In a nation that worries itself sick over its declining productivity. Americans do succeed in producing one thing more successfully than any other country on Earth--garbage. Lifestyles of luxury, fast food, and obsolescence have turned our society into a waste-vomitting machine. The average American produces about five pounds of garbage per day. New York City, perhaps the world's trashiest city, produces more refuse than London and Tokyo combined.

While most people put their garbage out of their mind as soon as they put it in their trash cans, the country's waste disposal problem is becoming a major issue for business and government, with both seeking ways to recycle garbage into an efficient energy source.

Cities throughout Europe and Japan have operated facilities to transform their waste into fuel for nearly 20 years, but significant numbers of plants have not opened in this country, despite considerable interest and research effort by energy companies, city officials and the federal government.

Instead, landfills distant from the inner cities have become the chief refuge for our refuse.

Spurred by recent environmental legislation forbidding the outdoor combustion of most garbage, city officials and private entrepreneurs have established networks for collecting, transporting and dumping waste. With a small group of corporations springing up to handle the waste disposal, and officials in many cities perfectly willing to hand them the job, the process has for the most part worked successfully.

But the landfill solution for getting rid of garbage has run into a problem that even the ingenuity of American enterprise might not be able to resolve--the imminent shortage of large tracts of land needed to serve as dumping sites. Also, public apprehension over the leakages of hazardous wastes at the Hooker Chemical Company's Love Canal site has aggravated fears of environmental dangers that landfills might bring.

The increasing concern over landfills and the search for alternative energy sources to coal-fired and nuclear energy have stimulated efforts to convert cities' garbage into heat, hot water, combustible material, and electricity. Many established corporations, such as Combustion Engineering and Union Carbide, have entered the garbage recycling industry. The giant General Electric Corporation supplies half the power for its turbine plant in Lynn. Mass. with steam from a $50-million garbage-converstion plant north of Boston, facility, built by the Wheelabrator-Frye Company at the suggestion of General Electric, generates steam from the 11 communities and three Boston districts that dump garbage nearby.

But solid waste converstion has come up against both financial and environmental obstacles in the current effort to innovate and expand into a viable, large-scale industry. The large plant size needed for efficient production creates a significant problem for cities attempting to find a renewable outlet for their garbage: experts have estimated that only 85 metropolitan areas can generate enough waste to make a garbage-power plant feasible.

Last November, financial liabilities forced the closing of the first large plant designed to turn trash into an easily transportable powdery substance called Eco Fuel. Combustion Equipment Associates, one of the venture partners for the plant and a leader in fuel converstion research, found its operations in debt and was unable to keep the plant running.

Another conversion option, dense pellets derived from solid waste that can be fed into a furnace to substitute for coal, faces a different problem. The first electric plant designed to use this converted fuel encountered numerous technological and operating difficulties in its first month of operation.

Environmental experts also fear the possibility of dangerous emissions into the atmosphere from such conversion plants. The bottom-line expense of conversion and the accessory cost of correcting corrosion and emission problems make solid-waste disposal uneconomical when compared with the landfill alternative.

As in the rest of the nation's environmental picture, the future of garbage disposal and conversion remains clouded, but not with the smoke of burning trash.