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Markets and Dematerialization

6 January 2022


We do more with less not because of government regulation or administrative direction, but because of capitalism and technology.Dematerialization may be the most important, yet unsung, example of environmental progress in the 21st century. It is commonplace to observe that the relentless drive to do more with less has led to more efficient resource use, so that a soda can today is made with a fraction of the metal required 50 years ago. But dematerialization is not merely a story about increased efficiency or per‐​capita reductions.What is now being observed represents a fundamental decoupling of resource consumption from economic growth, such that as mature economies grow, they not only use fewer resources per unit of output, but they also consume fewer resources overall. In short, economic growth in the most developed nations increasingly coincides with a net reduction in resource consumption. The United States in particular is “post‐​peak in its exploitation of the earth,” according to Andrew McAfee in More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources — and What Happens Next.McAfee, a principal research scientist at MIT, explains, “We’re now generally using less of most resources year after year, even as our economy and population grow.” The United States uses less gold, steel, aluminum, copper, stone, cement, and even paper than it did at the start of this century, despite the continued increase in gross domestic product. Annual consumption of all but six of the 72 resources tracked by the U.S. Geological Service are “post peak.” We also use less fertilizer and water while growing more crops. Plastic consumption is up, as is energy use, but these two appear to have been decoupled from population and economic growth as well.How does this dematerialization occur? Some examples may be useful. The dematerialization of soda cans is relatively easy to grasp, particularly for those of us who can remember the heavier cans of the 20th century. Aluminum cans weighed 85 grams when introduced in the 1950s. By 2011, the average can was under 13 grams. Cans today are not only thinner and lighter, they are produced more efficiently, with fewer separate sheets of metal.Substitution can be an even more powerful source of dematerialization. Consider telecommunications. A single fiber optic cable made from less than 150 pounds of silica can carry the same volume of information as multiple 1‑ton copper cables. And were that not enough, satellite and wireless technologies enable us to bypass the use of physical cables altogether. We can communicate more and yet use vastly less material to do so. This not only saves copper, but other resources too. Think of all the paper saved by e‑mail, e‑banking, and e‑readers.Markets or Malthus? / It was not expected to work out this way. Throughout the modern era, doomsayers have predicted the imminent depletion of one resource or another. Human impact on the natural environment was to increase inexorably with the rise of wealth, technology, and population, inevitably colliding with the earth’s natural carrying capacity. It seemed “logical and inevitable” that “the planet’s finite stock of these resources would someday be exhausted.”Yet, this is not what happened. Instead, “capitalism and tech progress are now allowing us to tread more lightly on the earth instead of stripping it bear.” The Malthusian “limits to growth” have not merely been delayed or forestalled; they have been transcended.This was neither planned, nor anticipated, nor is it the product of the ecological agenda advanced by the modern environmental movement. Since the first Earth Day in 1970, environmental advocates have called for constraints on consumption, limits on technology, and greater recycling. None of those impulses, in McAfee’s view, did much to encourage dematerialization. Indeed, he suggests, pushing for recycling may have cut the other way, insofar as recycling dulled the price signals that incentivized producers to do more with less. The environmental policies born of the 1970s may have “worked amazingly well” to reduce pollution and related environmental harms, but they played just a bit part in the story of dematerialization.We do more with less not because of government regulation or administrative direction, but because of capitalism and technology. These are the dominant forces driving dematerialization in the most developed countries and they could unleash similar gains in the rest of the world. We “want more all the time, but not more resources,” McAfee notes. We want more of what resources can provide, and one way to get more is to do more with less. Market capitalism both facilitates and enhances the underlying incentives that drive efficiency gains and technological advance. This not only leads to dematerialization but also promotes “critical aspects of well‐​being,” including health and prosperity.What’s left to be done / While celebrating dematerialization and dramatic improvements in many measures of human well‐​being, McAfee acknowledges there is more to be done. He devotes the latter part of the book to considering the challenges that remain. Dematerialization has occurred in the wealthiest nations, but it has yet to reach much of the world. Some types of pollution are declining, but others — including plastic waste and greenhouse gases — are not. He also worries about the potential effects of economic concentration and “disconnection among people and declines in social capital.” Not everything wrought by capitalism and technological advance has been positive, even if the net result is a good one.McAfee is an optimist, but he sees serious storm clouds on the horizon. He is particularly concerned about the atmospheric increase in greenhouse gases and writes that reducing “the carbon intensity of our economic activities” is “the most important task for responsive governments.”He is right to be concerned about climate change, but his discussion of the policy options is somewhat thin and disconnected from the central thrust of his book. Market‐​driven capitalism and accompanying technological advances drove dematerialization and could drive decarbonization as well, particularly if carbon emissions are priced. The proper suite of policies could facilitate a decarbonization in energy to rival the dematerialization we observed in telecommunications. Yet, the nature of any government interventions matters. Ill‐​conceived policies could blunt the market incentives that drive more efficient resource use.McAfee gives such questions relatively little attention, however. He also is too quick to credit regulatory interventions for prior environmental gains, such as the reductions in air and water pollution over the past half‐​century. Those trends often began before the regulatory measures he celebrates, and some regulatory measures may well have caused more harm than good.McAfee did not set out to write a wonky treatise on environmental policy, and More from Less is not one. The book tells the story of capitalism’s triumph over material scarcity with clarity and insight. He ably explains how modern society has achieved material ecological sustainability, and market capitalism was the cause. At a time when capitalism is viewed with suspicion, More from Less rises to its defense. Global challenges remain, but More from Less suggests solving such challenges will require more capitalism, not less.


Jonathan H. Adler
Professor of Law, Case Western Reserve University