Ken Webster & Emanuele Di Francesco
- As circularity becomes central to industrial policy and resource security, it also shapes who creates value and who captures it.
- How we imagine circularity matters. Viewing the economy as “pipework” encourages optimisation and concentration around strategic bottlenecks, while a living systems perspective highlights resilience, diversity and distributed productive capabilities.
- If ownership and control of materials, components and products become increasingly centralised, they may further concentrate economic power.
- Shared infrastructures, accessible finance, facilities for innovation, skills and open digital systems represent strategies of community wealth building and enable a wider access to productive capacity.
- Circular economy policy should focus not only on closing material loops but also on building economic systems in which the opportunities to create value are broadly distributed.
The circular economy discourse has so far strongly focused on reimagining the flows of materials, approaching circularity mainly as a technical challenge. From this perspective, the key objective is to improve the circulation of materials through the economy by increasing resource efficiency, minimising leakage and reducing waste.
This view has provided its contribution to help move circularity beyond waste management towards a more systemic understanding of resource flows. It has also supported governments and businesses in formulating strategies to help reduce dependence on virgin materials.
However, this understanding of circularity is fundamentally incomplete (Webster, 2021). Materials do not circulate independently of economic systems. Wherever materials flow, investment, ownership and opportunities to create value also flow, together with (bargaining) power, income and wealth. The way in which societies organise the circulation of materials therefore inevitably reflects and, in turn, shapes how economic opportunities are created and distributed.
Across Europe and beyond, circular economy policies are being tightly connected to industrial competitiveness, strategic autonomy and resource security. As access to critical materials (both primary and secondary) makes it to the top priority list of industrial policy, questions about who controls circular infrastructures, who captures the value generated by circular activities and who benefits from new resource systems become increasingly important.
Surprisingly, these questions have received comparatively limited attention within the circular economy (policy) discourse. Addressing them urges us to complement questions of material flows with a more fundamental one: what kind of economy is the transition to circularity helping to build? More specifically, how can societies ensure that the transition towards circularity distributes productive opportunities rather than simply concentrating new forms of economic power around the ownership and control of materials, components and products as strategic assets?
Two Metaphors for Understanding Circularity
The way we conceptualise a system and the metaphors we use to understand its functioning strongly influence the interventions we consider appropriate for improving it. Throughout the development of the circular economy discourse, much thinking has been implicitly guided by particular metaphors that shape how circularity is understood and which solutions appear most promising.
One of the most influential ways of imagining the circular economy is the pipework metaphor. From this perspective, the economy resembles an increasingly sophisticated network through which products and materials circulate. Resources enter the system, move through production and consumption, and are redirected through reuse, repair, refurbishment, remanufacturing and recycling into new cycles of use. This metaphor provides an intuitive way of understanding leakage, waste, reverse logistics and resource efficiency.
However, this metaphor carries more with it. Pipework describes flows, but also—and mostly importantly—how these flows are organised. Pipelines possess identifiable channels, junctions and bottlenecks through which materials necessarily pass. These become natural points for monitoring, coordination and control, providing opportunities for organisations controlling these strategic nodes to occupy increasingly central positions within the economy.
An alternative understanding emerges from ecology, systems thinking and complexity science. Evidence from these fields does not describe healthy systems as centrally coordinated, pipework-alike networks of optimised flows. It rather puts forward an understanding of resilience as an emergent property of distributed adaptive systems.
This perspective deeply questions whether efficiency alone is an adequate objective for complex adaptive systems, by showing that healthy living systems maintain a dynamic balance between efficiency and resilience, resulting in a system’s effectiveness (see, e.g., Ulanowicz et al., 2009). Systems that become excessively optimised may perform extremely well under stable conditions, but may gradually lose the diversity, redundancy and adaptive capacity required to respond to unexpected disturbances.
Oppositely, systems characterised only by redundancy may become inefficient and unable to sustain themselves over time. Long-term system health therefore depends on diversity, redundancy, continual adaptation and the distributed capacity of many actors to respond to changing circumstances.
This insight has important implications for the circular economy. If circularity is understood as the development of resilient socio-economic systems, taking insights from ecology and living systems, additional questions emerge. How should productive capabilities be distributed? How can economies maintain sufficient diversity to continue adapting? What institutional arrangements allow new circular activities to emerge spontaneously rather than depending upon a limited number of dominant organisations?
The Risks of a Rentier Circular Economy
One of the most important implications of these alternative perspectives concerns the distribution of economic power and how circularity may impact it. One prominent risk is that the circular economy may (unintentionally?) reinforce the emergence of a rentier economy. In a rentier economy, wealth is generated less through productive activity itself and increasingly through ownership and control of strategic assets upon which others depend.
Rentiers may derive income from controlling infrastructures, platforms, intellectual property, financial assets or natural resources that enable others to participate in economic activity. Value is captured because access to productive systems is mediated through assets under concentrated ownership.
Applied to the circular economy, the concern is not that materials fail to circulate. On the contrary, they may circulate more efficiently than ever before. Digital product passports may dramatically improve traceability. Artificial intelligence may optimise physical flows. Material marketplaces may match supply and demand more efficiently, and product-as-a-service models may extend product lifetimes while reducing resource consumption.
The challenge arises when these increasingly indispensable infrastructures become concentrated within a relatively small number of organisations. As circular systems become more interconnected, whoever controls these infrastructures or access to them, may gradually occupy positions similar to those already observed within today’s digital economy. The owners of these infrastructures are no longer simply participants within the circular economy, and assume a role much more alike “gatekeepers” through which participation increasingly occurs.
Over the past two decades, digital platforms have demonstrated how network effects often encourage increasing concentration. Search engines, online marketplaces, operating systems and social media platforms have each created substantial value while simultaneously concentrating considerable economic power. As participation increases, these platforms become more valuable, making it increasingly difficult for competitors to emerge. Similar dynamics could easily arise within the infrastructures supporting the circular economy.
From this perspective, the risk of a rentier circular economy emerges because the institutional arrangements through which circularity is implemented and scaled may reward concentration.
Community Wealth Building and Distributed Productive Capacity
A circular economy in which circular activities are undertaken by thousands of businesses, cooperatives, municipalities and communities differs fundamentally from one in which these activities become increasingly dependent upon a limited number of dominant firms. Both systems may achieve high levels of resource efficiency. However, from a living systems perspective, efficiency is only valuable insofar as it contributes to the broader effectiveness of the system.
While both approaches may circulate materials successfully, they are likely to differ profoundly in terms of resilience, regional development, democratic participation and the distribution of economic opportunity. Therefore, the narrower focus on efficiency is a deficient measure under this framework.
Living systems provide a useful analogy. Healthy ecosystems are resilient because productive capacity is widely distributed. Forests do not rely upon a single organism to determine where growth should occur. Instead, countless organisms simultaneously identify opportunities, exchange resources, adapt to changing environmental conditions and create value within their own ecological space.
Diversity and distributed capability allow the system to evolve continuously without depending upon central direction. The science of adaptive cycles by CS Holling is instructive about this process in ecosystems.
Local economies require something analogous to the ecological conditions that allow forests to flourish: accessible resources, shared infrastructures and institutions that reduce the barriers to experimentation, collaboration and entrepreneurship. Access to data, infrastructure, finance, equipment and knowledge all determine whether circular opportunities can be realised. The more widely these capabilities are distributed, the greater the capacity of the economy to generate new forms of circular activity.
This connects to the concept of community wealth building[1], which—even though is not a concept specifically aimed at the circular economy—is here introduced a strategy for expanding the productive capabilities embedded within regions and communities to contribute to the circular economy and derive wealth from it.
A municipality that invests in a shared repair and remanufacturing facility equipped with specialised tools is effectively lowering the barriers for a wide variety of individuals and organisations to enter repair and remanufacturing markets. Publicly accessible testing laboratories and prototyping facilities reduce the costs associated with experimentation and innovation, particularly for smaller enterprises. Similarly, vocational education and continuous professional training expand the human capabilities required to succeed in a circular economy.
Financial institutions also become part of this enabling environment. Regional investment funds, patient capital, cooperative finance and public guarantee mechanisms can reduce the risks associated with developing new circular business models. Digital infrastructures can make information about locally available materials, products and components openly accessible, reducing information asymmetries.
The significance of these interventions lies in increasing the capacity of the wider economic system to generate new forms of value. They effectively function as shared productive assets, expanding the productive possibilities available to many different actors simultaneously. Their value arises precisely because they lower barriers to participation, distributing the means through which circular activities can emerge.
This also offers a different way of thinking about the investments required to increase the adaptive capacity of the wider economy and the long-term productive potential of places.
Building Thriving Circular Economies
The circular economy has helped transform how societies think about resources, demonstrating that prosperity does not necessarily require continually increasing material extraction and reminding us that products and materials can remain valuable long after their first use. The transition towards circularity, however, also raises a broader question that extends beyond the circulation of materials themselves and asks what kind of economy circularity is helping to build.
From the perspective developed here, the distinction between pipework and living systems is ultimately a distinction between two different approaches to organising economic activity. One focuses primarily on improving the efficiency with which materials circulate. The other asks how societies cultivate the conditions through which value can be created continuously by many different actors.
Efficient material flows remain indispensable if societies are to reduce resource use and remain within planetary boundaries. However, living systems remind us that long-term resilience depends not only on efficiency but also on diversity, redundancy, distributed capability and continual adaptation. These characteristics emerge when productive capacity is broadly shared rather than concentrated within a limited number of organisations.
This suggests that the circular economy policy should pay as much attention to the distribution of productive capacity as it does to the circulation of materials. Community wealth building and shared infrastructures are important not simply because they improve local development or promote inclusion, but because they expand the number of actors capable of creating circular value.
In doing so, they strengthen resilience, support regional development, improve resource security and reduce the risk that the infrastructures of the circular economy become new sources of rent extraction. The transition to a circular economy is, ultimately, also about designing economic systems in which the capacity to create value is itself widely distributed.
Ken Webster
Ken Webster is a Visiting Professor at Cranfield University in the UK and a Fellow at CISL (Cambridge University Institute for Sustainability Leadership). From 2010 - end 2018 he was Head of Innovation for the Ellen MacArthur Foundation, a circular economy pioneer organization, where he helped shape current notions of a ‘circular economy’ His book The Circular Economy: A Wealth of Flows (2nd Edition 2017) related the connections between systems thinking, economic and business opportunity and the transition to a circular economy. He contributed to the Handbook of the Circular Economy (Eds. Alexander, Pascucci and Charnley (2023) and was a contributor and editor on Earth for All from the Club of Rome.
Emanuele Di Francesco
Senior Manager Communications and Partnerships, World Resources Forum
[1] Community wealth building is an approach to local economic development which focuses on increasing the flow, circulation and democratic ownership of wealth so local economies generate real benefits for people – from better health to improved education and reduced poverty.
Suggested Readings
- Webster,K. (2017), A Wealth of Flows, 2nd edition, Ellen MacArthur Foundation Publishing
- Webster, K. (2021) A Circular Economy is About the Economy, Circular Economy and Sustainability, Vol 1, pages 115-126
- Ulanowicz, R. E., Goerner, S. J., Lietaer, B., & Gomez, R. (2009). Quantifying sustainability: Resilience, efficiency and the return of information theory.
- Goerner S, Fiscus D, Fath B. Using Energy Network Science (ENS) to connect resilience with the larger story of systemic health and development. Emergence: Complexity and Organization. 2015 Sep 30
- To learn more about experiences of Community Wealth Building: https://www.weareeveryone.org/every-one-every-day & https://cles.org.uk/resilient-thriving-and-healthy-building-community-wealth-in-york-and-north-yorkshire/