Downcycling is the recycling of a material into a material of lesser quality. (Wikipedia)

Upcycling is the use of waste materials to provide useful products. Ideally, it is a reinvestment in the environment and embodiment of the notion that while using resources one is also contributing to them and their value. This is antithesis of the consume and waste concept in society. (Wikipedia)

Summary of the "Product Life-Cycle Management to Replace Waste Management" article by Michael Braungart

Key elements of the future waste management infrastructure involve industry, government and the consumer.  With the firm, consumable products should be designed for safe dissipative use, and service products should be designed for easy disassembly and recycling.  Governments should re-align responsibilities, encouraging leasing and other mechanisms, to ensure that producers have incentives to design products for lower life-cycle environmental impacts.  Governments should also encourage both waste supermarkets (to promote and simplify source separation and recycling) and waste parking lots (to store problematic wastes retrievably).  These are transition steps until the economy is able to produce sustainable products.

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See following link for critisism on recycling regarding energy and money savings, possible income loss and social costs.