Dematerialization, decoupling, and productivity Change

Eric Kemp-Benedict ()

No PKWP1709, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: The prospects for long-term sustainability depend on whether, and how much, we can absolutely decouple economic output from total energy and material throughput. While relative decoupling has occurred – that is, resource use has grown less quickly than the economy – absolute decoupling has not, raising the question whether it is possible. This paper proposes a novel explanation for why decoupling has not happened historically, drawing on a recent theory of cost-share induced productivity change and an extension of post-Keynesian pricing theory to natural resources. Cost-share induced productivity change and pricing behavior set up two halves of a dynamic, which we explore from a post-Keynesian perspective. In this dynamic, resource costs as a share of GDP move towards a stable level, at which the growth rate of resource productivity is typically less than the growth rate of GDP. This provides a parsimonious explanation of the prevalence of relative over absolute decoupling. The paper then presents some illustrative applications of the theory.

Keywords: decoupling; dematerialization; cost-share induced technological change (search for similar items in EconPapers)
JEL-codes: E12 O31 O33 Q32 (search for similar items in EconPapers)
Pages: 31
Date: 2017-08
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://postkeynesian.net/media/working-papers/PKWP1709-updated.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: Dematerialization, Decoupling, and Productivity Change (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pke:wpaper:pkwp1709

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