I would take your last statement as fact. There are raw inputs to an economy, the flesh of wild animals is a perfect example. And there is pure waste, such as non-recyclable plastic floating in the ocean, or when someone declares bankruptcy.
This notion of circulation does not hold. The system is wide open at both ends. Something becomes economic and something else ceases to be economic and they are not necessarily connected in any way. Even if you want to include the Earth and its contents as an economic actor (which I do not think can actually be done) the sunlight that falls on us is still raw input, and the ultimate waste-heat that can no longer be leveraged is still pure waste. Since by and large whatever sunlight does not happen to fall on a plant, still turns immediately into waste-heat, there is still huge leverage for efficiencies. This creates so great an opening that this is still virtually an open system.
Given that it is really an open system, it seems obvious that the economy grows by pulling more non-economic stuff into economic stuff, or by speeding up the loops that do exist in the system.
This latter is called the 'velocity of money' when the reverse flow involves cash, and I think it explains the vast majority of the growth we see. Most of the increased consumption in modern economies is artificially driven, and most of our production is of psychological value (It is the same food, but it tastes better, or we are happier about the source. It is the same clothing, but it marks our status. It is the same communication, but it happens more automatically.) And these distinctions are amplified by the overall overabundance of goods available, not by naturally occurring levels of psychological needs. Those otherwise non-productive layers of 'production' get people paid, and they spend their earnings, creating more money in the system.
So even a closed economy could still grow quite a bit, by pumping up the speed of circulation.