Moving Toward a Less Consumptive Economy

Consumption as a Way of Life
Government’s Toolbox
Lean and Clean
Take It Back!
Rethinking Products and Services
Public Consumption and Sustainable Credit
Escaping the Work-and-Spend Trap
New Dynamics and Values

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Consumption as a Way of Life

“Compulsive worship at the altar of consumption has brought humanity to the edge of an environmental abyss—depleting resources, spreading dangerous pollutants, undermining ecosystems, and threatening to unhinge the planet’s climate balance.”

Endless economic growth driven by unbridled consumption has been elevated to the status of a modern religion. Modern economies are capable of producing huge quantities of goods at very low cost. This leads both producers and consumers to regard more and more products as little more than commodities that can be discarded relatively quickly rather than items that embody valuable energy and materials and that should be well maintained and designed for long life spans.

From the standpoint of global justice and equality, the solution cannot be a system of consumer apartheid that upholds western binge habits but denies the poor a decent standard of living. Instead, the rich need to curb their outsized material appetites. Rough calculations suggest that in order to accommodate the twin imperatives of environmental protection and social equity, the rich nations may need to cut their use of materials by as much as 90 percent over the next few decades.

To support the move toward a less consumptive economy, consumers and producers will need to pay close attention to the full lifecycle of products. This means they need to concern themselves not just with the characteristics of the product itself, such as how much energy its use may require, but also with the materials and production methods used to manufacture the product and the kinds and types of wastes generated in the process. In addition, both consumers and producers need to consider how effectively goods actually deliver wanted services and comforts, how long products last, and what happens to them once they reach the end of their useful life.

A range of tools is at the disposal of governments, companies, and individual consumers to make progress toward the overall goal of a less consumptive economy. To make a difference, however, these efforts will need to be scaled up considerably, and political and structural barriers to change must be struck down.

Government’s Toolbox

“Governments can take a number of steps to facilitate the transition to a less consumptive economy. But these will need to be expanded dramatically to put consumption on a sustainable footing.”

Prominent among the measures governments can take are recalibrating tax and subsidy policies that encourage greater consumption, pursuing pro-environment procurement rules, and establishing appropriate product standards and labeling programs.

The Organisation for Economic Co-operation and Development estimates that global subsidies for fuels, timber, metals, minerals, and other items amount to something like $1 trillion a year, with OECD member states accounting for three quarters of the total. Phasing out destructive subsidies and shifting even a portion of those funds to renewable energy, efficiency technologies, clean production methods, and public transit would give the transition toward sustainability a powerful boost.

Ecological tax reform, too, is a way to make market prices reflect the full environmental costs of economic activities more adequately. Carbon taxes, levies on the use of nonrenewable energy and virgin materials, landfill fees, and other waste and pollution charges provide an incentive for manufacturers to move away from heavy fossil fuel use, to boost energy and materials productivity, and to curtail the generation of wastes and emissions. Denmark, Germany, Italy, the Netherlands, Norway, Sweden, and the United Kingdom have all introduced eco-tax reforms, though these are frequently weakened by a variety of loopholes.

Another important tool that governments can wield is procurement. By buying environmentally preferable products, government authorities can exert a powerful influence on how products are designed, how efficiently they function, how long they last, and whether they are handled responsibly at the end of their useful lives. Well-designed purchasing rules can drive technological innovation and help establish green markets.

Governments further influence product development through regulatory tools, such as national standards to save energy and water. By 2000, 43 countries—mostly in Europe and Asia—had household appliance efficiency programs in place, seven times as many as in 1980. Standards, which “push” the market by requiring manufacturers to meet minimum standards, are well complemented by ecolabeling programs, which “pull” the market by providing consumers with information to help them make responsible purchasing decisions, and hence encourage manufacturers to design and market more eco-friendly products.

Lean and Clean

“None of today’s industrial economies are truly sustainable. All modern economies can be leaner without being doomed.”

Industrial economies mobilize enormous quantities of fuels, metals, minerals, construction materials, and forestry and agricultural raw materials. A study for the European Union found that in 1997, the per capita material throughput amounted to about 80 tons per American, 51 tons per citizen of the EU, and 45 tons per Japanese. Given broadly comparable living standards, if Europeans can live on roughly half the material throughput mobilized on behalf of Americans (and the Japanese survive on even less), there is significant room for improvement in the United States—the paragon of consumption that much of the rest of the world strives to emulate.

Most material flows in industrial economies—including waste materials from industry, carbon dioxide and other emissions, and soil loss from farmlands—serve no useful purpose whatsoever and never actually pass through the hands of any consumer. Dealing with these “hidden flows” will require downsizing some of the most destructive activities, such as mining, smelting, and logging. This can be accomplished by improving energy and materials efficiency, boosting recycling and reuse, and lengthening the lifetime of products, so that there is far less need to extract virgin raw materials. But there is also ample space for reducing the environmental impact of the goods and services delivered to consumers—including through “dematerialization,” clean production, and “zero-waste” closed-loop systems.

“Dematerialization” aims to reduce the amount of raw materials needed to create a product by, for example, making vehicles lighter and cutting the energy needed to operate products. Advocates of dematerialization have pushed for Factor 10—policies that aim at providing a given volume of goods and services with one tenth as much material input. There has already been some de-coupling between economic growth and material throughput in Europe and elsewhere, but in most cases this achievement has not translated into a lower overall claim on resources. While per-unit materials consumption has declined, consumer tastes and wants keep spiraling upward. Efficiency gains in automobile fuel efficiency and elsewhere have repeatedly been canceled out or even overwhelmed.

Another important approach is “clean production”—taking advantage of opportunities to reduce and even eliminate the reliance on toxic materials in manufacturing, to prevent air and water pollution, and to avoid hazardous waste generation. This often involves moving away from a “cradle-to-grave” industrial model, where raw materials are extracted and processed and the substances not directly useful to a factory become unwanted waste, to an alternative “cradle-to-cradle” or “closed-loop” systems in which the byproducts of one factory become the feedstock of another. Although achieving zero-waste takes considerable time, it is attracting growing interest in Europe as well as places like China, Fiji, India, Japan, Namibia, the Philippines, Puerto Rico, and Thailand.

A Zero-Waste Success Story

Environmentalists widely regard the community of Kalundborg in Denmark as a trailblazer of industrial ecology. An increasingly dense web of symbiotic relationships among a number of local companies has slowly been woven over the past three decades, yielding both economic and environmental gains. For instance, natural gas previously flared off by Denmark’s largest refinery is being used as feedstock in a plasterboard factory, desulfurized fly-ash from a coal-fired power plant (also the country’s largest) goes to a cement manufacturer, and sludge containing nitrogen and phosphorus from a pharmaceutical plant is used as fertilizer by nearby farms. Instead of a master plan, the present network in Kalundborg actually evolved both slowly and spontaneously from a series of bilateral agreements, all of which were concluded in the first place because they were economically attractive.

Take It Back!

“It is much more likely that resource consumption will be minimized and the generation of wastes and emissions avoided if manufacturers factor environmental considerations in from the very beginning when they design products, develop production technologies, and select materials.”

Around the world, a growing number of governments are adopting “extended producer responsibility” (EPR) laws that require companies to take back products at the end of their useful life. These typically ban the landfilling and incineration of most products, establish minimum reuse and recycling requirements, specify whether producers are to be individually or collectively responsible for returned products, and stipulate whether producers may charge a fee when they take back products.

The goal of EPR is to induce manufacturers to assess the full lifecycle impacts of their products. Ideally, they will then eliminate unnecessary parts, forgo unneeded packaging, and design products that can easily be disassembled, recycled, remanufactured, or reused. The EPR approach has spread beyond packaging to encompass a growing range of products and industries, including consumer electronics and electric appliances, office machinery, cars, tires, furniture, paper goods, batteries, and construction materials.

Europe remains at the center of the EPR movement. In the United States, industry opposition has prevented federal take-back legislation, though a number of state and local governments are expressing interest in European-style take-back laws. Some companies, meanwhile, are launching voluntary take-back efforts—as a way to avert mandatory programs, lower production costs, or marshal goodwill with environmentally conscious consumers.

A number of technical and political challenges remain, however. Plastics recycling has proved resistant to easy solutions, as have certain packaging materials that consist of a complex amalgam of layers of different materials. And industry opposition is far from defeated: In Germany, the retail industry is undermining an ambitious attempt to require the return of all beverage bottles and cans and to discourage the use of throwaways. Finally, the rapid pace at which many electronic devices, such as cell phones, palm pilots, and computers, become obsolete is making it difficult to set up workable collection systems.

Rethinking Products and Services

“Today’s industrial economies are able to churn out large quantities of goods with considerable ease and at such low cost that there is a great incentive to regard most merchandise as throwaways…rather than designing and manufacturing for durability.”

Durability, repairability, and “upgradability” are essential to lessen the environmental impact of consumption. For easy refurbishing and upgrading, a “modular” approach permits access to individual parts and components, which allows them to be replaced easily. By working to extend and deepen useful product life, companies can squeeze vastly better performance out of the resources embodied in products rather than selling the largest possible quantity. Although fewer goods will be produced, there will be greater opportunity and incentive for companies to maintain, repair, upgrade, recycle, reuse, and remanufacture products, and thus greater business and job potential throughout the life of a product.

Already, recycling and remanufacturing have become substantial industries. With an annual turnover of $160 billion, the global recycling industry employs more than 1.5 million people. Not only does recycling keep materials out of landfills and incinerators, it provides substantial energy savings by replacing new raw materials extraction and processing with secondary materials. And remanufacturing operations—particularly in areas like motor vehicle components—save at least 11 million barrels of oil each year, an amount of electricity equal to that generated by five nuclear power plants and a volume of raw materials that would fill 155,000 railroad cars annually. In the United States, remanufacturing is a $50-billion-plus annual business and employs close to half a million people directly in 73,000 different firms; this is roughly equal to employment in the entire U.S. consumer “durables” industry.

Xerox: A Remanufacturing Pioneer

In 1990, Xerox embarked on an Asset Recycle Management initiative. While the company had previously done some remanufacturing, this program led Xerox to design its products from the very beginning with remanufacturing in mind and to make every part reusable or recyclable. As a result, 70–90 percent of the equipment (measured by weight) returned to Xerox at the end of its life can be rebuilt. Like some of its competitors, Xerox also remanufactures spent cartridges for copy machines and printers; in 2001, it rebuilt or recycled about 90 percent of the 7 million cartridges and toner containers returned to it by consumers. All in all, the company estimates that environment-friendly design has kept at least half a million tons of electronic waste out of landfills between 1991 and 2001.

Extended producer responsibility, remanufacturing, and related concepts logically lead to a whole new way of thinking about products and the economy. Instead of merely selling as many goods as possible, manufacturers move on to provide a desired service—leasing or renting their products to consumers. By retaining ownership, manufacturers also remain responsible for proper upkeep and repair, take the necessary steps to extend product life, and ultimately recover the item’s components and materials for recycling, reuse, or remanufacturing. Dow Chemical and Safety-Kleen, for example, now lease organic solvents to industrial and commercial customers, recovering the chemicals instead of making the customer responsible for disposing of them—which gives the companies a strong incentive to use fewer solvents.

Public Consumption and Sustainable Credit

“Sooner rather than later…we need to confront the specter of insatiable consumerism itself.”

Despite the promises of more-efficient and cleaner production and the emergence of a new type of service economy, this may not be enough. There is a danger that the consumer juggernaut will overwhelm even the most sophisticated methods and technologies that can be devised to make consumption lean and super-efficient.

How should societies go about the task of discouraging “excessive” consumption? For one, governments and communities can strike a better balance between private and public forms of consumption—for instance by expanding organized sharing of facilities and amenities, from public libraries and swimming pools to cars and tools. Government action is also indispensable in overcoming the immense structural impediments to lower consumption levels and to more public forms of consumption. Nowhere is this more pronounced than in transportation: low-density, sprawling settlement patterns translate into large distances separating homes, workplaces, schools, and stores—rendering public transit, biking, and walking difficult or impossible. Improved land use planning, environment-oriented norms and standards, and the creation of a reinvigorated public infrastructure that allows for greater social provision of certain goods and services will help ensure that consumers are not overly compelled to make consumption-intensive “choices.”

Another key area where government action is needed is consumer credit. Particularly since the 1990s, the savings rate in most OECD countries has been falling, while household debt is on the rise. Credit card spending is also expanding rapidly among emerging middle-class consumers in Asia, Latin America, Eastern Europe, and even parts of Africa. Governments could help consumers by offering advantageous credit terms for certain efficient, high-quality, durable, and environment-friendly purchases. The Japanese and German governments do this to support the installation of solar roofs on private homes. Governments could also design policies that offer tax rebates for the best-performing products, while taxing those that fall short of standards.

Escaping the Work-and-Spend Trap

“Greater disposable income translates into greater consumer purchases. And the lure of advertising, ‘keeping up with the Joneses,’ and other factors make it seem as though every penny earned is needed to stay on the material treadmill.”

In a reversal of the situation prior to the 1970s, Americans now work longer than most Europeans. Surveys show that almost two thirds of all employees in the United States were working longer-than-desired hours in the late 1990s, up from under half in 1992. (Japanese workers, meanwhile, still have by far the longest hours.)

Since the rise of mass industrialization in the late nineteenth century, however, employees have struggled for less work time—in the form of shortened workdays or weeks, extended vacation time, earlier retirement, or paid leave. In many places, people are going through some form of voluntary downshift—a withdrawal, or partial withdrawal, from the labor force, which is sometimes triggered by a quiet shift in values and behaviors away from consumerism. These efforts are often motivated by a desire to improve the quality of life. Channeling productivity gains toward more leisure time (rather than higher wages that can translate into ever-rising consumption) makes sense from an ecological perspective (assuming that greater leisure does not primarily translate into activities that are environmentally questionable).

More than Americans, Europeans prefer work time reductions over additional income growth. Even so, trading income for time is not a realistic option for many people—particularly in the face of stagnant and unequal wage trends. A significant fraction of the population has felt compelled to work additional hours, often taking on second jobs just to make ends meet. To be workable, work time reduction policies need to be accompanied by wage increases to narrow the income differential between rich and poor.

New Dynamics and Values

“A sustainable economy needs a different theory, abandoning the outdated assumption that quantitative growth is unconditionally desirable and embracing instead the notion of qualitative growth.”

What does consuming less mean for a capitalist economy geared toward perpetual economic expansion? After all, the consumerist culture does play an important role in ensuring that the goods produced by a hyper-productive economy will indeed be purchased. Moreover, the enormous overcapacities that have arisen in many industries seem to demand that consumption be stimulated. The global automobile industry, for instance, is operating at only 70 percent of its productive capacity. And export-driven economies in a number of developing countries are rapidly expanding their output, bringing additional pressure to bear.

At least some observers think that this system is inherently unstable and cannot go on expanding indefinitely. But is a recalibration feasible? Certainly, a large and sudden decline in consumer spending would likely send the world economy into a tailspin. But it is far more likely that a less consumptive economy will come about quite gradually, allowing time to reorient how the economy functions and giving companies an opportunity to adjust. Smoothing a transition will be a series of investments and technological innovations to accomplish the shift toward sustainability—such as promoting renewable energy sources; expanding public transit systems; replacing inefficient machinery, equipment, buildings, and vehicles with far more efficient models; and redesigning products for durability.

It is crucial to retool economic thought as well. The concept of the gross domestic product, in which all economic activities are lumped together whether they contribute to or detract from well-being, reigns supreme. A sustainable economy needs a different way of measuring human activity and of providing signals to investors, producers, and consumers. In such an economy, corporate revenues and profits would no longer be associated with maximizing the quantity of stuff produced and sold but rather with deriving the most service and best performance out of a product, and therefore minimizing energy and materials consumption and maximizing quality.

Without doubt, serious political obstacles need to be overcome. Vested interests, particularly in the energy and mining industries, are adept at defending lucrative subsidies and opposing meaningful environmental tax reform. Many manufacturing companies are wedded to the business model they are familiar with rather than venture into the unfamiliar territory of product take-back and related concepts. And retailers, particularly in the United States, are strongly oriented toward maximizing sales of ostensibly cheap products rather than pursuing quality retail. A less consumption-oriented economy is possible, but it will take government action, consumer education, and growing numbers of corporate trailblazers to make it happen.