Recently, Amsterdam announced that their economic plan to rebuild post COVID-19 will involve a doughnut! However, this doughnut is not the sweet treat we all know and love. It is an economic model by Kate Raworth, an Oxford economist.
The challenge we face
When we look at the economic challenges and ramifications we face in the wake of COVID-19, there are some adjustments we need to make.
Firstly, the mantra of capitalism highlights that efficiency and growth at any cost is the most effective economic plan. The supply and demand model of current day capitalism is that if we just continue to make more stuff and make it cheaper at the expense of those who don’t have a voice, then people will buy more and profits will rise.
But, let’s look around the world today. Our natural environment is almost at the point of disrepair. The gap between rich and poor has never been bigger. Majority of people’s wages are stagnating and living costs are increasing.
This is not sustainable.
Capitalism is not working.
But it really is all we have ever known. Are there any feasible options?
The Doughnut Economics model
Kate Raworth presents a new economic model that brings together economic, social and environmental growth. These three things cannot operate in isolation, but rather need to form a balance. Instead of focusing on exponential graphs that many economist view as the measure of progress, Kate looks at progress as a balance.
The basic premise is that we cannot have infinite growth in a finite world.
The Doughnut Economics model focuses on addressing the 4 major flaws in modern economics which neglect to incorporate these important aspects:
- Ecological context. Our economy is embedded into the environment. Without the environment, our capitalist system wouldn’t exist. We draw on the planet’s resources, like sun and water, and turn them into pollution and waste.
- Parenting. Some of the most important jobs are not valued in our economic system. Insane amounts of hours go into caring for families and maintaining our households. All of this adds to the economy, but aren’t accounted for anywhere.
- Unpaid work. Social exchanges are important and not valued. Volunteering, collaborating and just general social connection are the foundation of our communities. Just look at Wikipedia. It is a free service and is the gateway to knowledge for many people. Is it valued enough?
- Inequality. GDP growth is capitalism’s measure of progress, but so far, it’s failed to eliminate inequality. In most cases, it has actually widened the gap between the rich and the poor.
It changes how we view progress
The doughnut highlights the ring in which we need to operate in that is a safe and just space for humanity. If we overshoot we will see things like climate change, biodiversity loss and air pollution. Sound familiar? If we have a shortfall of the social foundations, then we will see terrible inequality. Also sound familiar?
The Sustainable Development Goals by the United Nations are incorporated into this model and shows a feasible way that allows us to measure progress in a new, balanced way.
According to Kate, doughnut economics is a new compass for humanity. It helps us address the world’s most important question of ‘how do we ensure resources so that we meet human rights around the world within the boundaries of our earth?’
Back to Amsterdam…
According to the Guardian, The Amsterdam City Government adopted the model 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.”
Their transformative plan started with this question, ‘How can our city be home to thriving people in a thriving place, while respecting the wellbeing of all people and the health of the whole planet?’ If that isn’t the question that every Government around the world needs to ask then I don’t know what is?!
After this question, they created 4 interrelated questions and used them as the basis for finding solutions.
They then used these questions as the lenses to view new plans and modelled a ‘new portrait for the city’, incorporating the planetary boundaries and the Sustainable Development Goals.
What does it mean for us?
It is great that City Governments are starting to adopt the principles of the economic model to build policy and plans. We can encourage our local Governments to adopt a model similar to Amsterdam.
We can also read and watch more about Doughnut Economics. Kate’s Ted Talk is below and a great summary of the work.
But maybe the most important thing we can do is take a ‘doughnut lens’ to our lives. When we shop, work, hang out at home or hang with others we can ask the following questions:
- Are my actions allowing nature and other people to thrive?
- Are there ways that I can value traditionally undervalued roles (parenting, caring, volunteering) in my community?
- How can I live within my means and create a balanced lifestyle of consumption? Can I choose more sustainable options? Can I buy ethical, fair trade or more importantly second hand?
- How can I consume less and repair more?
- Where are spaces that I can help others to see the importance of balancing people, planet and the economy?
- What are three changes I can make today that will push my lifestyle into the doughnut?
B Corporations are a great business model that incorporates sustainable growth for people and planet through an accreditation. Check out a previous blog post from my time in Italy meeting with some B Corps here.
We can all play a role, especially if we start to take a lens of balancing people, planet and the economy. While we have this unique moment in history where a pandemic has slowed, changed and disrupted much of our life, let’s use it to put more sustainable plans in place.
The COVID-19 pandemic presents a window for us to reassess, re-evaluate and rebuild our lives that ensure a sustainable and healthy future for people and planet. The good news is that there are people out there who have been proposing new models for years and have done the thinking.