Wednesday, October 27, 2021

Doughnut Economics

Even if you haven't studied economics, you're probably familiar with the law of supply and demand. However, there's a lot more to economics, and economics doesn't always look at the complete picture. For example, current theories of economics don't consider the value of unpaid household labor or recognize that resources are limited. (The GDP can't grow forever.) That's why Kate Raworth wrote Doughnut Economics: How to Think Like a 21st Century Economics. 

The premise is simple: imagine a doughnut. (There's a visual on the Wikipedia page here.) The hole in the middle is where people's needs are met. (These needs go beyond simple survival needs to include education, health care, and a voice in government.) The outer edge of the doughnut is the ecological ceiling we can't cross without harming the environment. Between the social and environmental boundaries is the doughnut itself, a safe and just space for humanity.

Raworth's book discusses several strategies for "getting into the doughnut." These include viewing human nature differently, designing systems that redistribute wealth and regenerate resources the way the natural world does, and focusing on stability, not constant growth. Obviously, this is a complete turnaround from the way our current economy works, and changing this paradigm will require a lot of work. For example, thanks to interest, money gains value over time, which is unlike material resources that degrade. To force money to be used for regenerating material assets instead of being hoarded, Raworth proposes fees be instated to make money lose some of its value when it's held for a long time. It sounds like a crazy idea, but according to the book, some cities in Germany and Austria tried it in the 1930s to help the local economy. (I can't help but wonder if it would be simpler to lower interest rates for some types of investments or make investing in sustainability more rewarding.) 

I think the ideas put forth in this book are intriguing and worth pursuing, but I disagree with Raworth in her assessment of human nature. For this model to work, humans have be more socially reciprocating and interdependent, and I think it's harder to nudge people in this direction than she thinks it is. However, stories that engage people's emotions can change their attitudes and behavior. This is where worldbuilding and solarpunk come in. If we use these ideas to build new types of societies, we can inspire people to work toward them in real life. It's been said that it's easier to imagine the end of the world instead the end of capitalism. I know which one I'd prefer. 

Have you heard of doughnut economics before? If not, what's your favorite kind of doughnut? (Mine is chocolate with sprinkles.) Feel free to share your thoughts in the comments.

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