The Dematerialization Concept

A number of studies in the 1980s stressed the concept of dematerialization, that is the prospect that the USA and other national economies were experiencing a permanent decline in the use of materials in industrial production. In general, these studies have had three major limitations. First, they have taken a very short-run perspective, often including data only since 1970. Second, they typically cover only metals and industrial minerals. And third, few of them have included the 'life cycle theory' of product development in explaining the perceived changes in materials consumption. They thus ignored the possibility that, with changing needs, economies will replace old materials with newer, technologically more advanced materials in a cyclical fashion.

Much of this research began with Malenbaum's (1978) World Demand for Raw Materials in 1985 and 2000. That work also was one of the first to analyze materials demand employing the IOU method and surmised that an inverted U-shaped curve could be empirically observed from the IOU data, reflecting an initial rapid increase in the use of minerals as per capita GDP increases, then followed by a slow decline. Malenbaum, however, focused only on a small group of minerals while making many subjective judgments as to changes in IOU. In addition, he erroneously assumed that declining IOU occurred because of a shift in demand from manufacturing to the less materials-intensive service sector in the industrialized countries. It has been shown in other studies that employment has declined in the manufacturing sector, most likely because of increases in productivity, but that the demand for manufactured goods has not significantly declined relative to the service industries. Also the limitation of a small group of materials examined is that they were largely older minerals, neglecting composites, plastics and advanced ceramics.

A variation on Malenbaum's IOU methodology was utilized by Fischman (1980) in his World Mineral Trends and US Supply Problems, which found downturns in IOU for several of the seven metals analyzed (aluminum, chromium, cobalt, copper, manganese, lead and zinc) over the period from 1950 to 1977. Humphreys and Briggs (1983) examined the consumption trends for 12 metallic and 19 non-metallic minerals in the UK from 1945 to 1980. They found that the consumption of most minerals in the UK displayed a tendency to stagnate prior to the early 1970s, and that the consumption of non-metallics had shown a faster growth as compared to the metallics, indicating that their share of the total value of minerals consumed in the UK had increased significantly.

About the same time, Tilton (1985) in his study of 'Atrophy in metal demand' examined seven metals of which the growth in consumption had mostly declined since 1974.

Although Tilton implied that a structural transformation has been occurring in the US materials industries since the mid-1970s, the metals examined (aluminum, copper, steel, lead, tin, zinc and nickel) were, excluding aluminum, linked to mature basic industries. While the study found the IOU of each of the metals to be declining, each of these metals had been in use for more than 100 years and the total consumption of each of them had peaked decades ago. In addition, most of these metals had been or are being replaced by technologically more advanced and lighter high-performance metals. Other attempts to explain dematerialization can be found in a special metals demand conference proceedings by Vogely (1986), and international investigations were made by Lahoni and Tilton (1993) and by Roberts (1996). More recently, Humphreys (1994) and Moore et al. (1996) have examined changing IOU in the construction materials industry.

The main challenge to the materials intensity concept was made by Auty (1985) in his 'Materials intensity of GDP'. Auty reviewed the above studies by Malenbaum and Fischman as well as by Leontief et al. (1983) and Radcliffe et al. (1981) to determine the reliability of their measures of declining materials IOU and to explain better their perceived trends. He disputed the inevitability of structural change in minerals for several reasons: substitution between materials tends to be erratic over time; the range of materials we use is widening rapidly as new technologies are employed, a fact that dematerial-ization does not take into account; and changes in the mix of manufacturing activity are proceeding faster than changes in the overall composition of GDP. He thus suggested that an alternative route to determining the direction of structural change and tracing underlying trends in minerals intensity could be provided by research on long wave economic cycles.

This was confirmed in works of Larson, Ross and Williams (1986) who provided evidence of some earlier or pre-World War II downturns in materials IOU and of Clark and Flemings (1986) who demonstrated that technological processes cause fluctuations in the way in which materials are used. The implications of these insights are that levels of IOU change regularly for different materials and that cyclical swings in this index might be a better indicator of mineral industry adjustments than that of a declining trend. This view was also supported by Sterman (1985) who concluded from his systems dynamics research and analyses of IOU patterns that structural changes in the economy can be better described as following a cyclical rather than a declining trend pattern. Finally, Ayres and Ayres (1996) show how dematerialization can be better explained in terms of materials substitution and recycling strategies.

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