the real circular economy - post growth...

SharonEde December2016 1

THE REAL CIRCULAR ECONOMY

How Relocalising Production With Not-For-Profit Business Models Helps Build

Resilient and Prosperous Societies

SharonEde

CoFounder,PostGrowthInstituteCatalyst,FabCityGlobalInitiative

www.postgrowth.orgwww.fab.city

December2016


THEREALCIRCULARECONOMYHowRelocalisingProductionWithNot-For-ProfitBusinessModelsHelpsBuildResilientandProsperousSocietiesIn recent years, the ideaof a ‘circular economy’has come to the fore as away to tacklecarbonemissions andwaste. It has gained tractionwith thought leaders and jurisdictionsaroundtheworldasawaytostimulateeconomicgrowth, foster innovationandgenerateemployment.The circular economy builds on concepts including zero waste, cradle to cradle andbiomimicry. It is focused on creating economic value and reducing environmental impactthroughdesign,highestandbestuseofmaterials,andefficientuseofresourcesandenergy.TheEllenMacArthurFoundation,aleadingauthorityoncirculareconomy,definesacirculareconomyas:

…one that is restorativeand regenerativebydesign, andwhichaims to keepproducts,components andmaterials at their highest utility and value at all times, distinguishingbetweentechnicalandbiologicalcycles1.

Howwedesign,make,useandmanagethingsattheendoftheirusefullifehasenormousimplicationsforeverythingfromourdemandonnature’sresources,ourcarbonimpact,andtheamountofwastewegenerate.Effortstocrystalliseandfocusattentiononcreatingacirculareconomyhavecreatedahugeawarenessof,interestinandmomentumforapproachesthatmakealotofenvironmentalandeconomicsense.Atthesametime,atechnologicalapproachtothecirculareconomyisnecessary,butnotsufficient,togetusontrackforasecurefuture.The principles2 of a circular economy speak to material resources and our systems ofmanaging them, however with a few exceptions, such as Douglas Ruskhoff’s call for‘reprogramming our economic operating system’3, Rammelt and Crisp’s ‘systems andthermodynamics perspective on technology in the circular economy’4, and ChristianArnsperger and Dominique Bourg’s call for ‘perma-circularity’5, there is little mention incontemporarycirculareconomydebateofthewidermilieuofeconomic,socialandculturalsystemsinwhichacirculareconomymustoperate.Adopting a broader definition of ‘circular economy’ can help us build a sustainable,prosperousandfairsociety.1www.ellenmacarthurfoundation.org/circular-economy2www.ellenmacarthurfoundation.org/circular-economy/overview/principles 3http://circulatenews.org/2016/11/douglas-rushkoff-on-reprogramming-our-economic-operating-system;www.rushkoff.com/medium-douglas-rushkoff-growth-became-enemy-prosperity-fix4www.paecon.net/PAEReview/issue68/RammeltCrisp68.pdf5http://wiki.p2pfoundation.net/Perma-Circularity


ECOLOGICALFOOTPRINTANDOVERSHOOTIf ittookBritaintheexploitationofhalftheglobetobewhatit istoday,howmanyglobeswillittakeIndia?MahatmaGandhi,1908Thecirculareconomyisprimarilyconcernedwiththeflowsofmaterialsandenergy,anditisoften taken for granted that this circulation can happen within a growing economy.However,thedemandformaterialsandenergyneedstobeconsideredinthecontextofthelimitsofafiniteplanet.Materialscankeepcirculatingthroughbeingdesignedfordisassemblyandremanufacturing,orkeptinuselongerthroughbeingdesignedfordurability,butifthe‘circle’ortotaldemandformaterialsandenergykeepsexpanding,wehavenotsolvedourcivilisation’schallenge.When human demand on nature’s capacity exceedswhat nature can supply,we are in astate of ‘overshoot’6. The level of overshoot is the amount by which nature’s biologicalcapacity is being used beyond its regeneration rate – for example, overfishing oroverharvesting,oremittingtoomuchcarbondioxideintotheatmosphereanddestabilisingtheclimate.Theminimum, non-negotiable condition for a sustainable civilisation is to livewithin themeansofnature-toavoidecologicalovershoot.This condition is at odds with the current development paradigmwhich dominates botheconomics and politics globally, that of continuous economic growth into the indefinitefuture.Historically,countrieshavesustainedthisgrowthbyappropriatingcarryingcapacity(resources, ecological services, waste sinks) from elsewhere on the planet througheconomic or military power, with waste (particularly CO2) being emitted into the globalcommons.Howeverthismodelofdependenceon‘ghostacreage’ignoresonesimplereality–globally,noteveryonecanbeanetimporterofbiocapacity.Once the biological carrying capacity of the planet is exceeded, ‘development’ occursthroughtheliquidationoftheplanet’snaturalcapitalstock,switchingfromthereproductiveuseoftheresourcebase,which leaves it intact, toextractiveuse,whichreducesthetotalstore. Instead of living off the Earth’s ‘interest’, humanity begins eating into the Earth's'capital'.Globally,weareliquidatingnaturalcapitalandcallingiteconomicgrowth.Itislikerippingoffpartsofahousetouseasfirewoodinordertokeepwarm.Avoiding overshoot is not sufficient in andof itself for a prosperous, healthy society, butwithoutit,sustainablecivilisationisimpossible.

6www.footprintnetwork.org/images/article_uploads/EOD15_PR_scenario_graphic_final.jpg


Allotherhumanchallengesareultimatelydependentonwhetherwesustainorunderminethe resource base and the ability of ecological life support systems to function. Thedestructiveandpainfuleffectsofeconomiccollapsewillpaleintoinsignificanceinthefaceoftheconsequencesofecologicalcollapse.Howcanweknow ifweare inovershoot?Themajorityof theresourcespeopleconsumeand thewastes theygeneratecanbe tracked,andmost resourceandwaste flowscanbeconvertedintothebiologicallyproductivearearequiredtomaintaintheseflows.The Ecological Footprint7 is a resource accountingmethod and toolwhichmeasures howmuchbiologicallyproductivelandandwaterareahumanityusestoproducetheresourcesitconsumesand toabsorb thewaste itgenerates,usingprevailing technologyandresourcemanagement, wherever on Earth those bioproductive areas are located. It aggregateshumanimpactonthebiosphereintoonenumber,acommoncurrencyofglobalhectares,orthe bioproductive space occupied exclusively by a given human activity8. This allowscomparison of supply (or biocapacity) with demand (the Footprint, or consumption) todeterminewhetherweareinovershoot–orusingmore‘nature’thanisavailable.The Global Footprint Network maintains a series of biophysical accounts for over 200countries, dating back to 1961. The Ecological Footprint account of each country isdetermined by a complex spreadsheet designed to enable calculation of a country’s percapitaEcologicalFootprint,andcomparethatnumberwiththebiocapacityof thecountryand planet. Official data from the UN Food and Agriculture Organisation (FAO) and theInternationalEnergyAgency (IEA),anddata froma rangeofother reputable internationalsources,formthebasisofnationalFootprintaccounts9.Thespreadsheets,whichcomprise thousandsofdatapoints, trackacountry’sproduction,import,exportandconsumptionofavastrangeofcommodities- includingfoodandfibrecrops,timberandfossilfuels–inbiophysicalunits(orvolumeofmaterialeg.tonnes)ratherthanmonetaryunits,whichonlyreflectmarketvalue,notavailabilityinthebiosphere.Eachcategory includes both primary resources, such as raw timber ormilk, andmanufacturedproductsthatarederivedfromthem,suchaspaperorcheese10. TheEcologicalFootprintaccountingmethodology isdeliberately conservative, to avoidexaggerating the Footprint,and is therefore likely an underestimate. Footprint accounting also trade corrects –revealingwherecountriesare‘outsourcing’impactslikegreenhousegasemissions11.TheEcologicalFootprintisanindicator,andindicatorsaresensors.Tobeeffectivesensors,theymustincorporatefeedbackmechanismsaboutthelimitingfactorsofsystems,sothatitthesystemknowshowtoreacttoimpendingdanger.Inthiscase,thelimitingfactoristhebiologicalcapacityoftheEarth,andhowmuchofithumanityisconsuming.7 TheEcological Footprint conceptwas initiatedanddevelopedby theUniversityofBritishColumbia’sProfessorWilliamRees,whohasbeenteachingtheEcologicalFootprintconceptsincethemid-1970s,andMathisWackernagel,aPhDstudentofRees,wentontofurtherdevelopandpromotetheFootprint,foundingtheGlobalFootprintNetwork.8www.footprintnetwork.org/en/index.php/GFN/page/footprint_basics_overview9www.footprintnetwork.org/en/index.php/GFN/page/footprint_data_and_results10www.footprintnetwork.org/en/index.php/GFN/page/methodology;www.footprintnetwork.org/documents/National_Footprint_Accounts_2016_Guidebook.pdf11www.theguardian.com/environment/2014/jan/19/co2-emissions-outsourced-rich-nations-rising-economies


Eachyear,theGlobalFootprintNetworkcalculatesEarthOvershootDay–thedayonwhichglobally, humanity’s consumption (Ecological Footprint) exceeds what the Earth’sbiocapacitycansupply.Theremainderoftheyear,weareinglobalovershoot.Earth Overshoot Day is determined by dividing the planet’s biocapacity (the amount ofecologicalresourcesEarthisabletogeneratethatyear),byhumanity’sEcologicalFootprint(humanity’s demand for that year), and multiplying by 365, the number of days in theyear12. In2016,EarthOvershootDaywas8August13–on thatdate,webeganexceedingecologicallimits.How can we be using more than nature is regenerating? Ecological limits can be easilyexceeded - for awhile,we canharvestmore thanwhat grows - creating the illusion thatlimits can be transgressed without apparent consequences. The reality is that overshooteatsintonature’sreserves,weakeningitsabilitytoregenerate.TheGlobalFootprintNetworkaccountsshowthathumanityusesaround1.5planets’worthof bioproductive space,meaning the Earth takes one year and sixmonths to regeneratewhat we use in a year. If population and consumption trends continue on their currenttrajectory,wewillneedtheequivalentoftwoEarthsby2030.Therearebillionsofpeoplewhose material living standard needs to increase, and many who wish to emulateconsumeristlifestyles.The defining question of our age is not whether we can achieve the impossibility ofsustainingmorethanninebillionpeopleonawesternindustrialmodelofdevelopment,buthow to deliver prosperous lives for the global population within the regenerativebiocapacityofoneplanet.

Sustainability is like buying a chair. There's no question whether the chair should bestrongenoughtositonornot.That'sthenon-negotiablecondition.Thequestionsare:Doyouwantaredone,agreenone,awoodenone,ametalone?Butnotwhetherthechairisstrongenough.MathisWackernagel,GlobalFootprintNetwork,SanFranciscoEnquirer,June2001

Thissustainabilitychallengewillbewonorlostincities,whicharenowthemostcommonhuman habitat, primary economic drivers, and the most powerful physical and politicalleverage points for change14. To win the challenge we need to build, and reconstructexistingcities,asecologicalcities.Amongmanyobjectives15,ecocitiesseek toensure thatcities’demandsontheEartharewithintheEarth’sbiologicalcapacity.

12www.overshootday.org/about-earth-overshoot-dayon the supply side, a city, state, or nation’s biocapacity represents its biologicallyproductivelandandseaarea,includingforestlands,grazinglands,cropland,fishinggrounds,andbuilt-upland.Onthedemandside,theEcologicalFootprintmeasuresapopulation’sdemandforplant-basedfoodandfiberproducts,livestockandfishproducts,timberandotherforestproducts,spaceforurbaninfrastructure,andforesttoabsorbitscarbondioxideemissionsfromfossilfuels.13www.overshootday.org14www.mckinsey.com/global-themes/urbanization/urban-world-mapping-the-economic-power-of-cities;www.citylab.com/housing/2016/04/cities-drive-the-new-world-order-parag-khanna-connectography-maps/48016515www.ecocitystandards.org


ECOLOGICALCITIESANDECOLOGICALDEFICITSAn Ecocity is a human settlement modelled on the self-sustaining resilient structure andfunction of natural ecosystems. The ecocity provides healthy abundance to its inhabitantswithout consumingmore (renewable) resources than it produces,withoutproducingmorewastethan itcanassimilate,andwithoutbeingtoxicto itselforneighbouringecosystems.Its inhabitants’ ecological impact reflects planetary supportive lifestyles; its social orderreflectsfundamentalprinciplesoffairness,justiceandreasonableequity.

EcocityBuilders16Rightnow,thereisnocityonearththatisanecologicalcity.Twenty-firstcenturycitiesarethe primary resource manipulators on the planet. They are a meta-technology – atechnology that organises other technologies. But it is precisely because they are suchpowerfuldriversofallkindsofactivitiesthatthewaywebuildandliveincitiesisthekeytoaddressingsocialandenvironmentalimpactseverywhere.Urban design and density determines much of a city’s carbon profile, and creating andmaintainingthebuiltenvironmentgeneratesmassivedemandforresources:

…asmuchasa tenthof theglobaleconomy isdedicated toconstructingandoperatinghomesandoffices.Anddollar fordollar, thisactivityuses several timesasmuchwood,minerals,water,andenergyastherestoftheeconomy:buildingsconsumeonesixthtoonehalfof theworld'sphysical resources…buildingsaccount for roughly40per centofthematerialsenteringtheglobaleconomyeachyear:some3billiontonsofrawmaterialsareturnedintofoundationsandwalls,pipesandpanels…

NicholasLenssen&DavidMalinRoodman,WorldwatchInstitute17In themid-2000s, a University ofMichigan study showed that human activity moved 10timesmoresoilthanallnaturalprocessescombined18.Inthemid-1990s,HerbertGirardet,authoroftheGaiaAtlasofCities,estimatedtheEcologicalFootprintofLondon,andfoundthat itwas 125 times the actual surface area of that city, in terms of the space it needsbeyonditsphysicalareatoproducetheresourcesrequiredtosustainitscitizens19.Withtheirlinearmetabolism,citiesareattheheartofthetake-make-wasteeconomy:

‘Estimates at the time of the Earth Summit (Rio) in 1992 found that 75 percent of thenatural resources that we harvest and mine from the Earth are shipped, trucked,railroadedandflownto2.5percentoftheEarth’ssurface,whichismetropolitan.Atthatdestination,80percentofthoseresourcesareconvertedinto‘waste’.’

JacSmit,UrbanAgricultureNetwork2016www.ecocitybuilders.org17https://i.unu.edu/media/ourworld.unu.edu-en/article/4502/transport-energy.jpeg18www.sciencedaily.com/releases/2004/11/041103234736.htm;www.nature.com/news/2005/050307/full/news050307-2.html 19www.gdrc.org/uem/footprints/girardet.html20www.ruaf.org/sites/default/files/UA%20and%20biodiversity.pdf


Cities are dependent on biophysical capacity and labour, both local and transnational, inorder todeliver theneedsof theirpopulations. Indoingso, theydrawontheecosystemsandcommonsofothercommunities.Itisimperativethatweunderstandthecityasanecosystem,acknowledgingandaddressingthebehaviourofthesemega-organisms,andtheirimpactbeyondthephysicalcity.Theseimpactsandplanetaryecologicallimitsaretypicallynotconnectedtoanindividual’spersonalexperience,andarerarelyfeltbymorethanthehalfofhumanitywholiveincitiesandtowns.People inurbanenvironmentsarerenderedpsychologicallyaswellasspatiallydivorced from their dependence on nature, especially those who are caught up in aconsumerculturethatpromotesabundanceandhasnotyetencounteredecologicallimits.If the true demand of the city wasmade visible, it would show that all urban areas arerunningecologicaldeficits21–thatis,theydependon‘occupiedterritory’elsewhere.Theneedsofurbandwellersarealsodependentonextensiveexternalsupply lines,whichare a large contributor to carbon emissions22. Shipping is projected to be responsible for17%ofglobalemissionsby205023,andincredibly,bothshippingandaviationareexcludedfrominternationalclimatechangenegotiationsduetothedifficultyofallocatingemissionstoonecountry.Creatinganecological cityand reducing thecity’sEcologicalFootprintdoesnotmean theendoftrade–itjustmeanstradehappenswhereitisnecessary,notwhereitisn’t.‘Frequent flyer prawns’ are just one example of a multitude of long and unnecessarilycarbon-intensivesupplylines,whichareonlymadepossiblebyaneraofcheapenergyandthe externalisation of costs. Prawns (shrimp) caught in Scotland are sent to Thailand forshelling,andshippedbackagainfordistributionintheUK,becausethelabourinThailandischeaper:

InsteadoftransportingUK-caught langoustinestherelativelyshortdistancefromseatofactorytodistributor,Britain’sleadingseafoodsupplierwillsendthemona13,000-mileround trip to Thailand – in the interests of cost-cutting. The shellfish will then berepackagedandshippedbacktothefactorywheretheybegantheirjourney.Eventually,theywillbebreadedandsoldacrosstheUK24.

ResearchbyGermany’sWuppertalInstituterevealedthatatypicalcontainerofstrawberryyoghurtclockedupovertwelvethousandmilesoftransportintheprocessofbeingmade,assembledintoitspotanddeliveredtothepointofsale25.

21www.footprintnetwork.org/ecological_footprint_nations22http://metrocosm.com/map-international-trade23www.theguardian.com/environment/2016/oct/28/shipping-industry-fails-agreement-cap-carbon-emissions;www.transportenvironment.org/press/shipping-emissions-17-global-co2-making-it-elephant-climate-negotiations-room24www.dailymail.co.uk/news/article-416740/British-seafood-shipped-Thailand---just-shells-removed.html25www.natcap.org/images/other/NCchapter10.pdf


In its 2009 report, the new economics foundation cited the following research into‘boomerangtrade’intheUKalone:

Allaroundusstill,areships, lorriesandplanespassing in thenight,wastefullycarryingoftenidenticalgoodsfromcitytocityacrosstheglobeandbackagaintomeet‘consumerdemand’…weexport4,400 tonnesof icecreamto Italy,only to re-import4,200 tonnes.We import 22,000 tonnes of potatoes from Egyptwhilst exporting 27,000 tonnes backagain.Thentherearethe5,000tonnesoftoiletpaperheadingfromtheUKtoGermany,withover4,000 tonnes returning,and10 tonnesof ‘gumsand jelly’ sweetsgoingbackandforthtoThailand.And117tonnesofsweetbiscuits,waffles,wafersandgingerbreadcameintotheUK,rumblingpast106tonnesheadedintheoppositedirection26.

USauthorandfoodactivistMichaelPollanalsocitedexamplesofwastefultrade:

…we are exporting sugar cookies to Denmark while we import sugar cookies fromDenmark: a mind boggling trade that one economist said, when he was told of it,‘Wouldn’titbemoreefficienttoswaprecipes?27’

Inthe21stcentury,urbanimpactsarenotjustphysical,butalsodigital.Amulti-billiondollarsubmarinefibreopticcablelinkextendingover15,000kmisbeingbuiltbetweenLondonandTokyoviatheArcticOcean,nowaccessibleduetotheretreatofseaice.Thiscablewillcutthe ‘friction’ between the two cities from 230milliseconds to 168milliseconds, enablingreduced transmission time,which ‘willbeaboon forhigh-frequency traderswhowill gaincrucialmillisecondsoneachautomatedtrade28.’Cities, with their immense economic and political power, are central to global and localecologicalproblems,andtheymustbecomecentraltosolutions.Citiesshouldnotonlydoless damage, but proactively work as an environmental repair kit – become biogenic, orgenerative,notbiocidic,orextractive.

An ecocity, in symbiosis with its region, is a lifeboat for human civilisation, an ark fordefence of the biosphere, a regulator of the global climate, and a fractal of oursustainablefuture.PaulDownton,UrbanEcologistandEcologicalArchitect29

Tosuccessfullyreduceourecologicalfootprintandmoveoutofovershoot,weneedtobuildecologicalcities,includingrelocalisingproductionoffood,energyandthings.Forcitiestoproducemoreofwhattheyconsumelocally,theyneedtobecomeproductive,fabricating(making)cities–FabCities.

26www.policyinnovations.org/ideas/policy_library/data/0155427www.mnn.com/your-home/organic-farming-gardening/videos/michael-pollan-the-problem-with-monocultures28www.newscientist.com/article/mg21328566.000-fibre-optics-to-connect-japan-to-the-uk--via-the-arctic29www.ecocitydesign.net


FABCITIES,RELOCALISATIONOFPRODUCTIONANDTHEFUTUREOFWORKThe first city tobecomeself-sufficient - simultaneously increasingemploymentbycreatingopportunities through open innovation, and radically reducing carbon emissions by re-localisingproduction-willleadthefutureofurbandevelopmentglobally.TomasDiez,FabCityGlobalInitiative30Digital technologies can either amplify and accelerate cities’ ecological devastation, or bechannelledtocreatepositivechange,suchasthroughdigitallysharingopensourcedesignenablingdistributedproduction31.AFabCityisalocallyproductive,globallyconnected,self-sufficientcity.‘Fab’ is short for ‘fabrication’,making and producing. Fab Labs (Fabrication Laboratories)andmakerspacesofferopportunities forpeopletomakeandproducewhattheyneedforthemselves,andtobringbacktocitizenstheskillsandknowledgeneededtomakethings.MakerspacesandFabLabsareopenaccessworkshops,whichmeansthatanyonecanaccessarangeofproductionequipment(includingbutnotlimitedto3Dprintersandothermeansof digital fabrication) and networks of knowledge. Fab Labs (Fabrication Laboratories)emergedfromtheCenterforBitsandAtomsatMITintheearly2000s32,originatingfromacoursedesignedtoenableanyonetolearnhowtomakealmostanything33.Harnessing these spaces and digitalmanufacturing technologies in service of the circulareconomyoffers thepotential for returningproduction to cities in the formof distributedmanufacturing with microfactories – small scale, cleaner production that is also lesswasteful,occurringas-needed,oftencustomised,insteadofover-producingformarkets34.TheFabCityGlobal Initiative35,whichoriginated inBarcelona in2014,hasexpandedwiththenetworknowincludingAmsterdam,Shenzhen,Copenhagen,Detroit,ParisandBoston,who have all joined the challenge of leveraging the capability of Fab Labs to relocaliseproductionofenergy,foodandthingsincitiesto50%by2054.

FABCity takes the ideals of the Fab Lab - the connectivity, cultureand creativity - andscalesittotheCity.Itisanewurbanmodeloftransformingandshapingcitiesthatshiftshowtheysourceandusematerialsfrom‘Products InTrashOut’(PITO)to‘DataInDataOut’(DIDO).Thismeansthatmoreproductionoccursinsidethecity,alongwithrecyclingmaterials and meeting local needs through local inventiveness. A city’s imports andexports would mostly be found in the form of data (information, knowledge, design,code)36.

30https://issuu.com/fabcity/docs/fab_city_booklet_v131https://en.wikipedia.org/wiki/Distributed_manufacturing32www.fabfoundation.org/index.php/what-is-a-fab-lab/index.html33https://ocw.mit.edu/courses/media-arts-and-sciences/mas-863-how-to-make-almost-anything-fall-200234http://singularityhub.com/2016/04/13/how-microfactories-can-bring-iterative-manufacturing-to-the-masses35www.fab.city36http://fab.city/whitepaper.pdf


Iftheideaofdigitaltradeseemspeculiar, it isworthnotingthatarecentMcKinseyreportrevealed that…‘digital flows—whichwerepracticallynon-existent just15yearsago—nowexertalargerimpactonGDPgrowththanthecenturies-oldtradeingoods37.’FabCitiesareaboutswappingthe‘recipe’,notthe‘cookies’.Fab Cities are not defined as a city full of Fab Labs, but are about reinvigorating oldindustriestomakethemmoreclean,dynamic,fastandadaptive,andconnectingthemwithgrassrootsinnovation.In Barcelona, a 1km x 1kmarea in thePoblenoudistrict has beendesignated the ‘MakerDistrict’withtheobjectiveofprototypingafractalofaFabCity,focusingon:

• Fabrication & materials: with complementary production ecosystems happeninginside the local network of Fab Labs, citizens have the possibility to producewhatthey consume, recirculating materials inside the neighbourhood and the city toreducewasteand carbonemissionsassociatedwith long-distancemassproductionanddistributionchains.

• Food production: growing food on the rooftops of Barcelona. Through urbanagriculturepractices,citizenscangrowpartofwhattheyeat turningproductionoflocalcleanfoodinaregularpartoftheirlives.

• Energy:Renewableenergyproduction.Withthearrivalofdomesticbatteriesandthecost drop of solar technologies, citizens have the tools to produce part of theirdomesticenergyconsumption38.

TheFabCityResearchLaboratoryteamhasrecently initiated‘FabMarket’,anonlineshopwheredesignerscanfabricateforlowcostandselltheiropensourcedesignsglobally39:

Usingdigitalfabricationas itsmainfocus,thenetworkpromotestheideaofdistributedmanufacturing. With this model, designs can be sent to the other side of the planet,modified andmade on the sameday.…you can find a variety of locallymade productsdesignedbypeoplefromallovertheworld.Allproductsareopen-sourceandsoldreadyforuse,assemblyorfabrication,givingpeoplethepossibilitytoparticipateinthemakingprocess.Themoreyouparticipate,thelessyoupayfortheproduct40.

Other terms being used to describe the approach advocated by Fab City include ‘DesignGlobal,ManufactureLocal’41,and ‘cosmo-localization’42. Inall cases, thismeans the ‘light’things(bits, information,shared/opensourcedesign)travel,butthe‘heavy’things(atoms,thephysical,manufacturing)staylocal.

37www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-globalization-the-new-era-of-global-flows38https://blog.fab.city/co-creating-the-fab-city-poblenou-roadmap-at-ouishare-fest-barcelona-2016-afb418c5a15139http://market.fablabs.io/40http://market.fablabs.io/manifesto41www.p2plab.gr/el/wp-content/uploads/2015/09/Futures.pdf42http://wiki.commonstransition.org/wiki/Cosmo-localism_and_the_futures_of_material_production


The circular economy approach can reduce demand for energy and materials andproductionofwaste,but ifacity isnotmaking things locally,does it trulyhaveacirculareconomy?A city that is exporting recycledmaterials elsewhere to be remade into thingsarguably still has a linear economy. Our oceans churn with carbon-intensive cargomovements43.Atruecirculareconomymeansrelocalisingproductioninourcities,needingtomovelessstuff,andmakingmoreofwhatweneed,whenandwhereweneedit.TheFabCityapproachofferspotentialtocutcarbonemissions,reducewaste,andgeneratelocaljobs,howeverrelocalisingproductionincitiesdoesnotnecessarilymeanrelocalisationofjobs44.AdidashaveannouncedplanstoshiftproductionofbootsbacktoGermanyfromAsia – but theywill be built by robots45. Theremay be local employment of peoplewhobuild andmaintain robots, however the objective of replacing labour withmachines willlikelyresultinfewerjobopportunities,especiallyforlowerskilledworkerswhomaynotbeable to accesswork roles that require skills they don’t have, or don’t have the ability orinterest to train for. The2016World Economic Forum report, ‘The Futureof Jobs’, foundthat technology could result in a net loss of five million jobs in fifteen developed andemergingcountriesby202046.Ina systemwherepeoplearedependenton selling their labour for themeans to sustainthemselves, a conscious choicemustbemade toprioritise labourandgenerationof localemploymentopportunities.Inmanycases,itcouldbebeneficialtoautomatedangerousorundesirablework,howeverifthechoiceismadetoautomatejobs,alotofsocialbenefitwillbelost,eventhoughrelocalisedproductionmaydeliverenvironmentalbenefits.Meaningfulworkisalsoaboutcontributionandsocialidentity,notjustanincome47.

…whileweinsistthateveryonemustworktomeetbasiclivingexpenseswhenthelabourmarketisbifurcatingintoasmallnumberofhigh-skill,highlypaidjobsandamuchlargernumber of unskilled, poorly paid and insecure jobs, we are preventing people frominventingnewthingstodoandnewwaysofworking…providingpeoplewithareasonableincomewhile they find or create for themselves the right job (not just any job), or toenablethemtodocreativeand/orsociallyusefulthingsthatarecurrentlyunpaid,ortostudyanddevelopnewskills,mightbeagood investment for the future, improvingtheproductivityofhumancapitalwhichoverthelongertermbenefitstheeconomy…48

Azerowastesocietyshouldalsomeanzerowasteofhumanpotential,andthispotentialcanberealised inwaysother thanseeking tomatchskillsandaptitudesofpeople to fulfillingjobs–itcanberealisedoutsidetheconfinesofpaidwork,outsidethenarrowdefinitionsof‘productivity’and‘workethic’thathavecharacterisedworksincethestartoftheIndustrialRevolution.

43http://digg.com/2016/every-ship-in-the-world44http://motherboard.vice.com/read/why-an-assembled-in-america-iphone-wont-bring-back-skilled-manufacturing-jobs45www.theguardian.com/world/2016/may/25/adidas-to-sell-robot-made-shoes-from-201746www.businessinsider.com.au/wef-davos-report-on-robots-replacing-human-jobs-2016-147www.bloomberg.com/view/articles/2016-12-02/a-job-is-more-than-a-paycheck48www.pieria.co.uk/articles/the_wastefulness_of_automation


Inaprovocative2013articleentitled‘OnthePhenomenonofBullshitJobs’,anarchistauthorDavidGraebernotedthattheincreasedleisuretimepredictedattheendofthe20thcenturybyeconomistJohnMaynardKeynesbackin1930hadnotmanifested,andthat:

It'sasifsomeonewereouttheremakinguppointlessjobsjustforthesakeofkeepingusall working…technology has beenmarshalled…to figure out ways to make us all workmore. Huge swaths of people, in Europe and North America in particular, spend theirentire working lives performing tasks they believe to be unnecessary. The moral andspiritual damage that comes from this situation is profound. It is a scar across ourcollectivesoul.Yetvirtuallynoonetalksaboutit49.

Ifthenatureofworkischangingsuchthatitisnotfulfillingeithermaterialornon-materialneeds,istheverynotionofa‘job’soontobeananachronism?Perhapsitistimeforustoreframethequestionfrom:‘howcanweensureeveryonehastheopportunityforasuitablejobthathelpssustaintheneedsofthemselvesandtheirfamilies?’to‘howcanwebestmeeteveryone’s needs in a way that enables them to fulfil their potential and contributemeaningfullytosociety?’In themeantime,within our current construction of the idea of ‘work’, there is a biggerquestion–whychoosetoautomatejobsandthrowpeopleoutofwork,severingthemfromtheabilitytoselltheirlabourtosupportthemselves?Thereasonisthatlabourisoneofthelargestcostsforanybusiness,andreplacingworkerswithmachinesthatdon’tneedtoeat,rest, sleep or be paid a wage, enables costs to be driven down, so that profit can bemaximised.Anevenbiggerquestionis:inanautomatedworld,whoownstherobots,andwhobenefitsfromtheirproductivecapacity?Ifautomationisasocietalchoice,itwillneedtooccurinconjunctionwithareinventionofthe social contract that reconfigures the job/work/income/means-to-meet-one’s-needsnexus,possiblywithaformofUniversalBasicIncome50,orUniversalBasicDividend51.Value is produced by all of society, including contributions to the commons and socialreproduction in the domestic sphere, not just in the formal economy where monetisedtransactionsoccur.Privateenterprisebenefitsfromthatwhichiscreatedbeyonditsvalue-capturing boundaries, such as supply of a schooled workforce, and the provision ofinfrastructuresuchastransportationandpowerinfrastructure.Howcanwebettersharethebenefitsofcollectivelyproducedvalue?Onewaytoachievethisisthroughbusinessmodelsandmodesofproductionthatprioritisepurposeoverprofit.

49www.canberratimes.com.au/national/public-service/the-modern-phenomenon-of-bullshit-jobs-20130831-2sy3j.html50www.theage.com.au/comment/the-case-for-a-universal-basic-income-no-questions-asked-20161118-gssj23.html51www.project-syndicate.org/commentary/basic-income-funded-by-capital-income-by-yanis-varoufakis-2016-10


POST GROWTH, CIRCULAR BUSINESS MODELS AND NOT-FOR-PROFITBUSINESS

Ahealthyeconomythrivesoncirculation.IfoureconomyhascirculationbuiltintoitsveryDNA,wecanensureafairdistributionofourcommonwealthwithoutdominatingeachotherandnature.Thedifferencebetweenfor-profitandnot-for-profitbusinesscouldbethe difference between having a linear, extractive economy and having a circular,generativeeconomy

DonnieMaclurcanandJenniferHinton,PostGrowthInstitute52Ecological citiesandFabCities,whichhavemany similarobjectives including reductionofurban Ecological Footprints, offer theoretical frameworks and practical ways to help usmoveoutofglobalovershoot.Circulareconomyapproachesareanintegralpartofboth.All are still embedded in and trying to change a world where the growth paradigm isdominant.Thedriversofgrowtharemany,buttheyincludemoneycreatedasinterestbearingdebt53,plannedobsolescence, consumer culture and status envy, population54 and the indicatorsthatweusetomanageoureconomicsystems.Economic growth, the overriding objective of governments everywhere, is measured byGrossDomesticProduct(GDP).GDPisanindicatordesignedtotracktotaleconomicactivity,developed in the 1930s and 40s amidst the upheavals of the Great Depression and twoWorldWars. Its inventor,SimonKuznets, thechiefarchitectof theUnitedStatesnationalaccounting system, cautioned against equatingGDP growthwith economicor socialwell-beingin193455.Yeteightyyearson,economicgrowthisseenasthepathwaytoprosperityandwellbeing.Althoughmanypeopletodaystilllackbasicneeds,manymorepeopletodayhaveamaterialliving standard higher than that of an average citizen at any previous time in history.Economicgrowthhasdeliveredthatstandardoflivingformanypeople.However,asan indicator,GDP isablunt instrument in that itaddsupthetotalmonetaryvalueofeconomicactivity,butdoesnotdistinguishbetweenthedesirabilityofthatactivity.Itdoesnotcountthevaluecreatedinthenon-marketeconomyofsocialproduction–caringwork, volunteering, domestic labour, ‘work for the world’. Yet every car accident, razedforest,oilspill,heartattackandbreak-iniscountedas‘growth’becauseitresultsingreaterproductionandexchangeofgoodsandservices.We are systematically incentivising unsustainable behaviours, wreaking destruction onecosystemsandcommunitieswithabstractionswehaveourselvescreated.

52inwww.howonearth.usforthcoming201753https://youtu.be/DOa8U0yixgQ54http://postgrowth.org/learn/about-post-growth/faq/#consuption-vs-population55www.spiegel.de/international/business/beyond-gdp-economists-search-for-new-definition-of-well-being-a-650532.html


In order to keep growing, a system dependent on economic growth must continuallyconvertnature into goods and relationships into services – thingsonceprovided tous asgiftsbecomemonetisedtransactions.Yetpastacertainpoint,thecostsofmoregrowth–congestion,pollution,decliningqualityoflife,inequality,destructionofecosystemservices(suchasbees’abilitytopollinateortheabilityofawatershedtofilterandcleanwater)56andliquidationofnaturalcapital–starttooutweighthebenefits.Economicgrowthbecomesuneconomicgrowth.TheUNdefinesuneconomicgrowthas:• jobless growth, where the economy grows, but does not expand opportunities for

employment;• ruthlessgrowth,wheretheproceedsofeconomicgrowthmostlybenefittherich;• voiceless growth, where economic growth is not accompanied by extension of

democracyorempowerment;• rootlessgrowth,whereeconomicgrowthsquashespeople’sculturalidentity;and• futurelessgrowth,wherethepresentgenerationsquandersresourcesneededbyfuture

generations57Persistingwith economic growth in a finite system is not only foolishwhen growth is nolongerdeliveringthebenefitsitusedtoandthecostsoutweighthegains,itisdangerous.The ‘eatmore’message of growth economics is at fundamental odds with the ‘eat less’messageofsustainability.Thishasbeenrecognisedwiththeemergenceofconceptssuchas‘greengrowth’,whichisthebargainingstageoftheendofgrowthgriefcycle.Itassumeswecanstillhavegrowth,aslongasitis‘greener’ormoreenvironmentallyresponsible.Theideaisthatwecandecouplematerialthroughputandenergyfromeconomicgrowth-thatis,wecanreducethedemandfornewresourcesandenergy,andstillgrow.Yetdecouplingisnothappeningatthescaleandpaceneeded:

UN Sustainable Development Goal 8 calls for improving‘global resourceefficiency’and‘decoupling economic growth from environmental degradation’.Unfortunately, there are no signs that this is possible at anything near the necessarypace. Global material extraction and consumption grew by 94% between 1980 and2010,accelerating inthe lastdecadetoreachashighas70billiontonnesperyear.Andit'sstillgoingup:by2030,we'reprojectedtobreach100billiontonnesofstuffperyear.Current projections show that by 2040 we willmore than doublethe world's shipping,trucking,andairmiles-alongwithallthethingsthosevehiclestransport.By2100wewillbeproducingthreetimesmoresolidwastethanwedotoday58.

56www.esd.ornl.gov/benefits_conference/nature_paper.pdf57http://steadystate.org/discover/downsides-of-economic-growth58www.theecologist.org/blogs_and_comments/commentators/2988051/to_deliver_sustainable_development_first_give_up_on_growth.html;www.pnas.org/content/112/20/6271.abstract


A recent study revealed that for every10% increase inGDP, anation’smaterial footprintincreasesby6%:

Metrics on resource productivity currently used by governments suggest that somedeveloped countries have increased the use of natural resources at a slower rate thaneconomicgrowth(relativedecoupling)orhaveevenmanagedtousefewerresourcesovertime (absolute decoupling). Using the material footprint (MF), a consumption-basedindicatorofresourceuse,wefindthecontrary:Achievementsindecouplinginadvancedeconomies are smaller than reported or even non-existent…two-fifths of all global rawmaterialswereextractedandusedjusttoenableexportsofgoodsandservicestoothercountries59.

In 2011, a study commissioned by the CEO of Veolia was published in a peer-reviewedjournalfocusedonsustainability,withtheobjectiveofassessingthebusinessopportunitiesofthecirculareconomyandrecycling.Itfoundthattheabilityto‘decouple’isonlypossibleifthetotalannualrawmaterialconsumptiongrowthrateisunderonepercent,andthat‘theinfluence of recycling on resource preservation is negligible for any raw material with agreaterthan2%perannumincrease inworldproduction’60.Eventhen,growth inmaterialconsumptionkeptbelowthatrateisstillinsufficienttodecouple,andrequiresahighrateofrecycling (60% - 80%). Economist and Professor of Sustainability and EconomicAnthropology Christian Arnsperger of the University of Lausanne61 analyses what thismeans:

Efficiency gains…become themselves the ‘raw material’ for generating new economicgrowth thanks to lower raw material requirements…and it explains why the circulargrowtheconomyattractssomuchenthusiasmamongbusinesspeopleand industrialists:Themirage isthatofperpetuallyexpandingmarketsalongwithperpetuallycontractingraw material consumption…we have no use for a pseudo-circular metabolism that isactually a steadily widening spiral: circling, yes, but spinning slowly out of controlnevertheless,inever-broadercirclesofever-growingcircumference.Weneedagenuinelycircularmetabolism…one that doesn’t spiral outward but, rather, promises to keep thesamecircumference...

ImagesbySharonEde

59www.pnas.org/content/112/20/6271.full60http://sapiens.revues.org/1242;http://wiki.p2pfoundation.net/Circular_Economy_Effects_Only_Work_Under_One_Percent_Growth61http://arnsperger-perma-circular.com/2016/06/22/one-engineers-deeper-wisdom-francois-grosse-and-the-rediscovery-of-the-perma-circular-mindset;http://unil.academia.edu/ChristianArnsperger


The earth is a finite system of nutrients, resources,minerals and energy. Human impactmustfitwithintheselimits,andleavesome‘breathingroom’notonlyforhumanity,butformillionsofotherspecies. If theabsoluteamountof resourceandenergyuse is still rising,economicgrowthwillnegateresourceefficiencygains.ItisaglobalJevon’sParadox62.

Capitalism’sanswertoeveryproblemismoreofthesamegrowthandoverconsumptionthat has wrecked the planet and the climate in the first place. There can never be amarket solution to our crisis because every ‘solution’ has to be subordinated tomaximizinggrowth,orcompaniescan’tstayinbusiness.RichardSmith,SixThesesonSavingthePlanet63

Running physical ecological deficits as part of growth economics is also a financial andpolitical security risk. TheUN Finance Initiative isworking in partnershipwith the GlobalFootprint Network on how to quantify natural resource and environmental risks, andincorporatethemintoriskassessmentsusedby insurancecompanies, investorsandcreditrating agencies64 (see overview of this project, ‘Integrating Ecological Risk in SovereignCreditRatingsandInvestments’65).Fortheworldasawhole,thegrowthmodelisnolongersafe–wearealreadyinovershoot.Uneconomic growth, where the benefits flow mainly to the rich, also creates socialinequality and contributes to social breakdown. In 2016,Oxfam’s report ‘An Economy forthe1%’,foundthat,worldwide,just62individualsownasmuchwealththe3.6billionwhomakeupthebottomsocioeconomichalfoftheworld’spopulation66.ResearchbyauthorsofThe Spirit Level, epidemiologists Richard Wilkinson and Kate Pickett, shows that socialproblems (including mental illness, drug addiction, obesity, loss of community life,imprisonment)aremoreprevalentinmoreunequalsocieties,evenamongthericherstrataofthosesocieties.Inequalityaffectstheentiresocialfabric,notjustthoselesswelloff67.Mentalhealthisoneofthebiggestpublicandhumancosts.TheWorldHealthOrganization(WHO)reportsthatmentalillnessesaretheleadingcausesofdisabilityworldwide,withanestimatedglobalcostofalmost$2.5trillion-morethancardiovasculardisease,respiratorydisease, cancer or diabetes68, and mental illnesses are more prevalent in more unequalsocietiesThisislargelyduenottoabsolutepoverty,butratherrelativewealth,orwhereyou‘rank’insociety-inotherwords,‘howamIdoingcomparedtowhatIseearoundme?’Agrowtheconomyrequiresongoingconsumption,whichiswhyitpromotesthedefiningofindividual identity, focusing our attention on what we are doing to maximise ourconsumptionandgeneratingtheincometosustainit.

62http://en.wikipedia.org/wiki/Jevons's_paradox63www.thenextsystem.org/wp-content/uploads/2016/11/RichardSmith.pdf64www.footprintnetwork.org/en/index.php/GFN/page/footprint_for_finance;www.footprintnetwork.org/images/uploads/UNEPFI_Ecobonds_Brochure.pdf65www.footprintnetwork.org/images/uploads/UNEPFI_Ecobonds_Brochure.pdf66www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp210-economy-one-percent-tax-havens-180116-summ-en_0.pdf67www.theguardian.com/commentisfree/2014/mar/09/society-unequal-the-spirit-level68www.shareadelaide.com/blog/hearts-minds-sharing-as-a-mental-health-intervention


While people are busy concentrating on the pursuit of individualistic, increasinglycommodified lifestyles, there is a corresponding retreat from involvement in civic,communityandfamilylife,andaweakeningofthesocialcohesionthathasbeenpartoflifefor centuries. This atomisation of society is at the basis of much social and communitybreakdown:

When the relationships of gift-giving in a community are replaced by monetarytransactions, the fabric of the community unravels…in sharp contrast to themonetizedworldoffinancialsecurity,whichinexorablyseparateseveryonefromeveryoneelse,agifteconomy is an economy of obligation and dependence. Financial security is not trueindependence,butmerelydependenceonstrangers,whowillonlydothethingsnecessaryforyoursurvival ifyoupaythem…themonetizedliferemovessomeoftheincentivesforpeopletoadheretosocialandethicalnorms.Dissolutionofcommunityisbuilt intooursystemofmoney.

CharlesEisenstein,TheAscentofHumanity69Inaneconomicsystemthatdependsongrowth,pursuingmoregrowthisentirelyrational.Butthereisadeeperquestionthatgoesunasked:isaneconomicsystemthatdependsongrowthitselfrational?Growthisnotworkingformostofhumanity,it’snolongerworkingaswell for thosewhohavebenefited, and it’s not at allworking for thenatural systemsonwhichthesecurityofourcivilisationdepends.ButjustlikeinthemovieSpeed,weare‘stuckonthebus’70,inacatch22ofourownmaking.How can we harness economic, financial and cultural dynamics to get us safely off thegrowthbusbeforewerunoutoffuel,withoutthedamagethatwilloccurifweslowdown?Inthislight,circulareconomybusinessmodelsarenottransformativeenough,astheytendtobefocusedonhowtounlockbusinessgrowththroughbettermanagementofmaterials71.ZeroWasteScotlandcitesthefollowingexamplesofcirculareconomybusinessmodels72:

Hire&Leasing:Hireorleasingofproductsasanalternativetopurchasing.

Performance/Service System: Providing a service based on delivering the performanceoutputsofaproductwherethemanufacturerretainsownership,hasgreatercontrolovertheproductionofaproduct,andthereforehasmoreinterestinproducingaproductthatlasts.

Incentivised Return: Offering a financial or other incentive for the return of ‘used’products.Productscanberefurbishedandre-sold.

AssetManagement:Maximisingproduct lifetimeandminimisingnewpurchasethroughtrackinganorganisation’sassets,planningwhatcanbere-used,repairedorredeployedatadifferentsite.

69http://charleseisenstein.net/ascent-of-humanity/the-anonymous-power70http://postgrowth.org/stuck-on-the-bus71www.forumforthefuture.org/sites/default/files/Card%20deck.pdf72www.zerowastescotland.org.uk/content/what-are-circular-economy-business-models


CollaborativeConsumption:Rentalorsharingofproductsbetweenmembersofthepublicorbusinesses,oftenthroughpeer-to-peernetworks.

Long Life: Products designed for long life, supported by guarantees and trusted repairservices.

While they are all worthwhile approaches, models such as hiring or leasing and assetmanagementarenotnew,andthestatedbenefitsofthesemodelsprimarily focusontheopportunitiesforbusinessgrowth.Growthofwhat,andforwhom?Whobenefits?Shouldtheimpetusforacirculareconomyberestrictedtoopportunitiesforbusinessowners?Partofthegrowthmythologyisthat‘growingthepie’enableswealthtotrickledown,thatgivingtaxconcessionstothewealthywillresult in investmentandproductiveactivitythatcreates jobs73,however this isnotnecessarily thecase.The lion’sshareof thebenefitsofgrowtharetypicallyprivatisedinthehandsofafew,whilethecostsaresocialised74.Are we missing bigger opportunities to profoundly transform our societies through abroaderdefinitionof‘circulareconomy’?In the business world, surplus value is typically extracted from an economic system asreturnson investmenttoshareholdersandowners,notreinvestedback intothebusiness,orsocietymorebroadly.Likeourtake-make-wasteeconomy,ourfinancialeconomyisalsoalineareconomy.Theprimarylegalresponsibilityofcorporateexecutivesisfiduciary,thatis,tomakeasmuchprofitaspossibleforreturningtoshareholdersandinvestors.Todothis,costs-likefrequentflyerprawns-areexternalisedtotheenvironmentandtosociety.OnereportsponsoredbytheUNrevealedthatnoneoftheworld’stopindustrieswouldbeprofitableiftheyhadtopayforthenaturalcapitaltheyconsume75.Thisexternalisationalsorelatestosocialcosts,andisoneofthedriversofbothautomationofjobs,andincreasingprecarityandcasualisationofwork–overathirdoftheUSworkforceisnowfreelance76.This focusonmaximisingshareholdervalue isnowbeingchallenged inthebusinessarenaitself77.Oneconsequenceofasystemstructuredthiswayisthatwealthisincreasinglycapturedandsuckedout of the ‘real’ or ‘common’ economyof goods and services, and into the ‘elite’economy-includinganestimatedat$32trillioninoffshoretaxhavens78-whereit isthenlockedawayfromandunavailabletowidersociety:

73www.abc.net.au/news/2014-11-14/dcosta-g20-should-focus-on-jobs-not-growth/589130874http://newint.org/blog/2011/03/02/privatizing-profit-and-socializing-risk75http://grist.org/business-technology/none-of-the-worlds-top-industries-would-be-profitable-if-they-paid-for-the-natural-capital-they-use/76www.forbes.com/sites/elainepofeldt/2016/10/06/new-survey-freelance-economy-shows-rapid-growth77www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/#7ab1d3c9222478www.reuters.com/article/us-offshore-wealth-idUSBRE86L03U20120722


Arecentstudy foundthat thesuper-rich,onaverage, invest18%of theirwealth in realestate, keep 26% of it in cash and bank deposits, use 27% of it to buymore equity incompanies,andput30%of it intohedge funds,derivatives, securities, currency tradingandbondmarkets79.Thewealthyessentiallyextractthesurplusfromtherealeconomyofgoodsandservices,puttingmostof it intotheeliteeconomyofbusinessequity,shares,securities,derivatives,moneymarkets,andhedge funds.Wecall this theeliteeconomybecause it is a speculativemarket thatonly thosewhohavea certainamountof extramoneycanaffordtobetin.

DonnieMaclurcanandJenniferHinton,PostGrowthInstitute80

DiagramfromHowOnEarth,forthcomingin201781Howcanwestopthisastronomicalflowofwealthbeingsiphonedintotheeliteeconomy?Onepowerfulwayistochangehowvalueissharedanddistributed.There is increasing momentum in support of employee/worker owned co-operativeenterprise82, includingplatformco-operatives83 - suchasa ridesharingplatformownedbythe drivers and other stakeholders, rather than the benefits flowing back to suppliers ofventurecapital.Evenmore broadly, open co-operatives84 share thewealth and governance of a businesswith all stakeholders who wish to participate. Complementary and local currencies85,includingcryptocurrencies86,canplayarole,locallyandtransnationally.79www.worldwealthreport.com/sites/all/themes/wwr/images/WWR2015-GeneralInfographic.jpg80inwww.howonearth.usforthcomingin201781www.howonearth.us82www.theselc.org/cooperatives83http://platformcoop.net/84http://open.coop/open85http://reconomy.org/economic-enablers/alternative-means-of-exchange/complementary-currencies86https://en.wikipedia.org/wiki/Cryptocurrency;http://en.wikipedia.org/wiki/List_of_cryptocurrencies


The potential of commons based peer production in creating a truly circular economy isenormous:

Commons-based peer production is a term coined by Harvard Law School professorYochai Benkler to describe a newmodel of economic production in which the creativeenergy of large numbers of people is coordinated (usuallywith the aid of the internet)into large, meaningful projects, mostly without traditional hierarchical organization orfinancialcompensation.Hecomparescommons-basedpeerproductiontofirmproduction(where a centralized decision process decideswhat has to be done and bywhom) andmarket-based production (when tagging different prices to different jobs serves as anattractortoanyoneinterestedindoingthejob)87.

Michel Bauwens, Founder of the Foundation for Peer-to-Peer Alternatives, cites theemergenceofglobalopendesigncommunities,which throughopencontributory systemsare now able tomassively scale co-operation in creating commons projects of value, likeWikipedia88,RepRap89andArduino90.

Aroundthesecommons,thereareextractivebusinessmodelsonhowtomaximiseprofitsfromthesecommons,butalsogenerativebusinessmodels.Thisisanewtypeofeconomy,where people organise to make a living without destroying the commons, and finddemocraticsolutionstoworktogether91.

BauwenscitesEnspiral92,whichoriginated inNewZealand,asanexampleofagenerativebusinessmodel.EnspiralembodiesthethreeelementsBauwenshasidentified:

• anopencontributorysystem,wherepeople(whetherpaidorunpaid)addtoacommon

shared resource that is outside the market ie. not subject to the supply-demanddynamic

• a coalition of ethical entrepreneurs that seek to co-operate with the commons andglobal design communities, creating markets and livelihoods around these commonsthatenablepeopletocontinuetheircontributiontosharedresourcesandmakealivingaroundsolvingsocialandenvironmentalproblems

• afor-benefitassociationthatmanagesthecommons(attheterritorialgovernancelevel,

thiscouldbethe‘partnercity’or‘partnerstate’)Enspiralproducedacommons,Loomio93,opensourcedecisionmakingsoftwareforvirtualteams.Aroundthat,theyhavenumerousbusinessventuresthatseektosolvehumanandecological issues. The Enspiral Foundation is the entity that manages their commoninfrastructure.

87https://en.wikipedia.org/wiki/Commons-based_peer_production88https://en.wikipedia.org/wiki/Main_Page89http://en.wikipedia.org/wiki/RepRap_project90https://en.wikipedia.org/wiki/Arduino91www.youtube.com/watch?v=46xXynjY4Nc92www.enspiral.com93www.loomio.org


Whenvalueiscapturedbyextractivemodelsandnotreinvestedinthecommons,itcreateseconomicuncertaintyand insecurity formanypeople94.Commonsbasedpeerproductionseeks to change that dynamic, returning the rewards to those who generate value andcontributetothecommons.How can capital be accessed without those needing it being beholden to investorsindefinitely?One approach is that of ‘capped investments’where investors are guaranteed an agreedpercentageofreturnoninvestment,butoveratimeperiodthateventuallyexpires,ratherthanrequiringtheenterprisetocontinuetoprovideadividendinperpetuity.

The biggest problem with our current system is that the growth path of successfulcompaniesveryoftenendupwithanIPOoracquisitionbyalistedcompany.Nomatterwheretheystart,companiestendtoendupinaprofitmaximisingsystemwithincentivesto externalise asmany costs as they can onto society. In this model, a fewwin whilesocietyloses.Theshares in thosepubliccompaniesneverexpire.Theytransition frombeingavehiclefor fair compensation to investors and entrepreneurs to becoming licenses to extractwealth fromsociety thatare sold to thehighestbidder.Therearedividendsbeingpaidouttodayonsharesincompanieswhereeverypersonwhotooktherisksandputinthecapitaltostartituphasbeendeadfor100years.Thereturnshavebecomedivorcedfromtheiroriginalconnectiontomeaningfulinputstothebusiness.If capped returns became the norm of business then the growth path of a successfulenterprisewouldbe topayback its foundersand investorsearlyon in its lifecycle (firstdecadeortwo).Thentherewouldbeabigcelebrationasthebusinessbecameafreeholdimpactventurewithabindingmandatetoservewidersociety.

JoshuaVial,Enspiral95

This is an example of ‘transvestment’96, reversing the effects of the wealth siphon bytransferringvaluebackintothe‘real’economy.Suchascenariowouldneedinvestorswhoseeka fair financial return-butnotanever-endingreturnofclaimsonwealth fromvaluegeneratedbyothers-andawillingnesstoinvestforpositiveandenvironmentalimpact.Alloftheseexamplesshiftusawayfromanextractiveeconomytoaregenerativeeconomy.A powerful approach detailed in the Post Growth Institute’s forthcoming book,How OnEarth97, makes the case that not-for-profit business models - which prioritisepurpose/mission ahead of profit - will become the core of the global economy by 2050,becausetheywilloutperformbusinesswhoseprimaryfocusisprofit.

94https://en.wikipedia.org/wiki/Precariat95http://joshuavial.com/capped-returns;http://wiki.p2pfoundation.net/Capped_Returns96http://wiki.p2pfoundation.net/Transvestment97inwww.howonearth.usforthcoming2017


Howoftendoweheartheterm‘for-profitbusiness’? It isassumedthatallbusinessesarefor-profit, just as it’s assumed all markets operate on the basis of growth, extractivepractices,evengreed.Yetbusinessesofallkindscanbenot-for-profit - socialenterprises,sustainable businesses, cooperatives, and even multinational corporations. Not-for-profitbusinesses already exist across sectors as diverse as telecommunications, engineering,retail, manufacturing, software development, construction, healthcare and the foodindustry.A not-for-profit business is one where profit cannot be privately distributed to anyone,includingworkersorstakeholdersaswellasshareholders.Itisdifferenttoatraditionalnon-profit,whichisoftendependentongovernmentfunding,philanthropyorcorporatecharity.

DiagramfromHowOnEarth,forthcomingin2017

Not-for-profit business is legally different to other models such as B Corporations (acertification scheme), corporate social responsibility and for-purpose business,where thesurplusisstillallowedtobeprivatised:

Whilesome for-profitorganizationsmayneverevenmakeanyprofits,allof themhavethe ability to privately distribute profits. A company that can distribute profits toindividuals (such as owners, shareholders, investors, partners, workers, managers andboard directors) is legally for-profit. Although the way for-profit entities handle theirfinancial surplus varies, the key distinction is that they can distribute surplus toindividuals,andalmostalwayshavetheintentiontodoso.By law, not-for-profit businesses aremission-basedand theymust invest 100%of theirprofitsbackintotheirmission.Becauseofthis,theyaremorelikelytocareaboutwhetherornottheirsupplychainsareethical;abouttheirenvironmentalimpact;andabouttheiremployees’wellbeing.Theyaremorelikelytotakeintoconsiderationtheconcernsofthelocal communities in which they operate and to give their employees the chance toexpressthemselves.Andtheyarenotatalllikelytosacrificeanyoftheseconcernsinthenameofprofit-maximization.


For-profit companies thatare trying to incorporateethicalbusinesspractices caneasilydrift fromasocialmissionduetothepressuretomaximizeprofitsorgeneratefinancialvalueforownersandinvestors.It’snotthatfor-profitcompaniescan’tdoworkthathasadeeperpurpose;rather it’sthattheprofitmotiveoftendistractsthemfromthatdeeperpurpose.

DonnieMaclurcanandJenniferHinton,PostGrowthInstitute98A not-for-profit business works the same as any other business: it must be financiallysustainable,everyonegetspaid,and itcanmakeasmuchprofitas it likes–but itcannotdistributeprofitprivately.Anysurplusisrequiredtobereinvestedbackintothemissionorpurposeofthebusiness.Thesebusinessesseeprofitasameanstoachievingdeepergoals,ratherthanasagoalinitself.Not-for-profitbusinesseshavemanyadvantages in themarketplace, includingbeingmoreresilient in timesofeconomicdownturn,becausetheydon’thavetoprovidedividends toshareholders.Theyalsohavegreater freedomto innovate,due to theabsenceofownersandshareholderswhotendtorestrictcreativeenergytotheareastheydecidewillyieldagoodfinancialreturn.Not-for-profit businesses that constantly cycle their surplus back into the real economyprovideapractical,tangiblewaytoredirecttheflowofbothvalueandcapital,enablingustoprimethewealthcirculationpumpintherealeconomy,tomeetsocialneedsandensurewearenotunderminingourecologicallifesupportsystems.Ifwewant tomoveoutof thedanger zoneofecologicalovershoot,wemustmoveawayfrom dependence on profit maximisation and evermore economic growth, which drivesextractivebehaviour,extremeinequalityanddestructionoftheEarth’slifesupportsystems.Ifwewantaneconomicoperatingsystemthat is regenerative,notextractive,wehavetochangehowsurplusismanaged.

Profit is neither inherently good nor bad. But, as the surplus of economic activity, it isimportant.Andwhathappenstothesurplusinoureconomyisattherootofwhetherwehaveahealthyeconomyoradestructiveeconomy.

DonnieMaclurcanandJenniferHinton,PostGrowthInstitute99Thenot-for-profitmodel isaboutpreventingvalueextractionandkeeping it investedandcirculatingintherealeconomy.Itpromisesvaluecreation,ratherthanvalueappropriation,andisasystemthatrunsonsharedinterest,notself-interest.Itcanhelpsupportthepushforworkerandopenco-operatives,platformco-ops,commonsbased peer production and, eventually, partially or completely replace the need for‘transvestment’, as there will be less need for a transfer of capital back from the eliteeconomytotherealeconomyifthevalueisretainedintherealeconomyinthefirstplace.98inwww.howonearth.usforthcoming201799inwww.howonearth.usforthcoming2017


Aneconomybasedonnot-for-profitenterprisewouldtakeusbeyondthecurrentdebateaboutwhetherthemarketshouldbemoreheavilyregulatedorifitshouldbeallowedtooperatemore freely,becausethe functioningofanot-for-profitmarketeconomywouldbesodifferentfromthefor-profitmarketeconomy.

DonnieMaclurcanandJenniferHinton,PostGrowthInstitute100Thenot-for-profitmodelmeetstheneedsofthosewhowantamarketeconomy,individualchoice and reward for effort; those whowant amore equitable society, where people’sneedsaremet;thosewhochampioninnovationandtechnology;anditsatisfiesthosewhounderstandthatourwellbeingandsafetydependonthehealthofourenvironment.Itisnotapanacea,butitisapracticalapproachandrealisticbridgefromtheoldeconomytotheneweconomy,andmost importantly, it isalreadyemerging intheworldwe live inrightnow.

100inwww.howonearth.usforthcoming2017


THEREALCIRCULARECONOMYElectriclightdidnotcomeaboutfromthecontinuousimprovementofcandles.OrenHarariAcirculareconomycanplayacrucialroleinimprovingthedesignandmanagementofourmaterialworld.Butcanwemeetourultimateobjectiveofasustainablesocietybyimprovingonthecurrentsystem,ormustwetransitiontoanewsystem?Any approach which is aligned with or dependent on an economic system based onperpetual growth and the pursuit of more, or one where value is created by many butcapturedby a few, doesnot offer the structure that candeliver the changesweneed toaddressourenvironmentalandsocialchallenges.Acirculareconomyisnecessary,butnotsufficient,forthesystemicchangeweneedtogetusontrackforasecurefuture.Thenot-for-profitmodelisalsonecessarybutnotsufficient,thoughitdiffersfromcirculareconomyinthatitisatransformationalapproachawayfromthegrowthparadigm,givingusabetter chance tomoveoutofecologicalovershoot,anddeliverprosperouslivesforeveryone.Arealcirculareconomywouldexpandthedefinitionofthecirculareconomytoonewhereitsoperatingsystemisregenerativenotextractivenotonlytowardsnature,butpeople;onewherewealthisequitablycirculatedandshared.Atrulycirculareconomywouldmeanthatthecircularethosisalsoreflectedinoursocialsystems,includingourfinancialservices,ourbusinessstructures,andthepoliticalframeworksandculturalnormsthatinfluencehumanbehaviour.

Whatifcirculareconomybusinesseswerecommencedas,ortransitionedto,not-for-profitbusinessmodels?

This is a way to fund circular economies in their truest sense - not just by moving to acirculareconomyofmaterialsthathastokeepgrowingandmaximisingprofit,butbyalsomakingcircularthevalueflowsthatcouldhelpfundthepositivesocialandenvironmentalchangeweneedtomake,creatingacirculareconomyofwealthinserviceofthecommongood.SharonEdeCoFounder,PostGrowthInstituteCatalyst,FabCityGlobalInitiativeDecember2016


ReferencesDiez,Tomas(2016)‘LocallyProductive,GloballyConnected,Self-SufficientCities’-FabCityWhitepaperhttp://fab.city/whitepaper.pdfHinton,JenniferandMaclurcan,Donald(2017forthcoming)‘HowOnEarth’www.howonearth.usIn addition to specified references, this paper reflects years of mentoring by, andcollaborationwith:Paul Downton, architect and urban ecologist, Cherie Hoyle, community leader and urbanecologist,thedrivingforcebehindAdelaide’s‘pieceofecocity’,ChristieWalkMathisWackernagel,GlobalFootprintNetworkfounderandCEOandWilliamRees,creatoroftheEcologicalFootprintconceptDonnieMaclurcanandJenniferHinton,co-directorsofthePostGrowthInstituteMichelBauwens,founderoftheP2PFoundationTomasDiez,instigatoroftheFabCityGlobalInitiativeAcknowledgmentsSpecial thanks to Tomas Diez, Donnie Maclurcan and Jennifer Hinton for reviewing thispaper,andfortheircontributionsandsuggestions.

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