Industrial symbiosis: the case for market coordination

Abstract

Despite the fact that all successful, documented cases of industrial symbiosis to this day have been self-organizing, some authors and development officials have suggested that increased public planning might deliver better results in this respect than spontaneously evolved market coordination. This paper takes an historical approach to suggest that comprehensive planning is unlikely to live up to the expectations of its proponents. The essay is structured as follows. The first section provides short case studies of industrial symbiosis in highly different economic and institutional settings, the essentially free-market regime of Victorian England and communist Hungary (1948–1989). The available evidence suggests that market coordination proved much more favorable to the emergence of industrial symbiosis, despite the elaboration of a comprehensive policy to that effect in Hungary. Insights derived from the so-called “Austrian” critique of central planning are then used to explain this paradox. The analysis presented suggests that the Hungarian planners’ failure was not so much the result of the bad implementation of sound policies, but the logical outcome of a top-down approach’s shortcomings. Policy implications for the public planning of industrial symbiosis in a mixed economy are then derived and the case for self-organization is found more compelling. The creation of more innovative institutions that will force firms to “internalize their externalities” while leaving them the necessary freedom to innovate is viewed as an urgently needed and promising path towards increased, sustainable reuse of industrial by-products.