The linear Economy
In this post we are not really going into circular economy. We are focusing on the opposite of circualr economy, the linear economy.
The main goal of circular economy is to reuse and recycle the materials of a product, whereas linear economy does not take care of the environment like that. Linear economy simply produces products with certain materials and does not resue them.
How resources are increasingly difficult to extract / linear economy
With mining and digging we are able to collect important materials and goods from way underground. The goal is to make good use of these, so to make good and practical materials with a lucrative price out of them. But what is the problem with linear economy like this?
A linear Economy relies on cheap energy, cheap materials and cheap credit to get the throughput. Which means, that the companies can make ends meet with their costs of production and people who work in these companies. Sadly, the environment which we extract the materials from, is not being taken care of.
We need an economic system that does help the environment. September 2008 taught us things, when the financial system was collapsing. This crisis turned the economy upside down.
The Linear Economy is not working very well. There are three reasons for this:
- Resources like fossil fuels, food and water are increasingly hard to get.
- Biodiversity is in decline worldwide. Yet ecological services provided by the natural world seem to be taken for granted.
- The financial system almost crashed the entire economy.
Why is it difficult for companies to be innovative
The competition is so high and intense, that it has become more and more difficult for companies to sell their products. It has become critical for companies to male good profits or even survive. The other side is that customers cant be easily persuaded to buy a certain product that offer fair trade or other environmental friendly.
- Real wages have been stagnant or falling for several decades.
- This has resulted in intense competition among companies selling products and services, and in an unfavorable market position for environmentally or socially benign products (these often cost more).
- The 3 billion new customers entering the market in the next 20 to 30 years will put an enormous pressure on the resource base if we continue along our current, linear ways.
So this is what we got so far concerning linear economy. We hope that we would show the difference between circular economy and linear economy in a simple way. We are happy to read your comments. :)
Sincerely
Chiara & Tonia