In our previous post (on Thanksgiving), we noted the prevalent symbol of the cornucopia, closely associated with that holiday.
It is an appropriate symbol, for in spite of all the problems in the world today, we can all admit that there is much to be thankful for, and that while unending goods and services do not simply appear miraculously (as they do from a cornucopia), the innovation and hard work of countless men and women operating under the free enterprise system have in fact created an abundance of very good things. Among those we might list are new medical treatments, semiconductors and networks and all that they enable, increasing harvests of food, and many other wonders.
There have certainly been those along the way, however, who have
shaken their head at this increasing prosperity, called it illusory or
even a dangerous fiction, and issued dire pronouncements which generally
centered around the warning that production cannot keep up with
consumption forever, and that "we" must take steps to limit demand --
usually by limiting population growth, or even by limiting population.
Some of those in this camp actually refer to those who do not share
their zero-sum fixed-pie view of the world as "cornucopians," which they
use as a term of derision.
Here is a webpage
written by a current university professor who uses that term, and who
clearly comes down on the side of the anti-cornucopians (although it is
billed as an examination of the "perspectives" of both sides, the
zero-sum arguments take up the majority of the essay). Here is another one, also written by a (different) university professor, and also coming down against the assertions of the "cornucopians". One wonders if
anti-cornucopians celebrate Thanksgiving, and if so whether they have
cornucopias as part of the decorations or not.
Fortunately,
history has decisively proven the zero-sum paradigm to be
bankrupt. Those economic systems that have enabled people to innovate
and create and produce have seen results in direct proportion to the
degree that they have done so. Those economic systems that tried to
enforce a zero-sum view of the world (seizing what others produce, with
the result that nobody wants to produce anymore) have generally
collapsed, and sometimes they have even been replaced with systems that give their people more freedom to
innovate and grow.
It is astonishing that many continue to espouse extreme zero-sum ideologies, to the point that the arrival of the seven billionth person on the planet last year was celebrated with a National Geographic site
that asks "are there too many of us?" and with articles asking whether a world-wide "one-child policy" might be a
prudent idea.
Students of economics and history will immediately recognize these lines of argument as "Malthusian," after the Reverend Thomas Malthus. In fact, both of the university professor-authored papers cited above specifically use the term "neo-Malthusian" as the opposite of "cornucopian," and align themselves with the "neo-Malthusian" camp. The neo-Malthusians are pessimistic about the idea human innovation will keep us ahead of ongoing demand placed on resources, particularly as populations continue to grow.
The counter to this argument, to which some of the neo-Malthusian authors do make reference, is the idea that it is a mistake to look at growing populations only as potential consumers of resources, rather than as the most important multipliers of resources, through their innovation. In other words, each person is not just a potential problem but a potential solution, because human innovation actually creates new resources as if by magic (like a cornucopia!).
Innovation makes things in our natural world become resources that were previously useless. For example, until cars, ships and airplanes could use petroleum products for fuel, petroleum was not a desirable resource. It was the innovation of human inventors that made today's resources "turn into" resources in the first place! Therefore, while future population growth will certainly create greater pressure on existing resources, the future innovation and inventions of some of those members of the future population will almost certainly "create" new resources that we don't even think of as resources today.
This is why, as investors and as believers in the free enterprise system, we are so convinced of the importance of growth and innovation -- and in the importance of providing capital to innovators and to innovative companies. It is also why we are so convinced of the importance of keeping the obstacles to growth and innovation as low as humanly possible.
Ironically, as defenders and supporters of capitalism and free enterprise, we are on the more "cornucopian" side of the equation, rather than the "Malthusian" (or "neo-Malthusian") side of the equation. In popular literature and movies, "capitalists" are often depicted as heartless Malthusians, one of the most famous being Ebenezer Scrooge in the Christmas Carol of Dickens, who makes a reference to helping the poor as being wrong, saying that it would be better for the hungry to hurry up and die, in order to "decrease the surplus population."
We would argue that the popular association of capitalism with Malthusianism is wrong, and that it is the proponents of free enterprise who understand that the pie is not necessarily a fixed pie but that it can be a miraculously growing pie, and that people cannot be "surplus" because it is people who make that pie grow!
Again ironically, the neo-Malthusians of today are often found in the halls of academia and the centers of government; both of which are centers of zero-sum thinking.
This is an important subject, and one that investors should understand. It is one that has important bearings on investment, and one that points to the message which we have woven into our posts throughout the history of this blog, that growth really is the answer.
Students of economics and history will immediately recognize these lines of argument as "Malthusian," after the Reverend Thomas Malthus. In fact, both of the university professor-authored papers cited above specifically use the term "neo-Malthusian" as the opposite of "cornucopian," and align themselves with the "neo-Malthusian" camp. The neo-Malthusians are pessimistic about the idea human innovation will keep us ahead of ongoing demand placed on resources, particularly as populations continue to grow.
The counter to this argument, to which some of the neo-Malthusian authors do make reference, is the idea that it is a mistake to look at growing populations only as potential consumers of resources, rather than as the most important multipliers of resources, through their innovation. In other words, each person is not just a potential problem but a potential solution, because human innovation actually creates new resources as if by magic (like a cornucopia!).
Innovation makes things in our natural world become resources that were previously useless. For example, until cars, ships and airplanes could use petroleum products for fuel, petroleum was not a desirable resource. It was the innovation of human inventors that made today's resources "turn into" resources in the first place! Therefore, while future population growth will certainly create greater pressure on existing resources, the future innovation and inventions of some of those members of the future population will almost certainly "create" new resources that we don't even think of as resources today.
This is why, as investors and as believers in the free enterprise system, we are so convinced of the importance of growth and innovation -- and in the importance of providing capital to innovators and to innovative companies. It is also why we are so convinced of the importance of keeping the obstacles to growth and innovation as low as humanly possible.
Ironically, as defenders and supporters of capitalism and free enterprise, we are on the more "cornucopian" side of the equation, rather than the "Malthusian" (or "neo-Malthusian") side of the equation. In popular literature and movies, "capitalists" are often depicted as heartless Malthusians, one of the most famous being Ebenezer Scrooge in the Christmas Carol of Dickens, who makes a reference to helping the poor as being wrong, saying that it would be better for the hungry to hurry up and die, in order to "decrease the surplus population."
We would argue that the popular association of capitalism with Malthusianism is wrong, and that it is the proponents of free enterprise who understand that the pie is not necessarily a fixed pie but that it can be a miraculously growing pie, and that people cannot be "surplus" because it is people who make that pie grow!
Again ironically, the neo-Malthusians of today are often found in the halls of academia and the centers of government; both of which are centers of zero-sum thinking.
This is an important subject, and one that investors should understand. It is one that has important bearings on investment, and one that points to the message which we have woven into our posts throughout the history of this blog, that growth really is the answer.