2.3 Circular Economy 29
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2.3.5 Demarcation to Post-Growth Economics
The concept of circular economy contradicts certain characteristics of today’s in-
dustrial economy. The relationship between the two concepts shall be explained in
detail in the following chapter and a clear differentiation between circular economy
and the concept of “post-growth economy” given.
The theory of industrial economy addresses the interactions between organi-zations, industries and markets. In order to describe markets formal models have
been developed. These models assume that rational decision making is employed
by participating organizations usually with the objective of profit maximization.
The focus of an industrial economy is on demand and supply behavior as well
as the determination of market equilibriums (Bester 2007). The two important
characteristics of the industrial economy are: Firstly, the linear model of resource
consumption: take, make, and dispose; And secondly, the permanent urge for
economic growth, for social welfare and progress (World Economy Forum 2014).
When comparing the current industrial economy and the circular economy oneof the main differences is the latter’s emphasis on taking, making, and reusing and
the circular economy’s objective of decoupling economic growth from resource
constraints. This objective distinguishes the circular economy from all post-growth
economy concepts which are discussed widely in academic literature, for example
in the special edition of the Journal of Cleaner Production in April 2010 (Volume
18, Issue 6) titled “Growth, Recession or Degrowth for Sustainability and Equity?”
and other scholars such as Paech 2012; Seidl and Zahrnt 2010; Latouche 2010;
Schneider et al. 2010.
Although some serious concerns exist regarding growth and the associatedexploitation of resources (such as the loss of fertile grounds, overexploitation of
drinking water reserves and climate change) rejecting growth is not the solution
of the circular economy concept. Rather, the focus is on pursuing smart growth.
This means that organizations have to redesign their products, processes and even
business models to become independent from scarce resources through renewability,
reusing, repairing, refurbishing, capacity sharing and dematerialization. As stated
in chapter 2.3.2, this requires a high degree of innovation, not only technological
innovation to improve the products ingredients and the production process but also
business model innovation to include the full range of decoupling options offered
in the circular economy concept.