Commodity prices: a bull run in the Year of the Ox?

IN the past month, much ink has been spilled on the idea that commodity markets have entered a new era. That is, from the ashes of the Covid-induced commodity bust of early 2020, prices of all types of commodities are poised to rise in the long run and in unison. But is this really the case?

In 1968, Paul Ehrlich, a Stanford biologist, won wide acclamation and fame for his book, The Population Bomb. For Ehrlich and others, the tremendous growth in human population from 1800 was a serious problem in a world of finite resources. In time, such growth would hit a hard constraint with humankind being consigned to a fate of conflict, disease, and famine.

Julian Simon, an economist, became Ehrlich's biggest intellectual opponent with the two sparring for the better part of a decade and Simon finally responding with a book of his own, The Ultimate Resource. In it, Simon turned Ehrlich's reasoning on its head: we do indeed live in a world of finite resources, but humanity in all of its creativity represents not just the problem but also the solution. That is, humankind has always figured out the means by which to balance the at-times competing demands of economic growth and the environment and, presumably, will continue to do so in the future.