Entrepreneurs and businesses have practiced “circular economy” for centuries without government intervention

The Circular Economy: (Re)discovering the Free Market

The Circular Economy (CE) is typically presented as an innovative new idea, in contrast to the existing economy which is caricatured as a “take, make, waste” extractive “linear model” of traditional market economies. The current economic system is described as one in which resources are extracted, processed, and disposed of carelessly, resulting in uncontrolled release of waste materials and pollution emissions.

In contrast to this description, a circular economy is said to be an alternative mode of production and consumption that maximizes the use of scarce resources by constantly re-using and regenerating them in a cyclical pattern, manufacturing more durable products and benefitting from the potential offered by the sharing and services economy. The CE can thus play a crucial part in addressing problems ranging from global climate change and biodiversity loss to air, land, and water pollution. Its rapid adoption is deemed critical in light of such current challenges as rising global population and affluence and the potential doubling in the production and consumption of resources in coming decades.

While the concept of a CE is somewhat new, it describes practices that have been an integral part of market economies from their very beginning. What is truly new is the misrepresentation of the market economy as linear, wasteful, and mismanaged, thus providing a pretext for new forms of central government control. The private sector has been “circular” for as long as humans have used waste from one process, such as manure and bones from livestock, as an input to others, such as fertilizer for crops or a material to manufacture countless tools, jewelry, and toys. And the private sector has sought ways to minimize the waste of inputs for as long as humans have conducted commerce in any form, for the simple reason that inputs are scarce and costly. Past market actors did not need prodding by academics, activists, consultants, politicians, and bureaucrats to make the CE a reality.