Economies 101: Linear, Circular, Sharing
A more sustainable economic model is evolving, the same one that evolved millenia ago.
As our society has advanced, we have learned that progress has a price that we can’t pay, so we have been forced to rethink our definition of progress.
Society is now advancing again – and ironically, we’re moving back towards an economic model which previously existed for millennia.
Thousands of years ago, the charcoal remains of our fires were used to make art. Hundreds of years ago, villages had a central store of tools and farming equipment which was shared with the community. Decades ago, our grandparents made blankets from old clothing.
Then industrialisation came along and we began producing at scale. Our ability to mass-produce food, goods and technology grew exponentially, as did the amount of waste we create. Our practices were no longer inherently sustainable.
Another consequence of the surging availability of ‘stuff’ was an ‘easy come, easy go’ mentality. People had greater access to goods than ever before, and they were more disposable than ever before.
The led to the modern Linear Economy model. Its practices ultimately contributed to its own downfall and it is now conceding ground to the Circular and Sharing Economy models it originally replaced.
So what exactly are these new ‘economies’?
The Linear Economy is the newest, but also the most rudimentary and heedless of the three. It is often referred to as the ‘Take-Make-Dispose’ model.
It is essentially the traditional picture of industry we know whereby we take resources like raw materials and labour and use them to make a product. This product is eventually (or quickly) disposed of, creating waste.
Instead of being built to stand the test of time, products are now built with planned obsolescence. Electronic devices, clothing and motor vehicles are just a few examples of products that, until quite recently, were built with a clock ticking towards a time when they are no longer ‘useful’. Traditionally, no consideration is given to what happens when the clock stops.
“We’ll just make and sell more”
The Circular Economy is easily understood as its mantra is ‘Reduce-Reuse-Recycle’.
However, it goes several steps further than simply recycling materials.
The Circular Economy is about rethinking the way products are and entire industrial processes are designed. The goals are to minimise the waste created, maximise the value of resources while they are in use, and extend their useful life by repurposing them after one stage of their cycle has ended.
These systems are more productive when they are not self contained, but rather add value across more than one, often unrelated, industry vertical. The whole is greater than the sum of its parts.
These are a few examples of companies which are embracing the Circular Economy model.
Walt Disney Resort sends food waste from the resort to a nearby, independently operated, biogas facility where it is converted to energy that helps power the resort.
Starbucks recycles excess coffee grounds and uses a chemical process to transform them into products that are used in cleaning and medical solutions.
WEEE Ireland is a non-profit organisation that coordinates the disposal and repurposing of electrical waste in Ireland. All UrbanVolt electrical waste is managed by WEEE Ireland.
The epitome of the model is known as a 100% closed loop Circular Economy, where nothing is wasted and everything is transformed. In reality, it is argued that achieving this ‘holy grail’ state is not possible. The closest example we have to a true 100% closed loop circular economy is the natural world.
That said, many companies and systems are striving to get as close to closing the loop as possible. The focus has shifted from ‘Take-Make-Dispose’ model towards the creation of practices which are restorative and regenerative by design.
In the Sharing Economy, products are not ‘consumed’ by a single user, either to be discarded or repurposed. Rather, resources or products are shared – they are used by one person (or company), and are made available to be used by another.
The most important criteria for a Sharing Economy model is that resources which would otherwise be underutilised, can be monetised by their owner by allowing others to use them.
Thus, less resources are needed to satisfy the same the requirements of people and industry.
Some examples include:
Yard Club is a B2B peer-to-peer equipment sharing marketplace where construction professionals can rent equipment to and from one another.
Airbnb is an online marketplace for short term accommodation rentals. ‘Hosts’ can rent spare living spaces (rooms, apartments, houses etc.) to people who need a place to stay short-term.
Rent My Dress allows people to monetise the dresses in their closet by renting them out over a peer-to-peer platform.
Our past recklessness has left us no choice but to transform our behaviour to ensure the future health of the planet. We are reviving old practices, where we get maximum value out of our limited resources, either by repurposing or sharing them.
Many may have seen these obligations as a hindrance to profitability. Others have embraced the change.
These challenges, along with the advancement and democratisation of technology, have created opportunities to develop innovative business practices and models built upon the sustainable principles of the circular and sharing economies.