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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.