Products as Service Carriers: Should We Kill the Messenger -- or Send It Back?

Background: dematerialization vs. economic growth Environmental problems and unpaid social costs are associated with all materials/energy intensive activities. These have already created strong pressures to reduce harmful wastes emissions, whether by end-of-pipe treatment or by adopting cleaner (i.e. more efficient) methods of production. To be sure, sometimes this can be done at low or even negative cost, as a result of uncovering previously unlooked-for opportunities to reduce costs by reducing inputs. These opportunities may be much greater than skeptics realize at first. However, when the "low hanging fruit" is picked, further reductions in materials consumption and emissions can only be achieved by other means, such as recycling, or investing in higher cost equipment or more labor inputs. The end result will be to make materials and energy producers pay more to reduce pollution and thus more costly to users. This will ipso facto encourage materials/energy users to be more efficient and to seek alternatives where possible. Many of these gains in materials/energy productivity must be achieved -in effect -by substituting labor or capital for energy or materials. (Insulating houses to reduce the need for hydrocarbon fuels would be an example). Other gains will be achieved by extending the useful life of material products by increasing the level of re-use, repair, renovation, remanufacturing and recycling. All of these are inherently more labor-intensive than original mass production. These changes appear to be very desirable from the standpoint of reducing unemployment, but they also ceteris paribus reduce labor productivity. Increasing resource productivity has a downside in the form of reduced economies of scale for the raw materials processing industries and the mass producers. On the other hand, continued economic growth itself continues to be an important political and social objective. Indeed, the needs of aging populations and increasing health-related entitlements, not to mention more investment in education and research, demand that economic growth should accelerate, if anything. A stark question arises: how is future economic growth to be reconciled with a static or declining rate of increase of labor productivity? Is it possible? This paper starts from the observation that the economy adds value to materials extracted from the environment, in the form of embodied information. In effect, the materials -and material products -act as carriers of information. We can think of them as service carriers. A very large fraction of these materials consists of intermediates that are dissipated in use.