Tyler, you are always so optimistic. But your own "dismal science" offers neither empirics nor analysis to back this attitude up.
The standard economic arguments about resources focus on the margin, while the real problem is infra-marginal. Don’t be misled by all that talk of prices and substitution. We are running out of resources and soon.
Think about eating your beloved dark chocolate, Tyler. Let’s say you have only four squares left of Lindt in the cupboard. Yes, as you eat more the shadow price of each remaining square goes up. Big deal. You are still going to eat all the chocolate before dinner. Economics tells us only that you will end up on the Pareto frontier, but that frontier still has some pretty miserable points. We are about to approach them. Who cares if prices mean that we meet our doom while equating private first-order conditions? We are simply too voracious for the resources at our disposal.
Market signals and property rights do not work for the globe as a whole, unless you have monopoly ownership of the entire world (hmm…). Property rights work best for local problems, such as fishing in a single lake or who should wash the dishes. Private property won’t cure the problems of bad air, poisoned oceans, global warming, or the overall carrying capacity of the planet. We will get doom, doom, and more doom.
The real question is empirical: are global demands for resources big enough so that the problem resembles you with your four squares of chocolate? Yes. The environment is toast, sooner or later and probably sooner. And it is doomed precisely because capitalism is such a wonderful productive machine. Do you really think you can fill the planet with so much rapacious human biomass without significant and indeed overpowering external effects? Our only hope is that we all become plugged-in machines who don’t need much of an environment any longer.
It is true that resources prices have been falling, on average, for some time now. But the Industrial Revolution is a remarkably recent development and we are just getting started. Mankind’s current productive powers truly are unprecedented, a fact which you libertarians love to stress in other contexts, just not this one.
It would be mere luck if energy-saving technologies outraced nature-destroying ones. And even if this were the case for a while, energy-saving technologies, in the long run, simply encourage us to raise our rapaciousness up another notch. The infra-marginal becomes even more infra- than we ever dreamed.
Now let us get speculative. Did I mention that in the economics of the future — once we are in exponential growth modes — the concept of price will hardly matter? It will be more like an engineering problems where 10x of today’s gdp is produced every week, and we have to see whether this wrecks the globe in ten or rather twenty years’ time. Don’t even bother recycling. Furthermore all you futuristic nerds out there should downgrade the relevance of price theory, given the size of the changes you have in mind.
My parting shot: Maybe you think I am a pessimist. But it probably is better if resource pessimism is true. Life as a hunter-gatherer is still life. And those Pygmies produced some pretty good vocal music. If the price of energy were to keep falling, that would mean everyone could, within a few generations time, own the destructive power of a nuclear weapon in his or her iPod. Now that’s scary.
As I have said in the past, Tyrone really is a pessimistic fellow. If that dark chocolate is gone, it is usually because I ate it in advance, knowing he would otherwise steal my supply. There are only so many cupboards in the kitchen, and Tyrone has learned all my hiding places. And why didn’t I buy more at the store in the first place? It is simple: I had to take Tyrone to his Zen Buddhism class; this sad sack doesn’t own a car.