Dematerialization (economics)

Dematerialization is a social science term which describes the process of making more goods with lesser material required. The term itself possessed multi-accentuality, which allows it to be diversely explained by different fields of social science, such as Mainstream economics, which put focus on the aspect of technological evolution and market demand shifts. At the same time, Ecological economics which emphasize the effect of Dematerialization on the natural environment.

For other uses, see Dematerialization (disambiguation).

In economics, dematerialization refers to the absolute or relative reduction in the quantity of materials required to serve economic functions in society.[1] In common terms, dematerialization means doing more with less. This concept is similar to ephemeralization as proposed by Buckminster Fuller.

Origin

Dematerialization is a phenomenon occurs simultaneously with technological advancement, especially in the Third Industrial revolution products. Miniaturization and optimization of products are enabled by the improve of wafer fabrication and battery production. Internet supported the digitalization of products (Online newspaper, Media Streaming, eBook). Servitize of products is due to the Industrial transformation in developed economies, from retailing to rental services.[2]

In 1972, the Club of Rome in its report The Limits to Growth predicted a steadily increasing demand for material as both economies and populations grew. The report predicted that continually increasing resource demand would eventually lead to an abrupt economic collapse. Studies on material use and economic growth show instead that society is gaining the same economic growth with much less physical material required. Between 1977 and 2001, the amount of material required to meet all needs of Americans fell from 1.18 trillion pounds to 1.08 trillion pounds, even though the country's population increased by 55 million people. Al Gore similarly noted in 1999 that since 1949, while the economy tripled, the weight of goods produced did not change.[3]

By most measures, quality of life improved from 1977 to 2001. While consumer demand is constantly increasing, consumers demand services such as communication, heating and housing, and not the raw materials needed to provide these. As a result, there is incentives to provide these with less materials. Copper wire has been replaced with fiber-optics, vinyl records with MP3 players while cars, refrigerators and numerous other items have gotten lighter.[3]

The three essential ways to dematerialize a product[4]
Meaning Examples
Optimize Reducing the product mass Reduction of mobile phone weight
Digitize Change into digital products Paper → Laptop, eBook
Servitize Sell the product as a service Mass production → Customization

Bicycle selling → Rental bicycle

Explanations

Mainstream economics

Digital economist Andrew McAfee noted that the two fundamental forces that cause Dematerialization are: thriving Capitalism and technological progression. The technologically advanced products enable the improvement of living standards while consuming fewer natural resources. In the late 18th century, the Industrial Revolution can be seen as the peak of human raw material consumption due to capitalism's expansion. Since then, the progression of technology started to prompt the disuse of obsolete products. As the demand for advanced products increased, the outdated products supply decreased. The economy grows simultaneously with the reduction of material quantity requirements, causing a cycle of "More from less."[5] The three consequences of dematerialization according to Andrew McAfee:

  1. Enhancement of human living standards as well as the natural environment. Poverty is decreasing, as is the rate of child mortality. Knowledge, education, food, and sanitation are spreading rapidly.
  2. When more production is produced by fewer factories, capital concentrates over time. Capitalism and technological progress are combining to allow us to achieve more with less, but this also implies that more profits are going to fewer people.
  3. The decline in the quantity of interpersonal interactions and bonds over time. There are numerous reasons for the reduction of social capital. One of them has to do with concentration: as farms and factories close, the work connections that they created wither.

Ecological studies
The Dematerialization route[6]

In terms of ecological research, dematerialization is the improvement of social metabolism. Unlike traditional environmental protection measures, it facilitates a market and industrial transition from non-renewable to renewable resources, which might fundamentally alleviate environmental challenges.[7] Word processing software, for example, can take the place of paper notes, reducing the demand and supply of non-renewable paper pulp, and slow down the process of deforestation. Dematerialization, on the other hand, is frequently hampered by the issue of reproduction rate. Renewable items will lose their price competitiveness in the market if their reproduction rate cannot exceed that of non-renewable products. Thus, Ecologists mostly suggest for government incentives for renewable energy development.

Dematerialized Industries

Agriculture

Since the 1970s, crop tonnage has quadrupled in the United States, and the agricultural region has fallen from 472 million to 390 million hectares by the 2010s. The environmental footprint of livestock production in the United States has been lowered as a result of productivity advances in animal agriculture. In Europe, Latin America, and East Asia, similar losses in acreage have been observed, accompanied by huge gains in productivity.

Logging

The majority of industrialized economies are now in the midst of a "forest transition," in which governments are reclaiming forest land. Forestry has improved in efficiency, and wood consumption has decreased. Electronic wording applications have replaced paper, and ships and structures are no longer made of wood. Since the 1960s, the global use of wood for fuel and building has decreased dramatically, and the imprint of human activity on the planet has shrunk.

Mineral Industry

Mineral usage is likewise dropping in the United States. Steel usage has decreased by 15%, aluminum consumption by 30%, and copper consumption has decreased by 40% in the United States since the late twentieth century, according to the US Geological Survey. Cars now weigh 30% less than they did in the early 1960s, while aluminum soda cans are six times lighter than they were then. By using reinforced concrete, steel framing, and stronger and lighter glass, the consumption of cement, stone, sand, and gravel in construction has been minimized. For more than a decade, the US has maintained a steady level of energy consumption. Similar trends may be seen in the UK, which began lowering its raw material usage in 2001 and 2003.[8]

Criticisms

There is not much evidence that industries around the world are under dematerialization. The international extraction of six minerals (bauxite, the platinum group, magnesium, cobalt, molybdenum and nickel) and the production of cement grew faster than GDP from 1960 to 2019. Although GDP growth and technological advancement maintains a decent rate, the market demand of non-renewable materials didn’t fall.[9] A reason why we are not seeing a global dematerialization but a regional one is because advanced economies outsourced the production of material-intensive goods to the developing countries.

See also

References
  1. Rosenberg, Nathan (1982). Inside the Black Box: Technology and Economics. Cambridge, New York: Cambridge University Press. p. 72. ISBN 0-521-27367-6.
  2. Coyle, Diane (1998). The weightless world : strategies for managing the digital economy. Cambridge, Mass.: MIT Press. ISBN 0-585-28558-6. OCLC 45734040.
  3. Bailey, Ronald (September 5, 2001). "Dematerializing the Economy". reason.com. Retrieved September 2, 2014.
  4. "Dematerialization". Circular Economy, Practitioner guide.{{cite web}}: CS1 maint: url-status (link)
  5. McAfee, Andrew (2019). More from less : the surprising story of how we learned to prosper using fewer resources--and what happens next (First Scribner ed.). New York, NY. ISBN 978-1-9821-0357-6. OCLC 1112803704.
  6. Gâf-Deac, Ioan; Otilia, Ciutacu (2016-12-16). "Dematerialization of the economy and environmental impact". {{cite journal}}: Cite journal requires |journal= (help)
  7. "Dematerialization, degrowth, and climate change agenda". World Bank Blog.
  8. Lorek, Sylvia (2014). Dematerialisation, Degrowth: Vocabulary for a new era. New York: Routledge.
  9. Hannesson, Rögnvaldur (2021-05-11). "Are We Seeing Dematerialization of World GDP?". Biophysical Economics and Sustainability. 6 (2): 4. doi:10.1007/s41247-021-00086-7. ISSN 2730-7204.


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