Doughnut Economics – Kate Raworth
The one sentence summary: Mainstream economics has led us astray in seven critical ways but it is possible to use an economic model that meets the needs of all and the planet.
WHAT THE BOOK SAYS
The title of the book is based on a doughnut-shaped model invented by the author. It was originally presented back in February 2012 in an Oxfam Discussion Paper entitled ‘A safe and just space for humanity – can we live within the doughnut?’.
The original discussion paper set out a visual framework for sustainable development – shaped like a doughnut – by combining the concept of planetary boundaries with the complementary concept of social boundaries. It highlighted that “Achieving sustainable development means ensuring that all people have the resources needed – such as food, water, health care, and energy – to fulfil their human rights. And it means ensuring that humanity’s use of natural resources does not stress critical Earth system processes – by causing climate change or biodiversity loss, for example – to the point that Earth is pushed out of the stable state”.
The concept has been further developed in this 2017 book, with the introduction of new ways of economic thinking for the 21st century.
The ring of the doughnut is the safe and just space for humanity, contained by a social foundation of well-being that no one should fall below. Should they do so, they would fall into the hole in the middle (critical human deprivation). On the outside of the ring lies the boundary of an ecological ceiling, beyond which we should not go because we create critical planetary degradation.
There are seven ways to think like a 21st century economist:
- Change the goal. Stop being fixated on GDP or national output, and instead use Doughnut economics to bring all of humanity into its safe space.
- See the big picture. Economics is not a circular flow diagram of a self-contained market. It needs to be an embedded economy, emphasising the core role of the household, the partnership of the state and the creativity of the commons.
- Nurture human nature. Rational economic man is a myth. Human nature is far richer than this. We are social, interdependent, approximating, fluid in values and dependent on the living world.
- Get savvy with systems. Supply and demand curves don’t work and there is no mechanical equilibrium. We need systems thinking with feedback loops that embrace dynamic complexity.
- Design to distribute. The old adage was that it has to get worse before it gets better, and that growth will eventually even it up. This notion is wrong because growth does not reduce inequality. Economies need to distribute far more of the value they create.
- Create to regenerate. Economic theory has long portrayed a ‘clean’ environment as a luxury good, only available to the well-off. This is untrue. Ecological degradation is simply the result of degenerative industrial design. We need to be regenerative by design.
- Be agnostic about growth. GDP curves are always portrayed as relentlessly upward, but they don’t work out like that. Nothing in nature grows for ever. We need economies that make us thrive, whether or not they grow.
The basic conundrum is this: no country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one.
Today’s economy is divisive and degenerative by default. Tomorrow’s must be distributive and regenerative by design.
Business responses vary hugely on the road to regenerative design – the so-called corporate to-do list:
- Do nothing – why change if returns are good?
- Do what pays – adopt eco-efficiency measures that cut costs or boosts the brand
- Do our fair share – acknowledge the issue and switch to sustainability
- Do no harm – this is a true step-change, often called mission zero.
- Be generous – by creating an enterprise that is regenerative by design.
WHAT I FOUND PARTICULARLY INTERESTING
- There are many economic myths that we need to shift, from > to:
- The market is efficient > is powerful, so embed it wisely.
- Business is innovative so let it lead > give it purpose.
- Finance is infallible so trust it > is in service so make it serve society.
- Trade is win-win so open your borders > is double-edged, so make it fair.
- The state is incompetent > is essential, so make it accountable.
- The household is domestic so leave it to the women > is core so value its contribution.
- The commons are tragic so sell them off > are creative so unleash their potential.
- Society is non-existent so ignore it > is foundational so nurture its connections.
- Earth is inexhaustible so take all you want > is life-giving so respect its boundaries.
- Power is irrelevant so don’t mention it > is pervasive so check its abuse.
- WEIRD societies are Western educated, industrialised, rich and democratic. It is here that most economic research is conducted, thereby producing a biased response.
- Economics as a discipline is now shown to attract self-interested people, and the more they study it the less they value helpfulness, honesty and loyalty.
- Suggested new ethical principles for economists are:
- Act in service to human prosperity in a flourishing web of life.
- Respect autonomy in the communities that you serve.
- Be prudential in policymaking, seeking to minimize the risk of harm.
- Work with humility, recognising the shortcomings of your models and being open to other perspectives.
- “We are persuaded to spend money we don’t have on things we don’t need to make impressions that won’t last on people we don’t care about.” Tim Jackson
- “Changing your mind is one of the best ways of finding out whether or not you still have one.” Taylor Mali
For a better explanation of the original model, I recommend reading the Oxfam Discussion Paper from February 2012: A Safe and Just Space for Humanity.
The big question (when you look at the progress or lack of it since 2012) is: can we move fast enough to ensure this safe and just space for humanity?