Exhaustible Resources and Classical Theory

Christian Bidard () and Guido Erreygers
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Christian Bidard: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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Abstract: Smith, Ricardo, Marx and Sraffa made no theoretical distinction between exhaustible resources and lands. The very notion of exhaustibility, however, can be opposed to that of `indestructible powers of the soil' (Ricardo) and calls for a specific analysis distinct from that of rent. The diversity of the contemporary attempts to deal with that question in a classical framework shows how varied are the understandings of the main methodological features of classical theory. Three crucial points emerge: first, the treatment of prices, which are invariant in classical theory but, according to the Hotelling rule, are changing through time for exhaustible resources; second, the notion and the measure of the rate of profits; and, third, the relationship between economic analysis and a more historical and sociological approach stressing the balances of power between classes. Our own approach starts from a very simple model, called the corn-guano model, where guano is the exhaustible resource, and examines the dynamics of such an economy on the physical side and the value side. These lessons serve as a basis for an extension to multisector models. We provide a critical assessment of a few alternative approaches developed by Sraffian scholars.

Date: 2020
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Citations: View citations in EconPapers (1)

Published in Œconomia - History/Methodology/Philosophy, 2020, 10 (3), pp.419-446. ⟨10.4000/oeconomia.9607⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02478428

DOI: 10.4000/oeconomia.9607

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