Once countries accept that GDP does not give them the big picture of how society is doing, but only how much the economy is growing, then they will understand the importance of creating and implementing approaches that better captures its population’s needs.
Doughnut Economics and the Amsterdam Experiment
Grand challenges of the 21st century require an immediate shift in mindset.
To address current pressing environmental and social challenges, we need to stop thinking linearly and embrace a more systemic approach; meaning, that we recognise the complexity and interconnectedness of the world we live in.
| 5 min read
- The goal of 21st century economic policy should be to create regenerative and redistributive systems by design. The Doughnut Economics is a new framework and tool for transformative action.
- The City of Amsterdam has incorporated the Doughnut Economics framework into the design of their recovery strategy with the goal to create a city where people and the planet can thrive.
Forward and upward.
Our society is addicted to growth. From our youth, we’re programmed to see the world function in forward and upward motion. Similarly, our economic, political and financial systems are based on a fairytale of everlasting growth – but if you think about it, nothing good in nature grows forever. In the twentieth century, economic growth (measured by Gross Domestic Product, commonly known as GDP) became the sign of prosperity and the overriding goal of policymakers. Of course growth has brought prosperity to millions of people, but this myopic focus on growth — at any cost — has led us to unprecedented levels of natural resource exploitation and increased social inequalities.
Grand challenges of the 21st century require an immediate shift in mindset. To address current pressing environmental and social challenges, we need to stop thinking linearly and embrace a more systemic approach; meaning, that we recognise the complexity and interconnectedness of the world we live in. Kate Raworth, self proclaimed renegade economist and senior research associate at Oxford University’s Environmental Change Institute, examines what a “sustainable, universally beneficial economy looks like”.
As Raworth explains, we need to urgently reimagine the shape of progress towards prosperous and thriving economies, whether or not they grow.
Introducing the Doughnut
In 2012, Raworth published the book “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist”. In the book, she introduced a new revolutionary economic theory based on the fundamental idea that sustainable development can only be achieved when considering prosperity (which is not necessarily a synonym of growth) as a double-sided challenge. There is a dynamic balance between meeting society’s needs and staying within planetary boundaries, and the goal of policy should be finding that sweet spot. Progress can no longer be measured with a single metric of a money indicator (again, we’re talking about GDP). Instead, we need a dashboard that captures how different dimensions interplay – and this is how the Doughnut came to be!
The Doughnut Economics model is represented by two overlapping circles. The inner layer represents twelve social foundations for people to live in prosperity, which are derived from the UN’s Global Sustainable Goals. The hole includes the areas where systems are falling short in meeting human life essentials, thus, creating social injustice, lack of access to education or healthcare, shortages in access to food, water, energy, etc.
You guessed it – the goal is to get everyone out of the hole!
However, it’s double sided. The outer layer delimits the ecological ceiling and overshooting beyond it means putting too much pressure on Earth’s natural resources. This has consequences: such as climate change, destruction of the ozone layer, ocean acidification, etc. (the list is long!). The space in the middle (the doughnut itself) represents the safe operating space for humanity and is that “sweet spot” we talked about before.
Downscaling the doughnut.
Covid-19 has inflicted an unprecedented shock to the global economy, and has manifested issues of the current systems – like the disproportionate negative impacts on less privileged communities. On the brighter side, the slowdown has presented an opportunity for policymakers to develop recovery plans built upon sustainability pillars. In the midst of the pandemic, the City of Amsterdam presented its recovery strategy adopting the Doughnut Economics model and becoming the first public example to implement the doughnut as a policy guiding framework.
The Amsterdam experiment showed that the Doughnut doesn’t bring answers. Instead, it provides a framework to look at solutions in a new holistic way. It all starts with the question “How can our city be a home for thriving people in a thriving place while respecting the wellbeing of all people and the health of the planet?” which is then answered from four different lenses (local-social, local-ecological, global-social, global-ecological) to create the “City Portrait” .
While the implementation of the new city strategy in Amsterdam is still at an early stage, the new set of policies are set to be economic, social and environmentally sustainable. At the same time, a global community of change-makers has emerged through the Doughnut Economics Action Lab (DEAL) who are turning the ideas of Doughnut Economics into transformative action and aiming to create systemic change. Cities, neighbourhoods and nations around the world are joining the movement!
Join the movement
isgood.ai is a proud member of Regen Melbourne, a network of organisations and individuals exploring a regenerative future for the city of Melbourne (home to our HQs), and we are excited to be able to contribute with our technology to developing the Doughnut City Portrait for Melbourne.
With our global movement, we are leading an intelligence revolution in the way we measure what really matters.
If you are an organisation for social impact and are interested in optimising outcomes for people and the planet join the waitlist as we get ready to change the world!
- TedTalk with Kate Raworth: A healthy economy should be designed to thrive not to grow.
- Kate Raworth’s doughnut: https://www.kateraworth.com/doughnut/
- The Sustainable Development Goals: https://sdgs.un.org/goals
- The Amsterdam City Doughnut: https://www.kateraworth.com/2020/04/08/amsterdam-city-doughnut/
- Amsterdam Circular Strategy 2020-2025: https://www.amsterdam.nl/en/policy/sustainability/circular-economy/
- Doughnut Economics Action Lab: https://doughnuteconomics.org/
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