Business and economics have an effect on our economy. Economic policies affect businesses and individuals in various ways. Many people are concerned about the effects of economic policies in their everyday lives. Business and economic principles are at the foundation of many important decisions we make in our lives. In order to understand how they affect you, take some time to think about how they have an impact on the economy in general.
A simple circular economy consists of a number of interacting agents that give and receive economic growth. In contrast to the traditional take-the-take-what-you-have approach to economic growth, a circular economy aims to steadily decouple economic growth from consumption of natural resources and instead provides input and output that continually renew itself. Inputs include human labor, capital equipment, raw materials, and technology, while outputs consist of retail goods, services, capital goods, intellectual property, and financial resources. In addition, while the input and output categories are stationary, in a circular process, the value of each input increases as it is transformed into a corresponding output, creating what economists call value extraction.
Innovation is the process of coming up with new or improved products or services. It can take the form of a new product, process, machine, technique, or innovation. In a system that revolves around constant and recurring inputs and value extraction, no new innovations can be introduced without being geared for profit. Thus, the circular nature of the economy provides endless potential profit opportunities for those who are willing to look for them.
One of the main advantages of innovation is that it produces positive effects for all involved in the process. Between demand and supply, there is usually a surplus of goods and services that can be sold to create new jobs, increase employment, and stimulate tax revenue. New jobs are created through innovations, which can also be used for revenue generation or for providing employment in areas that would not have been considered possible without the innovation. The net effect of all of this is that the entire economy grows, even when a recession exists. This is because economies have the ability to expand their boundaries, creating more job opportunities for everyone.
The principles of a circular economy apply equally to a traditional economy as well as a modern economy. For example, when I was growing up, my family would go out for vacations and spend the money on everything the family wanted. Because we had so little money, there was very little discretionary income for us to do the things we wanted. However, because our economy was based on the principles of the circular economy, we were able to enjoy vacations and spend what money we had on the things that really matter.
Another example of the benefits of a circular economy would be that of human health and wellbeing. A shift away from natural systems that provide us with the necessary nutrients for good health can lead to a variety of serious illnesses and diseases. When the human digestive system begins to ignore the nutrients provided by the food it eats, people become malnourished and may develop heart disease, osteoporosis, cancer, or other diseases. Likewise, when the body becomes starved of the natural nutrients contained in food, people may begin to suffer from vitamin deficiencies, which can lead to development of cancer, heart disease, diabetes, and other health problems.
The principles of the circular economy are also at work in the home environment. One of the most common examples of this is the lack of space available for a family household. In a world where families live in two or three rooms, the use of artificial compounds such as drywall or rigid foam board may be required in order to achieve an attractive home exterior. While a concrete wall with standard insulation is more than sufficient for a family home, the combination of the two compounds results in a very cold home interior. In an economy where land values are decreasing, the use of synthetic materials and construction methods that use massive amounts of concrete and other manmade components is not only harmful to the environment but also to the quality of life of the individuals living in the home.
The circular economy has been a topic of controversy since the inception of the first modern economy, the ancient Greek civilization. The followers of Socrates and Plato sought to remove money from its traditional role of creating surplus, and to place it into the hands of the individuals. Ultimately, the argument was that money was a means to an end, and that a true economic system was one based upon the production of goods and services in common. A central plan that was created by a group of individuals operating in a common enterprise was the perfect example of a properly running and operating economy.