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Editorial: Holes in Doughnut Economics?

By Kavisha Manoj

Despite the deep entrenchment of neoclassical economics, the past 2 decades have seen a variety of alternative economic theories in public discourse. Among them, is ‘Doughnut Economics’ theorised by Kate Raworth, which tries to fundamentally change the way economics is framed and its priorities. Currently, GDP (Gross Domestic Product) growth is viewed as the ultimate aim of every economy and is strongly associated with a measure of welfare and development. Instead, Raworth contends that thriving should be the main goal of policymakers, in a way that is distributive and regenerative. This theory tries to combine two of the fundamental issues with the current global order: unsustainability and inequality.

The ‘doughnut’ name comes from this diagram aimed to aid the visualisation of her aims. Since human beings rely on the environment for essentials, there is a minimum environmental burden on the environment to sustain humanity. This constraint forms the inner ring within which there are people living in unequal and unfavourable conditions. The outer ring is the ecological ceiling on planetary pressure beyond which it is unsustainable and harming our ecosystems. Raworth argues that by this definition it would change our classification of development. By this logic, we would all be developing countries as we would either be trying to improve our human welfare or reduce our environmental footprint. This might be a more beneficial way of thinking as often times ‘developed’ countries relegate the responsibility of reducing carbon emissions to ‘developing’ countries, for whom it might be necessary to sustain a standard of living for their human development.

The inner ring, also called the social foundation, consists of 12 aspects of life everyone should have access to and includes basic needs like food, water, and housing as well as social institutions like networks, political voice, and peace. I also think the model is more inclusive of all types of environmental degradation instead of a sole focus on climate change by including less spoken about issues like ocean acidification and nitrogen and phosphorus loading.

It might seem difficult to imagine this being embedded into UK policy, however, as this is not necessarily a new theory but instead a new framework of ensuring that economic policy lends itself to human betterment within planetary boundaries. Even harder is it to imagine policymakers willing to enact measures that would mainly affect the party donors and wealthy associates who are tied to unsustainable business practices. Whilst there is a general agreement on the need for sustainable development and elevating the social foundation of the country, recent policy decisions seem at odds with these ideals. Recent COP27 resolutions from the UK have widely been seen as lacking ambition and not nearly enough to combat growing concerns and social foundations also appear to have been infringed upon. Most importantly, the cost-of-living crisis has led to a growth in the number of people facing food insecurity and fuel poverty and the government’s anti-striking and protest legislation can also be seen as eroding our political voice.

Doughnut Economics being a new framework indicates that it would need to be enacted through structural changes in the decision-making process, through an evolved criteria for successful policies and would likely require bipartisan support. It also cannot be a one-off policy decision and would require a long-term focus on changing what economics is seen to mean and would need to remain a priority for successive governments. Furthermore, there have been discussions on the possible scale of adopting this model, as it is a relatively new addition to the growing field of alternative economic models, it has only been partially trialled in individual cities with varying success. It might, therefore, be an exceptionally large step forward to envision it being part of national-level frameworks in the near future.

Amsterdam became the first city to formally implement Doughnut Economics in 2020 and continue to lead the way in its innovation. However, there has been criticism as the numerous initiatives appear fragmented and most do not develop after the initial stage of discussion. The model also has been used by the Cornwall Council to some success but there are major doubts if this can be expanded upon due to different local contexts and political leanings.

However, the main merit of this book – I would argue – is not necessarily a detailed alternative to our current systems. Instead, it is the critique of mainstream and foundational economics which can compel individuals to demand more inclusive and representative ways of understanding the world. Her book details a critique of homo economicus – the rational economic man – which is based on Adam Smith’s ideas on self-interested and completely rational individuals. This essentially ignores non-financial motivations and emotions and has been criticised by other successful economists including Ostrom, Sen and Schumacher.

The expanding field of rethinking economics has also led to the expansion of feminist economics which aims to recognise the unvalued and undervalued work of women into the economic system. Marçal’s renowned book ‘Who Cooked Adam Smith’s Dinner?’ sheds light on the blind nature of theorising as Smith ignored the unpaid and unvalued care work from his mother which allowed him to dedicate more time towards his academic inclinations. Interestingly, psychologists have found that we take into account notions of justice in our decision-making process from the age of 7, and so perhaps this outdated and restrictive model of economics does have a small audience after all!

The case of the care industry is also worthy of particular attention as the unpaid care work of millions is often unpaid, and therefore does not contribute to GDP, illustrating Raworth’s argument that societies can thrive independently of growth instead of growth being the ultimate deciding factor.

In conclusion, it is easy to see that the Doughnut Economics model is still at the grassroots level and this early phase has meant that its partial implementations have not necessarily been a wholehearted embracing of its ideals. Instead, for this new framework to succeed on the national level, there needs to be more attention from businesses, technology developers, entrepreneurs, and governments. However, even without widespread implementation, this model has a lot to offer in the smaller stages. On an individual level, this forces us to recognise the economic agents mainstream discussions ignore and to build a stronger foundation for our idea of economics to include goods and services which do not have an attached value. More attention to the field of alternative economics would allow for the way economics is taught to change. Instead of environmental economics being an optional module in virtually all universities, it should be taught as a design fault instead of an unexpected externality.

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