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Elen Macarthur Foundation

 

Circular Economy

A new economy is emerging based on design and innovation

It is a cliché to say that times are changing, to point to the swelling tides of uncertainty worldwide – about jobs, about income, the rising prices of energy and materials; about the affordability of housing the state of the financial system and the retreat from public services; about rising populations and declining access to water, food, shelter and clean air.

Yet it is present, real, and challenging in the extreme. At the same time it all seems too much to understand let alone debate and engage with tentative ‘next steps’. It is now that there must be a premium on ideas, better still coherent models that might help bridge these disparate themes. It may even be a time to imagine giant strides rather than baby steps. As an educational charity, the Foundation makes its contribution promoting debate and discussion around the possibilities inherent in just one of these models: a transition from today’s predominately linear ‘throughput’ economy to one which, reflecting insights from living systems, is a circular or ‘roundput’ economy.

This publication is a short but detailed introduction to the framework for thinking which is associated with imagining and designing a prosperous circular economy for modern times.

The end of the world (Not)

An industrial world has been built with an astonishing rapidity and intensity upon exploiting cheap and easy fossil fuels and materials, and by exploiting the stocks, the capital of forest, soil, ocean, mineral ores and community.

This is the story we know so well, the linear take- make-dispose economy driven by the search for throughput with energy and materials dissipated and communities moving from self reliance to wage and market arrangements.

Many of us, post WW2 lived like kings, and a few like gods. So much so that there is a conviction that this will, must somehow continue, or in an opposite reaction that it must end and it will be disastrous.
All that will be left will be the bare bones of an economy, a dystopian vision reflected in movies such as The Road or Mad Max or one where we must start again from scratch. Both convictions share a view of a linear economy as inevitable because of a failing of human nature and this in turn might be summarised in the word ‘greed’.

Another intention

There are other views. The idea that the economy is a human construction, a collective choice means there could be an economy which accepts that the conditions under which an industrial world was built have changed, fundamentally and forever and adapts rapidly.

It need not assume that the world must be full of suddenly good or reformed, unselfish people to make it work. Perhaps there are other views of human nature which are more balanced or would could flourish in a different context? The fault may not be in ourselves or our stars as much as in the system conditions and incentives.

To engage with this touches on how we think, how we learn, where we get our values and how we see the world as well as its resources and patterns of production and consumption. A linear economy did not spring from the furnaces of Ironbridge of itself and the dominant ideas of the time about reality, physical and otherwise were around ‘world as machine’, around the individual’s self interest, around rationality in economic choices, about understanding predicting and controlling – above all, control. We thought we could do anything we willed: defeat disease, create wealth, fly to the moon. Onwards and upwards for ever. We could even Save the Planet if we chose. More and more would be better and better.

A linear economy is an emotional commitment as much as a production system.

A different context

Two frequently used diagrams (below) are of materials and energy flows in a linear economy compared to an idealised circular one.

Simple and familiar enough at one level but the idea of complete feedback, of ‘closing the loop’ in the materials cycle and of reasserting renewable energy cascades in place of fossil fuels is far more fundamental or profound in its implications.

Once again this has its roots in a sense of how the world works and instead of ‘world as machine’ the root metaphor is ‘world as metabolism’. Living systems are full of insights here. Sustainability, for want of a better word, is clearly not about objects it is about systems, about flow.

At the heart of the late 20th century computer and data revolution has been use of information technology to display what feedback means and how systems with lots of feedback work. The realisation has been that now we can model complex mathematics in the computer the physical world, the world of tides and rolling thunderclouds, of populations of organisms and economics is revealed as replete with non-linear relationships and while it is uncertain it is not random. There are new patterns, rules and relationships.

Science has moved on. It beholds us to do likewise – if science matters of course.

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Non-linear topography

A linear world is a simplified world one with limited or zero feedback. It’s a snapshot, a short-term world too. The real world, however is fundamentally non-linear, it is complex: inputs need not be proportionate to outputs; starting conditions are not controlled or sometimes even fully known; change can be rapid. Indeed it is as often boom and bust as much as stable but it is dynamic above all.

We do not understand predict and control, we use insight and models, draw topographies – landscapes of possible outcomes and influence- some fundamentals roll out in the wake…

Firstly, change can come from anywhere. We are participants not controllers. The state of the parts depends on the state of the whole. To act effectively we aspire to being ‘resonant’ and to see what happens and continually adjust. We are whole systems aware, we are navigators not train drivers. We no longer seek to maximise efficiency (focussing on a part) but to optimise whole systems, trading some throughput for resilience and enabling ‘roundput’. This is what is hidden in plain sight behind the curve that connects.

This is, by far, the hardest part of engaging with a circular economy as an idea: it requires systems thinking and being able to live with uncertainty, neither of which come easy in humans schooled in specialism, self interest and the instrumental.

Recycling. A test of perspective. If recycling means recovery from consumers and mashing up material and reconstituting it for uses it was ill suited to in the first place (or uses which degrade the value of the material) then it is much like any raw material flow. It is made to suit linear production where the expectation is that over a few cycles most of the material will still be lost. It is often energy intensive too.

The circular economy is a long way from the thought: ‘its just more recycling!’

The first ‘context’ for our work and resources therefore has to big picture thinking: about the intertwining of history, feedback, uncertainty and time. Context is everything.

By analogy, if we plant a chilli seedling in the garden that place has a history revealed in its soils, climate and latitude, the plant responds to all these factors (feedback) and in growing we can nurture it, but we cannot know all the possible conditions which can affect the plant and we cannot make it grow faster by pulling on its buds – we must wait.

Most Foundation educational resources are about ‘systems’ and ‘thinking’, and ‘thinking in systems’ and it is worth assuming this characteristic throughout.

In a very real sense most of what can be found on the website derives from using a whole systems perspective on design.

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Energy

The second context is energy.

At the end of an era of cheap fossil fuels, especially oil, the world is being reinvented, and a part of that is a blurring of what we think of as an energy debate. It is really energy and materials cascades we are considering. The Foundation often uses the image of the forest to illustrate some of the interconnections. It also illustrates the idea that natural capital can build over time as well as degrade, and that these systems have evolved to make use of the opportunities in decay as well as growth.

A cascade takes time, materials and energy are often released progressively. It is part of the general idea that waste is food in another part of the system. If, as seems likely, we move towards renewables, how these less concentrated energy sources and cascades fit with meeting our needs coincides with making the most of more local flows.

By analogy, the energy ‘forest’ will still have several big trees but we are likely to see discussion around many more mid and small scale projects. The result is a more devolved energy grid and its impact will be everywhere, but especially in the built environment, food production and getting around.

Materials

The third context is a closer look at the stock and flow of materials, the continual transformation of molecules, their aggregation and dissolution. In the economic sense it is the stock and flow of resources; their concentration, their combination and use and their onward use.

It is a tale of two kinds of stuff. A major contribution from ‘cradle to cradle’ (1) was the idea of biological and technical nutrient cycles. The former is designed to flow through the biosphere, from soil to soil as it were. Described as ‘products of consumption’, the most obvious is food and the characteristic which stands out is also contained in the word ‘food’ – its suitability for the cycle – toxics are designed out.

The technical cycle is the creation and maintenance at high quality of materials which provide a service to users, Unsurprisingly these are described as ‘products of service’. Most obviously, this could be tools, components and sub assemblies, precious metals and even complex polymers. As they cannot enter the biosphere they are husbanded outside it as far as possible. The best way of maintaining this pool is to prevent customers from owning them. With that thought the business model changes. ‘Use’ not using up, a variety of rental and leasing options come into focus.

Rising trend energy and materials prices reflect a new set of relationships in the market. As Walter Stahel noted: “Today’s goods are tomorrow’s resources at yesterday’s prices.” What a great summary of some of the new drivers for change.

Dynamic Flows

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As putative metabolists, the characteristics of flows are of interest. It seems that whether we are talking about money, electrons, materials, rivers or electricity there is a trade off between efficiency and resilience (2). The more the streamlining and simplification of the flow through a system the more it becomes a brittle system. Conversely, the more nodes and connections in a system the more resilient it becomes. A moderate shock does not shatter it: it merely reroutes and repairs the flow. At the extreme however, these systems become stagnant or sclerotic.

A sweet spot occurs, skewed towards resilience, where the potential for both change and some resilience coexist. (ref)

This takes us back to optimising systems and holding the paradox that there is both stability and change, these are dynamic places.

Money

The final context, before a short discussion on education, is money. The throughput economy suits the financial system of the day. Indeed the creation of public money as debt (at interest) and fractional reserve banking combine to drive production and consumption: the economy must grow to enable the payment of interest and cover the issuance of new loans. The ability to earn interest by holding financial instruments also drives short termism. Is the forest giving a better return than the treasury bond? If not strip the asset and look for other opportunities…

It follows that a circular economy, whose essence is long term, real wealth flows and rebuilding capital sits uneasily with a financial system so geared to short term monetary flows. Debate about its future direction is seen as valuable.

What Darwin actually refers to by the survival of the fittest was forms that have evolved that are most fit to survive in their environment.

Andrew Simms

Education

It comes as no surprise to see that a schooling system built to service a 19th and early 20th century industrial model is under pressure in the 21st century.

Quite apart from the mismatch between today’s demands and educational direction and achievement schooling remains remarkably linear and specialised.

The Foundation’s emphasis is consistent with the realities of a world which demands as much of the ability to see the bigger picture as the detail, to adapt through giving and receiving feedback – learning continually- and across disclipines and in teams.

It reflects the need for creativity and innovation as well as resilience in turbulent times. It is not a looking back but forward and as such hopefully contributes to what the venerable RSA (3) describes as ‘21st Century Enlightenment’.

Sources

  • Cradle to Cradle Remaking the Way We Make Things, William McDonough & Michael Braungart , North Point Press, 2002
  • Quantifying Sustainability: Resilience, Efficiency and the Return of Information Theory. Co-authored by Bernard Lietaer, Robert E. Ulanowicz, Sally J. Goerner, and Rocio Gomez.  Published in Ecological Complexity, Vol. 6, Issue 1, March 2009
  • http://www.thersa.org/

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SENSE & SUSTAINABILITY

The core text. Describing the basic shift from sustainability as 'doing less harm', and focussing on 'me and consumerism' to one of 'doing good' and 'systems and citizenship'.

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