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A Flow of Wealth or a Wealth of Flows?

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    [KEN WEBSTER,
    A Flow of Wealth or a Wealth of Flows?]
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    The circular economy come from nowhere
    in the last 7 years.
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    You have an EU package
    on the circular economy,
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    you've got the World Economic Forum
    working hard on that,
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    you've got great expectations from cities
    and governments.
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    At the recent Helsinki meeting,
    there were 90 countries
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    and nearly 1700 delegates --
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    In one hall looking at
    the circular economy
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    over a number of days.
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    This is very exciting.
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    ♪ (music) ♪
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    In Academia there are now
    hundreds of papers
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    and many more [inaudible]
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    And it's entering into the teaching --
    particularly in business and engineering.
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    ♪ (music) ♪
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    I think the question has to be,
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    what is it about the circular economy
    which is so appealing?
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    ♪ (music) ♪
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    I think we have to go back to the basics
    of what an economy is.
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    It asks three questions, really.
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    It asks, what to produce?
    How to produce it?
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    And, who get the benefit?
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    It's not only got three questions,
    it's got three main components.
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    Every economy has flows of material,
    flows of energy,
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    and flows of information --
    particularly money.
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    If you look at the textbook,
    they have an image, almost,
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    of a central heating system.
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    You got two sectors to it,
    households and firms;
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    capital and labor.
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    Money flows between the two.
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    Wages are paid, goods are produced.
    income comes back into the firm.
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    That's fairly simple.
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    Add to that, the government takes taxes
    and pays money out
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    Add in banks as well --
    they're intermediaries
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    to make sure that savings are productively
    put back into the economy as investment.
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    It's very much a pipe work
    and that's how many people understand it.
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    On top of that, there's a sense of it --
    going to be in an equilibrium long term.
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    Everything is going to be the best
    in all possible worlds
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    if the economy runs efficiently.
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    And that's almost
    the story of the economy.
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    Make it efficient, let it run,
    it'll sort itself out
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    as long as you don't get in the way.
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    (dramatic old music)
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    De Rosnay is an early system thinker.
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    [Joël de Rosnay]
    And de Rosnay wanted to characterize
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    [Le macroscope Vers une vision globale]
    an existing economy
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    and the problems with it.
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    And the main problem he identified
    was there was no context.
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    This economy was running
    as a sort of machine
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    sitting on top of stocks
    and flows of resources and energy.
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    It only touched it where it had to.
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    But what I mean by that is that
    it wasn't factored in.
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    There was no costing resource
    in a true sense.
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    There was no costing of the waste
    in a true sense.
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    It was artificially priced.
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    Everything had a price,
    but they didn't understand the value,
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    is what he was saying.
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    So he needed to contextualize the economy
    and look at resources and material flows.
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    Let's pause for a moment and think.
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    Joël de Rosnay came out with a microscope,
    which is the idea of dropping detail.
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    We have a microscope
    to look at the detail,
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    we have telescope to look at distance.
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    His idea was if we took a microscope --
    if we took a big picture view,
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    we can get a sense of the patterns
    in the economy
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    without worrying about the detail.
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    That's really very, very helpful
    because if the problem with the economy
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    was that it hasn't got a context,
    a microscope allows you to say,
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    "Where does an economy sit?"
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    [] sits within society, obviously.
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    It sits within an environment.
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    And all of these things
    are intimately interconnected.
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    Because the part of the system
    which isn't mechanical,
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    it's actually dynamic, interdependent...
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    it reflects what we now understand
    about how the real world works --
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    through the notion
    of complex adaptive systems,
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    which just means, a very dynamic system --
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    Where you can't predict the outcome,
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    but you have lots of patterns
    that show up.
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    And you can use the patterns
    to tell you what you might like to do.
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    But it doesn't offer you an answer
    in the way having an economy
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    as a machine with levers
    would give you an answer.
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    There's no long-run equilibrium
    in a complex adaptive economy.
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    It might be here, it might be there,
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    it might be doing very well,
    it might be poor.
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    But there's no assumption
    that it's going to all work out.
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    If only you're efficient;
    that, to de Rosnay,
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    would be an incredibly naive view.
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    And that's been the really big challenge
    for a lot of people in economics.
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    For some, it's been a journey
    from a mechanistic view
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    to a more enlightened complexity
    economics view.
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    But the general view of the economy
    is still of a machine.
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    The process's resources create
    economic growth.
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    And it's always a shame
    we've got these problems at the other end.
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    And it's a shame that we might be running
    into resource scarcity.
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    Where as if you see it as one complex
    adaptive system,
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    you can then work within these patterns
    [ease] flows.
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    (music)
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    The existing economy talks about
    just throughput.
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    It degrades capital
    and runs the system through it.
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    How much can you get through,
    you're a winner.
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    Where as a complex adaptive system
    would say,
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    "there's a stock, there's a flow,
    there's feedback."
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    If it's going to work long-term,
    all of these three components have to work
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    in an interdependent way
    and continue working.
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    And that's a very different question
    about how you do something
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    with an economy like that;
    you participate in it, you influence it,
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    but you don't control it in that sense.
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    And equally, though,
    you can't promise people
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    that it will all turn out fine,
    if only they behave in a certain way.
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    It just doesn't --
    that's not how the real world works.
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    Now there's a lot of people
    uncomfortable with that.
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    Because they want to be able to promise
    the people --
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    the politicians want to promise
    an outcome that's great.
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    Everything has to be better in the future.
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    Because we control the machine
    and it will be.
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    (Announcer) No wonder everybody
    is acting so nervous
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    But if it's not a machine,
    it's more like... a forest, if you like.
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    You're not going to predict
    what the forest does,
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    it's full of so many actors --
    so many players with so many influences.
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    (drumming noise)
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    It's a bit like a gardener
    coming along and saying,
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    "I want this plant to grow quicker."
    and pulling on top of it
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    to see if it would grow faster.
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    You can't do that.
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    You have to set the conditions
    for the forest, for the garden --
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    and you can choose where you plant it,
    you might do a bit of editing.
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    But you can't say,
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    "This will be the output.
    This will be the result."
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    You've got to see how it goes.
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    If that isn't working, adjust a bit.
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    And that requires a bit of humility.
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    And for some people,
    they absolutely hate the idea
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    that we might not be
    totally in control of this.
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    They just don't want to admit it.
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    Because they feel
    that they lose their power
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    if they can't promise
    an X amount of growth
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    in a number of years, or this much output.
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    So there's a real tension
    between seeing us being in charge
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    of the economy and us being an actor
    or a participant in the economy.
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    And that difference of perspective
    is really, really central.
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    And it spreads through right into
    the notion of circular economy.
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    (music)
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    For some people the circular economy
    is saying,
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    "Okay, we've got this circular flow income
    and expenditure.
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    How do we add in materials to this?
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    [] the materials into there,
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    because we'd like it to cycle
    continuously.
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    But that's more about pipe.work.
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    It's saying, "We don't want the leaks,
    we don't want waste --
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    we want to design out waste,
    but we want to make sure
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    there isn't any waste that we can
    keep control off the flow."
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    (music)
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    And if we say, "Move from people
    owning things to accessing them."
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    We can keep control of these
    big durables or houses or whatever.
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    And just say,
    "If you want access, you pay."
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    And that means we can use resources
    much more economically --
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    much more effectively.
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    And this is sort of selling products
    as a service or selling access.
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    This really might help with the economic
    question about resources.
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    Because you're slowing
    the flow of resources through the system
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    and you're looping it back.
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    So you'll slow the flow --
    complete the loop.
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    (music)
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    But the question then is,
    "Oh, you've added materials
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    into the pipe work...
    Who benefits from that?"
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    Now if this adding materials
    into the pipework
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    means we could lower prices
    to people,
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    if we could make things more available
    at lower cost,
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    people then would have more money
    to spend.
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    And then that would cause
    economic growth and jobs would increase.
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    (music)
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    Many people in the modern world
    are not experiencing increases in income.
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    So this would be a great idea --
    it helps save resources and lowers cost.
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    But if their income is falling as well,
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    this means that they're only
    just hanging on a bit longer.
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    So that's how a great idea
    like the circular economy --
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    if it's seen as a pipe work --
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    can actually have
    only a partially effect --
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    one that people would rather
    was better,
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    because some of the other
    system conditions haven't been changed.
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    Will you stop honking, Matt.
    We ain't going nowhere!
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    The other view of a circular economy
    is it's more like a forest, if you like.
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    there are lots of leaky loops.
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    Now what I mean by leaky loops
    is anything that comes in to a firm
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    and goes out, is food.
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    It's useful, it's not contaminated,
    it's not problematical...
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    people know what it is.
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    And if people know what material is,
    and it's clean in that sense --
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    it's not going to harm them --
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    they come and find a way of using it
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    as a way of increasing
    their economic activity.
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    It's very much like the forest floor.
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    All sorts of material
    falls on the forest floor.
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    And billions of creatures
    come and treat that as food.
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    The only rule, it seems, in the forest;
    what falls to the forest floor,
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    is pretty much okay to eat by something.
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    (music)
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    And this means that the circular economy
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    is one way you can build prosperity
    from the base out,
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    because you've got much more material,
    it's much more accessible,
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    you're not determining
    exactly how it's used,
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    but you're just keeping
    to some fairly simple rules:
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    Everything should be food for the system;
    whether that's the biosphere,
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    or the technical side of things
    where we make products.
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    So it comes back.
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    (music)
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    When you think about
    the difference in perception,
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    there's a very big difference between
    trying to eliminate waste in a pipe work
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    to stop it leaking
    and then maintain control.
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    And on the other one, with Janine Benyus;
    she's a writer in what's called Biomimicry.
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    She says, be generous.
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    Because that's what happens
    in living systems.
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    It's a lesson from living systems.
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    Be generous! Why?
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    Because to feed the trees,
    you feed the forest.
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    (music)
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    Michael Brown Gough said many years ago,
    he's a designer and chemist who worked on
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    the idea of cradle to cradle --
    the design philosophy which underlies
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    a lot of circular economy thinking.
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    He used to tell a story --
    and I think he still does --
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    of the cherry tree.
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    Why all of this blossoms in spring?
    You don't need that many cherries
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    to reproduce that tree over 25 years.
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    So why be so wasteful?
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    But that's not a question, even if tree
    could answer it, they would answer.
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    The tree produces blossom because, yeah,
    it needs to reproduce itself.
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    But whatever is chucked on the floor,
    is blown by the wind --
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    is food for the system.
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    And so that tree doesn't get fed
    by its own falling blossom.
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    No, that's nonsense,
    that's absolutely really dumb thinking.
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    How could you imagine
    it would work that way?
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    Why should it work that way
    with businesses?
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    If you're in a business ecosystem,
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    everybody should be able to feed
    from each other.
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    (music)
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    Because it lifts
    the overall level of prosperity!
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    This is a really effective systems 101.
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    To have an effective system,
    things must circulate.
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    If it doesn't circulate, it doesn't work.
Title:
A Flow of Wealth or a Wealth of Flows?
Description:

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Video Language:
Metadata: Geo
Team:
Ellen MacArthur Foundation
Project:
Films
Duration:
19:31

Metadata: Geo subtitles

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