The Doughnut Economy: changing the goal

In recent years, there has been considerable discourse on progressive economic models as alternatives to the traditional capitalist system, which has led to negative consequences stemming from human shortcomings (Killewald et, al. 2017). Among prominent theories, various efforts have been made to find solutions to the linearity of the current infrastructure centered around consumerism, GDP growth, and the notion of an economy that solely embraces growth for survival (World Economic Forum, 2022a). According to John Ruskin's observations, modern political economy is undergoing a significant transition that places a greater emphasis on the well-being of people than on the only goal of accumulating riches (Anthony, 1989). The Doughnut Economy is an example of this increasing body of knowledge indicating that our economic systems need to change to align with the Earth's closed system, as there is an inherent contradiction between the open-ended nature of the economy and the finite boundaries of our planet (World Economic Forum, 2022a, 2022b; Raworth, 2017a).

Kate Raworth’s theory (2017a) is based on the idea of creating a balance between meeting the needs of people within the limits of the planet's resources. The model envisions a social foundation, represented by the inner ring of the doughnut, which ensures that no one falls short on life's essentials, such as food, education, and healthcare (Raworth, 2017b). Simultaneously, it advocates for an ecological ceiling, depicted by the outer ring of the doughnut, which highlights the need to prevent overshooting critical environmental thresholds, such as biodiversity loss, climate change, and chemical pollution. The aim of the doughnut economy is to guide governments, businesses, and individuals to operate within this "safe and just space for humanity," promoting sustainability, equity, and a more balanced approach to economic development (DEAL, n.d.).

Since John Rockstrom highlights the deep environmental awareness exhibited by Generation Z as the first generation to accept the intrinsic limits of Earth's resources (Watts, 2021), here are some examples of successful implementations of the theory to take inspiration from.

INSTITUTIONAL APPLICATION: Amsterdam

The two-year initial practical action plan and the Amsterdam Circular 2020–2025 strategy were accepted by the Municipality of Amsterdam in April 2020 (Florian, 2023). In line with a modified version of Kate Raworth's doughnut model, Amsterdam became the first municipality in the world to formally accept the idea with this groundbreaking move. The downscaled model, called a City Portrait, was created in partnership with Raworth and provides a thorough picture of the city that is intended to spark systemic change by igniting holistic and co-creative innovations (Nugent, 2021). The strategy also seeks to engage a wide range of stakeholders in determining the direction the city takes by facilitating interdepartmental communication. This effort led to a startling discovery: of the roughly 60,000 applicants who applied online for social housing, only 12% were successful (DEAL, 2020). Ten percent of city renters found it difficult to meet their basic necessities after paying their rent, according to the Guardian. This emphasized how vital it is to address socioeconomic inequalities in the urban fabric of the city. Among the most prominent building projects there is Strandeiland (Beach Island), which is part of IJburg, an archipelago of six recently reclaimed islands in southeast Amsterdam (Florian, 2023).

CORPORATE APPLICATION: Patagonia

Patagonia is a model of ethical and sustainable business operations, leading the way in the outdoor and retail sectors by adopting the ideas of the Doughnut Economy. Adopting environmental responsibility as a core value, Patagonia's dedication to reducing its environmental effect and addressing the sustainability of its supply chain is in line with an environmentally responsible method of conducting business. Patagonia’s product philosophy, which places a high value on quality and durability, is in line with the idea of 'long-lasting commodities,' which is central to the Doughnut Economy’s goal of decreasing wasteful consumption behaviors (Raworth, 2017a). The Doughnut Economy's emphasis on promoting circular economy concepts and lowering the demand for new manufacturing aligns with the company's transparent approach, encouragement of repair and reuse, and "Worn Wear" platform (Patagonia, 2022a). Furthermore, Patagonia's commitment to ethical labor standards, environmental advocacy, and a never-ending quest for product innovation serve to emphasize how closely its principles coincide with those of the Doughnut Economy (Patagonia, 2022b; Raworth, 2017a).

FINANCIAL APPLICATION: Global Alliance for Banking on Values

In the realm of finance, the application of the Doughnut Economy is gaining ground through the collective efforts of organizations such as the Global Alliance for Banking on Values (GABV) and its collaborative initiatives (GABV, 2022). Through its proactive stance on global issues, the GABV, leveraging the policies and practices of its member banks, actively contributes to the ongoing discourse concerning the role and responsibility of the financial sector. Notably, the Values Regulation Europe (the VALoRE Project), supported by the Open Society Foundations, stands out as a significant research and advocacy initiative, aiming to influence European sustainable finance regulations positively (Open Society Foundations, n.d.). In a move resonating with the grassroots campaigning spirit, recent public engagement campaigns have encouraged individuals to critically evaluate the alignment of their banks with ethical and sustainable standards, prompting them to consider transitioning to values-based banks when necessary (World Economic Forum, 2022b). Additionally, strategic partnerships with several like-minded organizations, including the WWF, Sustainable Finance Lab, World Benchmarking Alliance, and Climate Safe Lending, among others, reflect a collaborative approach towards fostering a just transition in the financial landscape, as envisioned by the principles of the Doughnut Economy (World Economic Forum, 2022a). Through these concerted endeavors, the finance sector is gradually integrating the values of sustainability, ethics, and social responsibility into its operations, signaling a progressive shift towards a more conscientious and inclusive financial ecosystem.

- Federica Malizia

Bibliography:

Anthony, P. D. (1983). John Ruskin's labour: a study of Ruskin's social theory. CUP Archive.

DEAL. (n.d.). About Doughnut Economics / DEAL. https://doughnuteconomics.org/about-doughnut-economics

DEAL (2020). Amsterdam City Doughnut | DEAL. https://doughnuteconomics.org/stories/1

GABV. (2022, June 20). Engagement - GABV - Global Alliance for Banking on Values. GABV - Global Alliance for Banking on Values. https://www.gabv.org/transforming-finance/engagement/

Florian, M. (2023). How Amsterdam uses the doughnut economics model to create a balanced strategy for both the people and the environment. ArchDaily. https://www.archdaily.com/997291/how-amsterdam-uses-the-doughnut-economics-model-to-create-a-balanced-strategy-for-both-the-people-and-the-environment

Killewald, A., Pfeffer, F. T., & Schachner, J. N. (2017). WEALTH INEQUALITY AND ACCUMULATION. Annual review of sociology, 43, 379–404. https://doi.org/10.1146/annurev-soc-060116-053331

Nugent, C. (2021, January 22). Amsterdam is embracing a radical new economic theory to help save the environment. Could it also replace capitalism? Time. https://time.com/5930093/amsterdam-doughnut-economics/

Open Society Foundations (n.d.) —Who we are. https://www.opensocietyfoundations.org/who-we-are

Patagonia (2023a) Worn wear - better than new. https://wornwear.patagonia.com/

Patagonia (2023b) Environmental & social footprint - Patagonia. https://www.patagonia.com/our-footprint/

Raworth, K. (2017a). Doughnut economics: seven ways to think like a 21st-century economist. Chelsea Green Publishing.

Raworth, K. (2017b). Why it’s time for Doughnut Economics. IPPR Progressive Review, 24(3), 216–222. https://doi.org/10.1111/newe.12058

Watts, J. (2021, August 25). Johan Rockström: ‘We need bankers as well as activists. . . we have 10 years to cut emissions by half.’ The Guardian. https://www.theguardian.com/environment/2021/may/29/johan-rockstrom-interview-breaking-boundaries-attenborough-biden

World Economic Forum (2022a).  How to do business with doughnuts https://www.weforum.org/agenda/2018/01/how-to-do-business-with-doughnuts/

World Economic Forum (2022b) Meet the doughnut: the new economic model that could help end inequality. https://www.weforum.org/agenda/2017/04/the-new-economic-model-that-could-end-inequality-doughnut/