What is industrial metabolism?

The word metabolism, as used in its original biological context, connotes the internal processes of a living organism. The organism ingests energy-rich, low-entropy materials ("food") to provide for its own maintenance and functions, as well as a surplus to permit growth and/or reproduction. The process also necessarily involves the excretion or exhalation of waste outputs, consisting of degraded, high-entropy materials. There is a compelling analogy between biological organisms and industrial activities - indeed, the whole economic system - not only because both are materials-processing systems driven by a flow of free energy (Georgescu-Roegen, 1971), but because both are examples of self-organizing "dissipative systems" in a stable state, far from thermodynamic equilibrium (Ayres, 1988).

At the most abstract level of description, then, the metabolism of industry is the whole integrated collection of physical processes that convert raw materials and energy, plus labour, into finished products and wastes in a (more or less) steady-state condition (fig. 1). The production (supply) side, by itself, is not self-regulating. The stabilizing controls of the system are provided by its human component. This human role has two aspects: (1) direct, as labour input, and (2) indirect, as consumer of output (i.e. determinant of final demand). The system is stabilized, at least in its decentralized competitive market form, by balancing the supply of and demand for both products and labour through the price mechanism. Thus, the economic system is, in essence, the metabolic regulatory mechanism.

Fig. 1 The world of the market

Industrial metabolism can be identified and described at a number of levels below the broadest and most encompassing global one. Thus, the concept is applicable to nations or regions, especially "natural" ones such as watersheds or islands. The key to regional analysis is the existence of a well-defined geographical border or boundary across which physical flows of materials and energy can be monitored.

The concept of industrial metabolism is equally applicable to another kind of self-organizing entity, a manufacturing enterprise or firm. A firm is the economic analogue of a living organism in biology.' Some of the differences are interesting, however. In the first place, biological organisms reproduce themselves; firms produce products or services, not other firms (except by accident). In the second place, firms need not be specialized and can change from one product or business to another. By contrast, organisms are highly specialized and cannot change their behaviour except over a long (evolutionary) time period. In fact, the firm (rather than the individual) is generally regarded as the standard unit of analysis in economics. The economic system as a whole is essentially a collection of firms, together with regulatory institutions and worker-consumers, using a common currency and governed by a common political structure. A manufacturing firm converts material inputs, including fuels or electric energy, into marketable products and waste materials. It keeps financial accounts for all its external transactions; it is also relatively easy to track physical stocks and flows across the "boundary" of the firm and even between its divisions.