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OP-ED: Why circular economy may not be viable for poor countries

  • Published at 10:13 pm September 4th, 2021
Circular economy

There is nothing wrong with recycling. But it is actually impossible for a poor place to build an industrial civilization in the first place by only using recycled materials

There are times when the latest fashionable ideas are not quite as wondrous as they seem.

And it is always pleasurable to make fun of the guy next door – that is what neighbours are for, right?

Today, let’s combine the two as we consider Narendra Modi's commitment to the circular economy. 

As the Prime Minister of India, he is that guy next door we can amuse ourselves over, particularly his ardor for the idea that everything must be recycled and that we should only use recycled inputs. This popular notion is rather less useful than it seems.

Modi has announced that India is to create a circular economy, that darling idea of the rich world Green parties. 

The circular economy is the idea not just that we recycle what we can. 

Rather, it is that all the inputs we use are recycled from the things we previously used – that we take no new resources out of nature but simply have that circle of use churning again and again, forever.

The problem with this is that it is something that just is not going to work in a poor country. Not unless it stays poor forever – something which is not quite the point of economic development.

Circularity is something that just does not work when we start to use more resources. Which, to a large extent, is what a country becoming rich actually is. 

As we prosper, we have a greater stock of resources in use at any one time. 

We cannot actually prosper if we do not abstract new resources.

Now don't get me wrong, I've nothing against recycling. Given my professional career it would be odd if I had. 

I have recycled scrap parts from a Soviet nuclear power station into car wheels, tank night vision sights into fibre optic cables. 

Making use of something that has been used before is just fine by me.  

However, limiting ourselves to what has been used before is the problem. 

Modi indicates that he thinks that the Indian car industry should be using old cars to make new cars. To some extent this is fine and logical. 

Old cars are a ton of steel and if we feed that into a furnace then we can make a new car – or even two small ones. 

The problem comes when we are in a country, an economy, where we are building that industrial civilization for the first time. 

With cars the point is obvious; few in India or Bangladesh own a car, so to get to the point where we have as many cars as people – like in Europe or the US – we are going to need a lot more steel than we can have just by junking the old ones.

But this is true of everything. We can only build the new civilization – say Civilization 2.0 – out of the remains of the earlier one if we actually have that earlier one we are deconstructing. 

To make high-rise buildings that do not fall over we need rebar – steel – inside the concrete. We can only get that from old buildings if we are tearing down old ones to make way for the new. Ripping down brick buildings just does not do it, there's no steel there to recycle.

Or wiring up the country for telecoms and electricity. We can only do this from the old copper if there was already that copper out there in the previous wiring system. 

If we are building out that grid for the first time we cannot be doing it in a circular manner.

This really does apply to everything as well.

Now, it is true that when the currently rich countries build that next version there's often metal and other resources left over. 

We have learnt how to build more efficiently over the decades so there is often surplus scrap. 

But a country building the urban environment for the first time does not have that resource to hand. 

Which is why the general flow of scrap metal is from rich countries to poor. 

The rich have, after replacement, some left over, the poorer places need it to build for the first time.

This idea of a circular economy is entirely fashionable these days. 

But we must guard against intellectual fashions just as against others. 

There is nothing wrong with recycling. But it is actually impossible for a poor place to build an industrial civilization in the first place by only using recycled materials – there just are not enough of them.

Tim Worstall is a senior fellow at the Adam Smith Institute in London

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