The chief arguments that have persuaded people of the necessity of central direction of the conservation of natural resources are that the community has a greater interest in and a greater foreknowledge of the future than the individuals and that the preservation of particular resources raises problems different from those of the provision for the future in general.
The implications of the contention that the community has a greater interest in providing for the future than do individuals go far beyond the problems of the conservation of natural resources. The contention is not merely that certain future needs, such as security or defense, can be provided for only by the community as a whole. It is also that the community should generally devote a larger proportion of its resources to provision for the future than will result from the separate decisions of the individuals. Or, as it is often put, future needs should be valued more highly (or discounted at a lower rate of interest) by the community than is done by individuals. If valid, this contention would indeed justify central planning of most economic activity. There is, however, nothing to support this but the arbitrary judgment of those who maintain it.
There is no more justification in a free society for relieving the individuals of the responsibility for the future than there is for claiming that past generations ought to have made more provision for us than they did. The contention is made no more conclusive by the often used fallacious argument that, because government can borrow at cheaper rates, it is in a better position to take care of future needs. It is fallacious because the advantage which governments have in this respect rests solely on the fact that the risk of failure in its investments is not borne by them but by the taxpayer; in fact, the risk is no less, so far as judgment of the worthwhileness of the particular investment is concerned. But, since governments that can recoup themselves by taxation if the investment does not bring the expected return usually count only the interest they actually pay as costs of the capital they are using, the argument operates in fact against, rather than in favor of, government investment.
The claim that the government possesses superior knowledge raises a more complex problem. It cannot be denied that there are some facts concerning probable future developments which the government is more likely to know than most of the individual owners of natural resources. Many of the more recent achievements of science illustrate this. There will always exist, however, an even greater store of knowledge of special circumstances that ought to be taken into account in decisions about specific resources which only the individual owners will possess and which can never be concentrated within a single authority.
Thus, if it is true that the government is likely to know some facts known to few others, it is equally true that the government will be necessarily ignorant of an even greater number of relevant facts known to some others. We can bring together all the knowledge that is relevant to particular problems only by dispersing downward the generic knowledge available to the government, not by centralizing all the special knowledge possessed by individuals. There is probably no instance where authority can possess superior knowledge of all the facts that ought to influence a specific decision; and, while it is possible to communicate to the owners of particular resources the more general considerations that they ought to take into account, it is not possible for authority to learn all the different facts known to the individuals.
This appears perhaps most clearly where the problem concerns the rate at which stock resources, such as mineral deposits, ought to be used up. An intelligent decision presupposes a rational estimate of the future course of prices of the materials in question, and this in turn depends on forecasts of future technological and economic developments which the small individual owner is usually not in a position to make intelligently.
This does not mean, however, that the market will not induce individual owners to act as if they took these considerations explicitly into account, or that such decisions should not be left to them who alone know many of the circumstances which determine the present usefulness of a particular deposit. Though they may know little about probable future developments, they will be influenced in their decisions by the knowledge of others who make it their concern to estimate such probabilities and who will be prepared to offer for the resources prices determined by these estimates. If the owner can get a higher return by selling to those who want to conserve than by exploiting the particular resource himself, he will do so.
There will normally exist a potential sale price of the resource which will reflect opinion about all the factors likely to affect its future value, and a decision based on the comparison of its value as a salable asset with what it would bring if exploited now will probably take into account more of all the relevant knowledge than could any decision of a central authority.
It has often been demonstrated that, in the case of rare natural resources, exploitation by a monopoly is likely to extend their use over a longer period and that this is perhaps the only instance where such monopolies are likely to be formed and to persist in a free economy.
I cannot go all the way with those who use this as an argument in favor of such monopolies, because I am not persuaded that the greater degree of conservation which a monopoly would practice is desirable from a social point of view. But for those who want more conservation because they believe that the market habitually underestimates future needs, the monopolies that are likely to develop spontaneously in such instances provide the answer.