Stuart K. Hayashi
I have argued that, since the times of the hunter-gatherer, poverty has been the default for human beings. Most economic value existing today was created by human initiative, where entrepreneurial innovators have devised new methods of producing greater quantities of economic value from ever-fewer and ever-smaller inputs of natural resources.
But I think some people might reply that there are forms of economic value that existed prior to any human initiative, and that entrepreneurial value-creation might have been of detriment to these natural and preexisting forms of wealth. As an example, hunter-gatherers had fresh, breathable air. Throughout the 1800s, industrialization produced many forms of wealth that hunter-gatherers did not possess, but this industrialization infested the atmosphere with toxic smoke. Does a point such as that negate my argument overall?
I concede there are some instances of some natural resources already possessing economic value as a default. Breathable air is taken for granted until particular industrial activities cause pollution that render safely breathable air a scarcity. Although environmental regulations that governments imposed, from the top-down, are inaccurately credited as the main reason for improvements in air quality since the 1970s, much of the improvement is due to market-based factor.
One is the recognition that the breathable air in one’s vicinity is one’s private property, and therefore people whose air is polluted can rightfully sue neighboring air-polluting firms. These air-polluting firms were trying to cut their own costs by declining to make proper and safe disposal of the waste byproducts that went up their smokestacks. This hurt the air-polluting firms’ neighbors. In their civil suits, the neighbors transfer those costs back to the firms.
Hence, air pollution is not the result of laissez faire as much as it is an attempt by firms to socialize and collectivize their own costs. Those costs being transferred back to these firms, by means of the air being recognized as others’ private property that should not be damaged, is the solution. And it is a specifically capitalist solution. Insofar as people are free and peaceful, an entrepreneur cannot forcibly impose her own costs onto other people as an air-polluting firm would.
Every input of natural resources and human labor imposes a cost on the entrepreneur. The entrepreneur therefore downsizes her costs and upsizes her profits insofar as she can devise methods of producing greater economic value from ever-smaller and ever-fewer inputs of natural resources and human labor. Air pollution comes from the waste byproducts of this process. To cut down on this waste is to cut costs. Hence, entrepreneurs who did the most to reduce waste in the inputs of natural resources were, per unit produced, also the ones who cut costs by the widest margins.
Breathable air that can be damaged by some forms of industrialization may be an example of an economic value that already existed in the wilderness as a default. For the most part, though, most economic value comes from market participants applying scientific knowledge to convert objects from the wilderness into an environment more suited to human habitation. Overall, my point still stands. For hunter-gatherers, the infant mortality rate is 25 percent. In the West, it was political-economic liberalization and industrialization that got that figure below 1 percent.
On a net balance, most wealth comes from entrepreneurial development of technology, not from hunter-gatherers simply accommodating themselves to the wilderness in its default condition.
