The State of the Circular Economy – Part 1

“Invention is the mother of necessity” – Thorstein Veblen

This is, of course, a play on the oft cited aphorism attributed to Plato, and it was a part of my introduction at the UN Great Lakes Circular Economy Forum. I was participating in a panel discussion centered on the role of technology in the transition to the circular economy. The economist Thorstein Veblen’s inversion of the phrase resonates today: are we really creating technology to solve a problem, or are we creating technology that then becomes a need? A classic example is a smart phone. 10 years ago, these were not a necessity. Today, however, there are very few people that would not consider a smart phone a necessity in day-to-day business operations.

We can get sidetracked with an over reliance on coming up with the newest, flashiest “disruptive technology”. Companies then create new technology and set out to convince the world that their technology is the best and most “scale-able”. This often ignores the fact that with every new technology that “solves a problem”, there are unintended consequences. Are we really creating technology to solve a problem, or are we creating more problems? Are we creating technologies just to solve the problems of the last technology that was created?

All of this was to set up the central premise of my introduction to the panel discussion: in the movement to transition to a circular economy there are many things that are being left out of the conversation. Conferences, summits, and forums tend to focus on downstream material diversion of circularity. At times, there are companies that discuss their upstream sourcing of materials, but it is often in the context using recycled content (and not actually reducing material inputs to their system).

In my opinion, these are all items which are currently being overlooked in the broader conversation around creating a circular system:

1) Equity
2) Closed Loop could be another way of saying “resource hoarding”
3) Circularity does not happen in isolation!
4) Race and culture
5) Small businesses are often left out of the conversation
6) Open and communal space!
7) Meeting community and ecosystem needs
8) Jevon’s paradox: in our effort to make the system more efficient are we just making consumption easier?
9) System and planetary boundaries
10) Politics, ego and trust: the underlying force that make it all possible (or not)

For this first post, I will focus on the first three issues I addressed at the Forum last week.

Equity

If we’re not careful and intentional about how we promote circularity, it is possible to create a wonderful circular system where resources are flowing between just a handful of companies, with the proverbial oligarchs reaping the majority of the profits. Let’s imagine a company that only uses materials that has already been extracted from the earth. They have an incredible business model where all of the materials they put into a product make it back to their company and are reintroduced to their product line. This means all of the economic benefit is only flowing to their company, and not to the community or country from which the resources were originally extracted. Furthermore, this hypothetical business paragon of circularity could still have all of the wealth flowing to the top of the business, with workers at the bottom being exploited.

The other aphorism that often gets used at circular economy meetings is the one attributed to JFK in a 1963 speech: “A rising tide raises all boats.” This saying makes sense if you have a boat, and is particularly comforting if you are watching the tide rise from a yacht. As should be abundantly clear, in this economy not everyone has access to a boat (both literally and figuratively).

“Resource Hoarding”

Which brings me to the second issue, and that is the tension between, “closed loop” systems and the perception of hoarding. Many companies are advertising themselves as, “circular” companies because they are getting better at recapturing materials and nutrients within their own operations. If the resources are being, “looped” just within their own company, there is a real danger of the perception of resource hoarding. For example, take a company that is really good at looping water, but is located in a region that is experiencing a drought. They could be viewed as a hoarder of resources, particularly if they have been the beneficiary of any sort of government incentives. This issue becomes even more salient with Plant Chicago’s location in The Plant. As an organization, we use the phrase “closed loop” carefully, as it can have a connotation of being psychologically closed off in addition to materially closed off. It has the potential to suggest that if you are “closed loop,” you are operating in a bubble without concern about whether the community around you is actually benefiting.

Circularity does not happen in isolation!

Finally, if a company is only talking about how their individual company (in the singular) is circular, and not in solidarity with other companies, can they really claim that this is a circular economic practice? At the core, the companies that are closing loops just in their operations are really just making their own processes more efficient. Does this lead to broader economic benefit? Is the increase in efficiency really leading to an overall reduction in consumption?

For Plant Chicago, the idea that any individual business is a “circular” business is a misleading way to think about the concept. In reality, circular economic activity only happens between two or more businesses or individuals. The circular economy is a set of collaborative practices, not a state. Like democracy, there is no perfect end state where the system suddenly just, “works”. Just like democracy only works when the populace actually participates, the circular economy only works when companies are actually engaging in practices with each other.

Part two of this blog will go deeper into race and culture, the role of small businesses, and open and communal spaces.

Banner Photo: Evergreen Brick Works’ outdoor learning space, Toronto

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