From a thermodynamic point of view, there is no industrial production of a good without the manufacturing of at least one waste product. The practical implication of this phenomenon, called joint production, is the essence of our environmental problem.
While an awareness of joint production (i.e. combined production of at least two goods) played a key role in the early years of classic economics and Marx’ thinking, it later fell into oblivion. Environmental crises have brought it back into practical and theoretical discussions. When physicists proved that industrial production is always attended by the manufacture of at least one waste product, they also highlighted the general relevance of this concept for environmental issues. Their proof is based on the first and second laws of thermodynamics.
The added value of this concept is that it shows that the Mainstream Economics’ theory of externality is an ex post approach, while the Ecological Economics’ concept of joint production provides an ex ante approach. The former recognizes environmental degradation only after it has occurred, whereas the latter focuses on it right from the start.
An example from the soda-chlorine industry illustrates a process that evolved over 250 years. New technologies and products were invented due to resource scarcity. Over the course of time, pollution from the new technology was increasingly recognised, leading to environmental legislation. Thus, we can develop a “triangle of causation”: Resource scarcity initiates technological invention, this in turn produces environmental pollution which must be regulated by politics. This process leads to new technological innovation which produces new resource scarcities and new environmental pollution. This is how the textile industry led to the soda-chlorine industry and finally to the production of CFCs (Chlorofluorocarbons) which have destroyed the ozone layer.