This book constructs an economic theory focused on the material foundations of economic activity, providing a basis for economic policies to achieve sustainable development. In this economic theory, inputs that undergo physical transformation once used are termed “throughput resources,” while inputs that remain physically intact after use are called the “capital base.” Using a two-stage production function—one stage determining physical quantities and the other determining the amount of value added—it demonstrates the theoretical possibility that even economic agents aiming for profit maximization or utility maximization can achieve economic activities where greater value added is realized with fewer throughput resources inputs. It then points out that to elicit such economic activities, certain price groups must be determined outside the market and examines the rationale for goal setting outside the market grounded in capability theory. This book provides a theoretical foundation for policies aimed at dematerialization and decarbonization.