Conscious Leadership Book Club: 3 — Doughnut Economics
““Here’s the conundrum: No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one.” .” ― Kate Raworth, Doughnut Economics
1 Paragraph Summary:
This is one of my favourite books to really dive deep into the future of economics within sustainability!
Doughnut Economics is a book that calls for a fresh approach to economics, and most crucially the infatuation with GDP (and growing it) as the sole pursuit of economic policy/business. With the disease, inequality and climate crises we’re currently facing, this book has become more relevant than ever.
How can we build a just economic system that allows us to thrive while preserving the planet? A good place to start, Raworth suggests, is to do away with the old beliefs and ways of life that have shaped economic thinking for so long.
Things this book will teach you
- The ‘Doughnut’ is a new way of thinking about what ‘sustainability means, societally, economically and ecologically in the 21st century.
- Economics is obsessed with growth, but it’s a narrow metric that doesn’t tell the whole story.
- There’s more to the economy than the market, and it isn’t self-contained as many mainstream economists believe.
- Economics often rests on flawed and mistaken assumptions about human behaviour
“For over 70 years economics has been fixated on GDP, or national output, as its primary measure of progress. That fixation has been used to justify extreme inequalities of income and wealth coupled with unprecedented destruction of the living world. For the twenty-first century a far bigger goal is needed: meeting the human rights of every person within the means of our life-giving planet.”
Lesson 1: The 4 major flaws prevailing the current economic market model
Ecological context: Our economy is embedded into the environment. We draw on the planet’s resources, like sun and water, and turn them into pollution and waste.
Parenting: Huge amounts of hours go into helping our children and caring for our family, just to maintain a household. All of them add to the economy but aren’t accounted for anywhere.
Unpaid work: We’re social. We like doing things for others, even for free. Look at Wikipedia. Or Reddit. Or your facebook neighbourhood help page. But all of that adds value too.
Inequality: GDP growth is hailed as the holy grail all nations should strive for, but so far, it’s failed to eliminate inequality and, in most cases, has widened the gap between the rich and the poor.
Lesson 2: The Doughnut model can help us maintain our social foundation without breaking through our planet’s ecological ceiling.
To account for the missing factors in classic economic theories, Kate Raworth proposes a model she calls ‘the Doughnut of social and planetary boundaries.’ Inside the Doughnut’s inner hole lies our social foundation, which consists of 12 basic, human needs, like water, food, justice, or an education. Around outside of the Doughnut are nine planetary boundaries, which represent our ‘ecological ceiling’. If we overshoot on things like ocean acidification, land conversion, air pollution, and climate change, we’re hurting the planet to the point where it won’t be able to sustain us in the future.
Therefore, the ideal space for our economies to strive for and to be in, is in the ‘dough’ of the doughnut, the space between the social foundation and the ecological ceiling. As long as we’re in that safe and just space, we’re both satisfying our needs, as well as maintaining earth’s health.
We’ve already overshot in several important dimensions, which means so far, we’re not doing enough!
Lesson 3: In order to make our economy truly circular, we need to focus on maximizing the reusability of goods and services. As Raworth says, we need to design things to be “regenerative by design, rather than extractive by default”.
The reduce, reuse, recycle motto we all know well has been used for a while now. We all know we should do it but don’t see how doing so is intricately linked to our economic benefit.
In order to make our economy sustainable, it has to truly be circular, not just theoretically. And making products, goods, and services reusable is a great place to start. Here are some of the company initiatives going on around the world:
- Get more value out of materials by upcycling them into new products
- Get more value out of materials by reusing parts
- Get more value out of materials by transforming by-products into products
- Get more value out of products by leasing rather than selling
As you read this, scientists are working on extremely useful ways of using our waste, like turning plastic into fuel. But while they are working towards these goals, there are things each one of us can do in our daily lives to help. And most of them don’t require knowing much about economics at all.
Review
I consider this a must-read for anyone on their journey in sustainability.
Although a rather new idea, doughnut economics is successfully making its way into the world of economics which is normally rather difficult to do. The environmental perspective in the factor of economics is certainly what I would consider as the right one to take, and one that is showing us is ever more vital. We must create a future of ideas that are not just ecologically reasonable but also for us highly profitable. Whatever business idea you have now, or are going to have.
Try to take it through the doughnut model and see what you end up with.
