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On the life cycle metaphor: where ecology and economics diverge

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There is an attractive analogy between nature and industry, based on the similarity of natural functions and certain industrial activities. For instance, animals ingest (eat) and digest food. Finally, there are metabolic wastes. Firms are analogous to organisms in several respects, insofar as they consume material resources, process (digest) them, and produce outputs products and excrete wastes. Firms, like organisms, also compete with each other for resources. However there are at least four important differences between the biosphere and the techno-sphere. First, there is no primary producer in the techno-sphere, playing the same role as photo-synthesizers play in the biosphere. Second, in the biosphere there are no products except biomass (fruit, nuts, seeds or eggs). It produces only wastes and more of itself plus dead matter. Third, there is nothing like money and there is no labor. Indeed, there are no voluntary exchanges (i.e. no trade). Exchanges are involuntary (i.e. by predation, parasitism or theft.) Fourth, and contrary to what many laymen believe, the natural system does NOT recycle everything. Far from it. Water, CO2, and oxygen are recycled via an external reservoir (the atmosphere). Nitrogen, phosphorus and potassium are partially recycled through dead biomass (humus and topsoil). Other elements such as sulfur, calcium and trace metals are not efficiently recycled, except via slow geological processes. Coal and petroleum are obvious examples of wastes (recycled but not biologically), and so are chalk, limestone, marble, iron ore and sedimentary phosphate rock, to name a few. In ecology, growth is tantamount to accumulation of embodied solar exergy in the form of cellulose, sugars, lipids and proteins. In economics, by contrast, the inputs are mostly natural resources, capital services and labor, whereas the output is a heterogeneous mix of manufactured products and services. Labor, in economics, is an input, but not an output. The economic system recycles much less than the ecological system but utilizes a far greater suite of elements. Finally, evolution in nature is driven by differentiation by random mutations of the genome and Darwinian selection based on reproductive success. In economics, differentiation is based on discovery, invention and innovation by economic agents and selection is based on competition at the individual or firm level. Either way, the economic system is not closely analogous to an ecosystem. Attempts to use ecological concepts in an economic context are sometimes misleading and unjustified.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2002/2002-119.pdf

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