The Dematerializing Economy

Nov 15, 2019

Credit Dr. Chris Erickson

Commentary: Left wing environmentalists would have you believe that the insatiable needs of capitalism are inexorably stripping way precious resources. That greed and the desire for more and more is destroying the planet. Well, there is no doubt that capitalists are greedy, but that greed is not stripping the planet but rather driving the development of new technologies that allow us to make stuff with fewer materials.

The U.S. economy is, in fact, dematerializing. We use fewer and fewer molecules each year. Less copper, less iron, less of just about everything. The reason for this is the capitalist drive for efficiency—the drive to get more from less.

Better design allows aluminum cans that are about 30% lighter today than 25 years ago. Sides are thinner, use less metal and take less energy to make. We hit peak wood in the 1990s. Since then, technology innovations, especially the advent of the paperless office, have allowed us to get by with less wood.

Peak oil consumption occurred in 2005, although consumption has not declined much since then. Meanwhile, GDP has increased by 25% so that oil consumption intensity has fallen.

The premium example of the economy’s dematerialization is the iPhone. This one device, which fits into our pockets, replaces a flashlight, camcorder, camera, video console, TV, newspaper, book, telegraph, calendar, notebook, alarm clock, calculator, GPS device, photo album. I could go on, but you get the point.

Note also that while recycling a cell phone is not trivial, it is less of an environmental burden than each of the individual devices.

Of course, you might argue that an iPhone might do all these things but not as well as a dedicated device. There is something to this, but this depends on your basis of comparison. Take a TV. While the dedicated 60-inch TV in my living room has better visuals than my iPhone, I can’t hold the TV in my hand.

Looking beyond the border, the data is not as good, so we really don’t know what is happening to commodity consumption in other countries. Based on what we do know, the trend in developing countries like China and India are not as positive. Material usage per dollar of GDP does appear to be falling, at least as far as we can tell, but total consumption is up thanks to the increase in production.

That said, there is no reason to think that the dematerialization already evident in the United States won’t spread to developing countries including fast growing China and India. The same desire for profits that motivates capitalists in mature economies apply equally to capitalists in developing countries.

The real question is whether the spread of innovation will be rapid enough to help avoid the main effects of environmental degradation and climate change. We don’t have much time, so I’m not optimistic. Markets by themselves are not enough to save us. Government action will be needed.

Christopher A. Erickson, Ph.D. is a professor of economics at NMSU. Chris has worked at NMSU for 32 years. The opinions expressed may not be shared by the regents and administration of NMSU.