This song is based on the writings of Hungarian author and philosopher Arthur Koestler. Sting enjoyed Koestler's work, and the album Ghost In The Machine is named after one of his books. Koestler believed that outside influences could destroy our spirit and restrict our thinking. The "spirits" and "ghosts" Koestler wrote about were the innate higher functions that often get lost in the "machine" created by governments and corporations.
The word "material" has a double meaning here. In one sense, it indicates the physical world as opposed to the spiritual realm. It could also mean materialism, where a high value is placed on money and things at the expense of enlightenment.
Like many Police songs, this has a reggae beat, although it is more synthesizer-driven than many of the others.
Reggae singer Pato Banton recorded this with Sting for the soundtrack to the 1995 movie Ace Ventura: When Nature Calls. This version hit #36 in the UK.
Sting explained the song's meaning in Lyrics By Sting: "I thought that while political progress is clearly important in resolving conflict around the world, there are spiritual (as opposed to religious) aspects of our recovery that also need to be addressed. I suppose by 'spiritual' I mean the ability to see the bigger picture, to be able to step outside the narrow box of our conditioning and access those higher modes of thinking that Koestler talked about. Without this, politics is just the rhetoric of failure."
With the Ghosts in the Machine album, Sting says, he used densely layered multi-tracked vocals, synthesized keyboards, and horn riffs to "create the impression of something struggling to the surface, something hidden in the recesses of the mind, something from our dark subconscious wanting to be seen."