COMING FULL CIRCLE: Why Social and Institutional Dimensions Matter for the Circular Economy

Introductory summary and selected excerpts from a key read by  Vincent Moreau, Marlyne Sahakian, Pascal van Griethuysen, and François Vuille, appearing in the Journal of Industrial Ecology dated 28 April 2017. We can strongly recommend the full contents of  the Special Issue of that date: “Exploring the Circular Economy”.

In light of the environmental consequences of linear production and consumption processes, the circular economy (CE) is gaining momentum as a concept and practice, promoting closed material cycles by focusing on multiple strategies from material recycling to product reuse, as well as rethinking production and consumption chains toward increased resource efficiency.

Yet, by considering mainly cost-effective opportunities within the realm of economic competitiveness, it stops short of grappling with the institutional and social predispositions necessary for societal transitions to a CE.

Although the entropy law remains intransigent, institutional conditions and societal values can be challenged and transformed through political processes, in order to usher in a more equitable and circular economy.

The distinction of noncompetitive and not-for-profit activities remains to be addressed, along with other societal questions relating to labor conditions, wealth distribution, and governance systems.

In this article, we recall some underlying biophysical aspects to explain the limits to current CE approaches. We examine the CE from a biophysical and social perspective to show that the concept lacks the social and institutional dimensions to address the current material and energy throughput in the economy. We show that reconsidering labor is essential to tackling the large share of dissipated material and energy flows that cannot be recovered economically.

Institutional conditions have an essential role to play in setting the rules that differentiate profitable from nonprofitable activities. In this context, the social and solidarity economy, with its focus on equity with respect to labor and governance, provides an instructive and practical example that defies the constraints related to current institutional conditions and economic efficiency. We show how insights from the principles of the social and solidarity economy can contribute to the development of a CE by further defining who bears the costs of economic activities.

. . .

The concept of the circular economy (CE) has received increasing attention over the last decade as shown by recent reviews (e.g., Ghisellini et al. 2016; Sauvé et al. 2016). Instead of linear flows of materials and products through the economy, the CE promotes circular flows as a means to reduce environmental impacts and maximize resource efficiency.

In the policy arena, the CE has gained momentum with the Chinese law for the promotion of the CE entering into force in 2009. The European Union (EU) Circular Economy package, which extended earlier versions of the waste directive, was passed in December 2015 (EU 2015; Hill 2016). A large body of communications has also emerged from public and private organizations engaged in the CE, ranging from the Ellen Macarthur Foundation (EMF) in the UK, to the Institut de l’économie circulaire in France, A Circular Economy in the Netherlands by 2050, or the African Circular Economy Network, among others.

Several definitions of the CE exist and revolve around two long-standing ideas: closing material cycles and increasing resource efficiency (Ayres et al. 1996; Von Weizsäcker et al. 1998). A widely cited definition is that of the EMF:

A circular economy is restorative and regenerative by design, and aims to keep products, components, and materials at their highest utility and value at all times. The concept […] is a continuous positive development cycle that preserves and enhances natural capital, optimises resource yields, and minimises system risks by managing finite stocks and renewable flows. It works effectively at every scale. (EMF 2015)

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The CE focuses essentially on strategies to increase resource efficiency, including reducing, reusing products and their components, and recycling materials. Yet efficiency and profitability can be achieved without necessarily reducing energy use in absolute terms.  Similarly, maintaining products and materials at the highest potential value through reuse, remanufacture of recycling means that cost-effectiveness underlies these circular economic activities, possibly at the expenses of lower energy intensity and higher labor intensity.

To a large extent, the distribution of costs and benefits of material and energy use depends on institutions. Economic as well as territorial policies can also modify the conditions for profitability toward a CE as in waste management, for example. Therefore, we argue for the need for political reform not only changes from biophysical or even economic rationality, but also toward social rationality.

The prevailing institutional and biophysical conditions clearly limit the degree of recycling. Georgescu-Roegen’s flow-fund model brings subtle, but important, distinctions from IE’s material balance approach of stocks and flows, showing that lower entropy and higher quality in one process comes at the expense of another. Therefore, the lessons for CE are both qualitative and quantitative in the challenge to reach a significant level of circularity through recycling.

Multiple strategies toward the CE are necessary and complementary in our current industrial and societal metabolism. However, given the magnitude of dissipative material and energy flows, circularizing the economy through material recycling would need to go beyond economically viable efforts alone and the externalization of costs to future generations. In fact, research in IE and ecological economics demonstrates that the CE may require a significant increase in material throughput and addition to stocks before closing material cycles, in particular within the current institutional conditions. Greater throughput, however, runs against the biophysical constraints of natural sources and sinks, and the tacit hypothesis that smaller throughput of primary resources means lower environmental and possibly social impacts.

Moreover, Georgescu-Roegen and Cohen-Rosenthal’s contributions, as well as Stahel’s work, emphasize the need to reestablish labor at the core of the economy given its renewable nature. As such, the social and solidarity economy is an instructive and constructive example for the CE, increasing labor-intensive activities while raising the quality and diversity of human work involved in remanufacturing and recycling. Beyond shifting the bulk of taxes from labor to resource consumption, as put forth by Stahel, changing institutional conditions in support of SSE and participative governance would ensure a more suitable environment for cultivating both biophysical resources and human labor.

Although the entropy law remains intransigent, institutional conditions and societal values can be challenged and transformed through political processes, in order to usher in a more equitable and circular economy.

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About the authors:

(To follow)

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With kind thanks to the authors for their foresight and analysis.

About the editor:

Eric Britton
13, rue Pasteur. Courbevoie 92400 France

Bio: Founding editor of World Streets (1988), Eric Britton is an American political scientist, teacher, occasional consultant, mediator and sustainability activist who has observed, learned, taught and worked on missions and advisory assignments on all continents. In the autumn of 2019, he committed his remaining life work to the challenges of aggressively countering climate change and specifically greenhouse gas emissions emanating from the mobility sector. He is not worried about running out of work. Further background and updates: @ericbritton | | #fekbritton | | and | Contact: | +336 508 80787 (Also WhatApp) | Skype: newmobility.)

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