Alternatives to Political Systems, Consumerism, Economics, Financial Management, Global Warming/Climate Change, Health & Disease, People Systems, Society, Village Development — by Dr. Mae-Wan Ho January 13, 2012
The new Truly Green Economy needs to be modeled after and embedded within the circular economy of nature to generate and regenerate wealth for people and planet.
The linear economy and the circular economy
The world’s economy is on the brink of financial meltdown, thanks to the corrupt Wall Street money and banking system unleashed by deregulation in the 1970s and 1980s  (“Shut Down Wall Street!” SiS 53). Emerging from the ruins is a new socially accountable economy that can provide good jobs at living wages, and generate real wealth for people and communities, at least in the United States  (New Economy Now, SiS 53). But that is not enough, we need a truly green circular economy working with and within nature to generate and regenerate wealth for people and planet.
Until a few years ago, very few people would take green or circular economy seriously. Not anymore; governments and businesses are now outdoing environmental groups in claiming the green circular economy for themselves. So perhaps it is time to put down some goal posts to make sure we get there.
Circular economy now mainstream
I have been arguing for the “circular economy” for several years, and first used the term in 2006 to describe a sustainable farming system  (Circular Economy of the Dyke-Pond System, SiS 32), but it did not originate with me. During a study-lecture tour in China, I gave a talk on my ‘zero-entropy model of organisms and sustainable systems’ (see below) at the Guangzhou Institute of Geography in Guangzhou, Canton Province. Prof. Zhang Hongou, director of the Institute, told me afterwards that what I had been talking about was the “circular economy” of mainstream Chinese thinking, as opposed to the dominant linear economy of the West.
“Circular economy” was a Chinese government initiative launched in 2004 and targeted at the manufacturing and service business sectors. It exhorted the sectors to enhance the economy and the environment by collaborating in managing environmental resources, so “one facility’s waste, including energy, water, materials (as well as information), is another’s input” . This became government policy with the Circular Economy Law of 2008, albeit with aspirations considerably watered down .
The term “circular economy” has since caught on. It features prominently on the webpage of the Ellen MacArthur Foundation in how we should rethink the future . Recently, it was liberally used by speakers at a public conference organised by the UK group Green Alliance . Secretary of State for Environment, Food, and Rural Affairs Caroline Spelman spoke enthusiastically of building the “New Green Circular Economy” in partnership with business , and said UK has already produced its own Green Economy roadmap  ahead of European Union’s resource efficiency roadmap to be published early in 2012 .
The major driver of the circular economy is not so much environmental concern as the soaring prices of commodities that seriously threaten growth in the business sector. European Commissioner for the Environment Janez Potocnik put it more starkly: improving resource use is not just an environmental imperative; it is an “issue of survival” for businesses , as for the planet.
Potocnik reminded those — who still think that protecting nature is bad for business — of the tens of billions euros lost from flooding because environmental assessments were ignored. Circular economy, he said, is a “marriage of necessity” between business and the environment. Spelman concurred : “Being green saves money and makes money.” She mentioned new research by the Department of Environment, Food and Rural Affairs (DEFRA) that shows how improving resource use efficiency can save £23 billion for the UK and reduce its carbon emissions by 4 % a year. And according to the latest McKinsey report, globally, the savings could be as much as a total of US$3.7 trillion by 2030, plus half the global carbon emissions .
Spelman  was the only speaker who made reference to natural cycles, specifically the water cycle so vital to life (see Box). Actually the circular economy and life are much more intimately connected.
David Korten, co-chair of New Economy Working Group (NEWGroup) in the US and chief architect of its New Economy Agenda [1, 2] is also promoting ‘living economies’ that imitate life [13, 14]. He has identified practically all the hallmarks of a living system that I presented as the circular thermodynamics (and quantum coherence) of organisms, especially in the latest 2008 edition of my book  The Rainbow and the Worm, The Physics of Organisms. In other words, what Korten prescribes for the new economy are not just desirable features from a moral, ethical, social perspective. They are the physical properties of living systems.
Circular thermodynamics and green living economy
Thermodynamics is the science of material and energy transformation, the circular thermodynamics of organisms is therefore none other than living economy: the transformation of energy and materials that enable organisms including human beings to survive and thrive.
Circles imply dynamically closed systems, closed loops or cycles, in which resources are regenerated and reused. More importantly, a cycle goes around and returns to the same point, and a perfect cycle in thermodynamics is perfectly efficient and does not generate wastes. Instead, it regenerates and renews itself indefinitely, using renewable energies, mainly from sunlight.
Nature is replete with cycles (see Box). Organisms are entrained to the natural cycles of Earth, and are also dominated by cycles as biological rhythms in physiology and metabolic cycles in biochemistry.
Earth goes back 4.54 billion years , and life may have originated soon after, as early as 4.38 billion years ago . Since then, life has multiplied and evolved to colonize every ecological niche available on Earth, including extreme environments : high salt, high acid or alkaline, hydrothermal vents > 100 ºC, and permafrost at -15 ºC.
Life on Earth is possible at all because liquid water is present; but it also depends on the ability to capture energy for transforming inanimate materials into living organisms (or biomass). This ability is developed to the highest degree in photosynthetic green plants, algae, and cyanobacteria, which capture the inexhaustible energy of sunlight to split water, transforming carbon dioxide into carbohydrates and biomass and liberating oxygen into the atmosphere for the benefit of aerobic organisms . Aerobic organisms obtain their energy for growth and reproduction by using oxygen to turn carbohydrates back into carbon dioxide and water in the process of respiration; and this completes the cycle that supports nearly the entire biosphere.
The cycle of photosynthesis and respiration fuelled by sunlight in turn depends on the biogeochemical cycles that transfer and transform chemicals between the biosphere and the inanimate geological realm of rocks, soils, atmosphere, and water . The main biogeochemical cycles are those of water and the elements carbon, phosphorus, nitrogen, sulphur, and oxygen, which is part of all cycles. All the cycles intersect and interact to varying extent.
In addition, Earth has its own cycles to which the biosphere is entrained: the cycle of day and night as it rotates on its axis; the lunar cycle of ~29.53 days that the moon takes to orbit around Earth; and the tilt of Earth’s axis of rotation that gives the yearly cycle of the seasons in Earth’s orbit around the sun.
Nature is replete with cycles. Cycles mean renewal and regeneration for Earth as for organisms and ecosystems whose rhythms are tied to those of Earth. Most, if not all our environmental problems come from disrupting natural cycles by using up resources or generating wastes faster than the natural cycles can accommodate. Top of the list is burning fossil fuels and generating CO2 faster than the photosynthetic organisms can absorb, resulting in the increase of CO2 in the atmosphere and global warming (see  Global Warming Is Happening, SiS 31).
Practically all biological activities are in cycles: those yielding energy being directly coupled to those requiring energy, and the giving and taking can be reversed as necessity arises. Furthermore, the activities occur over the entire range of space times, so no essential activity is left without energy at any one time. For example, running away from a tiger incurs a local energy debt particularly in the leg muscles that gets repaid afterwards, in the event of a successful escape. To do that requires perfect intercommunication and coordination, as well as reciprocity or mutual aid between the different tissues and organs within the body.
These were some of the considerations that led me to my ‘zero entropy’ model of organisms that has been generalized to sustainable systems  (Figure 1), entropy consisting of waste heat or dissipated energy.
The equation SDS = 0 inside the circle means no toxic wastes accumulate inside due to the 100 % efficient material and energy transformation achieved. The equation SDS = 0 outside means that the toxic wastes exported are also minimized to almost zero as a result. This is the essence of being green, as organisms depend on the environment for input, minimizing the wastes exported to the environment allows the environment to regenerate itself so that it can sustain the organism.
Of course, real cycles are never perfect, or else organisms will never grow old and die, but the ideal ‘zero-entropy’ state can be approached as closely as possible, through judicious reuse and regeneration of resources. That is precisely what some in the manufacturing industry are attempting to do (see  Closed Loop, Cradle to Cradle, Circular Economy & the New Naturephilia, SiS 49).
Fractal structure of entangled coupled cycles
The almost zero-entropy state depends on the main life cycle of the organism or sustainable system being composed of coupled cycles in a fractal structure (Figure 2).
Figure 2 Fractal structure of entangled coupled cycles maximizes diversity, symbiosis, reciprocity, cooperation and equity for efficient resource storage and use
A fractal is a physical or dynamical structure with fractional dimensions instead of the usual 1, 2 or 3; it can be split into parts, each of which is a reduced size copy of the whole, a property called self-similarity.
The fractal structure bridges all space times and is typical of organic systems and processes. I suggested that it is optimized for capturing, storing, and mobilizing resources efficiently and rapidly while conferring local autonomy on all scales (see  and my new book  Living Rainbow H2O, ISIS/WS publication).
The structure also maximizes diversity: numerous small entities scaling up to very few large ones. Old mature forests tend towards this ideal ‘all size’ distribution  (Multiple Uses of Forests, SiS 26), and are more productive and diverse. It could be that a distribution supporting the greatest diversity is also the most equitable, and makes the most efficient use and mobilization of resources; but this hypothesis needs to be thoroughly examined and tested.
Another key feature (already mentioned) is that activities requiring energy or material are coupled to those that generate them; and the giving and taking can be reversed as the need arises. In other words, the system maximizes symbiosis, reciprocity and cooperation. It is fair and just reciprocal exchange of materials and energy that maintains and ensures the survival of the whole. Perhaps this is the biggest lesson for the commercial sector that has hitherto operated on exploitation and competition.
This raises the question on the medium of exchange. In human economy, money has become the medium of exchange for goods and services, replacing trust and goodwill. Goods and services have their obvious counterparts in living systems as materials and energy. But what is the equivalent of money in living systems? Is there such a thing?
ATP in living systems versus money in human economy
The medium of exchange in the living system — the equivalent of money in human economy — is a special chemical species adenosine triphosphate (ATP), which many cell biologists and biochemists have equated with money. It is the universal energy transducer in living organisms, so much so that its concentration in cells is maintained constant as far as possible by a reserve molecule creatine phosphate (CP), which is allowed to deplete, and its sole function appears to be to keep the supply of ATP constant. ATP has a very special role in maintaining the living state .
ATP itself is synthesized using energy from food stuffs or from sunlight, and never from nothing. In other words, ATP, the medium of exchange of goods and services in the living system is never decoupled from material and energy cycles, and that is where the analogy to money ends, at least in the current economic system.
In our current human economy, money is being created electronically practically out of nothing, without limit or control; or worse, out of toxic debt and debt pyramids . It has become completely decoupled from real goods and services. As such, it is more like the toxic waste energy or entropy that poisons the economy, and worse, generates real entropy in Earth’s ecosystem when used for overconsumption and exploitation of natural resources.
That is ultimately why we need to “shut down Wall Street” .
The new truly green economy is a complete way of life
There are two aspects to the new truly green economy. The first is to learn from nature and living organisms how to structure the money and banking system for the survival of the whole, and the second is to support renewable, closed loop approaches in all sectors of commerce and industry. The two aspects are closely intertwined.
In structuring the money and banking system, we need all levels of locally accountable financial institutions that support community projects towards greater equity and sustainability. The NEWGroup proposal to replace big Wall Street banks with a system of community banks, credit unions and state banks makes a lot of sense . But most of all, we need to ensure that money is never decoupled from the value of real goods and services. The NEWGroup has already suggested that all creation of money should be linked to the support of infrastructure (see ). The green economy would go one step further: the creation of money would be tied to supporting green infrastructure projects, such as city public transport based on biogas/solar electric vehicles, green corridors for pedestrians and cyclists; excluding for example, big dams, coal-fire station, and so on. Similarly, it will play an active role in divesting investments into all sectors of green commerce and industry beginning with organic agro-ecological farming ( Food Futures Now: *Organic *Sustainable *Fossil Fuel Free, ISIS/TWN publication), renewable and sustainable energy use ( Green Energies – 100% Renewable by 2050, ISIS/TWN publication), green buildings and retrofitting existing buildings to be green and energy efficient , the adoption of closed loop, cradle to cradle manufacturing and service industries , maximizing cooperation and reciprocity between companies in closing resource loops (as in China’s original circular economy initiative); and above all, national healthcare with special emphasis on primary healthcare.
Governments not only need to set realistic and strict targets and roadmaps towards the truly green economy, they must provide proper legislation to discourage or penalise the generation of wastes and incentivize efficient, closed loop resource use, especially community projects that eradicate poverty and increase equity and sustainability. Most of all, they must remove distorting subsidies on unsustainable resource use. Subsidies on fossil fuels, for example, cost Europe €50 billion a year in tax breaks for company cars alone .
Contrary to what many economists assume, an economy that genuinely supports livelihood is not just about the flow of money; it is about people making a living transforming and exchanging materials and energy, and is therefore closely aligned with thermodynamics. Money is the means for the exchange of real goods and services, and not the end of economy. It must never be decoupled from the value of real goods and services. Major disasters like the current financial crisis come about because money has been created without control, and ultimately because people mistake the means for the end.
The thermodynamics of the living state  – the science of energy and material transformation in living organisms and sustainable systems – gives ample support to the following features of a truly green economy.
- The green economy is a renewable, closed-loop resource use model that includes agriculture, the energy, construction, manufacturing, and service industries, as well as finance.
- It is a complete way of life.
Like nature, the truly green economy maximizes diversity, reciprocity, symbiosis, cooperation and equity; greed and inequity are unsustainable.
- A truly green economy is embedded within nature’s economy.
- It regards nature as the ultimate source of ‘natural capital’ (Paul Hawken’s Ecology of Commerce ), which must be regenerated and indeed, increased, in order to feed all sectors of the human economy.