What is doughnut economics?

It all started with a TED talk, a talk by Kate Raworth about her theory of “the green doughnut” (https://youtu.be/Rhcrbcg8HBw). When I listened to it I thought that this was it! This is the way we have to view economics, this is what we have to opt for to make our economy become viable and ready for the century we live in. Her book Doughnut Economics became my bible when it comes to rethinking the way we consume and make business.

So back to the beginning, I want to give you a quick overview of what Kate Raworth is trying to transmit.

In order to change the way we consume and the way we do business we have to change our mindset. We have to stop viewing the economy as a circular flow between only households and businesses and start taking into account other actors such as the society and planet earth. And instead of targeting continuous economic growth we should opt for our economy to thrive within the “doughnut” sustaining our social foundation (guaranteeing 11 social boundaries for all) while not surpassing the ecological ceiling (9 planetary boundaries)

 

The doughnut model by Kate Raworth

 

According to Kate Raworth, in order to get into the doughnut we have to change the way we think about economics in seven ways. She explains each of these ideas in short videos on her Youtube channel, which I will link below.

  1. Change the goal
    We have to change our economic goal from endless GDP growth to thriving in balance, meeting the needs of all humans while staying within the means of our planet.
    https://youtu.be/Mkg2XMTWV4g
  2. See the big picture
    We have to change the script of the play that explains the way we view our economic model not only taking into account markets, businesses, finance, trade and the state, but also adding actors such as households (as value creators), the commons, the society, the earth and power. https://youtu.be/V2vN_fu-wns
  3. Nurture human nature
    We have to change the picture of the rational economic man that is purely self-interested only looking to increase his own wealth to a new portrait of humanity. That not only acts based on extrinsic incentives but on intrinsic values like empathy, cooperation and mutual aid, who’s wants change based on her/his values. And that is dependent on nature rather than dominating it. https://youtu.be/SOKHWOMVMyo
  4. Get savvy with systems
    We have to change thinking in rigid economic models based on an equilibrium with little margin to respond to real world external changes or unexpected events. To a mindset that embraces economic complexity and that is based on a systems thinking, seeing ourselves as gardeners who are shaping the economy as it evolves. https://youtu.be/mNUMkPltnnE
  5. Design to distribute
    We have to change from economies that are divisive by default to economies that are distributive by design, and that are going beyond re-distributing income to re-distributing wealth that comes from controlling land, money creation, business, technology and ideas. https://youtu.be/FqnFa0POTpM
  6. Create to regenerate
    We have to change from an industry based on a degenerative design (take-make-use-lose) to industries that are regenerative by design. That run on renewable energies and re-use waste from one process to produce new goods, getting into a circular economy. https://youtu.be/XcgcMpgbNHA
  7. Be agnostic about growth
    We have to move from economies that need to grow weather or not they thrive, to economies that need to thrive weather nor not they grow and see growth as only one of the variables within the equation which can vary. https://youtu.be/5zkqGEaztRM So not only when thinking about our economies as a whole but also when defining new business models we can apply those seven principles to design products/services and processes in way to fit within the picture of the doughnut economy.

Source: Doughnut Economics – Seven Ways to Think Like a 21st Century Economist, 2017, by Kate Raworth

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