The Circular Economy Wiki

The existing economy is like a sandwich. Its meat (or tofu) is the product of fossil fuel energy – since every economy which isn’t limited by human and animal labour has been built on the surplus energy which makes humans more productive. Drive a car as far as two litres of petrol will take it and then ask someone what they will charge to push it back and you have an idea of how fabulously cheap energy is compared to muscle power. The bread of the sandwich is commodities on one side and wastes on the other. It’s a fat sandwich.

It’s also a reality sandwich. If the flow of commodities is reduced or gets more expensive or perhaps less available for political or other reasons then there is trouble. If the flow of fossil fuels does the same or even just stays the same while demand rises because of the rise of the giant economies of China and India then there is more trouble.

Either or both, but particularly oil is a big source of the surplus which enables economic growth which in turn keeps the financial system working. A single barrel of oil can represent 25,000 hours of human labour or 12 people working all year. Even a slow down can make the repayment of debt a lot more difficult. And finally, if wastes can’t be disappeared into the mythical space of ‘away’, there is trouble.

Below are some key trends in commodities and in oil (broadly understood). If there is a “why now?” for the rapid growth in the idea of a circular economy, the answer could be here. We are witnessing the very real impacts of rising and risk inducing volatility of commodities prices (fluctuations damage ability to plan) and their possible scarcity alongside expensive oil in an economy with a financial system looking for growth, which is hard to produce. There looks to be a turning point in how we see and operate the economy. If throughput isn’t working so well, then what about ‘roundput’? Would that take the pressure off materials and energy, would that allow for prosperity and some easing of the pressure on the financial sector? It seems the answer is ‘maybe’, it usually is in a big complex set of systems with many feedback channels. However, there appears to be a logic to all of this which is stimulating many businesses to change.

Jeremy Grantham (co-founder of global investment management firm GMO) says: “…of all the technical weaknesses in capitalism, though, probably the most immediately dangerous is its absolute inability to process the finiteness of resources and the mathematical impossibility of maintaining rapid growth in physical output.” (Forbes 1 Mar 2012)