Doughnut economics for dummies
Regardless of our positions on climate change and other contemporary global affairs, one thing that has genuine capacity to motivate change is whether doing the ‘right’ thing is profitable.
Whatever your outlook on the life, money really does make the world go round. While this can be a bit demoralising when constantly confronted with ingrained systems that make it difficult to shift our societal norms, there are ways we can use these systems to propel ourselves forward on the journey to generate productive climate solutions.
One of the major opposing arguments put forward by businesses and governments when solutions for climate challenges are proposed is from an economic standpoint. The ‘how is that going to make us money’ argument.
When Kate Raworth encountered these arguments, she took matters into her own hands. In 2017 she published the book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, outlining a framework for understanding economics beyond the narrow metric of GDP (gross domestic product) which continues to be used as the primary indicator of economic health globally.
Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth
Raworth argues given the ecological crisis we find ourselves in and the limitations of Earth’s resources, economic predictions need to encompass more than GDP (in her words ‘just total cost of goods and services sold in an economy in a year’). She proposes this can be done using her ‘Doughnut’ economics framework to ensure healthy outcomes for all while responsibly managing the resources on Earth.
As someone who lands firmly in the camp of ‘cant we just print more money?’ when it comes to economics, I’m going to attempt to break down how doughnut economics works and how it can be harnessed as a tool to help us fix our climate crisis, leaning heavily on Raworth’s work.
So what does doughnut economics mean?
Crediting many economics who aimed to shift the narrative from purely economic growth to one that centred humanity, Raworth praises a humanistic approach in which the focus of development should be to enhance human life.
She believed the central question was ‘what allows humans to thrive?’ which is where doughnut economics begins…
The Doughnut: a twenty- first- century compass
Raworth refers to The Doughnut as a twenty-first century compass which points in the direction of providing for every individual’s needs while safeguarding the planet.
The social foundation sphere (inner dark green) highlights the shortfalls in human wellbeing when exposed to conditions such as food insecurity and gender inequality.
(All 12 of these factors are outlined in the United Nations Sustainable Development Goals established in 2015 with the aim to be achieved by 2030.)
Beyond the ecological ceiling (outer dark green) lie Earth’s planetary boundaries, which when overshot, place pressure on the safe operating space for humanity due to (primarily) anthropogenic phenomena such as climate change and biodiversity loss.
Between the social foundation and ecological ceiling lies the ‘safe and just operating space for humanity’, in which a regenerative and distributive economy can thrive. The aim is to bring all of humanity into that light green space.
Economic development since the mid-twentieth century has lifted millions of people from deprivation, with these generations the first to live long, healthy lives. Unfortunately, this economic development has been at the expense of Earth’s finite resources, due to both the resource heavy lifestyles of high-income countries and rapidly growing middle class globally. In addition, despite major progress for human wellbeing over the past 70 years, millions of people remain below the social foundation dimensions.
So currently, we are far beyond the boundaries on both sides.
What are the factors standing in our way?
Five factors influence whether we can exist as a population within The Doughnut - population, distribution, aspiration, technology and governance. I won’t delve deeply into each but if you are keen to learn more, Chapter 1 of Raworth’s book gives a great overview.
Population: refers to how many of us there are and likelihood of our global population stabilising (e.g. as women and girls’ education improves, birth rates have been declining).
Distribution: of resources and wealth. The extremes of inequality push humanity beyond both boundaries of the Doughnut for example 45% of global emissions are generated by the top 10% of emitters compared with 13% contributed by the bottom 50% of the population.
Aspiration: what we consider a ‘good’ life and how this influences resource use, especially in the context of increasing consumerism (as a result of technology and urbanisation)
Technology: ensuring the choices made can facilitate positive outcomes for humanity and the planet, especially when generating infrastructure as the population grows and moves, and its role in influencing aspirations.
Governance: confronting current systems and implementing more effective ones to ensure equitable outcomes for humanity at a global scale, while acknowledging the interconnected nature of resource use, and varying impacts that complex interaction have at different regional and local scales.
How can we make it work?
The Doughnut Economics Action Lab have generated ‘Principles of Practice’ to help us work towards existence in the doughnut. Specifics vary depending on the setting they are applied to, but the overall principles remain the same.
Highlighted here are the Principles of Practice generated by the Doughnut Economics Action Lab. These principles ultimately encourage and require a mindset shift when we examine mainstream economics as it functions today.
Principles of Practice, Doughnut Economics Action Lab
The central argument is rather than thinking about growth as we have in the past, which is now inherently flawed as it relies on infinite resources, we bring humanity back into our debates and focus on ensuring every human can thrive within the planetary boundaries.
It is a framework that fosters balance, sustainability and stewardship of the planet, rather than economic productivity to the detriment of all else.
As Raworth articulates, while the Doughnut, and the science behind it, is relatively new, sustainable development has long resonated with a sense of balance the model invokes.
This is the direction we need to be heading if we have any chance of slowing the rate of climate change to maintain a safe and just operating zone for humanity. At the end of the day, the planet will persist. It will be humans that face the consequences of our actions.
If you look closely enough, you’ll start seeing doughnuts everywhere!
Resources
I did the reading so you don’t have to – and have hopefully distilled it in a way that makes it easy to understand!
But if you still aren’t sure or want to learn more, listen to Kate Raworth explain Doughnut Economics herself using the links below:
Ted Talk: A healthy economy should be designed to thrive, not grow (2018)
Ted Talk: How to live within the Doughnut (2021)
Also check out the Doughnut Economics Action Lab for tools to help integrate this framework at different scales from national to the classroom:
& finally if you want to delve deeper into the planetary boundaries, have a read of our article from February here.
