The Circular Economy: Extending The Life Of Things

The term circular economy, which shows up more and more at political agendas, is precise but does not express the deep mental change that it implies. We live in a time when machines and labor are used not only to produce jeans, but also to consume them before selling. Actually, the idea of a circular economy is just the opposite. It's meant to extend the life of products and materials, thus making them 'circulate' longer in the economy and reducing the amount of raw materials and newly produced goods, as well as their environmental impact. 'The EU action plan for the Circular Economy' and the Chinese policy for a circular economy are just two examples of the proliferating initiatives in this direction.

Walter Stahel, the Swiss architect and industrial adviser, has been since the '70s one of the fathers of the idea of a circular economy, for which he argues with a 'river and lake' metaphor. Thus far, the economy is conceived as a river, in which we should try to double the flow rate per capita every ten or twenty years no matter whether in this eternally doubling flow the content of beneficial nutrients or detrimental toxins grows faster. Instead, a circular economy would be rather like a lake. Citizens and policy makers would rather preserve and improve the quality and accessibility of this lake, without increasing the affluent and effluent river more than absolutely necessary.

In a circular economy the damage to the environment is reduced, thanks to increased durability, reuse, reparability, remanufacturing and recycling of products and materials. Both products and materials 'circulate' in the economy far longer, rather than passing quickly through it, becoming garbage and pollution. Some scientists think that current technologies could already provide the population of industrialised countries with products and services by using a mere tenth of today's raw materials and a third of our primary energy. Significant reductions in energy and material consumption are pursued, for example, by the Swiss energy strategy for a '2000 watt society' (2000 watts per capita, instead of the current 6000), the French think-tank Negawatt, the Rocky Mountains Institute, the Factor 10 Institute (a ten-time increase in resource productivity).

So why does this 'economy of common sense' fail to catch on? Let's take gold as an example. Its stock above ground is estimated at 180.000 tonnes, equivalent to a cube with sides of just 21 m. A portion of the world's worked gold has been circulating for millennia, melted and re-melted into countless artifacts. Thereby, relatively little material generated a great deal of usage value over time. Another portion of the world's worked gold is instead extracted from mines, at cost of great environmental damage and consumption of energy, returning quickly back underground to the vaults of banks - producing no technical usage value.

A further portion of the extracted gold also soon returns underground in landfills, where remains of cellphones and other devices are dumped, each containing small amounts of gold. Again, a lot of materials and energy wasted to generate very brief usage value. In its first iteration, gold is the prototype of a circular economy, yet in the second and third it's that of a linear economy.

Current technologies already allow us to put an end to most of the misuse and dissipation of gold and its related environmental damage. Indeed, only our misplaced conceptions prevent us from doing just that; on the one hand, we persist in conventions that give gold an exchange value out of proportion to its technical usage value, on the other hand, in many cases, it is more 'convenient' today to dissipate gold than conserve it as a result of a tax system that discourages what is desirable (employment) and encourages what is not (the use and abuse of nature).

In most industrial countries, labor (which abounds and is in part underused) becomes increasingly expensive through taxation and social insurance costs. Thus we encourage replacing labor with more machines, materials and energy. Yet materials and energy (relatively scarce, thus worth saving) are lightly taxed in comparison, or even subsidized, which stimulates their use, abets joblessness (adding to social costs) and increases waste.

For example, David Coady, economist at the International Monetary Fund, estimates that global subsidies to fossil fuels in 2015 amount to over 5.3 trillion dollars (6.5% of the global GDP). According to some economists, we urgently need an ecological tax reform to reverse this burden by lowering taxes and charges on labour, while increasing taxes on energy, materials, and generally on the use and abuse of nature. "The unemployed will then be kilowatts and tons, not people", said Ernst Ulrich von Weiszaecker, founder of the Wuppertal Institute, a leading German think-tank.

In 1976, Walter Stahel and Genevieve Reday published a report for the European Commission whose title seems a misprint: The Potential for Substituting Manpower for Energy. Hold on there. For thousands of years progress meant substituting machines for manpower, the exact opposite. This much is true. But the success of two centuries of industrial society brought about a problem of scale; human population and its material throughput reached such proportions as to turn what was real progress for billions of individuals into a collective boomerang. Today, consuming and wasting far too much material and energy compromises long-term planetary equilibrium and leads us into a new era that Earth scientists call the 'Anthropocene'; a geological epoch in which human activities began to have a significant global impact on Earth's geology and ecosystems.

'Substituting Manpower for Energy' (Walter Stahel) doesn't mean giving up the washing machine, nor giving up technical progress. Instead, it means giving direction to progress, using ingenuity and labor to extend the life of things, rather than reduce it. This is the very purpose of The Product-Life Institute, created in 1982 in Geneva by Walter Stahel and Orio Giarini, both university professors and consultants to companies, governments and international institutions.

Perhaps the contribution of Giarini and Stahel to the political economy is no less important than that in industrial ecology. In books such as "Dialogue on wealth and welfare" (1980) and "The performance economy" (2010), they redefine the concept of economic value; true value is found in what and how long things really perform, not in the amount of their production and commerce.

This simple concept was formulated by Aristotle in his distinction between oikonomia (care for the house) and chrematistics (care for money). But it was abandoned by many modern economists when the political economy seemed to become subordinated to quantitative economics; because it is difficult or impossible to directly measure the real usage of things, in its place we measure the quantity of their production and purchase.

This misbegotten premise shaped an economy that aims at continuously doubling both the production and destruction of things, rather than optimizing their lifecycle. Abandoning this concept of linear economy promises to instigate an actual counter-revolution. In the present terminal phase of our consumption-centred civilization, the ancient precept of caring for and preserving both nature and manufactured goods would subvert the present established disorder, while alleviating job loss and protecting the planet.