A Brief History of the Circular Economy

In recent years, the circular economy has become a wildly popular concept—one that many companies want a piece of. It’s easier to evaluate claims of circularity with a clearer picture of what it means and where it comes from. The circular economy concept is the product of a few different influential models. Of course, the idea of cycles and feedback loops has been around for millennia, but the concept of a circular economy is a product of the sustainability movement of the late 20th century. This article will explore some of the schools of thought that were critical to the development of the circular economy.

The Performance Economy

Walter Stahel, Swiss architect and co-founder of the Product-Life Institute, developed the concept of the performance economy (or functional service economy) as a solution to increased costs of resources and energy. In a 1976 research report to the European Commission, co-authored with Genevieve Reday, they argued that in order to manage resources better and get the most out of their value, we need to design more durable, upgradeable products, prevent waste, and consume as few material resources and as little energy as possible. According to Stahel, this means using “the goods of today as the resources of tomorrow at the resource prices of yesterday” (Ellen MacArthur Foundation).

Another key element of the performance economy, known as the service economy, is a shift from selling products to selling services—the use of products. Rather than consumers, there are users, who are incentivized to return goods to manufacturers when they’re finished. A company’s success will be dependent on its ability to provide attractive incentives and adapt existing and future products as users’ needs change and technology advances.

This early version of a circular economy identifies opportunities for job creation as it aims to reduce the linear economy’s unsustainable dependence on production and material flows. It includes a structure that calls for a higher, more skilled labor input that manages localized material recycling, remanufacturing, production of services, upgrading and take-back facilities, as well as work in design and research.

Cradle to Cradle

Although Stahel is credited as being the first to coin the expression “cradle to cradle,” architect William McDonough and chemist Michael Braungart are the fathers (and registered trademark owners!) of this term, philosophy, and certification. Cradle to Cradle rejects the linear economy, in which a typical product life cycle moves from cradle to grave, in favor of one that cycles materials and energy back into natural systems and new products, eliminating the concept of waste. The Cradle to Cradle philosophy understands that all materials that go into industrial and commercial processes should be “nutrients,” which means that they should enrich and nourish other systems. Biological nutrients are organic materials that can be disassembled and returned safely to the earth, while technical nutrients are the non-toxic, non-harmful synthetic materials that can be reused over and over in new products without contamination or loss of integrity.

Another principle is the use of clean and renewable energy. Living things and natural systems thrive on solar energy, and human systems can do the same. By using solar, wind, geothermal, gravitational, and other energy systems in development, we can capitalize on all of these abundant resources as we protect the environment and human health. Plus, these systems’ operations are low-cost and create no emissions. Cradle to Cradle celebrates diversity, which builds resilience in natural systems and in human systems. It encourages design that responds to the challenges and opportunities presented by specific contexts and geographies.


Biomimicry is a practice that uses strategies found in nature to solve human design challenges. Its basic belief is that any issue faced by humans is something that the natural world has already resolved—fungi figure out how to communicate and reproduce through their root systems, frogs and lizards climb vertical surfaces using their toe pads, and birds can fly without any jet fuel at all. Biomimicry believes that by studying these patterns and strategies, we can find sustainable solutions that protect nature and improve conditions for all living creatures. At the same time, we learn to value nature for all that it holds, rather than for its extractable resources. Janine Benyus is a biologist and co-founder of the Biomimicry Institute who popularized this idea in her 1997 book Biomimicry: innovation Inspired by Nature.

Industrial Ecology

Industrial ecology is an approach that applies an ecosystem model to industrial systems like manufacturing and product design processes. It was made popular in 1989 by Robert Frosch and Nicholas Gallopoulos, who proposed that like natural systems, industrial systems should provide outputs that are another system’s inputs, which would reduce pollution, the use of raw materials, and the production of waste. On the one hand, it’s ecological because it looks to natural ecosystems as closed-loop models to be studied as exemplars of efficient cycling of materials and energy, and tries to replicate this in industrial systems. It also takes into consideration local ecological circumstances and the impacts of different industrial processes on the environment. Industrial ecology is an interdisciplinary systems framework, taking into account the role of technological advances and companies as they move towards dematerialization, social wellbeing, and natural capital restoration.


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