Dematerializing the Economy

We're doing more with less. That's good for planet Earth.

Since 1977 the value of the U.S. economy has doubled, yet the amount of physical stuff it took to supply all the needs and wants of Americans fell from 1.18 trillion pounds to 1.08 trillion pounds. Even more astonishing: the "weight" of the economy fell while U.S. population grew by some 55 million people.

This is no small matter. Economic growth using less physical resources was not supposed to be possible, according to the infamous 1972 Club of Rome report, The Limits To Growth. That document, still referenced in all sorts of economic and environmentalist debates, saw economic growth as dependent upon ever greater amounts of material resources. The production of those resources, went the argument, would eventually lead to a depleted planet and then a massive population die-off. The report concluded that humanity must accept "a state of global equilibrium" in which there was no economic growth.

Kate Kane and her colleagues at the Cap Gemini Ernst and Young Center for Business Innovation, in Cambridge, Massachusetts, weighed the economy by estimating the cost per pound of finished product for 500 different Standard Industrial Classifications (SIC) codes in agriculture, mining, construction, and manufacturing. For a first estimate, Kane divided the annual gross output within each of these SIC categories by her cost-per-pound estimates. Since many industries produce inputs for other industries, this first estimate involves some double counting, which Kane handled by taking the gross weight of output for each SIC code and multiplying it by the proportion of real Gross Domestic Product produced by that industry. Based on these rough calculations, Kane estimates that the value of GDP per pound rose from $3.64 in 1977 to $7.96 in 2000.

Kane's work confirms former Vice-President Al Gore's claim made at the 1999 annual meeting of the American Association for the Advancement of Science: "Throughout our economy, skills, intelligence, and creativity are replacing mass and money -- which is why, in the past 50 years, the value of our economy has tripled, while the physical weight of our economy as a whole has barely increased at all." In other words, we got richer not just by using more stuff, but by being smarter about the stuff use.

It's indisputable that the quality of life for the average American has gotten much better over the past three decades. Per capita income in constant dollars rose from a little over $15,000 in 1977 to nearly $30,000 in 2000. But what people want is not more oil, steel, concrete, plastic, newspapers, and so forth. What they want is heating, cooling, housing, information, communication, and entertainment. How those services get to them is immaterial. Or perhaps more accurately, dematerial.

Let's take a look at a few concrete examples of dematerialization, or the "reduction of material use per unit quality of life." A copper wire can transmit 24 voice channels or about 1.5 megabytes of information per second. Far thinner and lighter optical fiber can transmit more than 32,000 voice channels and more than 2.5 gigabytes of information per second. The first American communications satellite, Telstar 1, was launched in 1962 and could handle 600 telephone calls simultaneously. Modern Intelsat satellites can handle 120,000 calls and 3 TV channels at the same time.

Miniaturization and its cousin "lightweighting" are pervasive. Consider heavy vinyl phonograph records being replaced by CDs--and now, by immaterial MP3 files. Since the 1970s, the weight of the average car has fallen by 25 percent. Food cans are 50 per cent lighter than they were 50 years ago. A flexible plastic pouch that replaces a steel can reduces the packaging weight by 93 percent. Plastic soda bottles are 30 percent lighter than they were in the 1970s--which were already much lighter than the glass ones that preceded them. Similarly, plastic grocery bags are 50 percent thinner than they were 20 years ago and lighter than the paper bags they replaced. The invention of the steel frame building did away with structures that needed heavy thick walls to support their own weight.

Functionality is increasing throughout the economy as well—as computers get smaller and faster, air conditioners, refrigerators, furnaces, and all manner of appliances become more efficient and longer-lasting. Reading this article on the Reason Web site means that it doesn't have to be printed on paper and shipped to you.

Of course, some things can't be miniaturized--food, for example (fans of nouvelle cuisine may beg to differ). Yet food can be produced more efficiently, which is what has happened. Hence, corn yields per acre in the United States have more than tripled since 1950. Improving crop productivity is based entirely on technological improvements such as fertilizer, pesticides, and better seeds.

"How Much Land Can Ten Billion People Spare for Nature?" That's the question Paul Waggoner, a distinguished scientist from the University of Connecticut Agricultural Experiment Station, used in the title of a 1996 article in the journal Daedalus. He concluded, "If during the next sixty to seventy years the world farmer reaches the average yield of today's U.S. corn grower, the ten billion will need only half of today's cropland while they eat today's American calories." If Waggoner is right--and all signs are that he is--the future will be populated by fat people who will have plenty of wilderness in which to frolic.

Near its conclusion, the authors of The Limits to Growth noted, "Any human activity that does not require a large flow of irreplaceable resources or produce severe environmental degradation might continue to grow indefinitely." Thirty years later, it turns out that economic growth is the best example of that idea.