When the institutional economist Thorstein Veblen coined the phrase ‘conspicuous consumption’ in the late nineteenth century, it was as a caustic term saved for the very rich. In particular, it referred to the glittering socialites born of the Industrial Revolution, who Veblen saw as wanting and wasting in equal measure.
In The Theory of the Leisure Class, he wrote:
“The basis on which good repute in any highly organised industrial community ultimately rests is pecuniary strength; and the means of showing pecuniary strength, and so of retaining a good name, are leisure and the conspicuous consumption of goods. Accordingly, both of these methods are in vogue as far down the scale as it remains possible; …
… the utility of both [leisure and conspicuous consumption] alike for the purposes of reputability lies in the element of waste that is common to both.“
Dismayed as he was by this state of affairs, how much greater Veblen’s rancour might have been had he been given a glimpse of twenty first century life? Increased purchasing power and an array of cheap goods allow conspicuous consumption much further ‘down the scale’ than he might have envisaged. On its back, the ‘waste industry’ has thrived.
Perhaps the economy has never been ‘everywhere linear’, but at the beginning of the last decade, it was not far from it. The vast majority of a household’s unwanted stuff was finding its way to landfill, and we knew little (and cared less) about where it went. Little thought given to the role of ‘waste management’ as part of any chain, let alone one related to supply of raw materials for industry. For waste managers, the key problem was to know ‘how much waste will come to my treatment facility?’ – with more being better for those making a living from gate fees.
Looked at through the lens of future historians, such consumption will surely be viewed as folly, an aberration that took humanity to the brink (and let’s hope we can pull back from it) of the collapse of ecosystems and the life-support they provide to us. But until recently, even those trying to care for the environment are urged to do so by consuming differently, not by consuming less.
Quite a lot has changed over the last fifteen years, and the UK economy is already much more circular than it was. But as the emphasis shifts away from disposing and treating of waste, and towards the upper tiers of the waste hierarchy, the waste industry is also having to change, in ways that are not always easy.
For example, as more waste moves into recycling streams, the revenues from the sale of recyclables become a more significant factor in the net cost of managing waste. This has long been understood, yet according to some of the circular economy’s advocates, the effects could only be positive: we were entering a new age of scarcity, in which commodity prices were going to be both high and volatile, rendering a circular economy an inevitability.
Inconveniently enough, the volatility of commodity markets has meant that prices have not stayed high: a decline in demand from China has led to falling prices, and a number of reprocessors have duly foundered. Of course, we should not now conclude that prices will stay low; merely that it was, and is, foolish to assume they will always be high, or low.
Those tasked with managing waste have to get used to the idea that they are selling into a market. Customers become more discerning (with regard to quality) when supply outstrips demand, and what we might term secondary raw materials manufacture has to focus on product quality if it is to compete. Issues of process optimisation and quality control are becoming more important. Policy makers also need to decide what to do to help: we’ve suggested mechanisms elsewhere, including shifting commodity price risk to producers through more effective producer responsibility.
But better still would be to give manufacturers of packaging and of products a stronger interest in obtaining secondary materials from the waste stream. Then in principle, manufacturers might become more interested in ‘take-back’ for their own use. Mechanisms which might find favour could include deposit refund schemes, which would be used to incentivise return not just of beverage packaging, but an array of products at the end of their first (or subsequent) lives. The role of waste companies would be significantly affected by such a shift.
Part of the solution?
Not all things that become ‘waste’, either now or in the future, are likely to be amenable to approaches any more circular than recycling. But what are the prospects for moving further up the waste hierarchy in waste future? How should a waste company engage with a system that is genuinely seeking to prevent waste, and where the aim is to keep resources in the chain of utility for as long as possible?
Movements towards this model can already be seen in high streets across the UK. A number of companies offer trade-in deals, which encourage consumers to bring items undamaged to stores and allow greater recovery of product residual values (for example through subsequent sale to secondary markets in the UK and overseas), whilst also increasing footfall and gaining further sales. Argos has recently adopted this approach under its Gadget Trade-in scheme, while some manufacturers, such as Dell, offer trade-in deals against their new products. Re-tek in Scotland works with businesses to incentivise return of ICT equipment, through a rebate, allowing 80% to be reused after appropriate refurbishment and data cleansing.
On the supply side, ICT asset management companies lease equipment to businesses and public sector organisations, and have a clear incentive to optimise equipment life and maximise residual value at end of life.
In scenarios where repair and remanufacture have greater prominence, the emphasis shifts away from the commodity value associated with materials, and increasingly towards the embodied value added in products and parts thereof. In principle, these values might not fluctuate so wildly as commodity prices, and could offer opportunities to waste businesses – although logistics providers would still want their exposure to the risk of fluctuating revenues to be minimised.
It is clear there is space in the market to accommodate these and other circular initiatives, which bring benefits, both environmental and social. Nevertheless, we are still some way off seeing a widespread move up the waste hierarchy. Perfect, as new, products are often returned to retailers, often without any genuine fault; yet by the time they arrive back at sorting and assessment centres, many are damaged and uneconomic to repair. The management of the reverse logistics in general is often poor, although in the course of a current study we have found some powerful examples of good practice that incentivise product return. Better still is to emphasise the minimisation of returns in the first place; through better communication with customers, improved product specification and design for durability and reliability.
Conspicuous by its absence
If product designers seem inured to the effect of their decisions on the fate of their products at end of what could be their first life, this is again partly a problem of economics. A circular economy is not only about the technical challenge of designing things better, but about ensuring the economic viability of a system that ensures that when materials and products are managed in the best way, they deliver the best business and consumer outcomes. In the same way as we need more collaboration and understanding between designers and end-of-life managers in product design, there is also an urgent need for collaboration to be undertaken to shore up the economics of the logistical loops that will be central to the circular economy.
This is more easily implemented where manufacturers take back their own products; but it becomes complex where more actors are involved in closing the circles, and particularly, where the logistics are distinct from those who want the products or materials they collect. The challenge is not just for businesses to look to new models for maintaining products, parts and materials within their production cycles, but to ensure that the inner circles of the circular economy are completed in as many places, and for as many products, as possible.
Within a successful circular economy there will still be plenty of consumption. There will still be materials and products to be collected, but they might be collected for different purposes, and so the logistics of doing so are likely to become very different from today’s familiar waste industry. But how we consume – what the products are like, who owns them, and what happens to them after we have finished with them – seems destined to change.
And what is removed is the conspicuous element of consumption, at least in so far as it is defined by its relationship to waste. If we can create a circular economy, perhaps then Thorstein Veblen can rest easy.
This article is based on Chapter 7 of the The All-Party Parliamentary Sustainable Resource Group‘s report Link to Link: Driving Resource Efficiency across Supply Chains.