A circular economy is one that is restorative by design, and which aims to keep products, components and materials at their highest utility and value, at all times.

—Ellen MacArthur Foundation

How Will Linear Economy Go Down?

Of course a circular economy, no matter how attractive, is not inevitable, and we can continue operating in a linear economy, perhaps ending in a massive-over-consumption crash like in the movie Thelma and Louise where the car carrying our heroines careens over the edge of the canyon. Some might call this type of ending to our linear economy a colourful, and maybe all-too romantic ending, in which case the more likely outcome of our current modus operandi is a decline that is long and drawn out.

This ending entails a gradual ratcheting downwards as the world economy yo-yos between episodes of reflation and asset boosting growth and a resource constrained economy prone to price spikes—and falls—while debt and deflation wait in the wings alongside increasing inequality. When it comes to the question of access to resources, this might, incidentally, play out in the following way: by impoverishing the middle classes and returning to a rentier economy. Another name for this type of economy is a 'tollbooth economy’ where ownership is restricted and access made expensive, just like the old toll roads. In a real sense freedom to own is an important freedom and if it is about access too, then that needs to be low cost, sans the economic rents.

Changing the Story in Our Mind's Eye

The troubling thing is that systems become entrained. The economy has changed profoundly since 1980 [note 1], but in our minds we still carry the story of the bountiful, democracy and social mobility enhancing, welfare affording economy, one where technological innovation solves our problems, cures our ills and provides employment. This was the story of the post war consensus and the end phase of seeing rising standards of living every decade for about 150 years.

In the end it might be the story we tell ourselves about how things work, which shapes whether a circular economy becomes accepted and adopted. As J.K. Galbraith noted "all revolutions are the kicking in of a rotten door". Changing the story to a circular economy sounds both unlikely and is a major undertaking, which of course it is and will not just happen on its own accord, but if the rationale and accompanying narrative do two things really well, then it might succeed.

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First, the linear economy needs to be experienced as failing in a broad and yet profound way. Perhaps that is happening, as the 2007 financial meltdown was such an example, followed by the lacklustre and incomplete economic recovery giving evidence of the extraordinary effort needed just to prop up the global economy—until the next crisis. The circular economy has to be a better, more coherent, story for our changing times.

The second thing needed to get to a circular economy is that those involved with political economy need to take a significant interest in and find it good news too. This is because, like all systems, it requires enabling conditions and certain changes to the 'rules of the game' that reinforce, embed, and extend the potential advantages circular economy offers to businesses, industry and the environment. Circular economy must answer to David Orr's injunction that it is not nearly enough to know what we are against but we have to describe what we are for—or at least the direction and underpinning of that change, along with the 'worldview' which energises it. And if cognitive science, in the form of the work of George Lakoff is a guide it will have to work on the basis of careful framing around resonant metaphors.

Thought, it seems, is not only habitual but abstract thought is nearly always metaphorical. This explains the importance of framing and changing the underlying metaphor to suggest different relationships and consequences. As an example, the industrial linear economy was and still is envisioned as 'machine-like'—a machine for taking resources, making products and disposing of the waste. The assumption has always been that resources are endless, and waste depositories limitless but, quite simply, we need an economics that matches what we now know about the way real world systems work.

The circular economy is based on insights from what now dominates our scientific understanding; we see through systems science when we explore dynamics. We do not use a machine analogy, as its too limited, too special case to be especially useful. The circular economy takes analogues from non-linear systems, particularly living systems. As Gunter Pauli notes, by "Thinking in systems and cycles we become metabolists".

In circular economy, we need to think in terms of inclusivity—an economy is embedded in energy, materials, information flows, and feedback, so that we need to think as much as we can in terms of stocks (e.g. restoring social and natural capital for example) and flows. When we talk about flows, they have to be flows that are effective, where everything is food for its next use.

The Bottom Line

Circular economy needs to offer economic advantages, which is exactly what we are beginning to discover, and is, in a nutshell what the work of the Ellen MacArthur Foundation does.

Read also: Are Citizens Prepared to Play a Role in Sustainable Growth?