137
© The Author(s) 2016
R. Clift, A. Druckman (eds.), Taking Stock of Industrial Ecology,
DOI 10.1007/978-3-319-20571-7_7
Chapter 7
Stocks and Flows in the Performance
Economy
Walter R. Stahel and Roland Clift
Abstract The performance economy is a concept which goes beyond most interpretations of a “circular economy”: the focus is on the maintenance and exploitation
of stock (mainly manufactured capital) rather than linear or circular flows of materials or energy. The performance economy represents a full shift to servicisation, with
revenue obtained from providing services rather than selling goods. While the form
of industrial economy which has dominated the industrialised countries since the
industrial revolution is arguably appropriate to overcome scarcities in a developing
economy, the performance model is applicable in economies close to saturation,
when the quantities of new goods entering use are similar to the quantities of goods
being scrapped at the end of life.
Key elements of the performance economy are re-use and re-manufacturing, to
maintain the quality of stock and extend its service life by reducing material intensity, i.e. the material flow required to create and maintain the stock. Because material flows represent costs which reduce the revenue from service provision, business
models inherent in the performance economy support the macro-level objective of
extending service life and thereby minimising material intensity. Product life in the
performance economy is limited by technological improvements in the efficiency of
manufactured capital rather than by damage, wear or fashion.
Re-use and re-manufacturing tend to be more labour-intensive and less capitalintensive than virgin material production or primary manufacturing. This enables
re-use and remanufacturing to be economically viable at smaller scales. It also
enables these activities to substitute labour for energy, reversing the trend which has
characterised industrial economies and offering ways to alleviate current environmental, economic and global challenges; i.e. to make the economy more sustainable. However, there are significant barriers to adoption of the performance economy
model, partly because economic and business models generally focus on flows
(GDP or added value) rather than prioritising the quality, value and use of stock.
Promoting the performance model may require a complete re-think of public policy,
W.R. Stahel (*)
The Product-Life Institute, Geneva, Switzerland
e-mail: wrstahel2014@gmail.com
R. Clift
Centre for Environmental Strategy, University of Surrey, Guildford, UK
e-mail: r.clift@surrey.ac.uk
© The Author(s) 2016
R. Clift, A. Druckman (eds.), Taking Stock of Industrial Ecology,
DOI 10.1007/978-3-319-20571-7_7
Chapter 7
Stocks and Flows in the Performance
Economy
Walter R. Stahel and Roland Clift
Abstract The performance economy is a concept which goes beyond most interpretations of a “circular economy”: the focus is on the maintenance and exploitation
of stock (mainly manufactured capital) rather than linear or circular flows of materials or energy. The performance economy represents a full shift to servicisation, with
revenue obtained from providing services rather than selling goods. While the form
of industrial economy which has dominated the industrialised countries since the
industrial revolution is arguably appropriate to overcome scarcities in a developing
economy, the performance model is applicable in economies close to saturation,
when the quantities of new goods entering use are similar to the quantities of goods
being scrapped at the end of life.
Key elements of the performance economy are re-use and re-manufacturing, to
maintain the quality of stock and extend its service life by reducing material intensity, i.e. the material flow required to create and maintain the stock. Because material flows represent costs which reduce the revenue from service provision, business
models inherent in the performance economy support the macro-level objective of
extending service life and thereby minimising material intensity. Product life in the
performance economy is limited by technological improvements in the efficiency of
manufactured capital rather than by damage, wear or fashion.
Re-use and re-manufacturing tend to be more labour-intensive and less capitalintensive than virgin material production or primary manufacturing. This enables
re-use and remanufacturing to be economically viable at smaller scales. It also
enables these activities to substitute labour for energy, reversing the trend which has
characterised industrial economies and offering ways to alleviate current environmental, economic and global challenges; i.e. to make the economy more sustainable. However, there are significant barriers to adoption of the performance economy
model, partly because economic and business models generally focus on flows
(GDP or added value) rather than prioritising the quality, value and use of stock.
Promoting the performance model may require a complete re-think of public policy,
W.R. Stahel (*)
The Product-Life Institute, Geneva, Switzerland
e-mail: wrstahel2014@gmail.com
R. Clift
Centre for Environmental Strategy, University of Surrey, Guildford, UK
e-mail: r.clift@surrey.ac.uk