Doughnut Economics

1. Change the goal: From GDP to the Doughnut

The Doughnut's inner ring – its social foundation – sets out the basics of life on which no one should be left falling short.

The Doughnut model redefines economic success. It envisions a sweet spot where human needs are met without overshooting Earth's ecological ceiling. This replaces the outdated pursuit of endless GDP growth with a more holistic goal:

• Inner ring: Social foundation (no poverty, quality education, gender equality, etc.)
• Outer ring: Ecological ceiling (climate change, biodiversity loss, ocean acidification, etc.)
• The "safe and just space" between: Where humanity can thrive sustainably

The Doughnut challenges us to create economies that are:

• Distributive: Sharing value more equitably
• Regenerative: Working with nature, not against it
• Agnostic about growth: Able to thrive whether GDP grows or not

2. See the big picture: The economy is embedded in society and nature

Far from floating against a white background, the economy exists within the biosphere, that delicate living zone of Earth's land, waters and atmosphere.

The Embedded Economy model recognizes that the economy is not separate from society and nature, but nested within them. This holistic view reveals:

• The economy depends on and impacts society and the living world
• Multiple modes of provisioning exist: household, commons, market, and state
• The financial system should serve the real economy, not dominate it

Key implications:

• Economic policies must consider social and ecological impacts
• We need to value and support all forms of economic activity, not just market transactions
• Financial systems should be redesigned to promote long-term well-being, not short-term profits

3. Nurture human nature: We are social, interdependent beings

We are the most cooperative species on the planet, outperforming ants, hyenas, and even the naked mole-rat when it comes to living alongside those who are beyond our next of kin.

Human nature is complex. We are not merely the self-interested, rational actors of traditional economic theory. Research shows we are:

• Social and cooperative by nature
• Motivated by intrinsic values as well as extrinsic rewards
• Capable of adapting our behavior based on context

This understanding has profound implications for economic design:

• Policies should nurture our cooperative tendencies, not just competitive ones
• Economic incentives should be designed to reinforce intrinsic motivations, not undermine them
• Institutions should be structured to promote trust and reciprocity

4. Get savvy with systems: Economies are complex and dynamic

We have inherited degenerative industrial economies: our task now is to transform them into ones that are regenerative by design.

Systems thinking is crucial for understanding and shaping economies. Key insights include:

• Economies are complex adaptive systems, not mechanical equilibrium-seeking machines
• Feedback loops, time delays, and non-linear relationships are common
• Small changes can have big effects; big changes can have small effects

Implications for economic management:

• Embrace uncertainty and expect surprises
• Look for leverage points where small interventions can lead to big changes
• Design adaptive policies that can evolve as the system changes

5. Design to distribute: Create economies that are distributive by design

Far from being a necessary phase in every nation's progress, rising inequality is a policy choice.

Distributive design is about creating economies where value is shared more equitably from the start, rather than relying solely on after-the-fact redistribution. This involves:

• Rethinking ownership of wealth-creating assets (land, technology, ideas, etc.)
• Reimagining business models to share value more broadly
• Redesigning money systems to serve the whole of society

Examples of distributive design:

• Employee-owned businesses
• Community land trusts
• Open-source technologies
• Complementary currencies that support local economies

6. Create to regenerate: Build economies that work with nature

Don't ask: what's my fair share to take? Ask: what other benefits can we layer into this so we can give some away?

Regenerative design mimics nature's cyclical processes to create economies that restore and renew the living systems on which we depend. This involves:

• Shifting from a linear "take-make-use-lose" model to a circular "make-use-return" model
• Designing products and processes that eliminate waste and pollution
• Actively regenerating natural systems through economic activity

Key principles of regenerative design:

• Use renewable energy and materials
• Design for reuse, repair, and recycling
• Create multiple benefits from single actions (e.g., regenerative agriculture that sequesters carbon, improves soil health, and increases biodiversity)

7. Be agnostic about growth: Thrive whether economies grow or not

We have economies that need to grow, whether or not they make us thrive. We need economies that make us thrive, whether or not they grow.

Growth agnosticism recognizes that while GDP growth can be beneficial, it should not be the primary goal of economic policy. Instead, we should focus on creating economies that:

• Meet human needs and enhance well-being
• Operate within ecological boundaries
• Can adapt to changing circumstances, including periods of no growth or even degrowth

This requires:

• Developing new measures of economic success beyond GDP
• Redesigning financial, political, and social systems to be less dependent on growth
• Exploring alternative economic models that prioritize well-being over expansion

By embracing these seven ways of thinking, we can create economies that are more just, sustainable, and resilient in the face of 21st-century challenges.

Last updated: September 22, 2024