“[T]he American Institutionalist economist Clarence Ayres explained the exponential growth or proliferation of technical devices in light of the fact that ‘the more devices there are, the greater is the number of potential combinations.’ New and better technology, in turn, meant that natural resources were really ‘materials’ that could become ever more abundant as ‘natural resources are defined by the prevailing technology’ rather than what nature had made available to humanity.” – Pierre Desrochers and Joanna Szurmak, “Seven Billion Solutions Strong.” February 7, 2020.

Boom! Add economist Clarence Ayres to the other Institutional-school economists explaining how economic progress is open-ended, and how progress sets the stage for ever more.

Such helps to explain, for example, the paradox of expanding ‘depletable’ minerals.

Simon and ‘Schools’ of Economics

Julian Simon reversed his thinking to realize that more people meant more resources and progress, not less. He noted a cascading effect from what he called the ultimate resource, human ingenuity.

“Discoveries, like resources, may well be infinite: the more we discover, the more we are able to discover,” he stated in The Ultimate Resource 2 (1996). Paul Ehrlich and the Malthusians, at wits end, did not challenge their deeply held views but retreated into group think and ad hominem.

Simon’s view of real-world progress was anticipated by members of the Institutional School of Economics. Previous posts at MasterResource have highlighted Erich Zimmermann’s functional theory of resources, resourceship. Institutionalist Wesley Mitchell called knowledge “the greatest of resources.”

Tom De Gregori has continued this tradition in my lifetime. And the torch has been passed to Pierre Desrochers and Joanna Szurmak.

Neoclassical economics, contrarily, wed to diagrammatics and mathematics where entrepreneurial change was banished, fell into the Hotelling trap of believing that the costs and thus prices of minerals had to go up. What seemed correct in the 1970s (under price and allocation controls) was refuted in the 1980s–and more so today.

The Austrian School of Economics has also emphasized entrepreneurship as key to overcoming the the so-called “limits to nature.”

Ayres’ “Principle of Combination”

Pierre Desrochers brought my attention to a 1944 book by Clarence Edwin Ayres (1891–1972), The Theory of Economic Progress, subtitled A Study of the Fundamentals of Economic Development and Cultural Change. Some quotations from chapter VI, Technology and Progress, follow.

Technology is organized skill…. [A]ll acts of skill involve the use of tools of one sort or another.

This absolute mutual contingency of skills and tools is of supreme importance for an understanding of technology as a function of human behavior….

It is the peculiar character of all technology, from chipped flints to Boulder Dam and Beethoven’s quartets, that it is progressive. It is inherently developmental. This circumstance which gives technology its peculiar importance in the analysis of culture­­ and most of all for economists­­ also can be understood only in terms of tools.

If we limit the conception of technology to “skill,” we are at once subject to great risk of conceiving technological development as the growth of skills, and since skill is a “faculty” of “individuals,” we are pre­conditioned to think of the growth of skill as in some sense an increase of this faculty on the part of individuals. But we know nothing of any such increase.

As a result of the rapid advance of machine technology in recent years, the process of invention has attracted general attention and has become the subject of a considerable literature. These studies have given the coup de grace to the “heroic” theory of invention­­ the myth which attributes inventions to the sheer magnitude of soul of the “Gifted Ones.”

… all inventions are combinations of previously existing devices. Thus the airplane is a combination of a kite and an internal combustion engine. An automobile is a combination of a buggy with an internal combustion engine. The internal combustion engine itself is a combination of the steam engine with a gaseous fuel which is substituted for the steam and exploded by the further combination of the electric spark. This is speaking broadly, of course. In actual practice the combinations are for the most part much more detailed. What is presented to the public as a “new” invention is usually itself the end­-product of a long series of inventions.

In this process, materials­­ that economists have so misleadingly designated as “natural” resources­­ function as devices. According to the principle of indestructibility of matter there is no such thing as a “new” material. Helium gas must have been present in the earth of the Texas panhandle geologic ages before man first invaded the Western hemisphere some thousands of years ago. Nevertheless helium was not a “natural resource” of the republic of Texas, inasmuch as helium was not identified in the sun for many years after the end of the republic, nor isolated from the earth’s atmosphere for many years after that, nor discovered to be a component of Texas natural gas until still later, nor treated as a resource until it was used in balloons only a few years ago.

The history of every material is the same. It is one of novel combination of existing devices and materials in such fashion as to constitute a new device or a new material or both. This is what it means to say that natural resources are defined by the prevailing technology, a practice which is now becoming quite general among economists to the further confusion of old ways of thinking (since it involves a complete revision of the concept of “scarcity” which must now be regarded as also defined by technology and not by “nature”).

Furthermore, as regards the nature of the process there is no difference between “mechanical” invention and “scientific” discovery. Scientific discoveries also result from the combination of previously existing devices and materials, laboratory instruments and techniques. It was by combining a magnet with a Crookes tube, for example, that J. J. Thomson discovered that the stream of incandescence in the tube was in fact a stream of physical particles and was even able to calculate the mass of the electrons. It was by combining a prism with a telescope that astronomers were able to identify elements (such as helium) in the sun.

Even in the fine arts “creation” comes about in the same way. Leonardo’s great achievement illustrated by the famous Mona Lisa, about which so much nonsense has been talked, was that he applied techniques which the monks had devised for the portrayal of angels to the portraiture of living subjects. Cezanne characterized his achievement as resulting from the application of Pissarro’s studio technique to painting from nature. In every innovation analysis reveals the combination of previously existing devices. That is what the achievement is which in different fields we call invention or discovery or creation.

This principle of combination is important by virtue of the light it throws on previous obscurities. One of these is the role of chance in discovery and invention. An extraordinary number of the most significant discoveries have been made by chance. Columbus discovered America by accident. Ostensibly he was sailing toward the Indies. The discovery of the X­ray resulted from the exposure of sealed photographic plates by their accidental juxtaposition to a Crookes tube. Ehrlich’s “magic bullet” treatment for syphilis eventuated from the accidental relation between the spirochete of that disease and the trypanosome which Ehrlich had much earlier selected for experimental purposes because it was easily identified under the microscope and could be bred in laboratory animals. In the case of mechanical inventions the rule of chance is even more notorious. Adam Smith relates the tale of the invention of the automatic valves by which the steam engine operates from the trick of a lazy boy who tied the control string to a moving part which then opened and closed the value automatically.

The lore of science and mechanics is full of simultaneous discoveries, often by several agents and as a result of strikingly similar combinations. …. But what seems utterly mysterious so long as invention is regarded as an act of individual inspiration is easily explained in terms of the principle of combination.

These combinations are physical not less than ideational. To be sure they are achieved by men, usually by men of great ability. But the things they put together are physical objects. The coexistence of these objects constitutes a possibility of combination which transcends the acts of any individual. It is in this sense that inventions seem “bound” to occur.

It is no disparagement of genius to recognize that certain combinations would almost necessarily have occurred in somebody’s hands sooner or later. Individual genius not only places its possessor in the front rank of pioneers; it also determines when a discovery is made. Often this happens “before its time.”

Another anomaly of the inventive process which also is resolved by the tool ­combination principle is the extraordinary role of tyros and amateurs in science and mechanics and even the fine arts. The number of important discoveries and inventions which have been made by juveniles and by such people as lawyers and clergymen whose professional training is wholly unrelated to the field in question is strikingly large­­ too large to be attributed to the peculiar talents of the individuals concerned, who in many cases have done little or nothing else to attract attention.

The explanation which follows directly from the tool­-combination analysis of invention is the one which accounts for the annoying facility with which an intruder often finds a solution almost instantaneously for a jigsaw puzzle with which the player has been struggling for hours. Where the solution is a matter of putting together existing pieces, it may be impeded by fixed ideas, preoccupations, and other behavior “sets,” on the part of the regular player from which the intruder is free. Consequently he sees at once the possible combination which has been hidden from the player by his own intense preoccupation. Innovations are often made by people who are so innocent as not to realize how outrageously novel they are. It is even said that important scientific discoveries have been made as a direct result of ignorance on the part of a discoverer who simply did not “know” that the thing he did “could not be done,” and so just went ahead and did it.

If technological development results from the combination of existing tool­-material devices, and if such combinations follow the pattern of existing devices and often do so in the hands of people whose peculiar advantage it is to be free from inhibiting preoccupations, then it would also seem to follow that innovations are likely to occur at any time and in any region in which devices are brought together which have hitherto existed in separate regions. This is an observed fact.

The diffusion of culture traits from one culture area to another is quite generally accompanied by innovation. Indeed, so striking is the stimulus which results from culture contacts that it has been called the “cross­fertilization” of cultures. But is the tools themselves, not the people that have been hybridized.

We have here the explanation of the “inscrutable” propensity of all technological devices to proliferate. This “propensity” is a characteristic not of men but of tools. Granted that the tools are always tools of men who have the capacity to use tools and therefore the capacity to use them together, combinations are bound to occur. Furthermore it follows that the more tools there are, the greater is the number of potential combinations.

For the tool­-combination principle is indeed a law of progress. If we suppose that tool­-combinations occur in the same fashion as that in which digits are combined in the mathematical theory of permutations, then the resulting series is a progressive one in the mathematical sense of a series each member of which is derived from each preceding member by the same operation. In such a case it would be sharply progressive in the sense that the number of combinations would increase very rapidly, that is by squares: x ; (x2) ; (x2) 2 ; ((x2) 2) 2 . . . or x ; x2 ; x4; x8; x16. . .