Why our economic engine needs redesigning for sustainability
By Professor Dato Dr Ahmad Ibrahim
The critical factors of any economy are quite basic. You cannot have a functioning market without the raw materials—the energy, water, and minerals—to produce the goods and services that society needs. You need the physical plants and the skilled manpower to convert those resources into something useful. In our globalised world, we’ve cleverly removed the constraint of geography; a factory in Detroit can rely on lithium from Australia, semiconductors from Taiwan, and steel from Brazil. However, we have mistaken the absence of immediate scarcity for the absence of vulnerability.
The past few years have stripped away that illusion. A geopolitical conflict, a pandemic, or a climate-induced drought in a single region can send shockwaves through supply chains half a world away. When resources are finite and supply chains brittle, the economy is fragile. This fragility has given rise to a compelling alternative: the circular economy. This is not merely a recycling program. It is a fundamental reimagining of production itself. In a circular model, waste is designed out of the system. Products are built to be repaired, remanufactured, or disassembled so their materials can be reborn as something new. It decouples economic growth from the consumption of finite resources. It turns resource productivity from a buzzword into a strategic imperative.
The logic is unassailable. A circular economy promises sustainability, resilience against supply chain disruptions, and long-term cost stability. If we want the economy to be sustainable—the shift seems inevitable. And yet, here we stand at the precipice of that inevitable future, refusing to jump. Why? Because the linear economy, for all its faults, is a masterclass in short-term profit maximisation.
The cold, hard reality is that business makes more money through linear. The current system is built on a business model that incentivizes volume over value. It is cheaper to extract virgin materials than to harvest recycled ones. It is more profitable to sell a consumer a new phone every two years than to design one that can be upgraded for a decade. The externalised costs—the carbon emissions, the water scarcity, the geopolitical instability caused by resource grabs—are borne not by the producer, but by society at large.
Moving to a circular model requires upfront capital expenditure to redesign supply chains, retool factories, and build new reverse-logistics networks to recover products at the end of their life. It requires a level of cooperation between competitors that runs counter to the Darwinian nature of market capitalism. It asks corporations to sacrifice quarterly earnings for generational stability. This is the central tension of our time. We know the linear economy is not sustainable, but the circular economy is not yet profitable enough—at least, not under the current rules of the game.
So, what is the way forward? We cannot rely on altruism alone. The transition will not happen through voluntary corporate social responsibility initiatives. It requires a fundamental rewrite of the rules that govern commerce. Governments must step in not as regulators of last resort, but as architects of the new economy. We need policies that price externalities, making virgin materials more expensive than they truly are. We need “right to repair” legislation that breaks the stranglehold of planned obsolescence. We need to shift the tax burden from labour—encouraging employment—to resource consumption, encouraging efficiency. Most importantly, we need to recognise that the supply of resources is not merely an economic issue; it is a matter of national security. A country that relies on extracting finite resources from volatile regions is not a sovereign economy; it is a supplicant.
The critics will say that moving away from linear models will kill growth. But this is a failure of imagination. Growth in the 21st century should not be measured by how many virgin tons we pull from the earth, but by how much value we extract from what we already have. The circular economy isn’t about doing less; it’s about doing better.We have reached the point where the conversation is no longer about if we should transition, but how and how fast. The linear economy was a brilliant solution for a world with unlimited resources and stable borders. That world no longer exists.
We can continue to cling to a model that enriches us in the short term while making us vulnerable in the long term, or we can accept that true economic security lies not in consuming resources, but in conserving them. The engine of the old economy is sputtering. We have the blueprints to build a new one. What we need now is the will to turn off the ignition and start the rebuild.
The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at ahmadibrahim@ucsiuniversity.edu.my.