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Presenting Doughnut Economics: Core Concepts of Doughnut Economics

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hello I'm Kate rayworth and this is an

introduction to the Core Concepts of

donut economics

what motivated me to write donut

economics was a frustration with the

concepts at the heart of my own

economics education Concepts that are

still far too often taught today because

at the heart of what I'm going to call

20th century economics and its mindset

are core images that show us the

underlying ideas of what the economy is

and who it's for and who we are and what

success looks like and these I believe

do not equip us for the reality and

challenges ahead

in the 20th century economic mindset the

first image that is so often still

taught is the supply and demand of the market

market

this puts markets immediately at the

center of our vision

it makes price the fundamental metric of

concern and it means that anything that

falls outside of a market contract is

called an externality

this is far far too narrow a starting

point for today's economic thinking

the biggest picture is known as the

circular flow of income and goods with

households and businesses in the

essential Market relationship and some

leakages and re-injections Via Banks

governments and trade

the fundamental point about this diagram

is that it makes absolutely no account

for energy or the material basis of the

economy it says nothing about unpaid

caring work that makes labor fresh and

ready for work every day and it's silent

on the commons so this diagram is too

small and does not take account of

everything that matters for the health

of an economy

the self-portrait of humanity at the

heart of this 20th century economic mindset

mindset

it's rational economic man and he would

look something like this he would be a

man standing alone with money in his

hand ego in his heart a calculator in

his head and nature at his feet he hates

work he loves luxury he knows the price

of everything

the tragic fact of this character is not

only how absurdly narrow he is

but that on being told that he is like

us we actually start to become more like

him students over time say that they

more value competition over

collaboration they value self-interest

over altruism so who we tell ourselves

we are shapes who will become we need a

new portrait of humanity and the goal

the goal of 20th century economic

thought it's so deeply rooted it's never

drawn but it underlies every economist's

lecture and politician's speech the goal

is endless growth measured in GDP or

national income

economies growing no matter how rich

they already are the idea is that they

will succeed by yet more growth add to

this two fundamental beliefs that were

dominant in the second half of the 20th

century about economic Dynamics on

inequality the kuznets curve based off

the work of Simon kuznets in the

mid-20th century seemed to imply that as

countries get richer first inequality

will increase but then it will decrease

this promises that growth will even

things up again it turns out not to be

true but it has underpinned over 50

years of trickle-down theory of grow now

and even things up later

when it comes to the environment the

environmental kuznets curve created in

the 1990s seemed to tell a similar story

that as countries get richer pollution

will at first increase but then it will

fall and this underpinned the promise

that growth will clean things up again

except it doesn't because when we take

account not only of local pollutants but

Global pollutants that curve does not

bend down naturally at all so these

ideas about the Dynamics of the economy

that growth will even things up again

and growth will clean things up again

gave great legitimacy for the pursuit of

growth but it turns out that these

Dynamics do not hold

I believe these Core Concepts together

have played a powerful role in shaping

the economy that we have created and so

the 21st century has begun with repeated

crises from Financial meltdown in 2008

we live in an era of climate and

ecological breakdown which has given

rise to protesters against whom there is Crackdown

Crackdown

and we lived through years of covet

lockdown now these crises are reported

separately in the news but they are

deeply interconnected they show us how

connected we are with each other and

with the rest of the Living World they

show us that they hit with great

inequalities of gender and of race of

wealth and power between the global

North and the global South

and they show us that systems based on

endless expansion will create their own

feedback effects if you create a

financial system that aims to endlessly

expand you will create a bubble that

will pop

if you create a system of energy and

material use of endless expansion we

will induce climate and ecological

breakdown and if we have a system of

human settlements ever pushing into

areas of wildlife coupled with

ever-increasing Global Travel

we create perfect conditions for

zoonotic disease transfer and pandemics

can we move away from thinking that the

shape of progress is endless a growth

and expansion

can we find a different vision

and that is what donor economics aims to

do so here are the Seven Ways to Think

Like A 21st century Economist set out in

the book

in this presentation I'm going to cover

some of these seven ways to thread them

together as the beginnings of a 21st

century story

let's start

with what we could take as the first

picture in the economics and it should

be the goal what is the economy for what

is our purpose if we don't know that how

will we ever know what success looks like

so the donut acts as a possible compass

for human prosperity in the very

broadest sense

and as you can see here in this image

the essence of it is that we should

leave no one in the hole facing critical

levels of human deprivation

but at the same time as we use Earth's

resources and means we must not

overshoot an ecological ceiling and

cause critical planetary degradation

we need to seek to live in that safe and

just space for Humanity in between the

two and that is the donut-shaped space

how can we give specificity to the human

deprivations and the planetary degradation

degradation

we can fill it in by creating a social

Foundation below which no one should

fall short and this is based on the

sustainable development goals because

through the sdgs all of the governments

in the world have agreed that every

person in the world has a claim to

meeting their essential needs in terms

of all these 12 social dimensions that's

why they've been crowdsourced from the

sustainable development goals so leave

no one falling short on the essentials

of life in the hole in the middle of the

donut but as we collectively use Earth's

resources we must also make sure that we

do not overshoot that ecological ceiling

of the nine planetary boundaries

identified by Earth system scientists

first in 2009 as the critical life

supporting systems that make life work

on this delicately balanced planet

that have held this planet in a stable

space for the last 11 000 Years A Space

in which all human civilizations have

been created and this is the space in

which Humanity can thrive so the goal is

instantly changed it's no longer endless

growth exponentially up a curve it's

thriving imbalance between the social

foundation and the ecological ceiling

shown here very different shape of

progress when I first Drew this diagram

in 2012 I was amazed by the traction it

had with people and it led me to look at

the visualization the image of health of

thriving of well-being that have been

drawn by indigenous cultures worldwide

for millennia and it was so striking to

see that again and again this sense of a

dynamic circle is a recurring feature

and so I now think of Donald economics

as a mindset recovery program for those

with a western industrial economic

education can we recover from thinking

that endless growth is progress

using the donut towards something that's

been reflected in indigenous wisdoms for

very long time can the donut help be a

bridge towards that

if thriving imbalance is indeed where we

want to get to we are very far from that

right now as all of the red in this

diagram shows it shows that billions of

people are falling short on the

essentials of Life Falling below the

social foundation for food for example

that red wedge on food goes 11 of the

way towards the center of the circle

because 11 of people worldwide do not

have enough food to eat every day and

you can see on every one of these social

foundations some are measured with one

indicator some are measured with two the

people are falling short on the

essentials of life we need to eliminate

all of the red from the middle of this picture

picture

but at the same time we have already

overshot multiple planetary boundaries

on climate change on excessive

fertilizer use on excessive land

conversion biodiversity loss and indeed

scientists have recently updated this

and recognized even on water withdrawals

and on chemical pollution we are also in

overshoot so we are living Way Beyond

the boundaries this is a world

dangerously out of balance on both sides

what would it mean to come back into

that space of balance we see this news

in the headlines every day and it can be

overwhelming can we remain sensitive and

aware to the impact of what is happening

to the Earth what is happening to her

people the extremes of inequality the

richest one percent of people own half

of the world's wealth

I profoundly believe that our children

and their children will judge Our

Generation against this compass and will

ask us what did you do once that you

knew once that you saw this as the

challenge that Humanity faces what role

did you play in turning the story around

and let's recognize that last Century's

economic theories

Los Angeles governmental policies and

business models and lifestyles

none of them were designed to solve this problem

problem

we need to create new economic models of

our own we need to create new

governmental policies new business

models new lifestyle aspirations and new

relationships between the global North

and the global South to turn this story around

around

so if getting into the donut is the goal

what kind of economic mindset would give

us even half a chance of getting there

let's start again with a new big picture

of the economy

let's call it the embedded economy

because this diagram brings together

ecological economics feminist economics

and Commons Theory to recognize that the economy

economy

is embedded in society structured by

social political cultural and legal

constructs and Human Society itself is

embedded in the Living World dependent

upon those planetary boundaries with a

stable climate and ozone protection

nutrient cycle fresh water healthy

oceans thriving biodiversity of fertile soils

soils

so the economy is a subset of society is

a subset of the living world and it's

bathed in a river of solar energy

from the Sun the economy draws in living

matter and materials and it puts out

waste matter back into the biosphere so

right from day one

we have to ask the ecological economic

question of how big can the through flow

of the economy be so that it does not

disrupt the cycles and the stability of

biodiversity and Earth's systems

and then let's look within the economy

itself and recognize that there are four

fundamental ways in which we provision

for our needs and wants and within each

of these there are many different roles

that we can and do play

let's start with the market which is

defined by price-based exchange where

you may be a consumer or a producer and

within that space of production are you

a laborer earning a wage or a capital

owner earning the rents and profits or

you may be excluded from markets and

destitute without access to them

let's focus on the role of the state

where one may be a resident accessing

public services or a public servant

providing them you may be a voter or a

protester of all fundamental roles we

can play in relation to the state or may

be stateless and not recognized

now the market in the state in the 20th

century became the dominant ideological

boxing match between being a free market

laissez-faire capitalist and a

state-loving socialist and in that

ideological boxing match it got so

intense that economists lost sight of

two other fundamental forms of

provisioning for our needs and wants

there's the household where we all begin

every day we may be a parent or a child

a partner a relative or you may be

kinless without that familial household

support the unpaid caring work of

cooking washing cleaning sweeping

raising the children doing it all again

tomorrow it's unpaid but it's essential

to our well-being

and then there's the commons where we

come together not through the market or

the state but as a community to

co-produce goods and services we value

hey you may be a commoner a steward a

co-creator a volunteer or indeed

excluded from access to the commons and

let's also recognize that there's the

role of financial markets Financial

flows moving between these different

forms in this space one might be a

creditor or a debtor an investor or a

Speculator or financially excluded

without access to finance

so now we have the market the state the

household and the commons and

intermediated by Financial flows

of course some of the most interesting

and important action in an economy goes

on at the Synergy between these

different forms so Market Commons or the

state and the commons there are also

power relationships between the market

and the household the market in the

state the state and the commons

I know that I wouldn't want to live in

an economy that lacked any one of these

four fundamental forms of provisioning

because they all bring unique characteristics

characteristics

but what are the skills to make them

work well what are the values and the

traits of behavior that will enable us

to create economies that provision for

our needs and wants through these ways

rather than concentrate value and

opportunity wealth in the hands of a few

and this is why it really matters how we

think about human nature we need to nurture

nurture

the best of human nature because

rational economic man that character I

introduced earlier

his traits that are ascribed to him in

mainstream economics have been that he

is self-interested he has fixed

preferences he's not influenced by

advertising but only informed by it he's

isolated in that he's independent from

the preferences and actions of others

that he's ever calculating in his head

uh the percentage opportunity or

comparing price or prices over all time

and that he's dominant over nature and

the rest of the Living World

the dangers of this model are that we

start to become like this model we start

to mimic it and believe it true

in fact we are social and adaptable

humans we are the most social of all mammals

mammals

and it is our connection to each other

that greatly defines who we are and how

we behave

so instead of Imagine ourselves as movie

self-interested we should start by

recognizing our social reciprocity

instead of thinking we have fixed

preferences recognize that we have fluid

values that can be triggered and

Amplified or withered and lost rather

than thinking of ourselves as isolated

recognize that we're interdependent upon

with one another rather than imagining

that we are ever calculating we are

actually approximating we are heuristic

beings and rather than thinking of

ourselves dominant over the rest of the

Living World recognize that we are

dependent upon it and part of the web of life

life

these are some of the steps and some of

the changes that are taking place in

reimagining and remaking human nature

and bringing this far more realistic

version of ourselves to the heart of New

Economic thinking so how can Humanity

get into the donut let's recognize from

this image that this is a deeply

degraded world

running down the life support systems of

our planetary home in overshoot it's

also a deeply divided World in which

billions of people can't meet their most

essential needs and others are in over consumption

consumption

so it's not going to be by believing

that growth will even things up again

because it won't and it's not going to

happen by believing that growth will

simply clean up after itself because it won't

won't

we need to change the Dynamics of our

economy we need to become regenerative

and distributive by Design

so we've inherited linear degenerative

economic systems where we take Earth's

materials we make them into stuff we

want we use it for a while and then we

throw it away and this take make use

lose this is what pushes us over

planetary boundaries taking again and

again from Earth's sources

and throwing waste again and again into

Earth's sinks we must transform that

linear degenerative process into a

cyclical or circular regenerative

process in which resources aren't used

up they're used again and again far more

carefully collectively creatively and

slowly separating biological materials

so that Earth can break them down

through decomposition and build them

again and new this is how nature works

and separate those biological materials

from technical human-made materials that

won't decompose because we have

transformed them in the way we've made

them and so they need to be refurbished

and repaired and restored and reused and

shared and as a last resort recycled but

never thrown away because there is no

away so this is an economy that will

work with and within the cycles of the

living world it's a move from

degenerative to regenerative in for

example agriculture landscape degradation

degradation

to landscape restoration and Nature's

generosity in coming back even when we

have pushed her extremely to the edge

nature is currently still generous and

coming back in so many places it's

moving from degenerative linear

manufacturing where we throw away waste

in the neighborhoods of the world's

poorest people

to creating a circular or cyclical

repair based refurbishment reuse-based

Manufacturing so that things are not

being thrown away in the first place

it's moving from car centered transport

such as this highway in Seoul in Korea

replacing that 10-lane Highway with a

river and a park bringing nature back

into the city so literally regenerating

the places we live and down to the level

of a building compare this natureless

Hospital in the UK to this nature-rich

Hospital in Singapore which hospital

would you prefer to heal and get well

again in we know that we heal much

faster when we are connected to Nature

and see ourselves as part of this

regenerative natural system

so at the same time as moving from

degenerative to regenerative we need to change

change

deep dynamics of inequalities because

we've inherited economic systems that

through infrastructure through law

through privilege through regulation

they are tending to capture opportunity

and value in the hands of a few

and this leads to the rise of a one

percent in many countries nationally

certainly globally

we need to transform that divisive

Dynamic into one that is far more

distributive by Design sharing

opportunity and value with all who

co-created and that turns out to be the

whole of society some examples of

possible entry points for distributive

design think of the contrast between the

housing and Rental crisis in cities like

London where many residents

feel now that they will never be able to

afford their own home because rents are

so high and the market has been captured

by many International and large-scale

landlords who see housing as an

investment asset contrast that with the

city of Vienna

which has over 60 percent of its

residents living in social housing which

is Central it's normal it's affordable

it's good quality because over 100 years

ago the city of Vienna decided that

housing is not an investment asset it's

a human right and decided to own the

housing by the city and city-run

cooperatives to make that possible

think in terms of transport

contrasting a massive traffic jam of

private cars in Beijing and many many

cities worldwide contrast that with the

priority given to public transport in

the city of Curitiba in Brazil with

dedicated bus lanes that make traveling

by bus affordable just fastest simplest

way to get around and it means that

those coming in from distant suburbs

actually reduce the excessive amount of

time that they spend traveling very

important time for lower income

households to reclaim

think of it in terms of from divisive to

distributive forms of energy production from

from

major companies multinationals drilling

for oil in the North Sea and many other

parts of the world to community-run and

owned microgrids shown here in Kenya or

think of it in terms of business

moving from a very 20th century model

where business has been driven by profit

but that's only one model of business it

can also be purpose-led such as this

handicraft company in Mumbai in which

the profits are shared far more

equitably with all of the workers so

we're moving from degenerative to

regenerative Dynamics from divisive to

distributive Dynamics these will help to

meet the needs of all people

simultaneously coming back within the

means of The Living Planet

and of course this raises the question

of the future of economic growth if the

goal is to become regenerative and

distributive by Design what does this

mean for the future of growth

let's just start by recognizing that the

idea of endless economic growth has an

absurdity within it that no matter how

rich a country already is the idea that

is Success lies on yet more growth

Without End

cannot make sense especially author

delicately balanced living planet in

which income

earning income and spending income

cannot be fully decoupled at all from

energy and material use

in nature Nature's growth curve

has an exponential phase that's about

growth being a healthy Dynamic part of

the life cycle but then it grows up and

it comes to maturity and comes to plateau

plateau

everything in nature thrives by

following this growth path can we

transform our economy so that they too

learn not to aim to grow endlessly but

learn to grow up and start to thrive in

balance and of course this is

particularly relevant to high income

countries that already have earned the

income and the wealth and accumulation

to lead good lives and to meet the needs

of all people that already have massive

ecological overshoot and have the

obligation to move first and fastest to

coming back with implanetary boundaries

how can they remove their dependency on

endless growth that has been currently

written into their economies

so pulling back 20th century economics

centers Concepts that do not serve the

realities and the challenges of our

times let's replace them with 21st

century Concepts that give us the donut

as the goal to meet the needs of all

people within the means of the living

planet that recognize the economy is

embedded in the society embedded in the

living world and utterly dependent upon them

them

that we need to bring forth all and that

we need to

that we need to nurture the best of

human nature so that we recognize

ourselves as social adaptable beings who

can collaborate and Steward and develop

the skills and behaviors and values that

will enable us to live well together

over 8 billion people in the 21st

century we need to create Dynamics in

our economy that take us from being

degenerative by Design to regenerative

by Design from being divisive by Design

to being distributive by Design and that

means questioning the pursuit of endless

growth and finding ways to end

dependency on endless growth especially

in the higher income countries so that

instead of growing endlessly they can

start to learn to thrive

these are many of the Seven Ways to

Think Like A 21st century Economist and

a donut economics action lab we explore

what it would mean to put them into

practice in the world of business

working with local governments and

cities in communities and in our own

lives and we invite you to explore these

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Presenting Doughnut Economics: Core Concepts of Doughnut Economics