Research note

Cyclic industrial economy emerging

The survival of our present industrial civilization, and the natural environment that supports it, is not assured. The main physical source of this risk or unsustainability is the design pattern of the worldwide industrial economy. As the industrial economy approaches the same physical scale as the biosphere, a new organizing pattern for industry is urgently needed.

In the present system of industrial production the pattern of physical flows is putting ever-increasing pressure on nature. In simple terms, raw materials are extracted from the environment (the biosphere and the Earth’s crust), processed to create products with transient economic value, and the resulting waste is dumped back into the natural environment.

This is workable if industry is small and nature is vast, but as industry continues to grow rapidly and approaches the same scale as nature itself, it is quickly becoming a major problem. For one thing, if the flow of materials being pulled from nature begins to be as large as the stocks and flows in nature itself, then the supply of materials will not last for very long. For another, if the flow of pollution is too large in comparison to the processing capacity of nature, nature is likely to be poisoned.

Scale and rate of growth are the two key reasons why the straight-line, or source to sink, flow of materials in the existing industrial economy cannot be sustained. If the scale of industry was small compared with nature—meaning the biosphere—then its activities could be sustained without undue difficulty. If it was not only small but also growing slowly, then a linear flow of materials could be sustained for a long period.

The alternative to a linear flow of materials is a ‘cyclic’ flow, in which materials continuously flow in circular loops and are reprocessed for reuse each time they reach the end of a period of use. A circular flow of materials has two main advantages over a linear flow, particularly when the linear flow reaches large scale.

One is that it avoids exhausting a finite environmental stock of materials, since it draws on the stock only once, to fill the loop, and then keeps circulating and reusing the material. In this way it ensures an indefinite supply of materials for the industrial economy.

The other advantage is that a cyclic flow avoids the pressures a linear flow exerts on the environment. At the start of the chain, extraction of materials often causes damage, for example habitat and species loss, collateral pollution and changes to geological structures and hydrology. Similarly, the release of waste at the end of the linear flow puts a heavy and growing burden on the environment’s limited capacity to act as a sink and processor for waste and pollution. The circular flow, or loop, creates a supply of materials that is independent of nature once it has been created and so does not exert pressure on nature.

A cyclic flow thus assures sustainability in two senses: the sustainability of nature and the sustainability of a society able to use a high level of technology. The creation of a physical ‘cyclic loop’ of materials is therefore one of the key aspects of securing sustainability at the level of physical resources.

The British scientist James Lovelock was one of the first to recognize that the web of life on Earth creates a set of flows and feedback loops that resemble the physiology of a regular organism—an inter-relationship that in 1979 he termed Gaia, the name of the ancient Greek goddess of the Earth. Lovelock pioneered the study of planetary physiology, or geophysiology as he calls it. Geophysiology encompasses geological processes, climatic and hydrological cycles, and ecology, all of which are responsible for materials flows in the natural environment. The ultimate aim of basing industry on a circular flow of materials is to accommodate the global industrial system—or more generally the human use of advanced technology—within the physiology of the whole planet on an ongoing basis. Put another way, this means creating a global technological infrastructure able to harmonize with the unique biogeochemical processes and cycles of this planet.

In contemplating an evolutionary transition of our industrial economy from a linear to a cyclic flow of materials we are following in nature’s footsteps. The biosphere itself operates as a cyclic system, endlessly circulating and transforming materials and managing to run almost entirely on solar energy. The evolution of this global cyclic pattern from its early non-cyclic origins—about 2.5 thousand million years ago when oxygen first began to accumulate in the atmosphere—mirrors the transition that our global industrial materials processing system now needs to make.


Relevant reports and publications 

The following white paper and contributed chapters were written by Synthesys' CEO, Hardin Tibbs, on concepts and issues that are relevant to the circular economy.

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Industrial Ecology: An Environmental Agenda for Industry

A seminal white paper on industrial ecology originally published by Arthur D. Little Inc. (ADL) based on work in the late 1980s, and republished by Global Business Network (GBN) in 1993. 


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The Technology Strategy of the Sustainable Corporation 

A chapter contributed to Sustainability, The Corporate Challenge of the 21st Century (Allen & Unwin Australia, 2000), edited by Dexter Dunphy, Director of the AGSM Centre for Corporate Change at the University of New South Wales.


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The Value Loop

The Value Loop is a proposed ecologically-inspired concept for business value-creation. This appeared as a chapter contributed to The International Handbook on Environmental Technology Management (Edward Elgar 2006), edited by Dora Marinova, Head of the Institute for Sustainability and Technology Policy at Murdoch University in Australia. The value loop idea also appeared in simplified form in a piece published by Strategy+Business in 2007.