Second Objection: On the Persistence of Given Quantities

The flow of oil supplied, besides undergoing a definite plan of extraction, can sud­denly change as a result of a change in expectations and in noncompetitive practices (cartels and collusions and the like).

THE OIL QUESTION, THE PRICES OF PRODUCTION AND A METAPHOR 195 and to threaten their role as attractors of the market prices. It can be answered that such fluctuations in a quantity supplied can be of the same magnitude and frequency as the changes in the demand for investment, which is embedded in the given quan­tities of product in demand. The assumption of a given supply of oil does not bring about a new lack of persistence, in addition to that already implied by the assump­tion of given, but not constant, quantities in demand. Slow continuous changes and sudden abrupt changes una tantum in quantities are compatible with a method of long-period equilibrium (positions), which does not presuppose the assumption of a stationary economy.

Still—the objection may run—the nature of the deviations from a nonstationary state, due to the exogenous changes in technology and consumer tastes, is different from that attributed to the endogenous depletion of oil: the former may happen in any direction, but the latter must occur in only one direction (running down). However, one of the main sources of a nonstationary economy, in the view of the Classics, was the increase in population that leads the economy to extend the margin of cultivation of different qualities of land or to a more intensive cultivation of the same land. This is a necessary change, like the change due to the running down of certain oil deposits. Both changes can be assumed to be compatible with the method underlying the determina­tion of production prices.

Sooner or later the prices of production must change under such conditions; therefore, they cannot be interpreted as constant production prices ad infinitum. Yet, we should not use a double standard by means of which we justify the method of long-period equilibrium in the presence of exogenous changes in the production conditions (in par­ticular those depending on the dynamics of population or on technical innovations), and instead we reject the same method when an exhaustion process necessarily brings about a structural change in order to avoid a collapse of the economy. The common condition for the application of the method in both cases is that the changes admitted are to be slow or una tantum. Incidentally, it would not be a convincing counterargument to say that the method is obsolete because the pace of technical progress is (or looks) much faster and more abrupt nowadays compared to that prevailing when the Classics applied their method of long-period equilibrium (positions). In fact, a faster pace would affect not only the persistence of such states but also the speed of the adjustment process vis-a-vis a deviation from those states.

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