Doughnut Economics

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= book, concept, and associated policies


Concept

Daniel Boffey:

"The inner ring of her donut sets out the minimum we need to lead a good life, derived from the UN’s sustainable development goals and agreed by world leaders of every political stripe. It ranges from food and clean water to a certain level of housing, sanitation, energy, education, healthcare, gender equality, income and political voice. Anyone not attaining such minimum standards is living in the doughnut’s hole.

The outer ring of the doughnut, where the sprinkles go, represents the ecological ceiling drawn up by earth-system scientists. It highlights the boundaries across which human kind should not go to avoid damaging the climate, soils, oceans, the ozone layer, freshwater and abundant biodiversity.

Between the two rings is the good stuff: the dough, where everyone’s needs and that of the planet are being met." (https://www.theguardian.com/world/2020/apr/08/amsterdam-doughnut-model-mend-post-coronavirus-economy?)


The Book

* Book: Doughnut Economics: seven ways to think like a 21st century economist. Kate Raworth. Random House Business Books, 2017

Doughnut-Economics-cover.jpg

URL = https://www.kateraworth.com/

"Doughnut Economics proposes 7 fundamental shifts needed in today's economic mindset if we – humanity – want to give ourselves half a chance of thriving together on this living planet in the 21st century."

Contextual Quote

Ralph Thurm:

"Oxford Economist Kate Raworth popularized the idea of environmental and social thresholds by envisioning a doughnut: its outer edge represents “ecological ceilings” (i.e. Planetary Boundaries), or “do-not-exceed” limits of resource use beyond which natural systems start to collapse; its inner edge represents “social foundations,” below which societal systems start to founder." (https://medium.com/@ralphthurm/what-are-thresholds-allocations-and-why-are-they-necessary-for-sustainable-system-value-fe127483c407)


Review

George Monbiot:

"We cannot hope to address our predicament without a new worldview. We cannot use the models that caused our crises to solve them. We need to reframe the problem. This is what the most inspiring book published so far this year has done.

In Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, Kate Raworth of Oxford University’s Environmental Change Institute reminds us that economic growth was not, at first, intended to signify wellbeing. Simon Kuznets, who standardised the measurement of growth, warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” Economic growth, he pointed out, measured only annual flow, rather than stocks of wealth and their distribution.


Raworth points out that economics in the 20th century “lost the desire to articulate its goals”. It aspired to be a science of human behaviour: a science based on a deeply flawed portrait of humanity. The dominant model – “rational economic man”, self-interested, isolated, calculating – says more about the nature of economists than it does about other humans. The loss of an explicit objective allowed the discipline to be captured by a proxy goal: endless growth.

The aim of economic activity, she argues, should be “meeting the needs of all within the means of the planet”. Instead of economies that need to grow, whether or not they make us thrive, we need economies that “make us thrive, whether or not they grow”. This means changing our picture of what the economy is and how it works.

The central image in mainstream economics is the circular flow diagram. It depicts a closed flow of income cycling between households, businesses, banks, government and trade, operating in a social and ecological vacuum. Energy, materials, the natural world, human society, power, the wealth we hold in common … all are missing from the model. The unpaid work of carers – principally women – is ignored, though no economy could function without them. Like rational economic man, this representation of economic activity bears little relationship to reality.

So Raworth begins by redrawing the economy. She embeds it in the Earth’s systems and in society, showing how it depends on the flow of materials and energy, and reminding us that we are more than just workers, consumers and owners of capital.

This recognition of inconvenient realities then leads to her breakthrough: a graphic representation of the world we want to create. Like all the best ideas, her doughnut model seems so simple and obvious that you wonder why you didn’t think of it yourself. But achieving this clarity and concision requires years of thought: a great decluttering of the myths and misrepresentations in which we have been schooled.

The diagram consists of two rings. The inner ring of the doughnut represents a sufficiency of the resources we need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare, democracy. Anyone living within that ring, in the hole in the middle of the doughnut, is in a state of deprivation. The outer ring of the doughnut consists of the Earth’s environmental limits, beyond which we inflict dangerous levels of climate change, ozone depletion, water pollution, loss of species and other assaults on the living world.

The area between the two rings – the doughnut itself – is the “ecologically safe and socially just space” in which humanity should strive to live. The purpose of economics should be to help us enter that space and stay there.

As well as describing a better world, this model allows us to see, in immediate and comprehensible terms, the state in which we now find ourselves. At the moment we transgress both lines. Billions of people still live in the hole in the middle. We have breached the outer boundary in several places.

An economics that helps us to live within the doughnut would seek to reduce inequalities in wealth and income. Wealth arising from the gifts of nature would be widely shared. Money, markets, taxation and public investment would be designed to conserve and regenerate resources rather than squander them. State-owned banks would invest in projects that transform our relationship with the living world, such as zero-carbon public transport and community energy schemes. New metrics would measure genuine prosperity, rather than the speed with which we degrade our long-term prospects.

Such proposals are familiar; but without a new framework of thought, piecemeal solutions are unlikely to succeed. By rethinking economics from first principles, Raworth allows us to integrate our specific propositions into a coherent programme, and then to measure the extent to which it is realised.

I see her as the John Maynard Keynes of the 21st century: by reframing the economy, she allows us to change our view of who we are, where we stand, and what we want to be.

Now we need to turn her ideas into policy." (https://www.theguardian.com/commentisfree/2017/apr/12/doughnut-growth-economics-book-economic-model)

The missing link with biophysical economics

Ugo Bardi:

"The problem with the doughnut is not so much understanding why it is shaped like a doughnut, but what it lacks. Look at the outer ring; you will see 10 sectors, all related to pollution: climate change, ocean acidification, chemical pollution, etc. Something is conspicuously missing and it is not a minor element of the overall picture. It is natural resources and, in particular, non-renewable resources.

Natural resources, their depletion, and the related concept of “overshoot” are not just missing from the doughnut, they go mostly unmentioned and unnoticed in the whole book. " (http://www.resilience.org/stories/2017-06-30/doughnut-economics-a-step-forward-but-not-far-enough/)

Policy

Amsterdam, the Netherlands

Daniel Boffey:

"the model will be formally embraced by the municipality of Amsterdam as the starting point for public policy decisions, the first city in the world to make such a commitment.

“I think it can help us overcome the effects of the crisis”, said Amsterdam’s deputy mayor, Marieke van Doorninck, who joined Raworth in an interview with the Guardian via Skype before the launch. “It might look strange that we are talking about the period after that but as a government we have to … It is to help us to not fall back on easy mechanisms.”

“When suddenly we have to care about climate, health, and jobs and housing and care and communities, is there a framework around that can help us with all of that?” Raworth says. “Yes there is, and it is ready to go.”

The central premise is simple: the goal of economic activity should be about meeting the core needs of all but within the means of the planet. The “doughnut” is a device to show what this means in practice.

...

Raworth scaled down the model to provide Amsterdam with a “city portrait” showing where basic needs are not being met and “planetary boundaries” overshot. It displays how the issues are interlinked.

“It is not just a hippy way at looking at the world,” says Van Doorninck, citing the housing crisis as an example.

Residents’ housing needs are increasingly not being satisfied, with almost 20% of city tenants unable to cover their basic needs after paying their rent, and just 12% of approximately 60,000 online applicants for social housing being successful.

One solution might be to build more homes but Amsterdam’s doughnut highlights that the area’s carbon dioxide emissions are 31% above 1990 levels. Imports of building materials, food and consumer products from outside the city boundaries contribute 62% of those total emissions.

Van Doorninck says the city plans to regulate to ensure builders use materials that are as often possible recycled and bio based, such as wood. But the doughnut approach also encourages policymakers to lift their eyes to the horizon.

“The fact that houses are too expensive is not only to do with too few being built. There is a lot of capital flowing around the world trying to find an investment, and right now real estate is seen as the best way to invest, so that drives up prices,” she says.

“The doughnut does not bring us the answers but a way of looking at it, so that we don’t keep on going on in the same structures as we used to.” (https://www.theguardian.com/world/2020/apr/08/amsterdam-doughnut-model-mend-post-coronavirus-economy?)

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