The Green Hand of Progress
A phone company in California recently began announcing one-stop shopping for telephone numbers. No need to know area codes: Just call a single number, name the location of the person you wish to call and, bingo, you get the desired phone number.
Environmentalists should rejoice. Behind this technological convenience lies an unintended environmental triumph. The phone numbers of millions of Americans used to reside in thousands of local phone books. Now a single CD- ROM can hold 90 million phone numbers, replacing five tons of phone books.
The process of uninhibited innovation and progress is commonly referred to as Adam Smith's invisible hand, but as this example illustrates, it is also an invisible green hand.
This invisible green hand lies behind most sustainable recycling efforts. Market forces, not regulators, inspired entrepreneurs to establish the first large wastepaper mill in the United States back in 1913.
Aluminum-can manufacturers, vying to remain competitive with less-costly plastic and glass containers, experimented in the 1970s with recycling. By the 1990s, aluminum cans were being recycled at a rate well over 50 percent.
But the biggest environmental rewards of the marketplace are elsewhere. They lie in the persistent drive that producers face to use less stuff per task or product. Technology historians call this drive toward efficiency the process of dematerialization.
The earliest generators operated at about 1 percent of theoretical limits. Today's gas-turbine generators operate at about 50 percent of theoretical limits. The mid-century switch to oil and natural gas heating from wood or coal cut residential sulfur-dioxide emissions from 2.52 million tons in 1940 to less than 500,000 tons by 1970.
All this happened before the Environmental Protection Agency was created. Much of this unglamorous improvement comes in small steps, largely invisible to conservationists.
Three decades ago, manufacturers used 164 pounds of metal to make 1,000 cans. By 1995 they used less than 33 pounds per 1,000 cans. Our ability to grow a ton of grain, build a high-rise building or make a soda can with less input has been a constant byproduct of market competition.
The unnoticed environmental benefits of these marketplace innovations are prodigious. Technology historian Jesse Ausubel calculates that global land space the size of the Amazon basin has been spared since 1960 simply through improved agricultural yields.
In recent years, the unintentional "green" side effects of competition have been supplemented with conscious private-sector efforts to incorporate environmental considerations into decisions on product design and manufacturing processes.
Ironically, this environmental progress may be curtailed by the very folks so eager to seek sustainable development. Champions of "sustainability" too often propose policies that could stifle the sorts of innovation that have produced environmental benefits. They push for all manner of product mandates and bans.
In the United States, recycling champions want recycled-content mandates to create more markets for discards. These mandates may end up compelling inefficient resource use.
For example, in California the effect of mandating recycled content in plastic bags has been to stall, and even reverse, innovations that were resulting in thinner and thinner bags.
In Sweden, "green" product advocates, working with retailers, have pushed to define which products are "green" and which are not. Their determinations may deter the introduction of new products with fewer environmental impacts.
No one argues that markets spontaneously take care of all environmental problems. Emissions into the air, for example, remain a challenge. Indeed, well-functioning markets always operate within a set of rules - contract protection, laws that clarify property rights and responsibilities, tort and trespass laws and so on. But not just any rules will do.
Too often environmentalists are blind to the role that competitive markets have played in stimulating both resource conservation and, often inadvertently, pollution reduction. They continue to press for command-style, innovation-suppressing rules and regulations.
Environmental regulators, however, are beginning to take notice of the role the private sector and market forces play in achieving environmental progress. The trend was clear at a recent conference of the Environmental Council of the States where the assembled regulators talked about "customer-service," "flexibility" and unshackling companies from prescriptive regulations.
Maybe it's time to celebrate Adam Smith Day, acknowledging the ideas that not only brought us the Wealth of Nations, but are also the best hope over the long run for reducing our global environmental footprint.
Journal of Commerce, January 13, 1998