From Scarcity to Surplus

What will happen if the world's supplies of oil, metals, and food begin to deplete? If resources become few, would a worldwide crisis ensue, or will human ingenuity find a way to overcome this challenge? The commodity market has been moulded by two competing economic theories for over a century, and this review delves into the epic struggle between them.

• For decades, the argument between Malthusian pessimism and Simonian optimism on scarcity and excess has shaped commodities markets and approaches to resource management.
• Malthusians predict that the depletion of scarce resources like oil and metals will lead to a global economic collapse. These predictions of shortage were supported by the "Limits to Growth" report published by the Club of Rome and the "Peak Oil" hypothesis proposed by M. James Hubbert.
• In response, Simonians argue that technological innovation, substitution, and efficiency may help humanity overcome resource restrictions. Despite worries of resource depletion, Simon predicted falling metal prices.
• Short-term increases in commodity prices due to speculation are common when fears of a supply shortage are widespread. Oil and lithium, both of which were expected to become scarce, were not, because of advances in resource extraction technology.
• However, protectionism and instability may pose a threat to the ongoing innovation necessary for Simonian abundance. It is crucial to keep in place incentives and institutions that promote productivity and innovation.

Malthusian scarcity and Simonian abundance perspectives continue shaping debates on resources, investments and markets. For the full analysis, see the essay "From Scarcity to Surplus: The Role of Malthus and Simon in Commodity Markets."

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