Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist

Kate Raworth

4.18(14297 readers)
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.

Pity then, or more like disaster, that its fundamental ideas are centuries out of date yet are still taught in college courses worldwide and still used to address critical issues in government and business alike.

That's why it is time, says renegade economist Kate Raworth, to revise our economic thinking for the 21st century. In Doughnut Economics, she sets out seven key ways to fundamentally reframe our understanding of what economics is and does. Along the way, she points out 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.

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.

Raworth handpicks the best emergent ideas--from ecological, behavioral, feminist, and institutional economics to complexity thinking and Earth-systems science--to address this question: How can we turn economies that need to grow, whether or not they make us thrive, into economies that make us thrive, whether or not they grow?

Simple, playful, and eloquent, Doughnut Economics offers game-changing analysis and inspiration for a new generation of economic thinkers.

Publisher

Chelsea Green Publishing

Publication Date

3/22/2017

ISBN

9781603586740

Pages

320

Categories

Economics

About the Author

Kate Raworth

Kate Raworth

Kate Raworth is a renegade economist focused on exploring the economic mindset needed to address the 21st century’s social and ecological challenges, and is the creator of the Doughnut of social and planetary boundaries.

Her internationally acclaimed idea of Doughnut Economics has been widely influential amongst sustainable development thinkers, progressive businesses and political activists, and she has presented it to audiences ranging from the UN General Assembly to the Occupy movement. Her book, Doughnut Economics: seven ways to think like a 21st century economist is being published in the UK and US in April 2017 and translated into Italian, German, Spanish, Portuguese, Dutch and Japanese.

Over the past 20 years, Kate’s career has taken her from working with micro-entrepreneurs in the villages of Zanzibar to co-authoring the Human Development Report for UNDP in New York, followed by a decade as Senior Researcher at Oxfam.

Questions & Answers

The "Doughnut" concept, introduced by Kate Raworth, is a visual representation of a safe and just space for humanity within the boundaries of social and planetary sustainability. It consists of two concentric rings: the inner ring represents the social foundation, encompassing essential human needs like food, water, education, and healthcare; the outer ring represents the ecological ceiling, which includes planetary boundaries like climate change and biodiversity loss. The space between these rings is the Doughnut, where humanity can thrive without exceeding the planet's limits.

This concept redefines the goals of economics for the 21st century by shifting the focus from GDP growth to human well-being and environmental sustainability. It emphasizes meeting the needs of all people within the planet's carrying capacity, aiming for a balance between social equity and ecological protection. This reimagined economic goal promotes a thriving economy that is not solely dependent on growth but is instead designed to be regenerative and distributive, ensuring prosperity for all while preserving the planet's health.

Doughnut Economics addresses the limitations of the Circular Flow diagram and other mainstream economic models by offering a more holistic and dynamic perspective. The Circular Flow diagram, while useful for illustrating income flow, overlooks the environment and society, leading to an incomplete view of the economy. Doughnut Economics, on the other hand, introduces the "Doughnut" concept, which centers on meeting human needs within planetary boundaries. This approach emphasizes the importance of balancing social equity and ecological sustainability, moving beyond GDP growth as the sole measure of progress. It also incorporates a more nuanced view of human nature, recognizing social, interdependent, and reciprocal behaviors, and promotes a diverse economy that includes households, markets, the commons, and the state. Additionally, Doughnut Economics advocates for systems thinking, recognizing the interconnectedness of economic, social, and environmental systems, and encourages a shift towards regenerative and distributive economic designs.

The book "Doughnut Economics" by Kate Raworth presents seven key ways to think like a 21st-century economist:

  1. Change the Goal: Shift from GDP growth to a focus on human well-being and environmental sustainability, represented by the Doughnut model.
  2. See the Big Picture: Recognize the economy as an embedded system within the biosphere, interconnected with Earth's resources and human activities.
  3. Get Savvy with Systems: Understand the economy as a complex adaptive system, using systems thinking to analyze feedback loops and dynamics.
  4. Design to Distribute: Focus on creating economies that are more equitable, redistributing wealth and power to ensure a fairer distribution of value.
  5. Create to Regenerate: Design economies that are regenerative, promoting circular economies and restoring natural systems.
  6. Be Agnostic About Growth: Develop economies that can thrive without constant growth, focusing on sustainability and well-being.
  7. We Are All Economists Now: Encourage a broader understanding of economics, involving diverse perspectives and disciplines in shaping economic policies and practices.

Doughnut Economics proposes redesigning money, finance, and business to serve people and the planet by focusing on sustainability, equity, and regeneration. It suggests:

  1. Redesigning Money: Shift from debt-based money creation by banks to a system where the state and the commons also create money, ensuring it serves the economy and society. This could include complementary currencies and state-led monetary policies that prioritize long-term investments and equitable distribution.

  2. Transforming Finance: Redesign finance to serve society by focusing on long-term investments that generate social and environmental value, not just financial returns. This involves reining in speculative finance, promoting community banks, and encouraging ethical investment.

  3. Reimagining Business: Encourage businesses to be regenerative by design, focusing on reconnecting with nature's cycles and creating enterprises that contribute to a thriving world. This includes employee-owned companies, cooperatives, and businesses with a living purpose that aligns with regenerative and distributive design principles.

Implementing Doughnut Economics in the real world presents significant challenges and opportunities. The main challenge is redefining economic goals beyond GDP growth to focus on human rights and planetary boundaries. This requires a shift in mindset and policy, which can be daunting due to entrenched economic structures and ideologies.

Opportunities arise from the potential for creating more sustainable, equitable, and regenerative economies. This can lead to innovations in business models, finance, and governance that prioritize social and environmental well-being.

Individuals can drive change by adopting more sustainable lifestyles, supporting regenerative businesses, and engaging in political activism. Businesses can contribute by adopting regenerative practices, creating shared value, and investing in renewable technologies. Governments play a crucial role in setting policies that promote sustainability, redistributing wealth, and ensuring equitable access to resources. Collaboration among these stakeholders is essential for a successful transition to Doughnut Economics.

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