Purpose: to allocate resources

I am pleasantly surprised that my textbook introduces the topic of economic systems with “The function of an economy is to resolve the basic economic problem” – the allocation of resources. I would like to be a little bit more specific though: The function of an economic system is to resolve the basic economic problem within the boundaries of the earth system, and with the inclusion of all. Thus, I embed the economic system in the ecological system of the earth, and I also set the stage for an honest distribution of resources. I could rephrase this as follows – more in line with systems thinking terminology and Doughnut Economics: The purpose of an economic system is to allocate resources within the boundaries of the doughnut.

Within the doughnut, allocation has several dimensions:

  • What is to be produced with the resources available? Should we use cotton to produce bedding, clothes, kitchen linen, nappies, stuffing, insulation or cosmetics?1
  • Where is it to be produced? If you follow the supply chain of a product, you will often find production travels the world.2
  • For whom is it to be produced? People in the west have a large amount of clothing items in their wardrobe which they do not wear on a regular basis or ever. From a resource allocation standpoint, that does not make any sense.
  • How is it to be produced? Which technology should be used? What is the ecological footprint of the production process and the supply chain? Resources most scarce based on ecological, economical measures should be used most efficiently and effectively in production processes.
  • How is production organised? How does organisation of production processes contribute to an honest distribution of wealth?

An economical allocation of resources means we need a circular economy in which we reuse, repair and recycle. The mantra I have often heard is ‘reduce, reuse, recycle’, which is ordered in relation to its effectiveness towards sustainability. I would suggest to add ‘repair’ to that mantra: reduce, repair, reuse, recycle.


How can you use this in your lessons?

A starting point for thinking about the ‘reduce, repair, reuse, recycle’-mantra is determining one’s ecological footprint. You could use the WWF Footprint Calculator for this. You could ask your students to fill in the questionnaire, and share their results anonymously. Once you have received all the results, you could score these, and share it with your students.

You could use this to discuss the four R’s:

  • Reduce – you could discuss the minimalist movement and, more particular, Project 333 – dress with 33 items or less for 3 months.
  • Repair – you could discuss the repair movement – activists who want to exercise our right to repair appliances (or have it repaired), and in particular iFixit, an online repair wiki.
  • Reuse – there are many handicraft projects that use used materials to make something new, but reuse starts with the use of reusable materials like glass instead of plastic. To tackle the damage of throwaway plastics,  in the UK, cotton buds and plastic straws could be banned from sales from 2019.3
  • Recycle – you could discuss why recycling is a last resort, and not the most preferred way to sustainability. You could use the Chinese refusal to import recycling waste from the West4 as an example.5

  1. All things mentioned may use cotton as a raw material. Long fibres are used for fabric, smaller fibres (linters) is used as stuffing and as a raw material in insulation, cotton seed oil is used in cosmetics.
  2. Which is nicely illustrated in the Planet Money T-shirt Project.
  3. This was covered in April 2018 through several channels like BBC news.
  4. The Guardian is one of the news outlets who covered this story in April 2018.
  5. Although it is aimed at chemistry students, The Fuse School explains why recycling has its limits (video).