Doughnut Economics

As the ingenious twentieth-century inventor Buckminster Fuller once said, ‘You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.’

always remember that ‘the map is not the territory’, as the philosopher Alfred Korzybski put it: every model can only ever be a model, a necessary simplification of the world, and one that should never be mistaken for the real thing.

Today we have economies that need to grow, whether or not they make us thrive: what we need are economies that make us thrive, whether or not they grow.

as GNP reached the height of its popularity in the early 1960s, Kuznets became one of its most outspoken critics, having warned from the start that ‘the welfare of a nation can scarcely be inferred from a measure of national income’.

In response to the constant call for more growth, she argued, we should always ask: ‘growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s the cost to the planet, and how much is enough?’

Today economists and politicians debate with confident ease in the name of economic efficiency, productivity and growth – as if those values were self-explanatory – while hesitating to speak of justice, fairness and rights. Talking about values and goals is a lost art waiting to be revived.

To put that in context, 30%–50% of the world’s food gets lost post-harvest, wasted in global supply chains, or scraped off dinner plates and into kitchen bins. Hunger could, in effect, be ended with just 10% of the food that never gets eaten.

As economist Tim Jackson deftly put it, we are ‘persuaded to spend money we don’t have on things we don’t need to make impressions that won’t last on people we don’t care about’.

since work in the core economy is unpaid, it is routinely undervalued and exploited, generating lifelong inequalities in social standing, job opportunities, income, and power between women and men.

In short, including the household economy in the new diagram of the macroeconomy is the first step in recognising its centrality, and in reducing and redistributing women’s unpaid work.

twentieth-century theory has led economists to overestimate the effectiveness of price as a lever, and to underestimate the role of values, sense of reciprocity, networks, and heuristics. Crucially, the theory overlooks the fact that some things may be put in jeopardy when they are given a price.

they had accidentally uncovered was the role that money can play in eroding social norms, such as student pride and parental responsibility, by replacing them with market norms, such as payment for effort and reward for compliance.

At the heart of systems thinking lie three deceptively simple concepts: stocks and flows, feedback loops, and delay. They sound straightforward enough but the mind-boggling business begins when they start to interact.

Due to the scale and interconnectedness of the global economy, many economic effects that were treated as ‘externalities’ in twentieth-century theory have turned into defining social and ecological crises in the twenty-first century. Far from remaining a peripheral concern ‘outside’ of economic activity, addressing these effects is of critical concern for creating an economy that enables us all to thrive.

Less fun but almost as frequent are asset bubbles in which the price of a stock builds higher and higher before it ultimately bursts. The name of that phenomenon originated with the South Sea Bubble of 1720, an event that the great Sir Isaac Newton forbade to be mentioned in his presence ever after. In March of that year, the price of shares in the South Sea Company – which had been granted a British monopoly on trading with South American colonies – began to rise fast as false rumours of its successes abroad started to spread. Newton had already bought a few shares in the company and so in April he cashed them in for a large profit. But the South Sea stock price kept on rising fast and so, swept along by the nation’s enthusiasm, Isaac couldn’t resist the market’s lure. He jumped back in at a much higher price in June – just two months before the bubble finally peaked and burst. Newton lost his life savings as a result. ‘I can calculate the movement of stars, but not the madness of men,’ he famously said in the bubble’s aftermath.24 The master of mechanics had been confounded by complexity.

Anyone who has played the board game Monopoly is well versed in the dynamics of Success to the Successful: players who are lucky enough to land on expensive properties early in the game can buy them up, build hotels, and reap vast rents from their fellow players, thus accumulating a winning fortune as they bankrupt the rest. Fascinatingly, however, the game was originally called ‘The Landlord’s Game’ and was designed precisely to reveal the injustice arising out of such concentrated property ownership, not to celebrate it.

‘Don’t be an unthinking intervenor and destroy the system’s own self-maintenance capacities,’ she warned. ‘Before you charge in to make things better, pay attention to the value of what’s already there.’49

In Piketty’s words, ‘Capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.’11

When epidemiologists Richard Wilkinson and Kate Pickett studied a range of high-income countries in their 2009 book, The Spirit Level, they discovered that it is national inequality, not national wealth, that most influences nations’ social welfare. More unequal countries, they found, tend to have more teenage pregnancy, mental illness, drug use, obesity, prisoners, school dropouts, and community breakdown, along with lower life expectancy, lower status for women, and lower levels of trust.17 ‘The effects of inequality are not confined to the poor,’ they concluded; ‘inequality damages the social fabric of the whole society.’

the twentieth century’s legacy of perverse tax policies, which charge firms for hiring humans (through payroll taxes), subsidise them for buying robots (through tax-deductible capital investments), and levy next to nothing on the use of land and non-renewable resources.

pollution. We have inherited degenerative industrial economies: our task now is to transform them into ones that are regenerative by design. There’s no denying that it is an extraordinary challenge, but it’s one that is inspiring the next generation of smart engineers, architects, urban planners and designers.

reminding them – with help from the poet Taylor Mali – that, ‘changing your mind is one of the best ways of finding out whether or not you still have one’.

This is not just a problem for budding mathematicians to worry about: as the nuclear physicist Al Bartlett warned, ‘The greatest shortcoming of the human race is our inability to understand the exponential function.’

Upton Sinclair famously noted, ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’

the energy contained in a single gallon of oil is equivalent to 47 days of hard human labour, making current global oil production equivalent to the daily work of billions of invisible slaves.

the New Economics Foundation has distilled the findings down to five simple acts that are proven to promote well-being: connecting to the people around us, being active in our bodies, taking notice of the world, learning new skills, and giving to others.