although efforts to acquire additional resources under

conditions of constant technology might yield diminishing

returns, technology itself might not.

 The view that improvements must show a diminishing
 return is implicit in the thought of those who
 regard more optimistic opinion as cornucopiann."
 Yet a strong case can be made for the view that the
 cumulation of knowledge and technological progress
 is automatic and self-reproductive in modern
 economies, and obeys a law of increasing returns.
 Every cost-reducing innovation opens up possibilities
 of application in so many new directions that the
 stock of knowledge, far from being depleted by new
 developments, may even expand geometrically. Tech-
 nological progress, instead of being the adventitious
 consequence of lucky and highly improbable discoveries,
 appears to obey what Myrdal has called the "principle
 of circular and cumulative causation," namely, that
 change tends to induce further change in the same
 direction.(13)

 In addition, new production processes could free

productive activities from dependence upon traditional

materials. Scientific advance might yield a new sort

of alchemy.

 Yet the analogies by which the classical law
 of diminishing returns is "demonstrated" to be
 approximately descriptive of today's long-term
 growth potentiality, border on the archaic. The
 transformation of materials into final goods has
 become increasingly a matter of chemical processing.
 It is more and more rare for materials to be
 transformed into final products solely by mechanical
 means. The natural resource building blocks are
 now to a large extent atoms and molecules. Nature's
 input should now be conceived as units of mass and
 energy, not acres and tons. Now the problem is more
 one of manipulating the available store of iron,
 magnesium, aluminum, carbon, hydrogen, and oxygen
 atoms, even electrons. This has major economic
 significance. It changes radically the natural
 resources factor of production for societies that
 have access to modern technology and capital.(14)


 3Barnett and Morse, Scarcity and Growth, p. 236.

 14Ibid., p. 238.