Our civilisation is experiencing significant challenges on many fronts. The Intergovernmental Panel on Climate Change warns that we have a little over a decade to turn around our economic system to avoid catastrophic changes to the global climate system (IPCC 2018). The Stockholm Resilience Center published a report stating that we have exceeded the ‘safe operating space’ in three areas: biodiversity, mineral use and climate change (Rockström et al. 2009, p.472). Our generation is also witnessing a level of income and wealth inequality unprecedented since the second world war (Piketty 2014). These problems are interconnected with the ever-expanding size of the global economy and have been described as wicked and persistent problems because they are complex, uncertain and related to systemic failures (Rotmans and Loorbach 2009; Rittel and Webber 1973).
The circular economy is frequently presented as a solution to these problems. The idea is that environmental problems could be decoupled from economic growth by increasing the effectiveness of resource extraction and utilisation. However, there is so far no evidence that it is possible to decouple the impact on the environment from economic activities (Simonis 2013; Cullen 2017).
In a recent journal article, we argue that it is not enough to reduce symptoms in the current economic system when we are faced with wicked and persistent problems. We need to rethink the foundation of the economic system and its pursuit of unlimited economic growth. We pose the question, does the circular economy provide a fundamental change to the current economic system? To answer this question we reviewed existing definitions of “circular economy” and its goals. We then compared these with the foundations of mainstream economics and its polar opposite, ecological economics.
Ecological economics came into being as a critical voice to the dominating economic system with three central focuses: sustainable scale (of the economy), fair distribution of resources and efficient allocation of resources. Contrary to mainstream economics, pursuing unlimited economic growth on a limited planet is seen as part of the problem. A sustainable economy must at some point stop growing, but it need not stop developing qualitatively. Secondly, the distribution of resources and wealth must be fair. We must move towards an economy committed to satisfying the basic needs of all human beings. Instead of focusing on economic growth and increasing profits, the global economy must include moral considerations and equity. Thirdly, the allocation of resources must be efficient. Accepting the fact that the ecosystem’s source and sink capacity is limited, human well-being must be combined with a reduction in the consumption of natural resources.
Mainstream economics and ecological economics can be seen as opposing paradigms. Following the Hungarian philosopher, Imre Lakatos, we determined that their defining central assumptions (alternatively, their hard core assumptions) are contradictory. Lakatos (1970) argued that scientific knowledge advances through changes in either the hard core or through changes in the protective belt of the hard core assumptions. Evolutionary development is based on changes in the protective belt while revolutionary shifts bring about changes in the hard-core of a system.
Circular economy – a protective belt or challenging the hard core?
The prominent contributor to circular economy, Ken Webster (2015, p.16) defines “circular economy” as follows: ‘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. … [It is] a global economic model that decouples economic growth and development from the consumption of finite resources’. The 4R framework of the circular economy has four main components: reduce, reuse, recycle and recover (or combustion of waste for energy) (Kirchherr et al. 2017). Combustion for energy is the second to last solution and landfill is the last option (Korhonen et al. 2018).
These definitions claim that economic growth can be maintained by increasing the efficiency of resource extraction and use. However, this is far from the reality on the ground. A well-researched article in the Financial Times shows a rising crisis in the recycling industry after China (previously a major importer of recycled goods) closed its doors to future imports (Hook and Reed 2018). The global economic system currently produces more than 270 million tons of waste every year. Recycling factories and incinerators are working at full capacity and still not able to handle all the waste. The overflow is being dumped in landfills or clogging the systems of poorer countries with lower environmental protection systems.
This trend corresponds with cautions by waste management experts that the circular economy must be accompanied by a rethinking of the global economic system. Cullen (2017, p.483) states that the perfect circular economy where ‘waste no longer exists, … where material loops are closed, and where products are recycled indefinitely’ is practically impossible to achieve. However, practitioners (policy-makers, business consultants, business associations and foundations) ‘have little interest in promoting reduction since this may imply curbing consumption and economic growth’ (Kirchherr et al. 2017, p.226). This approach to circular economy ignores the critical questions that we need to ask of the hard core assumptions of the current global economic system and plays the role of a protective belt.
On the other hand, we find strands in circular economy discourse that critically engage with the foundations of mainstream economics. Initiatives such as transition towns, ecovillages, sharing cities and solidarity economy are seen as transformative social innovations ‘involving new ways of doing, organising, knowing and framing’ (Longhurst et al. 2016, p.2). They focus on reducing the resource intensity of our consumption by sharing goods and services and generating value in local economies. These manifestations of circular economy open possibilities for finding creative paths for the future.
In conclusion, we argue that circular economy plays an important role in efforts to solve the complex challenges connected to environment, society and economy. It can either contribute by reducing symptoms within the existing mainstream economic system or by increasing the life forces in economy, society and nature in an ecological economic system.
- This blog post is based on the authors’ paper Circular Economy – Reducing Symptoms or Radical Change? In the journal Philosophy of Management (2019).
- The post gives the views of its author, not the position of LSE Business Review or the London School of Economics.
- Featured image by U.S. Fish and Wildlife Service Headquarters, under a CC-BY-2.0 licence
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Amsale K. Temesgen is a PhD scholar specialising in ecological economics at Nord University/Business school, Norway. Her current research focuses on human well-being in sustainability initiatives. Her background is in Development and Resource Economics. She has over ten years of research experience at Fafo, Institute for Applied International Studies, with a focus on living condition studies in Africa, the Middle East and Asia.
Vivi Storsletten is associate professor at Centre for ecological economics and ethics at Nord University/Business school. She publishes articles and book chapters both nationally and internationally, is active in interdisciplinary course development and holds lectures within philosophy, ecopreneurship and change processes, ecological economics and ethics.
Ove Jakobsen is professor of ecological economics at Centre for ecological economics and ethics at Nord University/Business school. He has published a large number of books and articles, nationally and internationally focusing on transformative ecological economics in the perspective of utopia and anarchism. Jakobsen is often invited as lecturer on conferences, seminars, workshops and public meetings.