Every page of this book stands as a decisive refutation of the “Club of Rome” and “Limits to Growth” schools of Malthusian economics. The authors show that predictions about the impending exhaustion of various natural resources— predictions that have been made for centuries—will not be realized as long as a free market is allowed to function.
They maintain that “if markets are given the freedom to respond, people will react to shortages and the resulting increases in prices with substitution and/or technological change, thereby eliminating the crisis.” On the other hand, the authors argue, government intervention in this process causes shortages and the very crises that are mistakenly cited as inherent in an unregulated economy.
The Doomsday Myth concretizes this central point with a number of examples across history. It explains that the process of replacing a resource is gradual and lengthy. That is, there are no sudden depletions of supply. The manifestation of a diminishing resource is not its physical disappearance from the marketplace, but its progressive rise in cost. As this occurs, substitutes are pursued long before the last unit of the old resource is considered too expensive to bring to market.
The frequent energy “crises” of the 1970s, for example, were the result, not of 47 any natural depletion of oil supplies, but of price controls. And the problem was solved—we had an oil “glut” and OPEC lost its power—only when the oil market was decontrolled in 1981.
This same scenario of doomsayers sounding the alarm about vanishing resources, only to be refuted by the response of a freely functioning market, has been played out over and over in the past, The authors cite, for instance, the warnings about a rubber shortage during World War Il—about a depletion of timber during the late 19th century as well as during the 16th-17th centuries—about vanishing whale oil early in the 19th century, In all these cases, the predicted disasters did not occur. The resource did not disappear, and economic upheaval did not take place. Why? Because the law of supply and demand was allowed to operate and to provide the incentives for solving such problems. First, as the price of the resource rose, there was a drop in its use, including a search for greater efficiencies. Second, less expensive substitutes were employed in place of the more costly ones. Finally, technological change created entirely new resources and products to supplant the old ones (e.g., the replacement of whale oil by petroleum), This is a very natural process—although while these changes are happening, they may appear to be “crises.”
This book contains an intriguing range of historical examples—such as the “labor shortage” in Europe during the late Middle Ages, or the scarcity of wood in Greece around 625 A.D.—to illustrate how people respond successfully to such situations. It also cites the fall of ancient Rome as a demonstration of what happens when the state does not allow its citizens to act freely. Because Diocletian imposed universal wage and price controls in 301 A.D., “Rome invited the collapse by suspending the marketplace.” The authors also critique the shoddy methodology of the doomsday movement, especially its extrapolation of past trends indefinitely into the future. In one of this book’s many witticisms, the authors parody this process and project that, based on the number of doomsday books published in the 1970s, such titles will comprise 80 percent of the Library of Congress by the year 2000, causing a severe shortage of shelf space.
The major drawback of this book, though, is the false implication it sometimes leaves that economic crises are prerequisites for progress and technological advances-—e.g., that man created skyscrapers, in effect, because of a shortage of cave space. But with respect to the primary purpose of dispelling the bugaboo about “diminishing resources,” and of shoving how free markets and self-interest work to alleviate scarcities and to produce abundance, The Doomsday Myth is enormously enlightening.
This review is made available by the Ayn Rand Bookstore (formerly Second Renaissance Books)
