Markets and the Future of the Circular Economy.

Abstract

The circular economy stands at a crossroads between true systemic change and rebranded business-as-usual. It will either evolve to become functional—optimizing technical capabilities to mimic resilient ecosystems—or dysfunctional—reinforcing current destructive, destabilizing structures and incentives despite appearing to make marginal progress. This paper offers a unique critique of the circular economy: we argue that the circular economy is set up for failure precisely because it is required to conform to our current socio-econo-political system—that is, a market system. We identify four core characteristics of market systems: private property, competition, a market for labor, and value determined by price. Together, these characteristics create incentives that are antithetical to a functional circular economy: a requirement for infinite growth, short product lifetimes and limited material circularity, technically suboptimal products and systems, ineffective reverse logistics networks, and misplaced priorities from distorted notions of value. We then show that the fundamental organizing principle of market systems is market efficiency, which is based on a false assumption of scarcity. In contrast, we suggest a competing worldview of sustainable abundance based on a principle of technical efficiency, which optimizes technical and environmental outcomes. Using this lens, we suggest alternatives to the core market characteristics, including an ecology of complementary currencies, a new understanding of private property, an adjusted balance of competition and cooperation, labor market alternatives, a reevaluation of true value, and lessons from Indigenous peoples. If—and only if—we embrace technical efficiency over market efficiency, we can unshackle the circular economy to create meaningful system change and a future of sustainable abundance.