While calls to rebuild a different post-covid world remain unheeded, the donut economy, developed and popularized by Kate Raworth, is back in the spotlight and is seeing its first concrete implementations in large cities. A model of social and sustainable development, whose ambition is to reconcile environmental and social justice.
We all have in mind the image of the giant cake of capitalism, which, thanks to a yeast called growth, is supposed to offer everyone a bigger and bigger slice – and in the worst case crumbs. But in the last few months, the ingredients are running out and the recipe seems to be reaching its limits.
It must be said that the global health crisis has led to an unexpected cooking surplus. With the world’s gross domestic product expected to fall by 3% in 2020, according to the IMF (by comparison, it only fell by 1.7% during the 2008-2009 financial crisis), about half a billion people around the world could lose their jobs in the next few months, following the 200 million Chinese and 26 million Americans who have already lost their wages. In France, 500,000 jobs had already disappeared by mid-summer, and forecasts indicate another million fewer jobs on the labor market next year, not to mention the 700,000 young graduates who have just arrived with no job prospects.
Is the cake completely burnt out? Perhaps it’s time to change the recipe. To forget this uninspired dessert that we have been served to the point of indigestion. Moreover, since the beginning of the pandemic, there have been countless calls for the construction of a new world, and if everyone has their own words to say it, the voices converge. The Minister of the Economy, Bruno Le Maire, has himself admitted for months that « capitalism has reached a dead end ».
Of course, the grand stands, petitions and political declarations are more often opportunistic than thoughtful, and the lyrical accents that make them up disappear before the beginnings of a concrete idea emerge. It will take a profound transformation of values and culture – what might be called a great transition if the word did not now sound so hollow – to achieve a future based on social justice, well-being for all and ecological resilience.
Can a donut save mankind ?
For those with a sweet tooth, the alternative is still sweet. To reorganize the economy, meet societal and environmental challenges, and guide humanity through this century, a new compass is emerging: the donut.
Behind this seemingly strange image is Kate Raworth, an economist who wants to change the rules of her discipline. « For over 70 years, economies have been obsessed with GDP as the primary measure of progress. This obsession has been used to justify extreme inequalities of income and wealth, coupled with unprecedented destruction of our environment. » This British woman proposes to redesign the major macroeconomic theories and rethink their goals. With a donut. « Think of the doughnut as a visual compass for how to meet the needs of all people within the means of a prosperous planet. The outer circle represents our ecological ceiling, consisting of boundaries beyond which are unacceptable environmental degradation and potential tipping points in Earth systems. The inner circle represents our social base, derived from internationally agreed minimum standards as identified by the world’s governments in the Sustainable Development Goals in 2015. It is in the middle space, where our needs are met and Earth systems are protected, that humanity can flourish. »
The donut, a space for action between two beacons, which allows us to consider that an economy is prosperous when the twelve social foundations (food, care, education, housing…) are met without exceeding any of the nine ecological ceilings (pollution, water stress, destruction of biodiversity…). These limits have been largely exceeded for the past century, leading to the climate disruption and the increase in inequalities that we know about and which we will not go back over here, as they have already been widely documented elsewhere.
The challenge remains: to destroy the supposedly irrefutable idea that the well-being of humanity can be summed up in a soaring exponential growth curve. To do this, we must learn to unlearn economic theories that are firmly established in the minds of yesterday and today, and still taught to those of tomorrow. The citizens of 2050 are being taught a vision based on the textbooks of 1950, which are themselves based on the theories of 1850, » laments the economist. Given the rapid evolution of the 21st century, this is a recipe for disaster. »
But to change things, it is not enough to denounce. We must propose a new model that makes the previous one obsolete. « During the financial crash of 2008, I already thought that we needed a new way of thinking to respond to both the ecological crisis and the crisis of inequality. So I left my job at Oxfam, I immersed myself in theories that I had never been taught. I wondered what would happen if ecological, feminist, complexity, behavioral and institutional economics perspectives were all on the same page. The result was donut economics. »
Published in a book detailing her theory and proposals, the image made her famous and immediately popularized her work. « I always doodled in the margins of my notes, and I liked to include images in my reports for Oxfam and the United Nations. The original donut diagram was published in 2012, and almost overnight it had a big impact. People started calling me ‘the donut lady,’ and I knew there was no going back. »
Abstract image, concrete proposals
Behind the metaphor, the plan is concrete. Forget the dependence on the idea of growth, on the evolution of GDP, on supply and demand and on market thinking, and go back to the roots of economics: managing the resources of the household (the planet) in the interest of all its members (the inhabitants). The measurement tools used must then answer only two questions, which are in fact very simple: can the population meet its basic needs? Is it doing so in a way that does not lead to exceeding the ecological ceiling?
« I don’t use the term degrowth, because I think it adds confusion rather than clarifying the debate. But in terms of the substance of what the degrowth movement represents, there is a deep alignment. The same is true for wellness and the solidarity economy. » Kate Raworth prefers to define herself as « growth agnostic, » making it clear that an economy can thrive regardless of whether the curves are rising, stagnating or falling. In this framework, whether GDP is growing or not, whether there is growth or not, is no longer the focus.
« I don’t use the term degrowth, because I think it adds confusion rather than clarifying the debate. »
This requires, again, rowing against the current of decades of contrary teachings. And behind them a robust system. « People often believe that it is the old generation economists who are the problem and that we are going to change the economy ‘one funeral at a time.’ I disagree. After a discussion with some academics in Belgium, a young assistant professor casually told me that he found the ideas in my book very interesting and would like to teach them, but since he was on the verge of getting tenure, he had to be careful. That comment stuck with me and reinforced my belief that it is not the people but the system that stands in the way of transformation. »
The success of Kate Raworth’s lectures, invited to universities around the world at the request of students in the economics departments, shows, however, a very strong desire at the international level for a transformation of the teaching programs. The British economist herself experienced her intellectual metamorphosis during her studies. « My big awakening came in my second year, when I wanted to talk about climate change, acid rain, the hole in the ozone layer and the collapse of ecosystems. To express this, economics offered me two words: « environmental externalities ». In the 21st century, to still talk about the death of the planet as a mere environmental externality is disturbing, to say the least. »
Since then, she has argued for a moral repositioning of economics. « If economists are not aware of the values embedded in the frameworks they teach, then they are not aware of what they are tacitly passing on to the next generation. During my first week at Oxford, we studied philosophy and economics side by side, discussing John Stuart Mill’s concept of utilitarianism at the same time as we derived utility curves and supply and demand in the market framework. This connection between philosophy and economics was exciting, but short-lived. In the second week of philosophy, the professor argued that utilitarianism is a very limited way of looking at the world, so we turned to other moral frameworks. Meanwhile, our economics studies were confined to utility theory for the next three years, which left me perplexed and disillusioned. Years later, I was introduced to the work of Amartya Sen, whose starting point is not the market, but the guarantee of the essential capabilities of every human being. Sen’s fundamental position is that we should all have the capacity to lead long, healthy, self-reliant, and engaged lives and that economic systems should be designed to enable such outcomes. »
Forget about growth, GDP and trickle-down
Kate Raworth also tackles the trickle-down myth, whose hypothesis is based on an inverted U-shaped curve, suggesting that in the normal functioning of a growing economy, inequality first increases, then decreases, suggesting the familiar mantra: if you care about inequality, don’t intervene to redistribute because you may well impede growth, which – as the curve shows – will eventually even things out.
Only thing is: Simon Kuznets’ work in the 1950s, which gave life to this curve, which has become the most influential chart in all of economic theory on inequality, is based on biased data. In 2014, Thomas Piketty revisited Kuznets’ analysis with much richer data. He concluded that Kuznets was right, but that he had studied a very unusual time period: from pre-war to post-war. It turns out that the war destroyed the capital of the rich and that postwar governments invested heavily in health, education, and housing. It was this unusual policy that bent the curve, not the inherent functioning of the market. But the myth survived for half a century. « We have now lived through decades shaped by the political consequences associated with this hypothesis, » laments Kate Raworth. Trickle-down economics. Austerity economics. Both are rooted in the idea that growth will lead to greater equality over time, so that today’s inequality must be endured. A theory that we now know is false. »
From words to action
Far from being just a theorist, Kate Raworth is putting words into action. Since the publication of her research, she has been giving lectures to share and disseminate her thinking, partnering with universities to develop new course outlines and materials, and collaborating with artists to transform the donut concept into works of art to make it playful and widely accessible.
But the economist is also involved in putting her ideas into practice, working with companies, cities and even entire countries. « I’ve been amazed at the level of interest from governments – from across the political spectrum. At an event in the Netherlands, I gave a talk at the Ministry of Economic Affairs and Climate Change, and the room was overflowing. The organizer explained that it was a real hunt for new ideas: ‘It’s like rain falling on barren land,’ they said. »
« Change is stalled as soon as finance departments start talking about ‘optimal cost’ – paying the least amount of money to achieve the greatest effect… »
On the ground level, agreeing on the general principles of donut economics isn’t the hardest part. « It’s complicated for someone to tell you why the donut is bad. People find it irresistible. They understand that there are tipping points because we see them, witness them, and experience them. They recognize that people have basic human needs – the legacy of 70 years of human rights work at the United Nations. People agree with these core principles. »
It’s when government finances come into play that things get stuck. « Engineers have told me that change is stalled as soon as finance departments start talking about ‘optimal cost.’ In the U.K., for example, there is a green book, which is the set of rules that governs the logic of the Treasury. It looks ahead and uses cost-benefit analysis. It is based on incrementalist economics, which says that we should always spend our time looking for the optimum. So by that logic, we want to pay the least amount of money to get the greatest effect, so we don’t waste money… »
A turning point?
This is perhaps even more true today, in the midst of a health crisis, as countries around the world look to the future with concern. Yet, as calls to think about the « next world » multiply, asking us to seize the opportunity to rebuild our economies in a different way, some are already doing the practical work.
As a result, more and more elected officials are asking how to make their cities and their residents thrive, while respecting the well-being of everyone and the health of the planet. In the U.S., Portland and Philadelphia have set goals such as a return to a circular economy, which reduces waste, and more responsible real estate management. Houston has focused its action plan on reducing emissions in sectors such as transportation and energy. Specific goals in the plan include adding 800 miles of bike lanes over the next five years, creating a business hub in the city for new energy companies, and cutting residential waste in half by 2040.
In South Korea, President Moon Jae-in’s Green New Deal includes a commitment to net zero emissions by 2050, an end to funding coal-fired power plants overseas and a new carbon tax. In Scotland, North Ayrshire Council is all about local wealth. It is committed to prioritizing local businesses for procurement, supporting cooperatives or employee ownership models, and committing to the regeneration of its 1,294 hectares of vacant land for community and local business use.
But one of the most ambitious plans has been conceived and implemented in Amsterdam. The city’s deputy mayor, Marieke van Doorninck, has brought together elected officials, citizens and experts in a committee called the « Amsterdam Donut Coalition », whose aim is to make the principles of the donut economy the basis of all the city’s public policies in the fields of health, housing, education, digital technology and ecology. It’s not a hippie vision of the world, » says the elected official. It is about developing the attractiveness of the metropolis, while providing better services to its inhabitants, while respecting its territory and local resources. »
Marieke van Doorninck explains that the donut principles « are not there to provide ready-made solutions, but to transform the way we look at problems. This change of view allows us to improve public policies, to make them more efficient from both a social and environmental point of view. On the menu of the Dutch capital’s recovery plan: the development of urban agriculture, the rental and repair of consumer products such as clothing, electronics and furniture, changes in the treatment of domestic waste, an increased fight against food waste, or the implementation of very strict ecological criteria for the design of new buildings and public spaces. The city plans to use half the virgin materials it uses today by 2030, and to reduce that consumption to zero by 2050.
While Kate Raworth never expected to see a concrete application of her theories « in such a crisis context, » she believes that « the need for such a transformative tool could hardly be greater right now, » and hopes that « its use in Amsterdam will inspire many more places – from neighborhoods to cities, regions and even nations.
Because the donut theory is much more than a brilliant and disruptive economic doctrine. It is a guide for territorial, national and even international public action. One of the key questions that humanity must ask itself is how to meet the needs of all peoples within the limits of the planet’s means. With the donut, she may have found a first concrete answer.
Sources : ADN, podcast journal, resiliences, OFCE, FMI