in natural resource utilization to support a very large population and in defense of resources from aggression. However, the results of human ingenuity are far from obvious to be sustainable.

Natural resources

Julian Simon claims that human ingenuity or inventiveness is the ultimate resource, rather than natural resources. That view is indefensible: natural resources are necessary and sufficient to maintain human population. Human ingenuity is neither necessary nor sufficient to do so.

Some things are intuitively thought of as natural resources: land, forests, fishing grounds, metal ores, petroleum, etc. These can assigned, controlled, fought over, exchanged, bought, sold, developed, used, and exhausted. Some of them are indispensable to sustain human population, e.g. land.

Nontradeables

Some things can be considered natural resources that perhaps do not come to mind: the Sun and the Moon. Both astronomical objects are essential for sustaining of human population, but since they normally cannot be destroyed, developed, assigned, waged a war about, bought or sold, they are usually not thought of as "resources". But that is what they are: things necessary for human sustenance, which, if destroyed, would be sorely missed.

Some natural resources are not subject to trade, or not directly so, and so are much less thought of as essential resources. Such is the case of the Sun, the Moon, the Earth's magnetosphere, the atmosphere or the ozonsphere. Some of them are not subject to exhaustion or damage either, which contributes to their not being tracked as resources.

Climate is one of the nontradeable resources that are usually not thought of as resources at all. And yet, it is not only the soil that matters but also the sun and the rain it receives, and when the soil is used for housing, the mild rather than extreme temperatures. While climate itself is not tradeable, plots of land differing by climate are. Sunny beaches allow for a certain kind of recreation; snowy hills allow for downhill skiing, another kind of recreation.

Land

Among natural resources, land is more of a candidate to be the ultimate resource than mined substances such as metal ores, coal and petroleum. Land is necessary to sustain human population while mined substances are not.

Compared to oceans, land is much more parceled, assigned, bought and sold, and developed. That said, with all oceans gone, land would be of no use.

Land is needed to build residential, commercial and industrial buildings or abodes on, to harvest crops from, to have forests on whether for wood or as animal hunting grounds, to place solar panels on, to mine ores from underneath, etc.

States are extended on land, have their boundaries drawn on land, and wage wars over land, especially fertile land, land with defensive capabilities and land with metal ores or petroleum underneath.

Land was the key capital asset in the Middle Ages, before the development of the modern industry.

Fertile land

Compared to land in general, fertile land is more of a candidate to be the ultimate resource. Not any and all land is sufficient to sustain human population, e.g. desert or the Antarctic land.

One may ask why, if fertile land is the ultimate resource, agriculture is only a fraction of the modern economy. It does not seem to be the most valuable resource. This is because the notion of "ultimate" is ambiguous. Fertile land is an indispensable resource, but in various time frames, it may be not the one most valuable or relatively scarce one. One needs metal ores and petroleum to use that land to feed the population and to defend the fertile land from aggressive neighbors.

One may object that fertile land is not absolutely indispensable if food may be imported. That is true, but then fertile land has to be elsewhere, being the ultimate resource.

One may object that fertile land is not absolutely indispensable if one depends on fishing, as Inuits do. That is fair enough. Indeed, the principle of substitution (e.g. of one source of food for another) does play a role, although not as big as economists make it seem.

Water resources

Water resources are one class of ultimate resources, not reducible to something else as a source of drinking water. They are also used for irrigation and industry, but neither of the two are strictly necessary to sustain human population. They include lakes, rivers and underground water, as well as rainfall and glaciers.

Inland water bodies

Inland water bodies such as lakes and rivers may not be thought of too much as resources until they are destroyed, as happened with Aral Sea. They are a source of water, a prerequisite for human life. They also provide for routes of transport. They are probably not prime candidates for the ultimate resource until one notes that fertile land will be of little use unless supplied with water. On the other hand, the supply of water can often be from rain. Inland water bodies do not seem to be worth singling out as candidate for the ultimate resources, as resourceful as they can be.

Oceans and seas

Oceans and seas are not created or destroyed and may not be thought of as a resource. However, they provide for convenient ancient means of fast transport, historically much faster than land. And waters surrounding an island offer defensive capability. The oceans surrounding Americas provided protection of these two continents, at least for some time. For one reason or another, large settlements often rise on sea shores and ocean shores.

In so far as the totality of oceans is indispensable for human sustenance, they are a candidate to be one of the multiple ultimate resources, even if they are not bought or sold or developed.

Mined resources

Mined resources such as metal ores, coal and petroleum are natural resources, but they are not the ultimate resource: they are neither sufficient nor necessary to sustain human population.

One may object that mined resources make huge populations (over 1,000,000,000) possible, which fertile land alone cannot do. That is true enough, however: 1) they are not necessary to sustain some human population. 2) they cannot sustain a large human population over long time periods. Thus, humans have been here for over 200,000 years, while fossil-fuel powered large populations only for over 300 years, and there is not much hope that this can be extended to, say, 10,000 years, let alone 100,000 years. Thus, fertile land appears more "ultimate", especially since, even if mined resources are used, it is indispensable to support any population at all.

One may object that a country exporting mined resources can buy food from the countries exporting food. That is true enough, but that means that there still must be some fertile land somewhere, even if in a different country. And the pure exporter of mined resources is vulnerable to disruptions in food markets: in case of doubt, a country's self-preservation instinct can lead it to cut food exports, making it more difficult for mined resource exporter to buy food. On the other hand, if the food producer is dependent of mined resources, the mined resource exporter can have a significant bargaining power. Either way, fertile land is indispensable while mined resources are not, to sustain some population.

Iron

We can highlight the role mined resources can play by focusing on iron. It can be used to make better use of fertile soil (plough), to steal fertile soil (sword) and to defend fertile soil from theft (sword). The point was already made that iron is not ultimate in that it is not indispensable while fertile soil is. However, if one has fertile soil but not iron and one's aggressive neighbors have iron, one may soon find oneself without the ultimate resource, the fertile soil. Thus, given the possession of land, additional iron becomes more valuable than additional land. The ambiguity of "ultimate" becomes felt in this analysis. There is an expansion of this in the Arms race section below.

Ingenuity

Julian Simon claims that human ingenuity or inventiveness is the ultimate resource. This can be supported by the fact that today's over 7,000,000,000 large population is only supportable by human ingenuity. It is true, but it is far from the complete picture. The support depends on fertile soils. At the same time, the hugely increased support capability is not created by adding ingenuity to the natural resource of fertile soil but rather by also adding an additional natural resource such as petroleum. Further added are natural resources of metal ores, from which agricultural machinery is made, and the mined resources used to produce industrial fertilizers. All this would be impossible without ingenuity, but the additional ingredient of additional natural resources plays the dominant role. Furthermore, once ingenuity invents a particular method or process, things can continue using that method without further addition of ingenuity, whereas additional natural resources are being required and exhausted, showing their truly scarce nature. Ingenuity is only required as a source to produce more inventions, methods, procedures and arrangements.

Ingenuity cannot overcome the fundamental and ultimate scarcity of natural resources, which makes natural resources the ultimate ones, not ingenuity. Ingenuity can find new methods to tap and discover existing resources, and to a limited extent, to make resource use less wasteful. However, the increase of resource use efficiency has inflexible limits.

The capability of ingenuity to help bring about the quasi-miracles of modern technology and to feed a billion is deceptive, creating a cognitive trap to fall into. Surely, if all those miracles were possible with the use of ingenuity, even more miracles, especially those we need or want, will be possible. Wrong. That is not correct inference. New pockets of natural resources to substitute those running out will continue to be found until the point when they won't. When exactly that happens is hard to say. When that finally happens, all those over-optimists will be refuted. However, they may still say that it was not a problem with ingenuity but rather with government intervention into free markets and human ingenuity. This may even be superficially plausible when governments, seeing how things are turning bad as a result of resource exhaustion, are going to try to intervene. But superficial plausibility is no truth.

However, ingenuity can be claimed to be the ultimate resource in the arms race analysis below. It is an expansion of the iron analysis.

Inventions

Human inventions are resources. They are not the ultimate ones: they are neither necessary nor sufficient to support some population. However, they are necessary to support a large population. At the same time, once here, they are not exhaustible and thus not really scarce, unlike the scarce natural resources that are running out and whose new pockets need to be sought, to be eventually exhausted as well.

One may point out that the space of inventions is also a resource, not just ingenuity, a resource that is mined with the use of ingenuity to invent things. In a sense, ingenuity does not create the inventions, it merely discovers them in the invention space. Still, ingenuity as a capacity to bring inventions from invention space to the empirical world is a genuine resource, even if not ultimate one.

In a strange analogy to natural resources, the space of inventions is being exhausted as well: once something is invented, it is a done thing, as if mined, and ingenuity needs to be searching for more items in that space, not yet invented or "discovered". The invention or "discovery" may become increasingly more difficult as the things that are easier to invent have already been invented.

Humans

Humans are one class of ultimate resources. They are strictly necessary for human ends. A male needs a female to have a child and vice versa, yielding strict necessity from human perspective. Since a single male can impregnate many females, it females would seem to be somewhat more ultimate or scarce as a resource than males. However, males are generally stronger and better able to protect resources from aggression, usually by other males.

A resource does not need to be owned or fully controlled in order to be accessed or used and thus act as a resource. To use or access a resource, e.g. fish in a river, the user needs to give something up, e.g. fishing time. Similarly, to use or access a human resource, the user needs to give something up, e.g. money. Thus, humans whose services are used by a human are resources for that human even if payment for the services is required.

Humans as resources are not reduced to their ingenuity. Indeed, a teacher, a factory worker or a bus driver are all resources for those who use their services regardless of the amount of ingenuity provided by them.

It follows that more humans can indeed mean more resources available, in part via better possibility of specialization and the resulting productivity. This does not depend on ingenuity of the humans in question. However, more humans still mean more pressure on natural resources, another ultimate resource.

Arms race

Arms race turns the resource relationships upside down. We have claimed that fertile soil is a candidate for the ultimate resource. However, a tribe with fertile soil, iron ore, and the requisite ingenuity or at least accumulated inventions can steal the fertile soil from a tribe that has fertile soil, iron ore, forests, coal underneath the land, but no mining technology, no metalworking and no other technology to talk of to defend their fertile soil from the robbers. The robbers can show their ingenuity not only in inventions but also in military strategy. In such a situation, it is the ingenuity, inventions and technological capability that make all the difference in viability; no amount of additional fertile soil will help the primitive tribe, or additional metal ore.

In arms race and technological race, the unsustainable beats the sustainable short-term. The long-term viable becomes short-term non-viable, not in terms of use of natural resources or coexistence with its environment, but rather in competition with the long-term non-viable but aggressive. This kind of "ultimateness" is not to be celebrated; it is of a criminal kind. Nonetheless, it is a gloomy fact of human existence that cannot be conveniently disregarded.

This gloomy principle may apply to economic technological race as well: a farmer who does not apply modern technology to agriculture can have a difficult time competing with a farmer who does: the latter is likely to obtain much better productivity of land. Whether this really holds true would require a closer investigation.

Ingenuity of Darwinian evolution

One thing can be admitted: something like ingenuity or quasi-ingenuity is what was necessary to sustain human populations. It is the quasi-ingenuity of Darwinian evolution by natural selection. It is only "quasi" since that process is no person and no mind, and therefore has no true ingenuity, merely an analog of it.

It is this quasi-ingenuity that produced the necessary plant layer on land, and that eventually produced human bodies.

However, this quasi-ingenuity is not the ultimate resource in that what it produced is already here, and it is no longer needed. At the same time, this process can take credit for human sustenance. But then, so can the processes of formation of the Solar System. The idea that it is the natural resources that are the ultimate resource is much more intuitively appealing, makes sense, and is of practical value.

Ingenuity as maker of new worlds

If only human ingenuity could help living things live on Mars or spread to other star systems, and thus possibly extend the longevity of the totality of all living things originating on the Earth, then ingenuity would have a strong claim to be one of the multiple ultimate resources, together with natural resources. Alas, none of that seems to be remotely realistic. Without such a feat, ingenuity runs the risk of being a maker of unsustainable pseudo-solutions, which at the same time present unique feats.

Sustenance of plants and animals

The concept of a resource is usually applied to human economics. However, the concept applies to animal and plant world as well.

Thus, for animals, water sources are natural resources, as are grazing and hunting grounds. Indeed, individual animals try to defend their resources from competing animals from the same species. No full analog of human economy is developed especially since there is not much of exchange and resource development in animals, but the concept of scarce resource to be allocated to its users applies no less.

Plants also compete for access to resources, e.g. to sunlight, to rain and to fertile soil.

In so far as plants and animals do not have a true analogy of human ingenuity, this only confirms the idea that natural resources are the ultimate resource, and also the historically original or antecedent resource.

Doomsayers always wrong

Multiple failed specific predictions of humanity running out of resources have been made, including The Limits to Growth. That does not change any of the points made in this article, especially the main one: land is essential and ingenuity is not for human population sustenance. There can be a meaningful discussion about when the natural resources are going to run out and the deep uncertainty about that point given that new pockets can repeatedly be found, not about the natural resources being the ultimate resource.

Declining prices of mined resources

One may object that declining prices of mined resources observed in some time periods show that these kinds of natural resources are not the ultimate resource, are not practically finite and that human ingenuity is the ultimate resource. This one may only do if one does not understand how prices work. Prices are strange phenomena. They reflect a strange aggregate of relatively short-sighted human planning and psychology, an interaction of readiness to sell and readiness to buy, represented in "supply curves" and "demand curves". Instead of reflecting the objective scarcity of a resource, prices all too often reflect the ease with which the resource can be extracted and made ready for sale. Prices all too often do treat the natural resource as if it was infinite and they only go up once it becomes all too obvious and short-term relevant that it is in fact finite and running out.

Entropy

This article does not deal with the concept of entropy because it seems too muddy, imprecise or unclear for a convincing scarcity of natural resources analysis. The scarcity of natural resources should be clear enough to a schoolboy with no knowledge of thermodynamics, information theory, cybernetics or another domain that uses one of the multiple notions of entropy.