In his influential 1966 essay “The Economics of the Coming Spaceship Earth,” heterodox economist Kenneth E. Boulding distinguished between the traditional “cowboy economy” and a more desirable “spaceman economy.” In the first, consumption and production are seen as inherent goods, though much output ends up “in the reservoirs of pollution.” In the second, the economic cycle, a neutral means to an end, more closely mimics the ecological system in its cycling of resources.

Although his original labels have long been obsolete, Boulding’s characterization of past economic development and aspirational goals aren’t. In the decades following his essay, sustainability scholars elaborated on his vision by writing about industrial metabolism, ecology, and symbiosis. More recently, the same impulses have led to ideas about increasing the durability of goods and the widespread prevention and recycling of waste—all under the moniker of a “circular economy.”

Dislike of an alleged past linear economy and the purported need to replace it with a circular one is now dogma among organizations such as the World Economic Forum, the Organization for Economic Cooperation and Development (OECD), and the Ellen MacArthur Foundation. Another pioneering organization in this respect is the British Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA). In 2003, to mark its upcoming 250th anniversary, the RSA put forward a manifesto called “Progress Unlocked.” It promoted, among other initiatives, “moving towards a zero-waste society” through, as specified in a later document, the development of “mutually reinforcing policies, products, technologies, behaviours and lifestyle that reduce waste of all kinds, with zero waste as the long term ideal.”

To make our economies more sustainable, we don’t need to focus on better product design. Rather, what we need is more freedom in the way we handle waste.

Eight years later, the RSA’s sense of urgency had grown. In its Great Recovery Project, it indicted the “current linear manufacturing models of ‘take-make-dispose,’” which it described as “taking raw material out of the ground, making products for consumption and disposing of these after use in a way that loses the resource.” Its preferred solution was a “more circular system” that would turn polluting residuals into valuable inputs and “bring stability and further economic opportunity.” More recently, as part of its Regenerative Futures program, the RSA similarly suggested that modern product lifecycles, “from materials extraction to consumption and disposal,” are “linear and drive waste, pollution and poor labour conditions.”

It apparently never occurred to present-day RSA staffers that some of their predecessors had hinted at similar ideas. But they had; the RSA was founded a few years after the publication of Carl Linnaeus’ 1749 dissertation on the economy of nature in which he first (or at least most influentially) described nature’s cycling of materials. And far from Boulding’s cowboy economy of uncreative wasters, many industrialists, engineers, technicians, and entrepreneurs of yore actually achieved some of the “radical fixes” backed by modern circular economy proponents.

A look at that history offers lessons for today. To make our economies more sustainable, we don’t so much need to focus on better product design. Rather, what we need is a more flexible regulatory framework that would allow creative people more freedom in the way they handle waste—something RSA’s founders appreciated very well.

How Was Recycling Invented?

Perhaps the most famous early writer on the circular nature of market economies was the mathematician and polymath Charles Babbage, born in 1791. Now mostly remembered as a computer pioneer, he was better known in his day for his 1832 treatise, On the Economy of Machinery and Manufacture, written after he had visited numerous factories in his attempt to develop a new calculating engine.

In the book, Babbage explained how competition between firms resulted in increasingly efficient use of resources. In remarking on “the care which is taken to prevent the absolute waste of any part of the raw material,” he offered the striking example of the products derived from cattle horns. The lower portion was made into combs and the clippings left after this process were sold as an additive to manure. The middle portion of the horn was split into thin layers to be used as a substitute for glass in cheap lanterns. Some other leftovers were “cut into various figures and painted, and used as toys” or sold with manure. The very tips of the horns were turned into knife handles, tops of whips, and other related articles, and the cores of the horns were then boiled in water. The resulting fat was used by yellow-soap producers while the remaining liquid was purchased by cloth dressers as a form of starch. The insoluble substance was then ground down and sold in manure. Similar thriftiness guided large industries as well, as he noted. And in both cases, byproduct recovery often led to “the union of two trades in one factory, which otherwise might have been separated.”

Babbage’s analysis, especially his horn illustration, was referenced and expanded upon in a range of publications in the following decades. Among the most influential was Francis Wayland’s 1837 Elements of Political Economy, the premier mid-19th century American economics textbook. Another was Alfred Marshall’s 1890 Principles of Economics, which dominated the same market at the turn of the 20th century. Discussions of Babbage’s insights on byproduct recovery were also found in a special 1902 U.S. Census Bulletin devoted to “The Utilization of Wastes and By-Products,” in the entry “Residual and Waste Products” in the influential multivolume Palgrave’s Dictionary of Political Economy from 1913, and much more besides.

Victorian optimism about pollution was based largely on his belief that competition would lead companies to turn as much waste as possible into sellable goods.

And it wasn’t just economist types picking up on the idea. The Scottish chemist Lyon Playfair, an acquaintance of Babbage, saw similar processes in chemistry. He emphasized advances in the sciences that had resulted in the development of “methods of utilizing products apparently worthless, or to endowing bodies with properties which render them of increased value to industry.” His interest in the topic can be traced to his work as chemical manager in a calico fabric print shop in the early 1840s. There, the leftovers of the madder plant from which coloring agents had been extracted were not valuable enough to be sold for anything. Instead, they were typically disposed of in rivers where they caused considerable damage. In time, however, a simple hot acid treatment was devised that profitably recovered the one-third of the coloring matter lost in precious processes. As Playfair would later observe, “[t]he dyer no longer poisons the rivers with spent madder, but carefully collects it, in order that the chemist may make it again fit for his use.”

Another of his favorite examples of circularity was perfume. In a widely disseminated writeup of lectures on his work, he is quoted as pointing out the “many a fair forehead,” that was “damped with eau de millefleurs, without knowing that its essential ingredient is derived from the drainage of cowhouses.” But perhaps the most important of his examples was the hundreds of products derived from the residuals of coal gas production (a flammable gaseous fuel produced by heating coal in the absence of air).

Playfair reminded his readers that it had been no mere feat to replace tallow candles and oil lamps with the coal-derived gas that was then streamed through pipes, especially because of the many noxious substances that were at first invariably mixed with it. The gas had an intolerably stale odor, and it became even more noxious when burned. It discolored the curtains, tarnished the metals, ate through the covers of books, and covered everything with fuming smoke. Even more problematic was the tarry residual that had to be removed from coal gas plants and was often buried, only to destroy the surrounding vegetation.

And yet, even though the “waste and badly-smelling products of gas-making appeared almost too bad and foetid for utilization,” the gas had already become “almost indispensable to human progress.” Indeed the tar that resulted from creating coal gas would by the turn of the century form the basis for everything from explosives, to paving materials, to dyes, to insecticides and batteries.

Despite the fact that many industrial pollution problems remained to be solved in his days, Playfair was confident that many “still useless” residuals would in time “be converted into a practical utility.” Indeed, the “whole history of manufactures” was a “commentary on this text,” and it had been seen on more than one occasion that the “refuse of the produce of to-day” had become “the chief source of profit to-morrow” and, in turn, would no longer poison waterways, air and land.

One area that seemed particularly ripe for reuse was petroleum byproducts. In his 1884 essay “Petroleum—The Light of the Poor,” Playfair pointed out that very little use was then made of the benzene, naphthalene and anthracene found in some fractions of petroleum and “barbarously rejected as useless.” And yet, similar substances were extracted profitably from coal tar, leading him to predict that petroleum residuals would eventually form the basis of “a very important branch of production,” perhaps even the “largest source of profit” for producers in some not too distant future. Playfair’s optimism would in time prove entirely justified. Socony-Vacuum Oil, which would later become Mobil and then ExxonMobil, neatly summarized (if oversimplified) the evolution several decades later in a figure that compared the key products extracted from petroleum in the late 19th century to some of those available by the middle of the 20th, a roster that has only grown.

Like Babbage, Playfair’s optimism was based largely on his belief that competition would lead companies to turn as much waste as possible into saleable goods. And in this, they would align ever closer with nature. The “economy of the Chemistry of Art is only in imitation of what we observe in the Chemistry of Nature,” he said in 1852. “Animals live and die; their dead bodies, passing into putridity, escape into the atmosphere, whence plants again mould them into forms of organic life; and these plants, actually consisting of a past generation of ancestors, form our present food.” He went further in later writing, observing that as nature “does not admit the idea of waste matter, man, when under the guidance of knowledge, should not be inclined to deem anything as a waste product.”

Playfair never had the inclination to become a full-time popularizer and soon left the task of documenting achievements and opportunities in the realm of waste products to Danish-born technical writer and publisher Peter Lund Simmonds, who was elected a member of the Royal Society of Arts in 1855. From that springboard, he published his landmark treatise, Waste Products and Undeveloped Substances, in which he credited Playfair with the “industry as nature” metaphor. “We perceive in nature how nothing is wasted, but that every substance is reconverted, and again made to do duty in a changed and beautified form,” he elaborated in Waste Products. “We have at least an example to stimulate us in economically applying the waste materials we make, or that lie around us in abundance, ready to be utilized.”

A decade later, Simmonds was tasked by the Vienna International Exhibition, which would devote a significant portion of their event to byproduct development, with creating a representative collection for the British section. This work surely helped him as he released updated versions of his book, first in 1873 and again, as an entirely new third edition, now 491 pages in length, in 1876. (A few selected entries from that book’s 13-page index include albumen from fish spawn; ammonia from coal gas; asparagus stems for paper; bullocks’ liver; crab-shell manure; dog’s fat (use of); furnace slag (uses for); fossil flour; hematite sand; iodide of potassium; Martin’s process for recovering tin; naptha distillers in London; papier-mâché from cocoanut-fibre dust; petroleum (residuum from); photographic waste (uses of); and so on.

For him, the recycling of waste products remained an effort to hew more toward nature. “Nothing comes amiss to our ingenuity. We consume our smoke, write and print on the remnants of our ragged shirts, and triumph over decomposition and stenches,” he wrote in the later editions of Waste Products. “Utilisation is the great law of Nature, and we are only following her teaching.”

Against this background, how, then, could one possibly conclude that the cyclical economy is a bold new idea? Hints of the answer lie in what happened to Simmonds’ work. After his exhibit at the Vienna International Exhibition, he was invited to develop an even larger exhibit, which would eventually be displayed at the Bethnal Green Museum (in London’s East End), then a branch of the South Kensington Museum. It formally opened to the public in 1875. A few years later, in 1883, the collection was removed to the south basement of the Bethnal Green building and thoroughly rearranged and relabeled. It remained there after Simmonds’ death in 1897 and was eventually destroyed in 1928.

Babbage, Playfair, and Simmonds were arguably the three most significant Victorian writers on industrial byproduct recovery, but their diagnostic that widespread wealth had been and could be created from industrial waste was widely shared among their contemporaries with an interest in the issue. For instance, in an 1852 article published in Charles Dickens’ periodical Household Words, the journalist George Dodd described many recent developments of “products once useless, but now of great value.” And French authors of the era, including Charles Baudelaire, Victor Hugo, and Émile Zola, wrote moving tributes to the agricultural uses of the urban waste of Paris.

It was in this era, too, that “waste not, want not” became a childhood mantra. In the preface to a 1928 survey authored by the chemical engineer John B. C. Kershaw, Max Muspratt, a past president of the Federation of British Industries, observed that in the days of his childhood, this was a lesson inculcated into all young people. While he couldn’t remember if there had been a suitable response in the nursery, “the same wise saying has had the constant consideration of every progressive manufacturer for at least a century.”

Even London resident Karl Marx may have been swept up in the zeitgeist. In the third volume of his Capital, he commented that with “the advance of capitalist production the utilisation of the excrements of production is extended” and that the “so-called waste plays an important role in almost every industry.” In this, Marx found something about capitalism that he liked. “These excrements,” he wrote, “reduce the cost of the raw material to the extent that they are saleable.” Indeed, Marx went so far as to suggest that industrial waste recovery was “the second great branch of economies in the conditions of production” after economies of scale.

Was the Industrial Revolution Better for the Planet than We Think?

Assuming that industrial activities in Victorian Great Britain did indeed involve much loop-closing, what can account for the present-day obsession with overturning the past? There are a few possible explanations.

First is the discomfort among most sustainable development theorists with acknowledging that, over the last two centuries, population growth in market economies was accompanied with greater personal longevity, health, and wealth, but also with greater environmental remediation in the form of cleaner air and water and an expansion of the forest cover. If one refuses to acknowledge real progress in humanity’s environmental stewardship, one has no cause to look for explanations for it.

Another might be the ego or self-interest of business leaders, consultants, and would-be economic planners who believe that lucrative low-hanging fruits are ready for the picking, if only they can be put in charge. For instance, the World Economic Forum is “committed to helping businesses, governments, and people recognize the shortcomings of the current, ‘take-make-dispose’ approach to production and consumption.” They “aim to bring public and private sector leaders together to make commitments to a circular economy approach—which treats waste as a design flaw, and is capable of creating significant economic benefits.”

Still another problem might be common perceptions about what has been labeled the “Industrial Revolution.” After all, one may not be inclined to look for the creative and caring individuals who understood the value of both wealth creation and environmental remediation in a world characterized by evil Robber Barons and Dark Satanic Mills. This will be even more so if those responsible citizens’ main consideration is profit. Too many academics and sustainable development theorists write off capitalistic impulses as drivers of short-term thinking, unmanageable pollution problems, wanton depletion of nonrenewable resources, and species destruction. As the public health historian John T. Cumbler put it in a 2000 article, “business has tended to look on the pollution costs of production as an external cost to be born by society,” an externalization of environmental costs that “encouraged economic expansion and employment by reducing costs to the manufacturers.”

But that isn’t the only story. As suggested by Playfair, Simmonds, Marx, and others, competitive pressures and the profit motive also incentivized the creation of value out of production residuals. In this era, pollution was really an opportunity to improve the bottom line. Significant problems lingered and solutions took much time to develop, but the historical record nonetheless suggests rather convincingly that countless win-win outcomes (that is, with both economic and environmental benefits) were ultimately triggered in the race for profits.

And perhaps that leads to a third problem confronting today’s sustainability theorists: a different understanding of what nature—and people—are ultimately for. The mindset of Victorians like Babbage, Playfair, and Simmonds was both Promethean (they believed in the desirability of the transformation of nature to benefit human beings) and Whiggish (they evinced the inevitability of peaceful material and moral progress). As Simmonds stated in a lecture delivered in 1861:

It is, indeed, a privilege that we should have our lot cast in the second half of the nineteenth century, with the prospect of seeing further improvements yet as the tide of time rolls on; that we should have witnessed such an advance in the elements of material well-being as scientific vision never pictured. In wealth, in the arts of life, in the discoveries of Science, and their application to the comfort, the health, and the safety of mankind; in private and public morality, in the diffusion of knowledge, in religious freedom, and in political wisdom—the period of the last sixty years has carried us on faster and farther than any other period in modern times. The Scientific Discoveries of the present century have done more to promote political improvement, and to secure public liberty, than all the revolutions that were ever planned.

By contrast, present-day sustainability theorists are much more concerned with planetary limits and the need to constrain humans, who are seen as destructive rather than creative. Among important movers and shakers, perhaps no one described this stance more concisely than business magnate Ted Turner in a 2008 interview: “We have global warming because too many people are using too much stuff. If there were less people, they’d be using less stuff.”

The bottom line is this: One should try to understand the complexity and sophistication of market economies before boldly claiming they need to be redesigned.

In the end though, perhaps the key explanation for the current lack of appreciation of the achievements of past innovators was their very success. As Babbage observed nearly two centuries ago, successful byproduct development often resulted in the integration of once-separated activities within the confines of one firm. In an encyclopaedia entry published in 1930, the economist John Maurice Clark similarly observed that the “utilizing of by-products has progressed from the stage in which only the more important materials are recovered and, in most cases, sold to separate concerns for manufacture, to the present stage in which substantially every material is typically worked up into finished form in departments of one concern.” He added that this process gave a “powerful stimulus” to large-scale production, “since the gains are only available when even the least plentiful constituents are present in quantities sufficient to pay for processes of recovery.”

In time, the very knowledge that existing successful operations might have emerged as a solution to past pollution problems was simply lost among practitioners.

Of course, Playfair, Simmonds, and many of their contemporaries were well aware of the severity of environmental problems created by profit-seeking businesses. Their solutions weren’t a denial of that. Rather, their contribution is better understood as an attempt to promote the development of win-win practices through creative problem-solving rather than through the reduction of manufacturing output and of living standards. They were living in a world where poverty, disease, and hunger were still the norm and where people were much less sheltered from the vicissitudes of nature than they would later become.

Be that as it may, their accounts suggest that the self-interest of businesspeople was never as diametrically opposed to environmental remediation as most of today’s academics, activists, and regulators now believe it to have been. Perhaps instead of simply dismissing their predecessors, twenty-first century proponents of the circular economy could try to learn from their achievements and struggles, especially the sometimes-significant length of time and resources devoted to this endeavor.

It might be, though, that today’s economies, diverse regulatory barriers and price-distorting subsidies are a more serious obstacle to the creation of closed loops than a lack of conscious planning or design to that effect. For instance, a number of analysts have pointed out that U.S. environmental regulations often define industrial residuals as a nuisance to be destroyed rather than as potentially useful resources. The result is that many environmental statutes define pollution prevention in a way that excludes recycling and reclamation while also instituting biases against technological innovation.

In the end, that such narrow thinking is perhaps the greatest obstacle today to closing loops, creating a spaceman economy, aligning with the economy of nature—whatever you want to call it. The bottom line is this: One should try to understand the complexity and sophistication of market economies before boldly claiming they need to be (re)designed.