Circulation and Circularity

I was really cheered to see a comment on my post about the need to understand the economy as a complex system, pulling me up for not mentioning the limitations of a Keynesian approach in an era of ecological crisis. I covered this point in my earlier post 'A green paradox of thrift', but I am still encouraged to know that the no-growth position is now so established that people are reminding me about it!

When proto-green-economist Kenneth Boulding made his point about the need for a 'circular economy' he was using this conception as a contrast to the wasteful production-and-destruction economy that typifies capitalism, which he described as linear. Materials come in at one end, they are transformed using large quantities of energy into products, which are sold and usually become redundant or unusable within a short period of time. They have then become 'waste'.

Since achieving all her ambitions in terms of round-the-world sailing, Ellen Macarthur has set up a Foundation to shift the mode of the productive economy towards a more ecological circular pattern. She freely acknowledges this as a far greater challenge than the southern oceans. The aim is to ensure that nothing is wasted, that products last longer, and when they can no longer be used in their current form can be broken down and reused as components or as materials. Reducing energy is another key aspect of this 'circular economy'.

German MEP Sven Giegold has recently produced a report linking the Eurocrisis to European economies' dependence on fossil fuels. I cannot make this link work, perhaps because of the slow Broadband speed in my semi-rural idyll, but his conclusion makes me feel that it is worth my while to persevere:

'The increase in raw material import costs between the first quarter 2009 and third quarter 2011 equals on average to 50% of their current account deficit in the same period. The rising import bill is particularly affecting lower and middle income groups, as they have to spend a disproportionately large part of their disposable income for energy consumption. Consequently, convincing measures to overcome the euro crisis have to reduce the dependency on fossil fuels and other non-renewable raw materials: No stabilization of the Euro without a Green New Deal.'

It is important that we explain to people why public-spending cuts are bound to cause recession, that we help people to understand the economy as a system in which circulation is what matters, not individual transactions. But it is also important that we are clear about the false dichotomy of austerity or growth. I hate to have to say this, but what we really need is a third way, a way in which we maximise local, quality economic interactions, and minimise those based on the use of materials and energy. Qualitative growth, and growth in local economies would build greater resilience and happier communities. While we need to be austere with our use especially of fossil fuels, the austerity of the spirit should always be condemned.
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Want Not Waste

The cries for a weekly waste collection as a human right give us a fine opportunity to introduce a classic green economy discussion into our bus-stop conversations. Waste is an obsolete concept: the future is one without waste where materials will circulate through our economy rather than entering as raw materials at one end and being dumped into landfill at the other.

This conception of the economy as circular is due to Kenneth Boulding, a leading figure in the development of a green approach to economics (and has now been picked up by the Ellen Macarthur Foundation, where much detail can be found). Kenneth Boulding was born in Liverpool, UK in 1910 and studied at Oxford, Harvard and Chicago; he taught economics at Michigan and Boulder, Colorado. He began his career in fairly conventional economic vein, and achieved an impressive academic reputation for publishing and teaching. However, after the war he changed tack, attempting to fuse biology and economics in the book Evolutionary Economics published in 1944. This was the first attempt to synthesise the scientific aspects of economics and ecology and thus an important precursor to green economics.

As an early proponent of the need to move towards a non-growth or ‘steady state’ economy, Boulding used the contrasted images of the cowboy and the spaceman to explore our attitude to our environment. The cowboy, who finds his apotheosis in American capitalism, is always pushing outwards, expanding his available resources, finding ever new frontiers to exploit. The spaceman, by contrast, is forced to recognize the limits of what he has brought on his small ship:

‘Earth has become a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution, and in which, therefore, man must find his place in a cyclical ecological system which is capable of continuous reproduction of materials even though it cannot escape having inputs of energy.’

This image provides a stark illustration of two of the key principles of green economics: the importance of the circular flow of materials around the planet and the need to handle wastes positively. It is an interesting ironic development of this contrast that, with the NASA project to put a human being on the surface of Mars now itself using up a large quantity of earth’s resources, the cowboy will meet the astronaut at the final frontier: space.

Boulding was also critical of the straight-line thinking inherent in mainstream economics; this he described as ‘a linear economy . . . which extracts fossil fuels and ores at one end and transforms them into commodities and ultimately into waste products which are spewed out the other end into pollutable reservoirs’. This way of organising an economy was, he declared, ‘inherently suicidal’. His alternative was a prototype for the spaceship earth which he thought he had identified in the traditional village economy of Asia. Rather than a linear form this had a circularity built in—‘a high-level cyclical economy’. This was written nearly forty years ago and laid the groundwork for the closed-loop economy and the principles of permaculture that are now being translated into practical policy in calls for a zero-waste economy.
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