The Circular Economy: Another ‘Industrial Revolution’?

The big boys who meet at the annual World Economic Forum at Davos aren’t really into warm fuzzy ideas. For them, money talks and bullshit walks. So the fact that they started talking about the circular economy at their meeting in January this year was a pretty good indicator that the idea has become mainstream – meaning that it pays. There is talk of it being worth a trillion dollars per annum (1.4% of global GDP) and it is the subject of next month’s Green Week – ‘the biggest annual conference on European environment policy’. So what is this circular economy that they are talking so effusively about?

The circular economy is best understood by considering what it isn’t. It isn’t the linear ‘take-make-dispose’ economy that we have become accustomed to where stuff is taken from the earth made into something and then discarded. According to the circular economy’s leading proponent, the Ellen MacArther Foundation:

It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models. (See their full reports here)

So it’s a little bit about reuse, a bit about recycling and a lot about the business model. In fact this last characteristic is perhaps the most important element – certainly as far as consumer goods are concerned. The shift towards a circular economy will see consumers involved in ‘collaborative consumption’ and increasingly buying access to services rather than ownership over goods. So you might buy ‘light hours’ rather than bulbs, or hire a washing machine in perpetuity from someone like the Dutch startup Turntoo who have hitched their wagon to the circular economy. And imagine simply updating the software on your phone rather than trashing it and ‘upgrading’. It is not particularly radical.

Such a model of consumption promotes product stewardship – giving producers the incentive to manufacture robust, long lasting products – whereas the current linear model incentivizes the building of obsolescence into goods. So the circular economy fundamentally challenges the linear status quo that relies on products being cheap enough that consumers are happy to discard them when broken. But there is nothing particularly new here either.

My recently deceased neighbor, born during the Great War, grew up milking cows barefoot on frosty mornings wearing clothes made by her mother from reused flour sacs – “We were poor. My old mum never wasted a thing”. So the Davos club, in coveting their trillion dollar circular economy, is merely injecting a bit of good ole frugality into twenty first century capitalism.

And the La San Marco espresso machine that graces this page (and my kitchen bench) is an exemplar of the circular economy. Four years ago a friend dug it out of his shed and gave it to me, insisting that it was a better means of caffeine delivery than my little travelling Italian stove top. He had purchased it for a couple of dollars from the ‘recycling’ shop that has a contract to collect reusables from the rubbish dump. When I disemboweled it recently to conduct some running repairs I learnt that it had been manufactured in 1993 (and its quality had been assured by Guido). It is still going strong, yet was only narrowly saved from its grave by the circular economy. Importantly its robust build – the designer and Guido clearly forgot about obsolescence – meant that it was possible for it to remain in circulation.

Circulation is vital because the earth is finite and the ‘eco-system services’ that it offers are under a great deal of stress. The new frugality of the Davos club is part of a growing recognition of the importance of resource efficiency both as an economic and environmental concept. We will explore this other side of the circular economy – resource efficiency – in more depth in the coming weeks.