Following up Art’s post, while Julian Simon was certainly right to take on Malthus (let alone the risible Paul Ehrlich), it’s worth remembering that the metaphor of human knowledge and agency as the “ultimate resource” is just that — a metaphor. Simon correctly pointed out that physical stuff is transformed into higher-order goods only when entrepreneurs figure out how to use the stuff in production. Menger himself noted that “things” become “goods” only when there are “[s]uch properties as render the thing capable of being brought into a causal connection with the satisfaction of this need,” and, particularly important, “[h]uman knowledge of this causal connection.” But it doesn’t follow that knowledge is itself an economic good, let alone higher-order good. As Mises (quoted the other day by Joe Salerno put it: “Capital is a praxeological concept. . . . It is a product of reasoning, and its place is in the human mind. It is a mode of looking at the problems of acting, a method of appraising them from the point of view of a definite plan. It determines the course of human action and is, in this sense only, a real factor.” In other words, physical goods become capital goods only as they are incorporated into an entrepreneur’s subjective production plan (Lachmann’s Capital and Its Structure and Kirzner’s Essay on Capital emphasize this point — see discussion here.) But that doesn’t mean these production plans are capital.
I’m reminded of the long-running debate on whether entrepreneurship is a factor of production. A few years ago I highlighted an insightful 1950 article from Jean Marchal on this point:
Some people doubtless will say that [the entrepreneur] provides the function of enterprise and receives as remuneration a sum which varies according to the results. But this is a tortured way of presenting the thing, inspired by an unhealthy desire to establish arbitrarily a symmetry with the other factors. In reality, the entrepreneur and the firm are one and the same. His function is to negotiate, or to pay people for negotiating under his responsibility and in the name of the firm, with two groups: on the one hand, with those who provide the factors of production, in which case his problem is to pay the lowest prices possible; on the other hand, with the buyers of the finished products, from which it is desirable to obtain as large a total revenue as possible. To say all this in a few words, the entrepreneur, although undeniably providing a factor of production, perhaps the most important one in a capitalist system, is not himself to be defined in those terms.
In other words, while production requires entrepreneurship, and resources exist only as mediated by knowledge, entrepreneurship is not itself a factor of production, and knowledge is not itself a resource, except in the trivial sense that resources — or any economic activity — cannot exist without knowledge.