By Pierre Desrochers
Like most people of my generation, I used to believe that recycling began a few decades ago in response to the crisis of energy and environmental degradation (except in the slums of the Third World where it was a means of survival). I had heard of the rag picker, the scavenger at the dump, the handcart junkman, and the old-clothes man of Dickens’ era, but I never thought of them as significant economic actors. Little did I know that recycling has always been big business, and that today’s "three R’s" banner (reduce, reuse, recycle) is actually as old as civilization.
My view of recycling began to change a few years ago through an offshoot of my doctoral dissertation in economic geography. Among other things, economic geographers look at clusters of businesses in places like Silicon Valley, Boston’s Route 128 corridor, and Hollywood. Much of their research illustrates how firms can benefit from close proximity to one another through such factors as lowered transportation costs, a mutually reinforcing creative environment, and the communication of tacit knowledge between people dealing face-toface. For my dissertation I looked at the processes by which knowledge developed in one field is used in another and what role, if any, local conditions play in the transfer.
I decided to talk to individual inventors, and my research strategy led me to shops, factories, bungalows, and apartments in my hometown, Montreal. I met many mechanically inclined people, most of them mavericks who had worked in many different industries. My research design was validated as I documented numerous cases of interindustry technology transfer.
My interviews showed me that inventors are compulsive problem-solvers. They see problems where the rest of us would be happy with the status quo. In their opinion, a machine can always be improved to do more with fewer resources. As a result of this mindset, they dislike waste. I began documenting ways that innovative individuals had helped reduce waste throughout their lives.
Many of these inventors were part of recycling networks, some of which had managed to escape the attention of tax collectors. I visited backyards and shops that looked like junkyards to me, but whose owners saw them as full of potentially valuable resources.
I had recently become aware of resource recovery. By chance, I had stumbled across urban theorist Jane Jacobs’ illuminating discussion of "cities as mines" in her 1969 classic, The Economy of Cities. There she pointed out that the best way to deal with waste is not to dispose of it, but to let private enterprises recycle it with a profit. She argued that such an approach would increase true economic abundance.
As my interest in resource recovery grew, I discovered the currently popular way of looking at the economic world and resource recovery known as "industrial ecology." The proponents of industrial ecology draw on an analogy (an imperfect one, as it turns out) with the natural world, in which living organisms consume each other’s waste (a true observation) and where nothing is wasted (this is not true-think of coal and oil, formed by decayed vegetation that becomes inert matter, escaping from the ecosystem).
These researchers argue that left to itself, an industrial economy always turns into an unsustainable "extract-and-dump" system. Industrial ecologists want to correct this "market failure" by developing interfirm arrangements that mimic the material and energy cycling of natural ecosystems. That is, they want industrial waste products to become a source of usable material or energy for other industrial processes.
Most industrial ecologists doubt that the free market can achieve such linkages on its own. For example, a pioneer in the field, Robert Ayres (1997, 24), concludes that the only efficient way to turn the waste of one industry into the input of another is through "long-term central planning and coordination authority." Industrial ecology has taken root in the U.S. Environmental Protection Agency’s Office of Pollution Prevention and Toxics, and the Clinton White House has called it "the new paradigm" in environmental protection.
Yet the history of resource recovery undermines the assumptions of industrial ecologists. While researching corporate innovation at the Jerome and Dorothy Lemelson Center for the Study of Invention and Innovation (a privately endowed institution affiliated with the Smithsonian), I did a computer search of what the museum had on "waste." Within seconds, I came across a multitude of sources such as the 1862 book Waste Products and Undeveloped Substances: Or, Hints for Enterprise in Neglected Fields (Simmonds 1862) and the 1918 volume The Utilization of Waste Products: A Treatise on the Rational Utilization, Recovery, and Treatment of Waste Products of All Kinds (Koller 1918), to name just two. I found countless instances of private businesses making a profit out of what were previously waste products.
Most authors who wrote on waste in the last century and at the beginning of this one understood the importance of industrial loops, the supposed bedrock of modern industrial ecology. In his classic On the Economy of Machinery and Manufactures, the polymath Charles Babbage (1835, 217) wrote that cheap production of any article was possible partly because of the care taken to prevent raw material waste: "Attention to this circumstance sometimes causes the union of two trades in one factory, which otherwise might have been separated."
Babbage described how horns from livestock were used by many other industries early in the nineteenth century. Some were made into combs and a substitute for lantern glass; others were carved into knife handles and the tops of whips. The processing provided fat for soapmakers, glue to stiffen clothes, and fertilizer for farmers-even toys for children. As Frederick Talbot (1920, 11) wrote in the early twentieth century, waste was "merely raw material in the wrong place."
The economist Alfred Marshall’s Principles of Economics, published in 1920, also discusses recycling and reuse. In his chapter on industrial location, Marshall wrote: "It is true that an isolated workman often throws away a number of small things which would have been collected and turned to good account in a factory; but waste of this kind can scarcely occur in a localized manufacture even if it is in the hand of small men. . . ." (Marshall 1986 , 232). As examples of industries that use virtually all their by-products he cited textiles, metallurgy, soda and gas manufacture, mineral oil, and meat packing.
If resource recovery was so prevalent in the past, why do we get the impression that it is something that must be forced today? I think there are two reasons. For one, few academicians and bureaucrats have taken the time to study recycling networks in any depth. The other is the misconception, fostered by regulation, that waste is something dangerous rather than something potentially useful. As industrial ecologist Nicholas Gertler (1995) has written: "To someone imbued with the spirit of the Resource Conservation and Recovery Act (RCRA), an industrial byproduct is a menace to be contained, controlled. It is primarily a threat."
Regulations reflecting this mentality are holding back industrial ecology today. Writing in Scientific American in 1995, Robert Frosch noted that once a substance is identified as hazardous, it is so heavily regulated that it can rarely be reused. Frosch notes that the automotive industry, in protecting cars against corrosion, creates a wastewater rich in zinc. In the past, the sludge from this wastewater was sent to a smelter which recovered the zinc. But once the wastewater was designated as hazardous, the regulatory requirements were so stiff that the smelter couldn’t take it. Now the zinc ends up in a landfill (Frosch 1995, 181).
While earlier manufacturers didn’t have such regulations, they were subject to the common law. They could be sued if they disposed of their waste improperly (as measured by the standard of the day). For example, Chicago meat-packers were sued in 1850 for throwing their byproducts in the Chicago River. After that, they had to transport most of their material far from the city to be buried (Clemen 1923). But because they were free to innovate, they eventually found valuable uses for their byproducts. The same was true for other producers, who had both legal and financial incentives to find productive uses for their wastes. Property rights protection, with freedom to innovate, solved the problem.
Today, most industrial ecologists assume that any industrial economy quickly turns into an unsustainable system where materials and energy are extracted, processed, used, and dumped in a linear flow into, through, and out of the economy. Yet virtually all historical evidence makes clear that this has never been the case. Instead of more central planning, what is needed to achieve the creation of "industrial ecosystems" is to remove the many environmental regulations that prevent the recovery of many by-products. Allowing waste producers to pursue creative solutions to their problems while the common law forces accountability will do more for the environment than centrally planned industrial linkages ever can.
Ayres, Robert U. 1997. Towards Zero Emissions: Is There a Feasible Path? Working Paper 97/80/EPS. Fontainebleau, France: INSEAD.
Babbage, Charles. 1835 . On the Economy of Machinery and Manufactures, 4th ed. London: Charles Knight. Reprint, 1986, Augustus M. Kelley, Publishers.
Clemen, Rudolf A. 1923. The American Livestock and Meat Packing Industry. New York: Ronald Press Company.
Frosch, Robert A. 1995. The Industrial Ecology of the 21st Century. Scientific American 273(3): 178Ð81.
Gertler, Nicholas. 1995. Industrial Ecosystems: Developing Sustainable Industrial Structures. Master’s thesis, MIT, Technology and Policy. Available: http:// www.sustainable.doe.gov/business/gertler2.html. Jacobs, Jane. 1969. The Economy of Cities. New York: Random House.
Koller, Theodor. 1918 . The Utilization of Waste Products: A Treatise on the Rational Utilization, Recovery, and Treatment of Waste Products of All Kinds, 3rd English ed. London: Scott, Greenwood & Son. Marshall, Alfred. 1986 . Principles of Economics, 8th ed. London: MacMillan.
Simmonds, Peter L. 1862. Waste Products and Undeveloped Substances: Or, Hints for Enterprise in Neglected Fields. London: Robert Hardwicke.
Talbot, Frederick. 1920. Millions from Waste. Philadelphia: Lippincott & Co.
Pierre Desrochers, a PERC Fellow this summer, is completing his Ph.D. dissertation in economic geography at the University of Montreal.