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The Circular Economy: Separating Economic Activity from the Consumption of Resources

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99% of consumer products are disposed of within six months of purchase, with little to no recovery of the materials. This is evidence of the “take, make, dispose” model, in which raw materials are continuously taken from the earth to make products that will be discarded. Known as a linear economy, this model relies on an infinite pool of resources and generates massive quantities of waste. A system called the circular economy (CE) has been created in recent years as a sustainable replacement for the linear economy. In essence, the CE is meant to separate economic activity from the consumption of resources. Resources would be circulated by removing materials from used products rather than wasting them. There are two cycles of resource flow as described by the Ellen MacArthur Foundation: the first is the technical cycle, in which products are reused, repaired, remanufactured, and recycled, and the second is the biological cycle, in which biodegradable materials are returned to the earth. Eventually, filtering products through these cycles would eliminate waste and pollution. The cyclical resource flow of the CE emulates natural systems and would allow nature to regenerate, as materials for new products are found in old ones and land is no longer needed to mine for raw resources.

Although the CE could have profound positive impacts on the environment, implementing the system would be complicated and not without its challenges. Businesses would need to fundamentally alter their supply chain and merchandise, designing products for “cradle to cradle” use rather than cradle to grave; in other words, manufacturers would need to consider the product’s end-of-life and ensure it could be reused, repaired, remanufactured, or recycled. Critics of the CE argue that the system is still too theoretical for practical application and say methods need to be developed to specifically quantify the sustainability impacts of particular CE strategies. However, there are a wide variety of viable business models already operating within the parameters of the CE. One study demonstrated that shifting to a CE would add 700,000 jobs in central and eastern Europe, while another concluded that CE business models would lead to four times more jobs than currently exist in waste treatment, recycling, and disposal.

Although recycling, renewable energy, and other methods currently in use to combat climate change are important and necessary, they aren’t the whole answer. Recycling cannot compensate for the sheer amount of waste produced by the linear economy, and still produces carbon emissions. Renewable energy will only solve 55% of global greenhouse gas emissions. Implementing the circular economy in addition to recycling, renewable energy, and other approaches would help solve our environmental crisis. Producers and consumers will both be required to change current practices to see system-wide change.

This blog post is a brief overview of a complex subject. For further resources, there are many videos available on YouTube that explain the circular economy and how it could be implemented, such asthis video from CNBC andthis video from Sustainability Illustrated. Other great tools include the Ellen MacArthur Foundation website and materials likethis video, which is part of their Circular Economy Show. Finally, for a more detailed explanation of the critiques surrounding the implementation of CE and how those critiques can be addressed, seethis article.



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Florian Lüdeke-Freund Professor for Corporate Sustainability. (2022, February 10). The Circular Economy: Four million business models and counting. The Conversation. Retrieved June 4, 2022, from

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Institute, B. (2021, August 3). A circular economy does not necessarily translate to sustainability. Forbes. Retrieved June 4, 2022, from

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