Proceedings: Discussion

Abstract

This session has focused on some major issues in natural resource economics. The papers, while quite diverse, have a common theme in their concern for the long-term prospects for civilization, insofar as those prospects are influenced by current natural resource allocation decisions with long-lived consequences. We have been blessed with three excellent papers, all exhibiting the highest levels of professionalism and all without major errors. My comments, for the most part, are intended to provide additional perspective and, on occasion, to identify issues which remain unsolved. Richard H. Day's criticism of the conventional, neoclassically-based economic way of thinking is much to the point. The adaptive models of which he speaks bear much more similarity to real world decision situations, and it is clear that these models yield some interesting insights into problems which have long puzzled natural resource economists. Day focuses on adjustment processes. Searching for the roots of this approach, he reaches back into the nineteenth century for evidence that seminal neoclassical economists had similar foci. However, such evidence is mixed, at best. While it is true that the Walrasian tatonnement is a groping adjustment process, Leon Walras seemed to expect that equilibrium eventually would be achieved. Alfred Marshall recognized adjustment problems, but concentrated mostly on analysis of equilibrium states. Rather than these early neoclassicals, it seems, the intellectual precursors to adaptive economics must be found elsewhere. Adaptive economics is evolutionary, but it rejects cruel, mechanistic social Darwinism. Its elemental unit of analysis is the transaction. Its time focus is sweeping and its analytical outputs are trajectories tracing the secular rise and fall of activities, firms, industries, and (there is no reason why not) institutions. Thus, its intellect al roots lie not among the early neoclassical , but with John R. Commons. Commons' system was a detailed and, in many ways, valid description of the real wo ld. As a model, it failed to find favor with mainstream economists not because it was faulty-it wasn't-but because it was not well adapted to the analytical technology of the economists of its day: geometry, algebra, and calculus. Now, Day brings to Commons' system a mathematical programming technology which has much greater potential of operatio alizing it. Commons' system was descriptive but, being basically insoluble, not predictive and not especially explanatory since it did not readily yield testable hypotheses. It seems fair to raise the question as to whether Day's system might not have some similar disabilities. Day indicates that it is not a predictive system and should not be, since surprises are to be expected and the past is a poor predictor. If adaptive economics cannot predict, can it explain? Day's models can be made to track or mimic, if you will, the past; but, is that the same as explaining either the past or the underlying system? Regardless of the answer to the above question, adaptive economics provides a useful way to conceptualize problems, as is clear from Day's perceptive discussion of natural resources issues in the closing pages of his paper. Let us now move to Kerry Smith's reconsideration of the resource scarcity question. The inquiry into resource scarcity by Harold Barnett and Chandler Morse (B and M) arrived at a conclusion which was most congenial to the conventional wisdom of its day. Their finding of no evidence that exhaustible resources were becoming more scarce was consistent with the pervasive optimism of the Camelot years when it seemed to be widely believed that an age not only of plenty but also of social justice was just around the corner. It was consistent with the view of what may be called the late-neoclassical era of economic thought that land (broadly defined as natural Alan Randall is a professor of agricultural economics, University of Kentucky. This is Paper No. 78-1-8, published with the approval of the director of the Kentucky Agricultural Experiment Station.