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

by Kate Raworth

Beware before you strike a match or start a market: you never know what riches it may reduce to ashes.

The challenge now is to discover how lessons from street-level success with sweet wrappers and text messages could be scaled up to nudge and network whole cities, nations, and international negotiations, into the Doughnut.

We humans can be just as fluid, engaging a wide range of our values many times a day as we switch from bargaining to giving to competing to sharing in our constantly changing economic landscape.66

So what is a system? Simply a set of things that are interconnected in ways that produce distinct patterns of behaviour

equilibrium economics actually turns out to be a form of systems analysis, just an extremely limited one.

economic actors trapped in the narrow confines of an equilibrium model: when all the restrictive assumptions are in place, they will indeed behave as required.

A systems perspective makes clear that the prevailing direction of global economic development is caught in the twin dynamics of growing social inequality and deepening ecological degradation.

Today’s economy is divisive and degenerative by default. Tomorrow’s economy must be distributive and regenerative by design.

First, healthy hierarchy is achieved when nested systems serve the greater whole of which they are a part.

Second, self-organisation is born out of a system’s capacity to make its own structures more complex,

Lastly, resilience emerges out of a system’s ability to endure and bounce back from stress,

Building diversity and redundancy into economic structures enhances the economy’s resilience, making it far more effective in adapting to future shocks and pressures.

four ethical principles for the twenty-first-century economist to consider. First, act in service to human prosperity in a flourishing web of life, recognising all that it depends upon. Second, respect autonomy in the communities that you serve by ensuring their engagement and consent, while remaining ever aware of the inequalities and differences that may lie within them. Third, be prudential in policymaking, seeking to minimise the risk of harm – especially to the most vulnerable – in the face of uncertainty. Lastly, work with humility, by making transparent the assumptions and shortcomings of your models, and by recognising alternative economic perspectives and tools.

Don’t wait for economic growth to reduce inequality – because it won’t. Instead, create an economy that is distributive by design.

Resources such as energy, matter and information can flow through these networks in ways that achieve a fine balance between the system’s efficiency and its resilience.

What design principles can nature’s thriving networks teach us for creating thriving economies? In two words: diversity and distribution.

Such redistributive policies can be life-changing for those who benefit from them. But they still may not get to the root of economic inequalities, because they focus on redistributing income, not the wealth that generates it.

Employee-owned companies and member-owned cooperatives have long been a cornerstone of distributive enterprise design,

economic analysts worry that today’s robot replacements are cutting across so many industrial and service sectors so fast that job creation in other fields simply cannot keep up.

switch from taxing labour to taxing the use of non-renewable resources:

invest far more in skilling people up where they beat robots hands-down:

it is also time to look beyond the traditional binary choice of market versus state when it comes to controlling technology. Turn instead to the innovation taking place in the collaborative commons, which have the potential to transform the control of knowledge.

Open-source design also promises large social benefits and vast cost savings for state-funded institutions in every country,

It is clear that the digital revolution has unleashed an era of collaborative knowledge creation that has the potential to radically decentralise the ownership of wealth. But, argues the commons theorist Michel Bauwens, it is unlikely to reach its potential without state support.

First, invest in human ingenuity by teaching social entrepreneurship, problem-solving and collaboration

Second, ensure that all publicly funded research becomes public knowledge,

Third, roll back the excessive reach of corporate intellectual property claims in order to prevent spurious patent and copyright applications from encroaching on the knowledge commons.

Fourth, publicly fund the set-up of community makerspaces

And lastly, encourage the spread of civic organisations

integrity of the living world is clearly and profoundly in the common interest of all: clean air and clean water, a stable climate, and thriving biodiversity are among the most important ‘common pool’ resources for all of humanity.

What’s still missing, however, is a dedicated global digital platform enabling them to collaborate with researchers, students, enterprises and NGOs worldwide to develop free open-source technologies.

Equitable economies don’t emerge after an unavoidable process of economic pain: they are created by pursuing an intentional pattern of design.

poor countries are too poor to be green.

Rather than wait for growth to clean it up – because it won’t – it is far smarter to create economies that are regenerative by design, restoring and renewing the local-to-global cycles of life

from a systems-thinking perspective, quotas and taxes to limit the stock and reduce the flow of pollution are indeed leverage points for changing a system’s behaviour – but they are low points of leverage.

do what pays, by adopting eco-efficiency measures that cut costs, or boost the brand.

do our fair share in making the switch to sustainability.

do no harm, an ambition that is also known as ‘mission zero’:

William McDonough has put it, the avid pursuit of resource efficiency is simply not enough. ‘Being less bad is not being good,’ he says. ‘It is being bad, just less so.’

be generous by creating an enterprise that is regenerative by design,

We are big-brained animals, but we are newcomers on this planet, so we are still acting like toddlers expecting Mother Nature to clean up after us. I want us to take on this design task and become full participants in every one of nature’s cycles. Start with the carbon cycle – let’s learn to halt our industrial ‘exhale’ of carbon pollution, and then, by mimicking plants, learn to ‘inhale’ carbon dioxide into our products and store it for centuries in rich agricultural soils. Once we’ve cut our teeth on the carbon cycle, let’s apply what we have learned to the phosphorus, nitrogen, and water cycles, too.

No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one.

W.W. Rostow’s Five Stages of Growth (The twentieth-century journey) The traditional society The preconditions for take-off The take-off The drive to maturity The age of high mass-consumption

‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’

The challenge of decoupling. If GDP is to continue growing in high-income countries, its associated resource use must fall not just relatively or absolutely but sufficiently absolutely to move back within planetary boundaries.

First, by rapidly shifting energy supply away from fossil fuels and into renewables

Second, by creating a resource-efficient circular economy whose material throughflow becomes a round-flow within the capacity of Earth’s sources and sinks.

third by expanding the ‘weightless’ economy made possible by digital products and services,

We have an economy that needs to grow, whether or not it makes us thrive. We need an economy that makes us thrive, whether or not it grows.

W.W. Rostow’s six stages of growth (the twenty-first-century update) 1. The traditional society 2. The preconditions for take-off 3. The take-off 4. The drive to maturity 5. The age of high mass-consumption 5. Preparation for landing 6. Arrival