circular economy design film sustainability

The Circular Economy – from consumers to users

The Ellen Macarthur Foundation has been taking a lead in championing the idea of a circular economy, one where products are designed to be reused and recycled at the end of their lives. One way to make this easier is for companies to retain ownership of the product, and we as ‘consumers’ would pay for access rather than pay for ownership. If we can get over the need to own things, we might find that leasing works better for us in all sorts of ways, as the video explains.

If it all sounds a little theoretical, check out some real life examples. Ricoh provides office photocopiers on this basis. Dutch company Desso provide carpets on a leasing basis, replacing and recycling tiles when they’re worn. This is going to be an increasingly common business model as we transition to a sustainable economy.


  1. Well – we need not dream or theorize – some are already deep into the concept, and we are talking global players here – a few years ago German renewable energy supplier Lichtblick teamed up with Volkswagen to provide heat and power (swarm electricity). In 2010 they won the German sustainability award for the concept (my company only ended up on place 3…). But no hard feelings here – I love it:

  2. Musing about the costs: usually when I buy something, I buy it from capital stock. The circular economy as described here would have to be credit financed in its entirety and basically the payment (lease) would have to include the credit costs (interest). Even if these costs were offset by savings from re-use and increased efficiency it would mean that entities that basically are doing nothing (banks, equity funds etc.) would be further strengthened, which, most likely, would mean further trouble. At the foundation I see no way out without a fundamental reform of the interest based fiat money system with licensed private banks as main beneficiaries. I see no principal reason, for example, why state banks should not directly deal with customers and the profit goes back into the public system financing social services…. everything would remain the same (manufacture, private ownership, relatively liberal markets etc.), except without a private banking sector. What, for example, is the biggest cost factor for the energy transformation? Interest on bank credits!

    1. Yes, the circular economy only works as part of a broader programme of change, including social attitudes towards ownership, financial innovation, and political reform. The social side is happening already, through the emergence of Collaborative Consumption. The finance side of things is moving much slower, and the politics side is barely moving at all – yet.

      1. Sure (financial and political side). But I just experienced a surprise. Despite my old age I am taking post graduate economics courses in resource economics and as part of that brush up on my past courses in business (which I originally gave up in favor of Physics and Geo sciences). I bought the latest edition of the same major German textbook, the “Wöhe”, a massive book titled “Einführung in die Betriebswirtschaftslehre”. The bible for everyone studying business here. The surprise: the current 24th edition begins with a massive critique of neo-classical economics, stating that Smith’s rational actor is now confined to the world of fiction and basically identifying the theory as dysfunctional. Now this is not a book on economics but on business, but it is amazing enough. Originally I thought my chancing on more and more works critical of the prevailing paradigm was an observational effect (merely noticing what confirms my view), but I am down to standard textbooks now and even there I find it. Even Krugman… well. Look down to the end of this article:

        1. Maybe your view of current economics is a straw man that you are finally seeing is more sophisticated than you knew?

          Smith’s ‘rational actor’ was always a model, not to be confused with real life but like a fundamentalist Christian thinking finding a flaw in Darwin’s ‘Origin of the Species’ disproved all evolutionary science, those who want the some different economics seize of their misunderstandings to ‘prove’ what they want

          1. I was in the middle of an International Relations degree when 9/11 happened, and you could see the whole discipline thrown in the air. It was a very interesting time to be studying it.

            The financial crisis should have done the same thing to economics. Even Alan Greenspan, the godfather of neoclassical economics, admitted that he had to reconsider his assumptions.

          2. I never read the entire original “Wealth of Nation” – I suppose hardly anyone studying business or economics does that. But I am afraid the rational actor (although Smith himself doesn’t seem to use such a word – he speaks of rational religion somewhere) pretty much is a core assumption. It surely can be characterized as a model, but if it is a valid model it should reflect reality well enough to predict it’s development over time. A notorious weak spot of classical economics. Besides that: I absolutely hope that economics is more sophisticated than what I know about it! I personally am biased towards economists who apply a rigorous mathematical approach and include the real world (human psychology, the actually existing physical world out there) into account. Some critiques suggest that Smith was a step back even behind Aristotle – in some respects. In general my critique is backed by – or originates from – eminent figures, who do research in economics. I originally had changed from economics to science in the early 90s because economics just felt too unreal. I first got the impression that something is rotten in the state of Denmark when I read a paper by Prof. Binswanger (Swiss Ecnomist) on the impact of the introduction of money on native populations. It clearly suggested that money in itself is not harmless, but if left alone is destructive. The reasons simply are that actors are not rational, and actors do not have the same means and abilities. These assumptions are models that very obviously do not reflect reality. I don’t need agent based modeling to understand that a Gnu with a broken leg will be left behind by the heard and eaten by the Hyenas… Oh – an equilibrium will be reached. Sure. But equilibria are no values for societies. Practical economics should reflect those, and not some abstract models up in the clouds. A side note: considering that Smith is generally seen as the first modern economist, he looks pretty weak compared to other giants who were “firsts” of roughly that time, say Leibnitz, Newton or Linnæus – and Humboldt a bit later. Economics is about numbers and values and their relations, and as far as I recall I haven’t seen any equations in Smiths work, which ought to be expected. Calculus was rather new, but Algebra had reached a very sophisticated level by that time. Why doesn’t he use it to test some of his points? Without math there are hardly any models but merely thought experiments. Gedankenexperimente.

            The sort of economic analysis that I consider convincing is a) mathematically rigorous and b) takes real world conditions and empirical observations (!) into account. For a science that should be self evident. Differences among households, for example – like Juergen Kremer (Prof. of Economics and physics Ph.D.) does in his paper “Dynamic Analysis – –Investigating the long-term behaviour of Economies”. Here the abstract:

            This paper presents a procedure for the simulation and analysis of the chronological development of a macroeconomic model over several time periods, called dynamic analysis. The models investigated explain a range of crucial observable macroeconomic effects, such as rising unemployment, falling wages and increasingly unequal wealth distribution. The models also identify a fundamental cause for these effects: interest rates enhance the imbalance of the wealth distribution within an economy, and this assertion may even be true if the …fiscal system is taken into consideration.


  3. Stefan. You argue that economics is just a dry form of maths modelling (in which you follow the numbers wherever the result may lie) but also it is to have a moral character, when morals are an invented human concept and not numerical. Economics long ago ceased to describe itself as ‘science’, other than a ‘social science’ which anyone who ever studied one should know is not a real science and don’t pretend to be otherwise (except by the literal minded).

    Again you fall back on knocking Adam Smith (What an idiot not to know real economics had to have equations! Its almost as if there were virtually no statistics worth a damn in 1776) and a concept of ‘rational actor’ that has only ever been a model, never proclaimed as truth by its adherents and has been much modified in the last 250 years.

    1. This is a misunderstanding. For one one has to make a difference between economy, economic politics and economics as a science (probably also better do keep applied and theoretical apart). The economy is a broad term describing all – in the widest sense – economic activities, which is (or should be) guided by politics based upon the generally overarching values of society. Those values – and their derived moral and ethics – ought to define the limits within which economic activity takes place. The limits are set by law. Obviously that happens, and it is a dynamic process of change. Selling people for profit (at least directly) is not very acceptable anymore these days. Turning them into little pieces of a large economic machinery and replacing them when dysfunctional, however, seems fine. But the situation has changed drastically, and those guidelines have to be adjusted.

      As it happens, I saw a documentation yesterday about a new theater project in Berlin by a director who used to be a banker himself. It is a project about, well, high finance, more precisely, about retired top managers and bankers. He conducted dozens of interviews with those former “captains of industry”, and at least among them, the practitioners, the idea of the rational actor was very much alive, and the rational actor was defined narrowly in the quantitative sense: more profit for their organization, more power and influence for themselves. Period. Rational actor = doing everything that increases the actors (and the actor’s organization’s) wealth, power and influence. THIS rational actor certainly exists, and it is, I am afraid, the rationality of the psychopath (pure uncompromising self interest without empathy). On the microeconomic household level it looks rather different in the real world. People don’t want ever more. It takes considerable effort to make them want things they don’t need. Rationality there means to strive for stability and good relationships with neighbors etc. And I think I stressed above that I was delighted to find that the revision of a major German business textbook did AWAY with the idea of the rational actor.

      I do not want to knock Smith. I also can’t, because I only have a superficial and mostly 2nd hand understanding of his main work. If at all, I am judging the fire by its smoke, so to say. My main point simply is that the outset of economics (as a field of academic inquiry) was far less rigorous and less firmly grounded than that of other fields of study.

      A dry form of maths and modeling… who says that’s dry!? :-). No – but what is a Science? Social sciences biology for example is a science, right? Empirical studies first, theoretical analysis second. Studying what is there and how it works. Anthropology is the Zoology of man – and similar. Is anthropology a science? Economics has gone a long way with enormously complex mathematical concepts by now that actually rival the level of complexity found in Physics, and slowly the loose ends of those mathematical models are tied up with reality – in resource economics, energy economics etc. The non-science Psychology tied up with biology and evolved into the hard neuro sciences. The non-science archeology tied up with the natural sciences and developed the methodological sub-branch of Archeometry. I think the non-science economics is undergoing a similar evolutionary development, which is slowed and hampered by vested interests that don’t exist in other fields of inquiry. Mixing the field of study with moral and ethics (large driven by ideology) is in my view one reason why progress in economics has been so slow and single minded. We also don’t leave the moral decision whether or not studies on embryonic stem cells are allowed to the scientists and those who sign their pay cheques. We decide that on a society/political level. So again: society and academically the humanities define where we want to be and what society we’d like to live in, and then economics – together with other sciences – figures out as rigorously and open minded as possible how to get there, what works, and what probably doesn’t. All questions allowed.

      1. I wouldn’t suggest that a banker attempting to increase the wealth of the organisation they work for is ” the rationality of the psychopath (pure uncompromising self interest without empathy)”. Banks have shareholders who are ultimately most people via pension schemes. Increasing your company’s profits is giving widows and orphans higher pensions. Hardly psychopathic. Business is about the only place the ‘rational actor’ model really works because its practitioners are attempting to be self aware rational actors, unlike most people who annoyingly refuse to be rational and are at heart still shaved chimps.

        Are you suggesting that alchemy and astrology were firmly grounded at the start as they are where chemistry and astro-physics came from? Pretty much all fields of study started out as dabblings, but Smith was no mean thinker and those who quickly followed him just as good (Ricardo’s theory of comparative advantage is not obvious but brilliant.) Of course calling them ‘neo-classical’ economists is a misnomer. They are the ‘classical’ ones, nothing neo about them.

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