By Anthony Wile
November 17, 2005
Forward courtesy of Robert Busser
PEAK OIL ROUSES PROPHET!
NEWS ANALYSIS & REBUTTAL
Prophet, an FMNN regular commentator and amateur Austrian
economist takes a whirl below at summarizing a free-market response to the
Peak Oil myth. Here he addresses one of the myth’s more reasonable
advocates who has been involved in the debate for several days in feedback,
where this Prophet commentary initially appeared.
Dear Richard Walling - it is all a matter
of financial literacy! Your statement as follows, "This is a highly
technical discussion of reservoir depletion and discovery" may perhaps
reveal a misunderstanding of how markets work. Such misunderstandings -
if they are such - are certainly to be expected given free-market economics
have been rigorously repressed and have not been taught in the schools or
even interpolated into economic texts for the most part. Until the Internet
and the subsequent explosion of free-market ideologies driven by such outfits
as the von Mises Institute, there was no viable methodology to even begin
to communicate the truth. It is no one's fault that pernacious tales such
as Peak Oil haunt public discourse - they would be far worse, and more immediately
catastrophic were in not for the debunking power of this wonderful mechanism
of "individual mass communication."
Having said that, here are further points that cut to the
heart of the fallacious argument projected by Peak Oil.
1) No one can foretell the future.
The future is infinitely unpredictable in a free-market economy, or even
in one such as this that is far, far less than a free market. That is why
no free-market economist would engage in a rigorous discussion of the intricacies
of such a technical discussion. The Soviet Union apparachicks did so for
years and all it got them was bungled projections and a bankrupt society.
The beauty of free-market economics is that it depends, as von Mises said,
on "individual action" and there is no telling what a single individual
may accomplish. And those accomplishments will have nothing to do with bureaucratic
projections or numerical assumptions.
2) Consumption will continue to increase.
Supply drives demand. This is another neo-classical economic law. In modern,
Western society, consumption of all kinds will increase despite the efforts
of those who would like Western citizens to live like stone-age Indians.
In fact, short of bombing Western societies back to the stone age, there
is almost nothing that can be done to curb consumption and the efforts of
so many to do so are further indication of the economic illiteracy that
afflicts the Green Left and others of less radical stripe as well.
3) Marginal utility demands that the market, not man,
The law of marginal utility which separates classical and neoclassical economics
spells doom for those who believe in rational scarcity. Marginal utility
is the unconscious economic calculus of the marketplace - one which prices
a glass of water higher if sold near a desert than a lake. It is the MARKET
that prices such things, not humans, not five-year plans, not propaganda
about the diminishment of certain commodities. If oil is somehow running
out, then marginal utility will price oil in such a way that either another
resource will come along to take its place (human action) or more oil will
be discovered (another consequence of marginal utility).
4) The fallacy of classical economics.
Only economic illiterates look at a graph and conclude that a line runs
straight ahead forever. Thomas Malthus, a classical economist did so and
concluded that England would starve to death within his lifetime, and he
lived hundreds of years ago, and England did not starve. Karl Marx was a
classical economist and he made rigid, classical assumptions about the value
of labor, etc., and all of these proved false. Classical economics is indeed
the economics of Peak Oil and it is as rigid and fallacious now as it was
Malthus' day. There is nothing in economics as in life that is a sure thing,
despite every Keynesian and statistical effort to claim otherwise.
5) Economic literacy must be acquired over time through
It is unfortunately almost impossible to pour economic literacy into people's
heads simply by stating its principles. Like other forms of literacy it
takes time; ultimately it provides the determined student with a rigorous
frame of reference that includes certain bedrock principles. As these prove
out - and they do - knowledge turns to certainty, though it is a certainty
that is hard to convey, anchored as it is in years of study that others
have not undergone. Thus, it is convenient (easier) to point out that the
rhetoric of Peak Oil is recycled from over 30 years ago - and was in fact
a propagandistic effort then as now, and a cynical one at that. Those who
float such phantasmagoria are often among the most educated and powerful;
they certainly know better - for it is they who have attempted with some
success to wipe out all understanding of free-market economics and to substitute
elaborate bureaucratic rituals for Mises celebration of private action.
Inevitably it will not work! Their struggles are growing more
desperate and their momentum builds to an uncontrollable speed. Hamlet killed
a King and the 20th century global power elite created an Internet. One
was a crime, the other a miscalculation but both likely end in rage and
tears. Power was so close and once upon a time the world was almost so small
you could grasp it!
staff reports - Free-Market News Network
"If A Nation expects to be ignorant and free, in a state of civilization,
it expects what never was and never will be"
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