Our traditional economic system is broken, how will doughnuts save us?
The challenge of the twenty-first century is how we can enable everyone on earth to thrive without depleting the planet’s natural resources, or pushing it past tipping points – after which it is likely to suffer ruinous, irreversible damage.
We’ve already overshot six of the nine planetary boundaries – the environmental limits we must stay within so that the earth can continue to support life. But even though we’re extracting and exhausting the planet’s resources at a rapid rate, hundreds of millions of people around the world continue to suffer from hunger and poverty.
The theory of doughnut economics outlines how we can preserve the natural world while meeting the needs of everyone on earth. It seeks to upend traditional economic perspectives, where growth is seen as the end-all, to encapsulate the environmental and social elements that must also flourish in a sustainable economic system. It’s a transformative framework based on principles of regeneration and redistribution.
The theory was devised by economist Kate Raworth, first in a report for Oxfam and later in her 2017 book ‘Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist’.
The Doughnut explained
Image: doughnuteconomics.org
The social foundation of the doughnut includes the things that every human on earth needs to secure their wellbeing, like education, housing, work, and health, as well as the earth systems that we depend on such as soil and water.
The outer circle of the doughnut – or the environmental ceiling – is made up of the nine planetary boundaries, which if crossed would have catastrophic consequences for life on earth. Inside the doughnut-shaped ring is room for the earth to flourish, while meeting everyone’s needs, without crossing these boundaries.
Seven ways to think like a 21st century economist
To transform our global and local economies so that they support all life on earth, there are seven changes that Raworth proposes to how we think about economic systems.
1. A change of purpose
Under traditional schools of economic thought, a country’s GDP is seen as the ultimate benchmark of its progress. Countries’ endless quests for economic growth have generated stark inequality and ravaged the natural world.
Instead, viewing economics through the lens of the doughnut means shifting to a broader perspective and accounting for other elements of social progress, as well as environmental health. A high GDP won’t mean much on an overheated, uninhabitable planet.
2. Beyond a standalone market
Dominant neoliberal economic viewpoints see the market as separate from society, unencumbered from the needs of people and the natural world it extracts from. But many are beginning to recognise that this view has led us to the point of collapse.
Doughnut economics instead positions the market as embedded within human and natural ecosystems. The household, market, state, and the commons all are dependent on one another, and can only thrive as a whole.
3. A different view of human nature
Humans can be as cooperative and caring as they can be selfish and competitive. The theory of doughnut economics argues that we can nurture the former traits, bringing benefits across society.
4. Start systems thinking
Traditional economists have strived to view the field as a science, seeking unequivocal laws that explain how markets are bound to operate. 2008’s housing crash pulled back the curtain on this wrongheaded belief. Raworth argues that economists urgently need to begin embracing a view of the economy as a shifting, complex system to be stewarded rather than controlled.
If you are interested in systems thinking – we run a range of workshops to help organisations embrace system thinking concepts.
5. Distribution is key
Twentieth-century economics promoted the myth that by allowing inequality to grow, wealth would eventually trickle down to those at the bottom. Doughnut economics, however, argues that policies need to be put in place to distribute income fairly and the means to create wealth, such as controlling land, enterprise, and technology.
6. Going circular
Industrial activity – and its ‘take-make-waste’ approach to natural resources – has pushed the planet to breaking point. A new, regenerative approach to nature via a circular economy can harness the potential of the planet to create the things people need, but designing them to be renewable and reusable.
7. Become growth-agnostic
If we see economic growth as necessary, periods where the economy stabilises, are then viewed as a crisis. But the pursuit of growth has little bearing on whether communities and natural ecosystems thrive – and often can hinder them from doing so.
Abandoning the tunnel vision of society’s obsession with growth means we can focus on the things that matter – protecting nature and ensuring the well-being of people around the world.
Turning doughnuts into action for organisations
Organisations that make it their purpose to be regenerative and distributive can help bring humanity into the doughnut. The Doughnut Economics Action Lab has listed principles for organisations wishing to put this thought into practice:
1. Embrace the goal of the twenty-first century (meeting the needs of everyone while staying within planetary boundaries)
2. Recognise that the market is just one part of a bigger picture
3. Nurture the best in human nature, by promoting diversity, collaboration, and wellbeing
4. Think in systems, not siloes
5. Distribute value with all co-creators
6. Be regenerative, working within the cycles of the natural world
7. Put aside an addiction with growth, and focus instead on thriving
8. Uplift excluded voices, and share learning and innovation
By incorporating the ideas of doughnut economics in their work, businesses and organisations can help create a world where we live within the planet’s means, and all life can thrive.
If you would like to know more
Contact us at Evolveable Consulting, and we assist businesses in identifying decarbonisation solutions and strategies to reshape their business. You can learn more about our services or book a consultation directly with us.