The economy is the means by which we provide ourselves with all of the things that we need and want in order to live our lives. The economy is the process of us taking the resources that the Earth and its environments provide to us, and converting those resources into products: goods and services. The amount of resources that we need to run our economy, is closely tied to the size of our economy, so as our economy grows, the amount of resources that we use must also grow.

There is a limit to the amount of resources that the Earth is able to provide for our economy to convert into our goods and services. That limit means that there is a limit to the size that our economy can grow to.

Some people argue that our economy can grow bigger without encountering the limits of resource availability, by decoupling economic activity from our use of resources. Decoupling means arranging our economy so that the amount of resources that we use is no longer tied to the size of our economy, so our economy can grow bigger without increasing our use of resources. Three proposals for doing this are:

• we can focus on performing only economic activities that don't use resources (a service economy) 

• we can find ways to perform economic activities that use the same resources repeatedly (recycling) 

• we can invent new ways to perform economic activities that use less resources (technological advances.)

If our economy largely comprises economic activities that don't use resources, then our economy can grow without encountering the limits of resource availability.

To perform only economic activities that don't use resources means that an economy must be based on the supply of services rather than on the supply of goods. Services can be performed for a fee as an economic activity, without the direct use of resources. An economy that operates this way is called a service economy.

Providing services, like all economic activity, is always part of a complete economic process. A complete economic process starts with the collection of resources from the Earth, passes through production and distribution of its products, and ends with consumption of those products. For any economy to function, this entire economic process must be completed from beginning to end for it to produce the products that pay for it. Services can only ever be a part of this economic process; they may be the end product of the economic process, or they may be services such as design, administration, and marketing that will be required throughout the economic process.

For an economic community to choose to have only a service economy, the other economic activities of the economic process must still be performed somewhere, so that the economic process can be completed from beginning to end, creating the need for the services. Those other economic activities must be performed in other economic communities. Overall, the same amount of resources must still be used because the other economic activities that use resources must still be performed. That resource use is hidden in other economic communities.

Economic activities may achieve the use of fewer resources by using the same resources repeatedly; that is, by incorporating recycling into the economic process.

Using recycling to decouple economic activity from the use of resources is constrained by several factors. The nature of some resources, or the way that we use them, makes them unrecyclable. The effects of market forces means that recycling won't be implemented until recycling is cheaper than getting new materials, by which time a lot of the resource materials may have been irretrievably lost into the general environment. Continuous economic growth means that even if all resource material is recycled, more new resource material will always be required for the extra economic activity that is always being added by economic growth.

Technological advances may allow us to reduce the amount of resources that we need to make the products of our economy. Technology may allow us to make better materials so that we can use less material in those products. Technology may allow us to use material more efficiently as products are produced, so that there is less waste.

However, if technological developments are to stabilise and reduce the amount of resources that we use in our economy to a sustainable level, they will need to be able to continually reduce the amount of resources used, because the economy continually grows. Technology will need to continually reduce resource use at a rate that is at least equal to the rate at which the economy grows.

While technology may enable our economy to make more products from the same amount of resources, technology won't be able to keep reducing the amount of resources that are needed to make products forever, because there is a limit to how much the resource need to make products can be reduced; the products of our economy must be made of at least some resources.

Regardless of any technological advances, some resources will still be required for economic activities, so eventually finite resources must run out, because technology can't reduce the need for new resources to nothing. Eventually, our use of renewable resources must become unsustainable, as that use grows with the inexorable growth of our economy. The limits to the amount of resources that are available for us to use means that, even with the effective application of technology, there is still a limit to the size that our economy can grow to.

The idea that decoupling by having a service economy will reduce the use of resources is utterly false; however, it may seem that decoupling by using recycling or technological advances we could at least extend our use of resources well into the future; however this isn't so, because our economy not only has to grow but it has to grow exponentially. Exponential growth means that our economy will grow much bigger, much faster, than we expect.

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resource use and economic activity

decoupling using technology

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