The economic logic behind the ultimate resource

Originally published in The Review of Austrian Economics

Using economic reasoning, Julian Simon offered crucial insights into a range of pressing issues including the environment, immigration, and economic development. The main lesson from Simon’s scholarship is that the ultimate resource does not reside in the ground (natural resources), or even in the accumulated wisdom and knowledge in books and scientific journals (human capital), but in the imagination of people. Through their purposeful actions, people turn their thoughts and aspiration into a new reality that enables immense improvements in the human condition. In making this argument, Simon articulated the core ideas of Ludwig von Mises, F.A. Hayek, and Israel Kirzner regarding the discovery and use of knowledge in society, and the role of entrepreneurship as the prime mover of progress. This paper makes this intellectual connection clear.

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