“Mad Max” Economy

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One’s awareness of the limited nature of resources is frequently raised in the very first lectures on economics. In fact, the whole life or even the history of mankind is an ongoing process of utilizing limited resources in order to satisfy endless wishes of human beings.

This is particularly vivid in dystopian Hollywood movies such as “Mad Max”. There is no difference whether you watch the version from the 1980s or from 2015, the message is clear: human life is an endless inhumane fight for the chippings of well-being. The one who controls petrol production (“Mad Max”), pig manure (“Mad Max 2”) and water (“Mad Max: Fury Road”), controls the society. One should also look at how the films reflect the realities of their time. In 1980s people in the U.S. could not forget the severe consequences of the oil embargoes of 1973 and 1979, while in the second decade of the 21st century the pop culture became a witness to hysteria over a lack of drinking water.

However, the concern about the limited nature of resources is not the product of our times. While observing the life of peasants back in the 18th century, Robert Malthus concluded that the number of people is growing geometrically while the food production – arithmetically, thus suggesting overpopulation and scarcity of food in the future. Such situation will indeed result in a desperate fight for an opportunity to eat the last living dog. Malthus would have certainly liked the “Mad Max” movies.

In fact, the fear that one or another resource will be completely exhausted is not just an element of popular culture or a mere observation of a lonely clergyman. In 1970 many claimed that oil will be exhausted by the second millennia. Then, after 2005 boom in oil prices many speculated about reaching a peak: a decline in oil production and an increase in its price up to $250 per barrel. However, the current price per barrel is as low as $45 and the production has never been higher. The heralds of the end of the world have fallen silent or pretend to have claimed something else ten years ago (by the way, the Energy Strategy of Lithuania is still pretending as if oil price is $145 per barrel).

In 17th century England people noticed that their major source of energy – forests, are cut down faster than they are growing. Moreover, as impure coal could not be successfully used in industry, the lack of timber and the bane of England did not seem that distant. However, people invented the way of purifying coal by heating it and this resulted in an industrial revolution rather than economic disaster.

A whale-oil lamp that brought clear light into millions of homes is another example. The huge increase in the demand of whale oil in the middle of 19th century resulted in too many whales hunted and whale oil prices quadrupled. However, it was not a tragedy as the invention of kerosene resulted in even brighter and up to 20 times cheaper light affordable for virtually everyone. Moreover, early oil refiners were to learn how to produce petrol, diesel and other substances essential today.

But let’s make no mistake. This had nothing to do with luck. It was the lack of timber and an increase in whale oil prices that created incentives to experiment with coal and invest into refineries. Technological advance is not occasional; it is the result of targeted investment, human reason and labour. Human mind is the only tool capable of turning a wasteland into a flourishing oasis.

But does it mean safety from the dystopian future similar to that of “Mad Max”? Optimism is the result of reason. Free thought and human creativity would allow the raise of civilisation even after a nuclear catastrophe. However, human reason is not protected from restriction or destruction. North Korea is a perfect example of living in the “Mad Max” conditions of the 21st century: a constant suffering from hunger and the fear of death. Human reason is suppressed by ridiculous communist ideology and the repressive state apparatus.

Resources are scarce, but is it the only truth? In the face of scarcity one struggles to save resources and looks for alternatives. In fact, human reason is probably the only resource worth caring for – it should not fall into the hands of bureaucracy and robbers. The first scenario would make it ineffective due to unreasonable rules and restrictions, while the latter would not allow the deserving to reap the fruits of their labour. Therefore, in order to avoid the “Mad Max” scenario, we should concentrate on human reason rather than speculations about the shortage of oil.