EDWARD S. MASON 159 



2. It is said that characteristic supply and demand inelasticities in 

 the production and consumption of raw materials tend, under laissez 

 faire, to produce a range of price variation that works great and un- 

 necessary hardship on producers and consumers and hampers the 

 attainment of ideal inputs in the natural resource area. In the case of 

 internationally traded raw materials, this price volatility is alleged to 

 create foreign exchange difficulties that seriously damage the network 

 of world trade. Are the conditions of raw material production suffi- 

 ciently different from those of other commodities to justify public 

 intervention designed to dampen or modify excessive price fluctu- 

 ations? 



3. It is argued that natural resource use under laissez faire is likely 

 to be accompanied by economies and diseconomies external to the 

 producing unit but internal to the economy as a whole, that can only 

 be captured or avoided by public action. External diseconomies in the 

 piecemeal development of water resources may provide the justifica- 

 tion for multi-purpose river valley development under public author- 

 ity. External diseconomies in the individual exploitation of oil reserves 

 may only be avoided by public regulation or compulsory co-ordina- 

 tion of individual activities. External economies and diseconomies are, 

 of course, not limited to natural resource use but, as recent writers 

 have pointed out, most of the examples discussed in the literature ap- 

 pear to fall in the natural resource area.^ And there seems to be a 

 reason for this. 



4. It is said that an unregulated exploitation of natural resources 

 will frequently lead to the sacrifice of high-priority future uses in favor 

 of low-priority present uses. Oil that will be needed later for the pro- 

 duction of high-octane gasoline may, if competitively exploited, be 

 currently used for oiling roads. The unimpeded cultivation of Appa- 

 lachian hillsides or the plowing up of western range lands may destroy 

 for all time the topsoil needed later to feed our growing population. 

 According to this contention, laissez faire tends to produce waste in 

 the form of a faulty time distribution in the use of our resources. 



Two of these problem areas, the third and fourth, were central to 

 the range of interests of the early conservationists and have remained 



- Cf. Tibor Scitovsky, "Two Concepts of External Economies," Journal of 

 Political Economy, April 1954. 



