Industrial ecology is both a vision, a research field, and a source of inspiration for practical work. Its proponents aim to contribute to sustainable development by closing materials cycles and realising a fundamental paradigm shift in the thinking concerning industry–ecology relations. Dominant research lines in industrial ecology focus on industrial metabolism and life cycle tools. The underlying assumption is that the flow and transformation of materials can be managed through the correcting of market and regulatory failures which are causes of environmental degradation. This literature review suggests, on the one hand, that the manageability of the flow of materials is currently limited by market and regulatory failures which inhibit the implementation of the principles of industrial ecology and, on the other hand, that the flow and transformation of materials are only partly affected by prices, information and laws.