The Invisible Hand at Odds with Environmentalists

Craig S. Marxsen is an Associate Professor of Economics at the University of Nebraska at Kearney.


 In his famous paragraph that stated the principle of the Invisible Hand, Adam Smith explicitly denounced “those who affected to trade for the public good.” Environmentalism has opened a new avenue for this sort of activity and efforts have been vigorous.Some of the major forms of recycling, however, seem now to vindicate Smith’s original judgment. Widespread recycling costs give the impression almost invariably of exceeding any credible benefits. The Invisible Hand, however, might help pull us out of this farce of misguided efforts.

change the color of the background

Adam Smith (1776, Book 4, Chapter 2) argued that::

"As every individual, therefore, endeavours [sic] as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours [sic] to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an Invisible Hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."

In today’s business setting, there are many disbelievers. In particular, well-meaning individuals advocate greater efforts to promote the public good in the form of “sustainability” and corporate environmental friendliness. An enterprise must divert attention from the ordinary business of controlling costs and producing desirable products toward gestures of kindness to Mother Earth. The same sort of zeal can be present down at a low level as can be found up at a national or international level among believers in a coming ecological catastrophe (“eco-catastrophists” ). Adam Smith never knew much good to be “done by those who affected to trade for the public good,” but then, Smith never knew a modern environmentalist or deep ecologist. If Smith was alive today, would seeing our environmental efforts change his mind?

If the reader is part of an office culture at work somewhere, then much of the following may seem familiar. Baskets of wastepaper accumulate for recycling; one overhears discussions of using cloth napkins and china plates at the office Christmas party; someone proposes that linen towels replace the paper towels in the washroom. Walking down the hall with a stack of papers has one cringing in fear of being called a “tree killer.” Startling taboos against throwing old pieces of equipment into the dumpster are announced by email. Bathrooms stink from water-saving colleagues who do not flush toilets. Printers leave inkless streaks from their recycled ink cartridges. Copying machines jam with their recycled copying paper. Perhaps the account Michael Lounsbury provides of Charles, a passionate recycler from a major Southwestern University, even seems vaguely familiar. Charles advocates “Recycling because the other option is extinction!” Unless humans begin living in harmony with nature, we will make Mother Nature too sick and she will eventually heal herself just like the human body heals sickness--it kills off and expels the toxins polluting its system.” Right now, humans are the equivalent to the toxins!” (Lounsbury, 2001). Disagreement with Charles brings one the tacit label of “sociopath” among Charles’ numerous sympathizers.

The Coercive Nature of the Recycling Movement

  Recycling’s volunteers go beyond individual deeds of seemingly noble sacrifice – they organize peer pressure groups and seek to encourage a conformity that only the force of law can adequately reinforce. A recent article in the Chronicle of Higher Education (Carlson, 2003, p. A33) emphasizes that disposing of old computers is becoming a nightmare for colleges and universities – the University of Minnesota, for instance, spent over $100,000 in 2002 taking old computers to a special recycling center and it expects to spend over $150,000 in 2003. Some states have even passed laws against disposal of electronic waste and environmental groups hope to pressure colleges into computer recycling. Activist student groups try to force companies to produce “greener” computers and to “take back” old computers when owners are successfully coerced into paying shipping charges. Elsewhere, CNET staff writer, Jonathan Skillings (2002) reported that HP, IBM, and Best Buy have recently charged about $30 or so to take back an old computer. For comparison, Michael Fumento (2003) reported that landfill disposal costs, in general, run about $28 per ton, and we can infer, therefore, about $1 per 72 pound computer system, including monitor, keyboard, etc. The Chronicle of Higher Education article notes that Cato’s director of natural resources studies, Jerry Taylor, takes issue with making companies recycle electronic waste since a number of landfills safely control its various toxins. Indeed, the whole effort seems redundant to the widespread mandatory redesign of landfills that now must have waterproof liners and leachate collection systems. The college tuition explosion includes some of these and other hidden tithes to the Earth-God. Company take-back mandates would simply change the place where the student pays his or her $30.

Costs and Risks Pollute the Snow-white Image

Many cities have operated extensive recycling programs to receive the fruits of office and household garbage vigilance. Evidence denies that these programs have particularly succeeded. The Economist (2002, p. 32) reports that New York City mayor, Michael Bloomberg suspended the city’s recycling program that started about a decade ago under mayor Rudy Giuliani because so many of the recyclables collected simply ended up in landfills for want of a market for them. Garbage trucks made special runs to collect the various categories of sorted trash at a cost of about $40 million per year. Giuliani closed the city’s only landfill and costs of sending New York garbage hundreds of miles away added half a billion to a budget deficit in the neighborhood of $5 billion or more by early in the first decade of the present century. Bloomberg can no longer afford to delude the city’s greens into thinking they are “making a difference” this way. Washington DC cancelled its recycling program in 1997 after it found it had to pay mills $30 a ton to take away paper that the mills had been willing to pay $150 per ton for just a couple years earlier (Blake, 1997, p. 38). In Montgomery County, Maryland, homeowners had to pay $64.66 per year in extra county taxes in 1997 to pay for the net cost of recycling 38% of their garbage (Blake, 1997, p. 38). Boston recyclers admitted dumping their collectibles in local landfills, while San Jose has cut back on libraries and parks so they could afford to continue subsidizing $5 million annual recycling losses (Rothbard and Rucker, 1997, p. 10). A Canadian man, Jeff White, argues that recycling can only work if unpaid labor is extracted from ordinary residents – a feat achieved by Western Nova Scotia’s garbage patrols searching for recyclables in garbage put at the curbside and by Toronto’s $130 fine for failure to recycle (2002, p. 39).

Michael Fumento tells a humorous story about taxpayer subsidization of a disposable diaper recycling company in Santa Clarita, California (2003). With half a million in government subsidies, the firm, Knowaste LLC, disposes of a 35-cent diaper for $7 in recycling costs (Fumento, 2003). The same cost of landfilling 8000 diapers covers recycling about 9 diapers and Knowaste also recycles some of its subsidies into paying lobbyists to get it more subsidies (Fumento, 2003). Fumento explains that the recycling effort wastes large amounts of fossil fuels and locally scarce water and ultimately yields a trivial amount of useable materials. Fumento cites Peter Anderson of the Madison, Wis.-based consulting firm, Recycle Worlds, who reasons that only non-ferrous metals and high-grade office paper are actually proving valuable in recycling – even aluminum cans cost too much to handle to be very worthwhile (Fumento, 2003).

U.S. News and World Report (Hawkins, 1999, p. 62) warns of perils of injury and death resulting from hospitals recycling and reusing medical devices that were designed to be discarded after a single use. The article tells of cardiologists experiencing breakage of catheters used for coronary artery treatment, resulting in potentially fatal exposure of sharp wires that can rip blood vessels as the instrument is withdrawn. Refurbishing sometimes fails to fully remove blood, mucus and feces from biopsy jaws first passed through one patient’s rectum and then, later, down another patients esophagus. Dana Hawkins, the article’s author, advises, among other defenses, asking the OR nurse to wait to unwrap the instruments only after the patient has arrived and can see that they are fresh. Presumably, if the patient is a devoted recycler, then a delayed unwrapping could likewise insure instead that the doctor was using recycled instruments, in hope of helping to save the Earth -- the patient making a sacrifice in the form of taking a mortal risk for that noble cause.

In a brief article in the British Medical Journal (2003, p. 237), Imre Loefler, the editor, reports that funeral practices are giving way to concern for the environment. Burial recycles the body by feeding it to worms and arthropods, but it risks contaminating the groundwater while it ties up valuable land. Cremation wastes large amounts of fuel and pollutes the air with noxious exhaust. More environmentally efficient methods are discussed including burial at sea that feeds the body to marine scavengers, feeding the body to livestock such as pigs or chickens (presumably after grinding it), and donating some of the bodies to Florida alligator farms where animals can also digest many of the prosthetic devices attached to, for example, deceased Floridians. Funerals might also benefit from concentrating more on the memory of departed loved ones rather than focusing on the presence of troublesome remains, Loefler concludes. Nevertheless, this example falls short of the others in supporting Adam Smith’s contention because of the coincidental cost efficiency of this kind of environmental reverence.

Limited Usefulness of Crummy Materials

To the untrained eye, old tires look like they would provide good material from which to make new things. Unfortunately, Ted Pattenden, president of Toronto's National Rubber Co. Inc., described the problem with old tires when he explained that reprocessing old tires yields a product that takes the form of black crumbs (Verburg, 1994, p. 20). "The physical properties of tire crumb are not good," Pattenden explains; "It's basically black dirt." (Verburg, 1994, p. 20). Pattenden’s observations underlie Peter Verburg’s conclusion tire recycling makes little economic sense so that burning appears to be the best alternative to land filling with them (Verburg, 1994, p. 20). Moreover, tires are proving burnable in productive ways. An article in Popular Mechanics (Chaikin, et. al., 2001, pp. 86-87) notes the successful mixing of chipped tires and coal to fire cement kilns, wood pulp processing, and electricity generating plant boilers. The cutting edge of tire recycling research seems to be searching for ways of burning or cooking tire chips to extract synthetic oil, flammable gas, coke, and other useful products. However, the zeal to recycle tires has produced action that has run ahead of the speculative technological capability upon which it is partly based. The town of Atlanta, Texas had accumulated more than 30 million tires by late in 2002, all collected by a recycling business that went bankrupt after the owner discovered the business could not be run profitably (Pollution Engineering, 2002, p. 11). The Texas Natural Resources Conservation Commission found itself stuck with quite a problem, especially after local business leaders blocked burying the tires for fear of an underground fire than might burn for years like a fire in a coal mine (Pollution Engineering, 2002, p. 11). The vast pile of tires kept residents in terror that an above ground fire might start in spite of round the clock efforts of security guards trying to prevent it. The Texas state environmental agency has now contracted with a Louisiana firm that plans to dispose of the tires for $5 million (Porter, 2003). Dave Porter reports that somewhere between 500 million and 3 billion old tires currently stand stockpiled in the U.S. while about 70% of each year’s 270 million addition to this heap is recycled (i.e., burned for heat) or exported annually, the rest being financially burdensome additions to municipalities (Porter, 2003).

Jay Lehr (2003) explains that every community’s recycling program in America, at the time of his writing, was generating less than enough revenue to cover its costs. Aluminum has fallen from 60 cents a pound down to 20 cents while drink cans contain only half the aluminum they once did and labor has gone up so that it takes recycling six cans to get the financial return that recycling one aluminum can used to bring (Lehr, 2003). While recycling is not really good for the environment nor does it conserve resources, Jay Lehr (2003) reasons, its sole benefit is a “warm-fuzzy feeling” for the human psyche of its adherents. Lehr advocates a realistically priced “pay as you throw” waste disposal program combined with freedom for private decision makers to choose whether to recycle or not based on the costs of alternative landfill disposal.

Virtuous Alternatives to Recycling

Daniel Benjamin (2003) discusses “Eight Great Myths about Waste Disposal.” While landfills are declining in total number, they provide more capacity than a decade ago (Benjamin, 2003, p. 3). Modern landfills protect the groundwater thoroughly; modern packaging promotes garbage reduction; 45 states safely and voluntarily (and profitably) import trash for landfilling; recycling often consumes more resources and creates more pollution than manufacturing from virgin materials; and meritorious recycling is adequately driven by the profit motive while legal mandates cause non-meritorious recycling to be overdone (Benjamin, 2003, pp. 3-6).

So many of the well-intentioned efforts to benefit the planet by recycling and other similar activities almost certainly, in the last analysis, do the Earth more harm than good. Keeping carbonaceous materials out of landfills defeats a major thrust against the anthropogenic carbon dioxide problem expected to contribute to greenhouse warming. EPA investigations have found that a substantial fraction of carbon in materials such as paper, leaves, plastics, and other leftovers remains permanently sequestered underground long after a landfill is closed (EPA, 1998, p. 105). Virtually all recycling efforts consume large amounts of fuels and other resources, natural and not, by the time we tally all the transportation, processing, and manufacturing of required capital goods. The bottom line denies that we benefited the earth because so much of the effort was conspicuously unprofitable.


Business enterprises (and other organizations that produce goods or services), when they put aside their pursuit of their owners “self-interest” and try to serve more noble goals of helping the Earth, almost comically demonstrate the truth of Adam Smith’s Invisible Hand paragraph. These firms add to the costly flow of misdirected materials that are just not valuable enough to merit the attention they get. Comical is the appropriate word because the relentless magnitude of the effort, the enormity of the costs and absurdity of the elusive benefits seem reminiscent of a Laurel and Hardy or Three Stooges comedy.

As Adam Smith has explained, agents could better serve both the public and the Earth by a greater business attention to the self-interest of the principal whom those agents have abandoned in favor of environmental and even quasi-religious goals. Within reasonable constraints, seeking lower cost methods of producing goods and services and of disposing of wastes seems no less environmentally friendly than letting a more unbridled environmentalism run free to ride roughshod over our other interests and mindlessly over the environment itself. This is not to suggest that the zeal of environmentally concerned people cannot serve the former master, per se. Paperless records and communications goals are proving very cost reducing, for example. Recycling of corrugated cardboard seems worthwhile. General Motors has made many iron castings from sheet metal scrap melted down. Nevertheless, to reiterate, recent experience does not appear to justify the large-scale abandonment of efficiency and profitability concerns in favor of the once seemingly laudable pursuit of saving the Earth. We could use a little help from the Invisible Hand to pull us back out of this suspected farce that we seem to be caught in both at the office and at home!

Other articles in this issue of B>Quest on the same subject:

"Sustainable Development: Pros and Cons"

"Incorporating Environmental Excellence in Service Industries"


Benjamin, Daniel K. 2003. “Eight Great Myths about Waste Disposal.” Perc Reports 21, no. 3 (September): 3-6 [Retrieved September 1, 2003 from]

Blake, Kevin. 1997. “Recycling trashed?” Consumers' Research Magazine 80, no. 5 (May): 38 [Retrieved August 26, 2003through University of Nebraska at Kearney’s access to Academic Search Elite, href=""]

Carlson, Scott. 2003. “Old Computers Never Die--They Just Cost Colleges Money in New Ways.” Chronicle of Higher Education 49, no. 23 (February 14): A33(3). [Retrieved August 24, 2003 through University of Nebraska at Kearney’s access to Academic Search Elite, href=""]

Chaikin, Don; Coledan, Stefano; Lowe, Malcolm; and McKelvie, John. 2001. “Oil On A Roll: Fuel From Used Tires Begins To Flow Out Of The Lab And Into The Real World.” Popular Mechanics, 178, no. 12 (December): 86(2) [Retrieved August 26, 2003 through University of Nebraska at Kearney’s access to Expanded Academic ASAP; search terms “tires” and “recycling”]

Fumento, Michael. 2003. “California's Dirty Diaper Deal.” Scripps Howard News Service (August 7) [Retrieved August 27, 2003 from]

Hawkins, Dana. 1999. “Risky Recycling.” U.S. News & World Report 127, no. 11 (September 20): 62(5) [Retrieved August 24, 2003 through University of Nebraska at Kearney’s access to Academic Search Elite, href=""]

Lehr, Jay. 2003. “Recycling: Your Time Can Be Better Spent!” Point of View, The Heartland Institute (spring) [Retrieved September 1, 2003 from]

Loefler, Imre. 2003. “Environmentally Friendly Disposal of the Dead.” British Medical Journal 327, no. 7408 (July 26): 237 [Retrieve August 29, 2003 through University of Nebraska at Kearney’s access to EBSCO Host Academic Search Elite]

Lounsbury, Michael. 2001. “Institutional Sources of Practice Variation: Staffing College and University Recycling Programs.” Administrative Science Quarterly 46, no. 1 (March): 29 [Retrieved August 27, 2003 through University of Nebraska at Kearney’s access to Expanded Academic ASAP]

Pollution Engineering. 2002. “Recycling.” 34, no. 10 (October): 11 [Retrieved August 26, 2003 through University of Nebraska at Kearney’s access to Expanded Academic ASAP; search terms “tires” and “recycling”]

Porter, Dave. 2003. “Tire Recycling Costs Fuel New Programs.” Axcess Business, Inc. [Retrieve August 26, 2003 from]

Rothbard, David and Rucker, Craig. 1997. “Recycling Doesn't Always Make Sense.” Human Events. 53, no. 49 (December 26): 10 [Retrieved August 24, 2003 through University of Nebraska at Kearney’s access to Academic Search Elite, href=""]

Skillings, Jonathan. 2002. “Consumers May Bear PC Recycling Costs.” CNET (March 19) [Retrieved September 1, 2003 from]

Smith, Adam. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations. (Rendered into HTML on 28 February 1998,  by Steve Thomas Steve Thomas for The University of Adelaide Library  Electronic Texts Collection) [Retrieved August 21, 2003 from]

The Economist. 2002. “New York's Budget Punctures a Costly Green Fantasy,” 364, no. 8280 (July 6): 32 [Retrieved August 24, 2003 through University of Nebraska at Kearney’s access to Academic Search Elite, href=""]

U.S. Environmental Protection Agency. 1998. Greenhouse Gas Emissions from Management of Selected Materials in Municipal Solid Waste. Contract No. 68-W6-0029 (September). [ Retrieved February 14, 2000 from ].

Verburg, Peter. 1994. “Not All Waste Turns To Wealth.” Alberta Report / Newsmagazine 22, no. 1  (December 19): 20 (2) [Retrieved August 26, 2003 through University of Nebraska at Kearney’s access to Academic Search Elite, href="]

White, Jeff. 2002. “To Save The Planet, Let's Stop Recycling.” Report / Newsmagazine (National Edition) 29, no. 3 (February 4): 39 [Retrieved August 24, 2003 through University of Nebraska at Kearney’s access to Academic Search Elite, href=""]

 To change the background color use the scroll bar to find a color you prefer and click on it.

Return to the top of the page

Links to tables of contents