Product stewardship which focuses on the complete life cycle of goods from cradle back to cradle will enable the economy to uncouple resource flows from economic success. The key to a higher resource productivity amid to dematerialized products lies in the transformation of the present linear production-focussed industrial economy into a utilization-focused service economy in loops. The result will be an increased regional competitiveness relying on a decentralized economic structure and a "substitution of labour for resources" in the economy.

This trend in the economy towards a more sustainable society and functional economy has started some time ago, yet most experts are unaware of the potentially fundamental change that the signs on the horizon indicate. This is probably due to an interpretation of the signs in terms of the old thinking in terms of the industrial economy.

A functional or service economy needs an appropriate structure, characterized by a regionalization of 'hardware' jobs and skills (mini-mills for material recycling re-manufacturing workshops for products, decentralized services for maintenance and product-life extension), supplemented by virtual 'software' design, research and management centers which commute by means of electronic highways. Such an economy will consume less resources and have a higher resource productivity, it will be characterized by smaller regionalized units using a higher and more skilled labour input. Transport volumes of material goods will diminish and be increasingly replaced by transports of immaterial goods.

1. Introduction

This paper provides a vision for such a sustainable society, and tries to clarify the key notions that are linked to the shift from a linear industrial economy (and its concept of value-added) to a service economy in loops (and its concept of asset management).

2. Sustainabilitv

A sustainable economy is based on several pillars, each of which is essential for the 'survival' of mankind on Earth. This means that we cannot argue on priorities, or speculate on which of these pillars we can afford to lose - we cannot take the risk of losing any single one of them:

1. eco-support system for life on the planet (e.g. biodiversity): a factor of the regional carrying capacity of nature with regard to populations and their lifestyle.
2. toxicology (qualitative approach); a direct danger to mankind, resulting increasingly from its own economic activities, with the phenomenon of accumulation over longer periods of time,
3. flows of matter (quantitative approach): a factor of potentially catastrophic change for the planet (towards a re-acidification), and of potential conflict between industrialized and less developed countries [Factor 10 Club (1994)].

But the idea of a sustainable economy also contains the 'Quest for a Sustainable Society' [Coomer, James C. (ed) (1981), with a broader objective that includes, besides the natural resource issue, the question of the viability and sustainability of our

4. societal and economic structures, including skillful and meaningful occupations for all who want to work, and social integration of all.

This insight was at the base of the movement that coined the English term 'sustainability' in the early '70s, The Woodlands Conferences in Houston, Texas, and the related Mitchell Prize Competitions, had from its beginning, emphasized the quest for a sustainable society. With the growing popularity of the term 'sustainability', this aim has become increasingly confused. But it is vital to keep the wider reference of a sustainable society (including subjects such as quality of life) in mind, in order to understand the importance of the social, cultural and organizational changes involved in a move towards a more sustainable economy.

The first of the above pillars of sustainability is the domain of conservationists (nature parks); the second of legislators (limits and prohibition); the third domain is one of innovative business strategies within the market economy; the fourth mainly a result (but also a precondition!) of the other three.

An economic analysis of the implications of a cradle-to-cradle product responsibility will inevitably question the feasibility of producing and selling short-life goods. Alternatives such as producing and selling the utilization of long-life goods, or selling the results of the utilization of goods rather than the goods themselves, might give a strategic advantage and an economic incentive to those economic actors who get the knack of it - and an increased sustainability and competitiveness will directly result from this.

Re-take and recycling both turn a linear economic thinking, where materials as well as product responsibility is transferred from the producer to the consumer at the point-of-sale, into a sustainable economic thinking in loops, where manufacturers retain an extended product responsibility (Fig. 2 Closing the material loops). A higher resource efficiency can be achieved by "a reduction in the speed of the flow of matter through the economy", e.g. through technical and commercial strategies which promote a longer utilization period of goods, and "a reduction of the volume of the flow of matter", e.g. through strategies of a more intensive utilization of goods and the resources incorporated within them.

Increasing the life expectancy of goods is pollution prevention! Doubling the utilization period (or product-life) of goods in markets near saturation cuts by half the need for raw materials and energy in production, and reduces by half the amount of post-consumer waste, without a reduction in wealth and welfare! It reduces mining waste and environmental impairment in extractive industries, waste in manufacturing, in distribution, recycling and waste disposal by 50% with largely existing technology and at the same or a lower price to the user!

3. The aftermaths of traditional linear economic thought

The terms 'added value' in exclusive relation with production, 'waste' at the end of the first (and normally only) utilization period of goods, and 'GNP' as a measure of the monetarized resource flow at the point-of-sale, are notions from the linear industrial economy (Fig. 1), and of little use in measuring the performance of an economy in loops. ISEW, the index of sustainable economic welfare, is a more appropriate measure, and clearly shows 'the inefficiency of the present economic system in most industrialized countries today [Von Dieren, Wouter (1995) Taking Nature into Account, a report to the Club of Rome]

This is due to the fact that cycles, circles and loops have no beginning or ending point - a true 'economy in loops' does not know 'waste' in the linear sense - nor do natural systems, such as the water cycle. Equally, the notion of value added of the industrial economy gives way, in an economy in loops, to the notion of wealth management: Wealth being the sum of existing goods, knowledge and natural riches, of material and immaterial nature, in monetarized or non-monetarized form.

An economy in loops is often referred to as a 'service economy' [Giarini and Stahel, 1989/93], as the key for economic success is no longer the optimization of manufacturing but the optimization of utilization, the management of existing assets. Thus, in contrast to the manufacturing economy, economic success in a sustainable service economy is not linked to fast mass production, but to long-term customer satisfaction, good husbandry and product stewardship. Economic rewards come from minimizing the efforts, not maximizing production volumes (Fig. 3: Strategies for a higher resource productivity).