On the life cycle metaphor: where ecology and economics diverge

Abstract

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 output products and excrete wastes. Firms, like organisms, also compete with each other for resources. Curiously enough, one of the apparent differences between natural and man-made systems is actually not one; like the industrial system, the natural system does not recycle everything. However, there are at least four real and important differences between the biosphere (ecology) and the technosphere (economy). First, there is no primary producer in the economic system analogous to what photosynthesizers play in the biosphere. Inputs to the economy are mostly natural resources, capital services and labor. Second, in the economic system, 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. In the biosphere, there are no products as such. Growth is tantamount to accumulation of embodied solar exergy in the form of cellulose, sugars, lipids and proteins. The biosphere produces only wastes and more of itself plus dead matter. Third, in the biosphere, there are no markets, there is no medium of exchange (like money) and there is nothing analogous to paid labor. Exchanges are involuntary (i.e., by predation, parasitism or theft.) Fourth, 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 intelligent 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 often misleading and unjustified. The paper discusses the implications of the eco–eco mismatch for resource accounting and life cycle analysis.