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Economics is the mother tongue of public policy. It dominates our decision-making for the future, guides multi-billion-dollar investments, and shapes our responses to climate change, inequality, and other environmental and social challenges that define our times.
Simple, playful, and eloquent, Doughnut Economics offers game-changing analysis and inspiration for a new generation of economic thinkers.
Named after the now-iconic “doughnut” image that Raworth first drew to depict a sweet spot of human prosperity (an image that appealed to the Occupy Movement, the United Nations, eco-activists, and business leaders alike), Doughnut Economics offers a radically new compass for guiding global development, government policy, and corporate strategy, and sets new standards for what economic success looks like.
A picture speaks a thousand words, so here’s the state of humanity in a single image. It’s the “Doughnut” of social and planetary boundaries and it could just turn out to be the compass we need for creating a safe and just 21st century.
The inner ring of her doughnut 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.
The hole at the Doughnut’s centre reveals the proportion of people worldwide falling short on life’s essentials, such as food, water, healthcare and political freedom of expression – and a big part of humanity’s challenge is to get everyone out of that hole. At the same time, however, we cannot afford to be overshooting the Doughnut’s outer crust if we are to safeguard Earth’s life-giving systems, such as a stable climate, healthy oceans and a protective ozone layer, on which all our wellbeing fundamentally depends.
Safe and just space
If getting into the Doughnut’s safe and just space between these social and planetary boundaries is humanity’s 21st-century goal, then – it comes as no surprise – we have a big job ahead. Many millions of people still lack life’s essentials, living daily with hunger, illiteracy, insecurity and voice-lessness. At the same time, humanity’s collective pressure on the planet has already overshot at least four planetary boundaries: for Climate Change, Land Conversion, Fertilizer Use, and Biodiversity Loss.
In other words, today’s global economy is deeply divisive – risen with extreme inequalities – and it is degenerative too, running down the living world on which everything depends. What economic mindset can give us even half a chance of turning this situation around? As mentioned in the book, Doughnut Economics: Seven Ways to Think Like a 21st Century Economist, and here I’ll focus on just one of those seven ways: a revolution in economic thinking about inequality.
Progress for everyone
Inequality seems to have become the topic of our times, even though barely a decade ago it was politely kept off the agenda. Thanks to the past 10 years of ground-breaking analysis – including Wilkinson and Pickett’s The Spirit Level, Oxfam’s annual billionaire calculations and Piketty’s Capital in the 21st Century – combined with the extraordinary rise of the 1%, the promise to tackle inequality now appears high on every policymaker’s list. We are daily offered “inclusive growth” and “an economy that works for everyone”. So what kind of economic mindset can help bring it about?
Distributive by design
To transform today’s divisive economies, we need to create economies that are distributive by design – ones that share value far more equitably amongst all those who help to generate it and thanks to the emergence of network technologies – particularly in Digital Communications and Renewable Energy Generation – we have a far greater chance of making this happen than any generation before us.
As we do so, we should also deepen the ambition of the redistribution agenda. In the 20th century, policies promoting redistribution were largely focused on redistributing income – by raising taxes, increasing transfers, and implementing minimum wages – along with investing in key public services such as health and education. All are essential, but they still don’t get to the root of economic inequalities because they focus on income, not the sources of wealth that generate it.
Instead of focusing foremost on income, 21st-century economists will seek to redistribute the sources of wealth too – especially the wealth that lies in controlling land and resources, in controlling money creation, and in owning enterprise, technology and knowledge. Instead of turning solely to the market and state for solutions, they will harness the power of the commons to make it happen. Here are some questions that 21st-century economists have already taken on to help create an economy that is distributive by design:
Land and resources:
How can the value of Earth’s natural commonwealth be more equitably distributed: through land reform, land-value taxes, or by reclaiming land as a commons? How could understanding our planet’s atmosphere and oceans as global commons far better distribute the global returns to their sustainable use?
Why endow commercial banks with the right to create money as interest-based debt, and leave them to reap the rents that flow from it? Money could alternatively be created by the state, or indeed by communities as complementary currencies: it’s time to create a monetary ecosystem that can fulfil this distributive potential.
What business design models – such as cooperatives and employee-owned companies – can best ensure that committed workers, not fickle shareholders, reap a far greater share of the value that they help to generate.
The world is experiencing a series of shocks and surprise impacts like Covid-19 which are enabling us to shift away from the idea of Growth to ‘Thriving’,
That’s why it is time, to revise our economic thinking for the 21st century. In Doughnut Economics, Raworth sets out some key ways mentioned above to fundamentally reframe our understanding of what economics is and does. Along the way, it is also important that how we can break our addiction to growth; redesign money, finance, and business to be in service to people; and create economies that are regenerative and distributive by design.