The circular ecological theory of economist Kenneth Boulding (1910-1993), expressed in his metaphor of "Spaceship Earth", is defined as a self-reproducing living organism that carries out exchange interactions between man and the environment, offering a structured vision for the balance between economic development and environmental preservation. Boulding's approach sought to unify economic, biological, sociological and psychological aspects, with the intention of reconstructing the economy. His vision was to "bring together economic, biological, sociological, psychological and even religious man, reintegrating what has been fragmented".

Tiago Barreira

Introduction

In the article previousIn this article, we analyze the ecological economics of Nicolas Georgescu-Roegen and his entropic theory, which united economics with thermodynamic biophysics. His criticism of the mechanistic and mathematical neoclassical model was strongly influenced by Schumpeter's Austrian thought during his stay at Harvard in the 1930s. Georgescu's bioeconomics influenced a whole generation of ecologists in the 1970s and inspired radical movements in the 1970s. Deep Ecology in developed countries, focused on state policies of economic degrowth and deindustrialization. These policies were rejected by Romanian Georgescu-Roegen, who was personally a defector from a totalitarian regime.

In this essay, we will discuss another important economic theory that has influenced modern environmentalism: the circular model of economist Kenneth Boulding. Unlike the pessimism of bioeconomics, Boulding's circular economic model admits the possibility of a self-sustaining stationary economy, accepting, in part, neoclassical mechanicism as an integral part of a multi-level system of exchanges between the economy and the environment.

The circular economy

The circular economy can be defined as an economic system based on the reuse, exchange, repair, reconditioning, remanufacturing and recycling of materials, with the aim of minimizing resource consumption, waste and emissions, in particular through the circular design of products and production processes. (European Union, 2023)

In short, the circular economy seeks to preserve the value of products, materials and resources for as long as possible and minimize waste. The concept of the circular economy therefore presents itself as a counterpoint to the concept of the linear economy that predominates in the economic production process, in which there is no concern about the destination and reuse of waste.

In recent decades, the search for efficient and reusable use of resources has been on the political agenda of governments and international organizations, such as the European Union, highlighted in its Circular Economy Action Plan (2015) and the European Green Deal (2020). The latter sets an ambitious goal of doubling the share of materials recycled and reincorporated into the EU economy by 2030.

Kenneth Boulding, circular economy theorist

Kenneth Boulding (1910-1993) was an American economist and philosopher, born in Liverpool, UK, and one of the founding theorists of ecological economics in the 1960s and 1970s. From a Quaker Protestant family background and with a life marked by pacifist and environmental activism, his ecological economic theories served as the basis for the development of circular economic thinking.

Born in England, he completed his university education in the United States in the 1930s, where he spent his entire academic career. A student at the University of Chicago and Harvard, he was taught by important neoclassical economists such as Frank Knight. Like Georgescu-Roegen, Boulding was also a student of Schumpeter at Harvard.

His research goes beyond economics, encompassing an interesting range of diverse disciplines, including biophysics, ethics and cybernetics. His main research focus was on developing an integrated theory of the sciences, based on interdisciplinarity between the human and natural sciences, a common concern among theorists linked to ecological economics.

His interdisciplinary research focus and ethical worldview also have deep links to his Quaker Protestant background, which led him to peace research. He was the author of important works analyzing the economic conditioning factors of international peace. His Protestant background also led him to have a worldview that was averse to state centralism and focused on the search for a society of voluntary and peaceful exchanges. Curiously, in the 1960s and 1970s, he showed a preference for the US Republican Party, which distanced him greatly from the political vision of a modern-day anti-capitalist environmental activist.

Boulding's interdisciplinary approach to the social sciences was consolidated after his transfer to the University of Michigan in 1949 and during his research at the Center for Advanced Study in the Behavioral Sciences (CASBS) between 1954 and 1955. (Hammond, 2003) His stay at CASBS in the 1950s led him to deepen and consolidate one of the theoretical foundations of his circular ecological economy: General Systems Theory (GST).

TGS, first established by biologist Ludwig von Bertalanffy in the 20th century, was amalgamated by Boulding with the theory of cybernetics, proposing the possibility of a closed, self-reproducing global system through the appropriate integration of subsystems, including the economic one (Hammond, 2003).

The historical intellectual context of the emergence of GST should be emphasized, as well as the great importance given at the time to cybernetics studies, as a legacy of the Second World War era, marked by the emergence of information theory, computers and weapons technology, which shaped thinking about the nature of complex systems (Hammond, 2003).

In this context, TGS was developed in American research centers funded by foundations such as Rockefeller, and was intertwined with the development of the behavioral sciences, in their mutual efforts to integrate the knowledge of the natural and social sciences in understanding human behavior, perceived as a particularly critical task in the context of the Cold War. These studies would lead to Boulding's ecological economics between the 1950s and 1960s.

Boulding's approach to TGS sought to unify economic, biological, sociological and psychological aspects, with the intention of reconstructing the economy. His vision aimed to "bring together economic, biological, sociological, psychological and even religious man, reintegrating what has been fragmented". (Hammond, 2003) His main theoretical work, the ecological theory of capital, provided a holistic vision that transcended disciplines.

This approach makes Boulding understand the economic structure not only as a subsystem with its own internal laws of organization, but also as part of a "multi-level system", impacted externally by laws that govern other hierarchical systemic structures, ranging from the most basic level of organization (physical-natural) to the most complex level (ethical, symbolic and cultural systems).

This definition of the economic system as part of a multi-level system and externally impacted by more complex systems leads Boulding to a very different interpretation of the analysis of the dynamics and economic concepts of neoclassical economics.

The following characteristics define the economy as a multilevel subsystem in Boulding's view:

1. Critique of the distinction between normative and positive economics, with emphasis on an economic analysis centered on the ethical study of values in society;
2. Consumption preferences that are endogenous and subordinate to ethical values defined by social and cultural systems;
3. Emphasis on social capital rather than the traditional idea of income flow;
4. Emphasis on the idea of stationarity^[1] and in defense of minimizing consumption and production.

The "Spaceship Earth" metaphor

This thinking culminated in his concept of the "spaceship" economy, formulated by Boulding in The Economics of the Coming Spaceship Earth (1966), and bases its influence on the development of the steady-state economy.

The "spaceship" metaphor proposed a static, finite and closed economic system, with circular changes between economic goods, resources and natural and biological waste. Economic production is limited by the amount of physical material resources available in the natural and biological environment. This approach adopts the concept of hierarchical levels of complexity, derived from general systems theory.

With regard to the idea of natural resources, the "spaceship Earth" approach establishes an analogy between natural resources and capital, but using a different concept of capital to the one traditionally used by economics to analyze production. This concept is closer to what we now call "social capital", with the ability to generate not only externalities of the traditional kind, but deeper changes in elements that economics normally considers exogenous (such as preferences). (Hammond, 2003)

The emphasis on social capital to the detriment of the traditional idea of income flow implies, in Boulding's view, a defense of the minimization of consumption and production.

TGS and the Hierarchical Levels of Subsystems

Drawing on their training in biology and the social sciences, the founders of General Systems Theory (GST) became involved in the emerging field of behavioral sciences, with a special focus on the psychology of social organization. Russell Ackoff, whose interest in GST evolved from his work in operations research and management theory, identifies three types of systems: technological, biological and social (Hammond, 2003).
Boulding's approach to TGS assumes the existence of hierarchical levels of complexity in systems of economic, environmental, biological and physical organization. These levels cover nine categories, from the simplest (atomic subsystems) to the most complex (symbolic subsystems):

1. Basic structures of the universe, like the arrangement of electrons in an atom or the anatomy of a gene.
2. Simple mechanisms, such as the solar system or machines (such as levers and pulleys).
3. Control systems, like thermostats, which maintain a given balance.
4. Automated open systems, like cells, where life begins.
5. Plants, with differentiation of parts and growth according to a plan.
6. Animals, with mobility, teleological behavior and developed sensory organs.
7. Human beings, endowed with self-awareness.
8. Social organizations, whose unit is the "role" rather than the person.
9. Transcendent cultural systems, which include the absolute and the incomprehensible, but also show structure and systematic relationships.

This classification offers a holistic view of the variety of systems in the universe, from the simplest to the most complex and abstract. Economics is a subsystem that has largely been based on simple equilibrium theory and dynamic mechanisms centered on self-interest and utility. Although this approach was useful in its early stages, it has yet to incorporate more advanced concepts, such as information. According to Boulding, economics has hardly moved beyond level (iii).

In short, the main difference between Boulding's idea and that of other authors of ecological economics, such as Nicolas Georgescu-Roegen, lies in the idea that the mechanism of economic theory is part of a larger hierarchical system.

The intellectual roots of TGS

General Systems Theory, consolidated by Boulding in the 1950s, has intellectual roots in 20th century thinkers and scientists. The popularity of systems concepts in the mid-20th century resulted from a convergence of advances in both the biological and technological fields. The latter gave rise to increasingly complex social organizations and fostered concern with the management of large-scale socio-technical "systems", such as energy, transport and communication networks.

The Austrian biologist and philosopher Ludwig von Bertalanffy (1901-1972) is generally considered to be the father of General Systems Theory. He saw GST as an effort to discover universal patterns of organization, while recognizing that there were unique emergent qualities at each level of organization and therefore sought to distinguish between principles that were common to all levels and those specific to individual levels (Hammond, 2003).

The most significant influences on the evolution of his thinking came from philosophers and mystics, including Heraclitus, Nicholas of Cusa and Leibniz (Hammond, 2003). Bertalanffy referred to Heraclitus' conception of reality as an incessant flow of events: "We ourselves are not the same from one moment to the next". Although the organism seems persistent, it is in fact the manifestation of a perpetual flux, an open system in a dynamic stationary state. The organism is never in static equilibrium in the mechanical sense and maintains itself in a state of non-equilibrium by receiving a continuous supply of energy and exchanging components with the environment (Hammond, 2003).

Therefore, his concept of the organism as an open system derives from this understanding of the dynamic nature of the organic structure, in the self-regulating balance between assimilation and decomposition, importing matter and energy from the environment and exporting its entropy or waste. (Hammond, 2003)

And yet, according to Bertalanffy, an organicist approach recognizes the hierarchical nature of organization in natural systems and demands the investigation of phenomena at all levels, from the physico-chemical to the cellular, the organic and even the supra-individual. Each level, he argues, is characterized by new properties and new laws, as well as increasing degrees of freedom, allowing for the autonomy of life. Anticipating the Gaia hypothesis, Bertalanffy wrote that all life on Earth could be seen as the highest level of organization.

Parallels between TGS and Hayek's Spontaneous Order

The deep parallels between the open system of General Systems Theory established by Bertalanffy, marked by hierarchical natural and social systems that spontaneously self-organize like vital organisms, and Hayek's vision of a spontaneously self-organizing order should be highlighted. The holistic vision of society, which behaves analogously to a natural organism that is internally self-regulating and without a central command that dictates external orders, consists precisely of the idea that justifies an economic and social order based on voluntary contractual relations.

In developing GST, Bertalanffy emphasized the autonomous, active and self-organized character of human life and society, vehemently rejecting mechanistic models of human behaviour, such as the stimulus-response model of behaviourist psychology. Attracted by the holistic vision of the Gestalt school of psychology, Bertalanffy considered that the behaviorist conception of the organism as totally passive contributed to a vision of humanity that justified totalitarian forms of social control (Hammond, 2003).

Conclusion

Boulding's circular ecological theory, expressed in his metaphor of "Spaceship Earth", is defined as a self-reproducing living organism that carries out exchange interactions between man and the environment, offering a structured vision for the balance between economic development and environmental preservation. This idea has deep roots in his interdisciplinary interest in the search for a unified science that integrates ethics, economics and the natural sciences.

It should be noted that Boulding's organic vision does not necessarily imply centralized planning. Boulding, as a student of Schumpeter, Frank Knight and other professors from the Chicago School, and also from a distinctly Quaker Protestant background, was given a worldview that was averse to state centralism and focused on the search for a society of peaceful voluntary exchanges.

Boulding's open system, inherited from Bertalanffy, which is anti-mechanistic and has a vitalist organicist basis, aligns perfectly with the anti-totalitarian concerns of these thinkers. Each level of system, from the lowest levels of cells to complex levels of ethical-cultural systems, operates internally according to its own laws and interacts externally with each other, contributing organically to the dynamic balance of the whole.

Although it has anti-interventionist roots, Boulding's organicist and holistic model, as well as Georgescu-Roegen's entropic model, has unfortunately been ideologically reinterpreted in the light of ecological state planning. The idea of spaceship Earth is a very influential idea today, influencing utopian models of social planning, as currently found in the Ecological Pact led by the European Commission.

References

Boulding, K. E. (2013). The economics of the coming spaceship earth. Environmental quality in a growing economy (pp. 3-14) RFF Press.

Hammond, D. (2003). The science of synthesis: Exploring the social implications of general systems theory University Press of Colorado.

European Union (2023). Economía circular Transición lenta de los Estados miembros a pesar de la acción de la UE. Special Report 17/2023. European Court of Auditors.

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[1] What we translate as "steady state" actually encompasses two different terms used in Anglo-Saxon literature: stationary state e steady state. Boulding's "stationary state" is a reworking of the concept of the stationary state from classical economists such as Adam Smith and J.S. Mill. It is a situation of equilibrium to which the economy tends in the long term, characterized by the exhaustion of growth possibilities. On the other hand, in the economic literature of the 20th century onwards, what is understood as a "stationary state" corresponds to the concept of steady stateThis represents the equilibrium of a dynamic system (a concept derived from physics), an equilibrium that implies a constant growth rate (positive, negative or zero). To complicate matters further, in ecological economics, the concept of steady state in a different sense: as a situation of sustainable equilibrium, in which the economy operates without exceeding the capacities of the surrounding ecosystem.