Resources, Conservation & Recycling 187 (2022) 106604
Contents lists available at ScienceDirect
Resources, Conservation & Recycling
journal homepage: www.elsevier.com/locate/resconrec
Perspective
Circular Economy and economic (de-)growth? Let’s shift the baselines!
Florian Hofmann
Brandenburg University of Technology Cottbus - Senftenberg, Institute for Philosophy and Social Sciences, Sociology of technology and the environment, Platz der
Deutschen Einheit, Cottbus, 03046 Germany
The circular economy (CE) is mostly seen as a glimmer of hope to
achieve what has seemed impossible so far on a great scale; advocates
assert that it offers an attractive economic approach that allows
decoupling of continuous economic growth from ecological burdens.
Indeed, it is probably the argument par excellence why CE receive great
attention, not just from business representatives, but also from political
decision-makers at the national and supranational levels. The scientific
community that studies CE has gradually engaged in critical discourse
on the dynamic reciprocity between CE and growth. Current perspective
articles on the topic can be found in the international scientific journal
Resource, Conservation, & Recycling (Bauwens, 2021; Kirchherr, 2021).
These position papers represent the two most prominent sides of the
debate on economic (post/ de-)growth.
Some assume that CE and circular business models (CBMs) can
harmonize economic expansion and sustainability (Kirchherr, 2021).
They argue that economic growth is a social, political, and corporate
necessity, and that circular (green) growth with sufficient decoupling
can decrease anthropological pressure on ecological systems to such a
level that we can proceed to a safe operating space for humanity with
respect to planetary boundaries. Moreover, framing CE and CBMs with a
degrowth attitude may send disenchanting signals to practitioners
attempting to integrate CE solutions into everyday business reality.
Kircherr (2021: 1) points out that calls “for ‘post-growth’ circularity may
alienate practitioners, creating a scholarly community that loses its ability to
influence the mainstream.” Without going into further detail, this posi­
tion, which primarily pursues a neoliberal notion of economic evolution,
relies on the promise that, in a Schumpeterian ever-coming storm of
creative destruction (Schumpeter, 1934), risk-taking and inventive en­
trepreneurs and their CBMs should substitute powerful incumbents
performing linear and unsustainable business models. “After all, only
circular business models that grow will be able to substitute their linear
counterparts” (Kirchherr, 2021: 2).
In contrast, there are those who argue that decoupling economic
growth from natural exploitation is not feasible due to the second law of
thermodynamics and the inevitability of entropy (built on the work of e.
g. Nicholas Georgescu-Roegen, 1971); implying the likely occurrence of
E-mail addresses: florian.hofmann@b-tu.de, florian.hofmann@tu-berlin.de.
https://doi.org/10.1016/j.resconrec.2022.106604
Received 30 May 2022; Accepted 11 August 2022
Available online 22 August 2022
0921-3449/© 2022 The Author. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
rebound and backfire effects; the inability of use-oriented CBMs (such as
product leasing, renting, sharing, and pooling) to reduce environmental
impacts, or the high costs of running CBMs that are “quickly outpriced
and driven out of the market by cheaper, non-circular competitors” (Bau­
wens, 2021: 1). For them, a focus on degrowth is the best approach
tackling ecological unsustainability. In addition to durability, efficiency,
and frugality, degrowth oriented CBMs should keep value creation ac­
tivities small-scale and embrace cooperative ownership models that
support democratic participation in decision-making procedures and
profits redistribution (ibid.).
Scientific studies on the decoupling debate have shown that the
relationship between economic growth and natural resource consump­
tion is not sufficiently understood to make reliable predictions about
whether successful decoupling (i.e., finding a dynamic equilibrium in a
safe ecological operating space for humanity) will be achieved within an
appropriate time frame (Petschow et al., 2018). We do not know how the
gross domestic product (GDP) per capita will develop in countries of the
Global North if their economies are transformed in such a manner that
they no longer exceed planetary boundaries. It is possible that the GDP
per capita will increase, but it is also conceivable that it will shrink
dramatically. If the second scenario occurs without governments taking
appropriate precautions, the social consequences will be devastating. A
GDP contraction would, in fact, significantly impair the functioning of
almost all publicly financed democratic institutions (e.g., social security
systems or health systems), if not even causing them to collapse. Ac­
cording to the precautionary principle, it is indispensable to transform
relevant social institutions so that they can provide their services to a
suitable degree, regardless of the future development of economic
growth (ibid.).
However, it is also evident that we cannot continue to follow
neoliberal ideology without major alterations to market designs.
Extensive corrections of market parameters are required to financially
support companies that invest in and experiment with CBMs, especially
those that intend to slow down consumption (value creation activities
that concentrate on refuse, reduce, reuse, repair). A large set of market
incentive instruments and regulatory policies has already been
F. Hofmann
extensively researched, discussed, and critically evaluated to encourage
CBMs for sustainability. Boosting CBMs beyond the experimental status,
firms need economic regulations and market governance structures that
support them to supersede cheaper, non-circular competitors. Thus, we
need selective (de-)growth, in which policy decisions are made demo­
cratically about which industry sectors need to degrow and which mar­
kets must become dominant. A good example is the democratically
legitimized energy transition in Germany, known as the German Ener­
giewende, by shutting down fossil and nuclear energy infrastructures, but
simultaneously creating markets for new democratic based business
models for accelerating the energy transition (e.g., energy cooperatives).
The mission is to design a social and ecological based market economy
that respects the planetary boundaries. A market design that sets clear
and absolute limits for consumption and fulfills socially based impera­
tives that need to be met. Transdisciplinary collaboration between po­
litical, economic, scientific, and civil society actors is crucial for
reflexively creating economic breeding grounds that displace the market
configurations sustaining the contemporary business rationale.
The greatest problem is that a hegemonic mania with economic
growth may lead to one-dimensional thinking across politics, eco­
nomics, business, and education: applying purely quantitative de­
terminants to evaluate the health of an economy, equating quality of life
with material wealth, and the instrumental perspective of the natural
world that functions as a pure production factor and service instance,
which must first be quantified in monetary terms so that it appears
worthy of protection (Banerjee et al., 2020). This kind of self-referential
growth obsession has gradually manifested in almost all political, eco­
nomic, and corporate agendas as the purpose of economic activity. This
implies that economic growth can solve complex social problems such as
poverty; it is even believed to stop climate change and the sixth mass
extinction in Earth’s history. Consequently, innovation policy programs
and business strategy roadmaps that unleash economic growth are
generally favored, because there is simply a lack of alternatives. Eco­
nomic growth has become a driver of capital accumulation that not only
increases social disparities and natural exploitation, but also leads to
multiple interdependencies among firms, investors, suppliers, em­
ployees, the educational, health care, and political systems in such a
manner that without economic growth, everything that we have built as
a society will collapse like a house of cards (ibid.).
There is a pressing need for an inventive critique of circular (green)
growth to unlock intellectual and creative spaces for overcoming
thinking in dichotomies, as exemplified by the two perspectives
Resources, Conservation & Recycling 187 (2022) 106604
mentioned above. We need time, financial resources, and capacities for
research projects targeting experimental management and organiza­
tional studies that explore other forms, types, and narratives of growth.
Furthermore, we need time in academic education to scrutinize the
classical approaches and instruments of strategic management and
organizational development, which are mostly based on assumptions of
unconditional growth (and thus also originate from an ideology that
carries the names of the world’s largest management consulting firms,
such as the Boston Consulting Group Matrix or the McKinsey Portfolio
Matrix). Given the current rise and prominence of CE and CBMs, the
time is right to rethink and redefine growth, especially for researchers
and lecturers at universities who deal with topics on organizations,
firms, business models and economics. The following question remains:
What constitutes economic success in times of climate change and mass
extinction on a porous planet?
Declaration of Competing Interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
References
Banerjee, S.B., Jermier, J.M., Peredo, A.M., Perey, R., Reichel, A., 2020. Theoretical
perspectives on organizations and organizing in a post-growth era. Organization 28
(3), 337–357. https://doi.org/10.1177/1350508420973629.
Bauwens, T., 2021. Are the circular economy and economic growth compatible? A case
for post-growth circularity. Resour. Conserv. Recycl. 175, 105852 https://doi.org/
10.1016/j.resconrec.2021.105852.
Georgescu-Roegen, N., 1971. The Entropy Law and the Economic Process. Harvard
University Press. https://doi.org/10.4159/harvard.9780674281653.
Kirchherr, J., 2021. Circular economy and growth: a critical review of “post-growth”
circularity and a plea for a circular economy that grows. Resour. Conserv. Recycl.
179, 106033 https://doi.org/10.1016/j.resconrec.2021.106033.
Further reading
Petschow, U., Lange, S., Hofmann, D., Pissarskoi, E., aus dem Moore, N., Korfhage, T.,
Schoofs, A., Ott, H., 2018. Gesellschaftliches Wohlergehen innerhalb planetarer
Grenzen - Der Ansatz einer vorsorgeorientierten Postwachstumsposition. https
://www.umweltbundesamt.de/sites/default/files/medien/1410/publikationen/
uba_texte_89_2018_vorsorgeorientierte_postwachstumsposition.pdf.
Schumpeter A., J., 1934. The Theory of Economic Development. Harvard University
Press, Cambridge.