The analyses in Part I and II of this essay have been carried out under the explicit assumption that natural resources be treated not only as free goods but as goods available in unlimited quantities of equal grade. Although aware of the fact that, except for certain chemical elements, this latter assumption is unrealistic, we found it useful for the purpose of isolating the dynamic processes induced by the complementary factors labor and technology, when studying steady growth, or by labor alone when studying a special case of unsteady growth. Moreover, unlimited supply of homogeneous natural resources is even a systematic requirement for the steady growth of output quantities. On the other hand, unsteady changes in the rate of labor supply, the subject matter of Part II, and of technical improvements, which we are going to investigate in Part IV, can well be combined with changes in the rate of supply of natural resources and, in the interest of realism, must be so combined.

It is the task of this chapter and the next to discuss two types of changes in the supply of natural resources: One refers to the effect of diminishing returns in the realm of natural resources on the adjustment process by which a steady increase in the rate of labor supply is absorbed; the other is concerned with the recycling of material residuals created both in production and consumption.