Title: Goods and services and the dematerialisation fallacy: implications for sustainable development indicators and policy

Authors: Philip A. Lawn

Addresses: School of Economics, Flinders University of South Australia, GPO Box 2100, Adelaide, 5001, Australia

Abstract: It has been widely suggested that the economic process can be dematerialised by shifting it away from the production of goods and towards the provision of services. This is a fallacy. Goods are the physical objects that yield the service. Service is the benefit that flows from goods as they are consumed or worn out through use. Clearly, all services have a physical dimension as indicated by the fact that accounting services, for example, are not provided by an imaginary accountant in an imaginary office. Any reduction in resource and energy use intensity, which does not amount to dematerialisation, depends on the extent to which: (1) the durability and recyclability of physical goods is increased; (2) production waste is reduced; and (3) the service flowing from physical goods is increased. Both (1) and (2) are subject to thermodynamic limits. While there are no strict limits to (3), there are good reasons for believing that limits also exist in this regard. These limits have considerable implications for sustainable development indicators and policies. In terms of indicators, a ||green|| measure of national income cannot increase indefinitely. While a measure of sustainable economic welfare can perhaps rise without limit, its increase depends on how well policies facilitate the attainment of five behavioural modes put forward to achieve sustainable development.

Keywords: dematerialisation; sustainable development; green national income; sustainable economic welfare.

DOI: 10.1504/IJSTM.2001.001609

International Journal of Services Technology and Management, 2001 Vol.2 No.3/4, pp.363-376

Available online: 10 Jul 2003 *

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