On Operational Mechanism Of Circular Economy

Since 2002, the literatures about the theory of"Circular Economy"(hereinafter referred to as CE) are now increasing. Many scholars strive for construction of the system info of CE, but it is pity that the theoretical defect of classic economics, improper use of methodology of CE and the blindness of practice lead to the concept of CE philistine and policy simple. So from a new angle of understanding, the author believes that the present research includes three aspects: inoculation of knowledge, amalgamation of theories and innovation of paradigm. To be specific, this dissertation focuses on the micro-foundation of CE, and its operational mechanism.The problem of environment looks like a problem resulted from policy of economic development and way of economic growth, but in essence it is caused by the shortcomings of traditional economics. Once natural resource is regarded as an endogenous variable, the exiting system info of economics has to be rewritten. The subject of economics is always being changing from value circulation in traditional economics to material circulation in early ecology, then to unification of value circulation and material circulation, and the transition of its economic logic is also happening, that is, basic concept, economic orient, systemic medium, and the type of capital movement are changing from the traditional economy, and finally, from labor productivity to resource productivity. When resource productivity is regarded as the key indictor of economic efficiency, economic activities are characterized with dematerialization, which is the essence of CE.Different from traditional economic mechanism, the operational mechanism of CE is the synergetic one of material flow, value flow and information flow in the eco-economic system. Its content and process of formation are discussed in this dissertation. The theory about operational mechanism of CE mainly includes economic conditions, motive mechanism, micro-foundation, mechanism of adaptation, change of relation between economic organizations and its institutions.The core of CE is economization and comprehensive utilization of resources and its tenet is dematerialization of economic activities, and to improve resource productivity (eco-efficiency) for sustainable development. The main difference between CE and other economic types toward sustainable development is that the former pays attention to industry of new economy with the function of efficiency improvement, artery industries with great potential of saving resource, and vein industries with Pareto's improvement, which is systematic, holistic, structural and dynamic saving resource.As a new economic shape, CE requires attaining material, technical and institutional support through industrial base, protecting property rights, building trust and revealing information. CE needs flawless market institutions and wholesome government function, because during its development, it is essential that governments intervene with some economic activities, and cultivate spontaneity ability of CE in order to make firms self-constraint and self-development. Only on this background, does CE have low costs. The true and exact price of resources is the key to influence agent's rational decision in CE. Price of Resources adaptable to the need of CE should reflect the basic value, production cost, scarcity, supply and demand in market and environmental cost of resources. When the original price of resources equals to the recycling price of resources, all prices of resources reach the point of equilibrium. The imbalance of economic development at the stage of structural change and institutional transaction, for example, rapidly advance of industrialization, severely lag of market, illegibility of government function, brings some obstacles to the reform of the price of resources. So the formation mechanism of the price of resources should be considered comprehensively since it not only refers to its own problem, but also includes many other factors.The microeconomic foundation of CE is the starting point to study operational mechanism of CE. The presumption of agent's behavior is"eco-economic man", who is in pursuit of eco-economic efficiency at the level of moderate optimum. In CE, consumer's behavior is moderate consumption which can reduce consumption's influence on environment, and create a sustainable market demand inducing firm to adapt a production way with characteristics of saving resource and environment friendly.The function of self organization of CE determines its dynamic efficiency. As a complex adaptable system, economic organizations in CE evolve continuously. Firm is a"producer"in eco-economic system as well as an economic organization with systematic function. The feature of this system determines economic organizations'evolvement process, namely, from firm to industrial chain to industrial network. Eco-industrial park is an industrial network with a typical circular type.The motivation of the firm with circular type comes from the low costs and more revenue resulted from saving resource and environment friendly, while industrial chain does not care about this short-term profit, but cooperation among firms on the chain in a long run, and industrial network with circular type is characterized with embeddedness and complement. Good social capital and special capital help members in the network to form a firm relation which can produce network effect. The change of eco-economic organization from firm with circular type to industrial chain with circular type and to industrial network with circular type, embodies that the efficiency of eco-economic system is a process of systematic, holistic, structural and dynamic improvement.The regulation mechanism of CE is mainly the ways of resource allocation in eco-economic system with the target of synergetic function of material flow, value flow and information flow. The regulation way of CE includes pre-regulation and post- regulation. Based on the new economy, effective property rights, complete information, trust and cooperation, pre-regulation includes virtual exchange in advance and public participation. Based on microeconomic foundation of moderate consumption and firm's eco-management, post- regulation includes market and government. Because of these two regulations, operational mechanism of CE displays a new regulation mechanism in which government plays the leading role, firm becomes the main body, public participates, information replaces, market prompts, law constraints and policy inducts. CE is an eco-economy based on market economy. During its formation, it needs institutional support and cultivate its spontaneous ability to attain self-operation and self-reinforcement so as to realize resource-saving and cost-saving eco-economy. In order to achieve these dual performances, the study on operational mechanism of CE should combine approaches of classic economics and eco-economics.On a whole, the innovation of the dissertation is the basic theoretical change under the support of new ideas and new leading logic, and the change embodies as follows: innovation of analysis paradigm, industrial mode, adaptation mechanism and microeconomic foundation, with the key in innovation of regulation mechanism and microeconomic foundation.