Doughnut Economics

Kate Raworth, Creating the Future 2019




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THE ECONOMIC REVOLUTION IS COMING - AND IT'S DOUGHNUT SHAPED

Doughnut Economics is the new economic model which:
 

  • is gaining traction around the world, with cities, businesses, teachers, and community change-makers
  • aims to meet the needs of all people within the means of the living planet
  • calls for building a ‘regenerative and distributive’ economy that prioritises people and the planet over endless economic growth

WHY DO WE NEED TO RETHINK ECONOMICS?

It’s probably fair to say that when most of us think about economics, one of the first things that springs to mind is a deadly dull three-letter acronym: GDP – gross domestic product. GDP measures a country’s annual output of goods and services, and making sure that it keeps growing is often viewed as the primary economic purpose of governments and central banks. Growth means jobs, jobs mean money, and money means prosperity – right?

Maybe not. Because GDP tells us very little, if anything, about other major issues that most of us would view as being important indicators of prosperity. The condition of the environment, and whether it is improving or being degraded, has no place in our GDP calculations. GDP figures will tell you little, if anything, about the distribution of wealth, and the relative condition of the poorest and the richest in a society. 

Few of us would argue that growth for growth’s sake is more important than human welfare, or ensuring that our planet remains habitable. And yet this emphasis on growth in economics and politics means we are still locked into ways of doing things that damage both. Oxford economist Kate Raworth aims to address this, by looking at economics using a new framework – “the Doughnut.”

WHAT IS "DOUGHNUT ECONOMICS"?

The overall idea of the Doughnut is straightforward. At the lower bound (the inner ring of the Doughnut), the goal is to use our resources so that every human being has what most of us would view as life’s essentials, such as food, shelter, healthcare, education, political voice, etc. At the upper bound (the outer ring) lies the "ecological ceiling” - the point at which human activity risks permanently damaging the planet, which is ultimately our life-support system.  

So rather than endless growth, the goal of economics should be to remain within the “ecologically safe and socially just space” of the Doughnut itself (the light green section of the diagram below). Yet humanity is currently far beyond the boundaries on both sides, with the global extent of social shortfall and ecological overshoot shown in red in the diagram. Eliminating this deprivation and degradation should be humanity’s 21st century goal, argues Raworth, so that we can – for the first time – meet the needs of all people within the means of the living planet.

WHAT ARE THE PRACTICAL IMPLICATIONS?

Raworth points to a number of implications in her book, Doughnut Economics. Perhaps the key observation – which also ties in with the “doughnut” theme – is that we need to build a circular economy that prioritises people and the planet right now, rather than a linear one, where it’s assumed that endless growth will eventually clean up the damage done. 

In terms of looking after the planet, we need to transform today’s “degenerative industries” – which take Earth’s resources, use them once, then throw them away – into “regenerative industries”, which use resources again and again so that “waste from one process becomes food for the next”.

What’s more, regenerative approaches to doing business can help to restore, rather than run down, the living world. Think of constructing buildings in ways that absorb and store CO2 rather than release it, or of growing food in ways that enrich soil carbon and biodiversity, instead of depleting it. Think, too, of designing products – from mobile phones to office buildings - in a modular, open way so that they can be repaired, refurbished and reused, rather than discarded or demolished. Such product designs already exist, but they need to be backed up by business models, finance, and public policy that make them the new normal.

As for creating a more just society: rather than have faith that ‘trickle down’ plus endless growth will eventually lead to a more equal society, we need to embed distributive design within our social structures. This isn’t so much about redistributing income through taxes as it is about pre-distributing the sources of wealth creation. From society-wide investments in health and education to innovations in the ownership of enterprise and intellectual property, distributive design ensures that value created can be shared far more equitably with all who co-create it.

For example, what if more businesses were owned by their employees and customers, rather than by external shareholders who are less likely to be committed to the company’s purpose? How can creative commons licensing unleash the worldwide potential of open-source innovation to solve social challenges? And how could complementary currencies be designed to empower communities and multiply their ability to create local, social value?

As Raworth put it in her 2018 TED talk, “Today we have economies that need to grow, whether or not they make us thrive. What we really need are economies that make us thrive, whether or not they grow". Starting with the Doughnut as our goal, rather than the pursuit of exponential growth, could better focus our minds on how to get there.

Doughnut Economics: Seven Ways to Think Like a 21st Century Economist, Kate Raworth

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Kate Raworth will be joining us at Creating the Future 2019. Find out more about this extraordinary event by using this link.

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KATE RAWORTH, ESG Economist

Kate is an economist focused on exploring the economic mindset needed to address the 21st century’s social and ecological challenges. Her bestselling book, "Doughnut Economics: Seven Ways to Think Like a 21st Century Economist (2017)" has been translated into 15 languages and has been widely influential amongst sustainable development thinkers, progressive businesses and political activists. She has presented it to audiences ranging from the UN General Assembly to the Occupy movement. Kate’s career has spanned working with micro-entrepreneurs in Zanzibar to co-authoring the Human Development Report for UNDP in New York, and a decade as Senior Researcher at Oxfam. She is currently a senior visiting research associate at Oxford University’s Environmental Change Institute and a senior associate at the Cambridge Institute for Sustainability Leadership.

CLIMATE CHANGE & DEMOCRACY: CTF 2019


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CREATING THE FUTURE 2019


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