Opinion: Focus on doughnuts, not economic growth
We live in a world where the religion of economic growth dominates everything. Whether we look at the ongoing climate disaster, the growth of inequality and the degradation of living standards, the way we are killing the world’s plant and animal life – the only thing we ever consider is whether it will help increase GDP.
Why is this?
There doesn’t seem to be a good reason. Even Simon Kuznets, the man who standardised the GDP measurement, did not believe that economic growth was a good measure of a nation’s success, saying: “The welfare of a nation can scarcely be inferred from a measure of national income.”
Yet, almost 100 years later, GDP has become the one and only measure that the vast majority of the world’s nations measure their success against. This means that accumulating more and more wealth has become the end goal rather than the means by which we achieve other things, an impossible situation which is a time bomb for the future. We are in a situation where the only consideration is generating wealth in larger and larger amounts, perpetually, forever.
Anyone who takes a step back can see the obvious issue. We live in a finite world, and an economy that is based on perpetual growth is not compatible with that.
When looking at an economic theory, it is important to always ask what the point of it is. What purpose does it serve? Perpetual growth, and the obsession with it, certainly is not concerned with making the best life for everyone or ensuring that the only home we have remains liveable.
Trickle-down economics is an illusion, as demonstrated by the fact that the richest 26 billionaires in the world have as much wealth as the 3.8 billion poorest people, and that gap grows every year. The idea of a compassionate capitalism which works in concert with the natural world is equally discredited. Look at the fires in the Amazon or the plastic-filled oceans if you need proof of that.
Average global economic growth is generally something around 3% in a good year. If we continue this pattern, everything we have now will have to double in less than 25 years. All the cars, all the pollution, all the waste and the greed; everything will be twice as intense as it is now before we get halfway through the 21st century.
Think about that for a minute and it is clear how completely and utterly insane that prospect is. The need for a radical change is both apparent and urgent. We simply cannot afford to go on pursuing economic growth as we are. But what are the alternatives?
It helps to bear in mind that economic theory and monetary wealth are not real. They are abstract concepts and stories that we have all agreed to believe in. And the beauty of stories is that we can tell a new one if we want to. We’re not stuck in the same old loop. We can choose.
A good place to start might be to think quite seriously about doughnuts.
Specifically, thinking about a new theory of economics developed by Kate Raworth, an economist working for the University of Oxford and the University of Cambridge. Confronted with the problem of an infinite economic feedback loop being imposed on a finite world, Raworth came up with a solution which, if adopted, could save us.
The theory rests on the idea that our economic goal should not be to create more and more wealth; instead, the driving principle underlying our economic decisions should be to stay in the space between two boundaries.
The first, lower boundary is called the social foundation. This means that we collectively decide on the absolute minimum standard of life every single person on earth is entitled to. This includes food, water, healthcare, education, peace, social equality, housing, energy and more.
The second, upper boundary is the ecological ceiling. This is the level which the planet can stand without suffering further damage. Beyond this ecological ceiling we enter into the realms of climate change, water pollution, ozone depletion, loss of species and all of the other bad things we see on the news every day.
This system is visualised best in the form of a doughnut:
By staying in between these two lines, inside the doughnut, we can create a future in which everyone has a good standard of life. By doing so, we will ensure that the planet we live on can continue to support us indefinitely into the future.
Such a change will be tough. Make no mistake, switching to doughnut economics will require nothing less than changing the focus of our entire society and global economic system. No more will the needs of shareholders take precedence over everything else. The rights of corporations will not supersede the rights of people. No more forests will be burned down for industrial agriculture; no more rivers will be polluted by avaricious mining corporations. Billionaires, a class of people who serve no socially useful function, will be looked upon as the historical anachronism they are, and all will finally benefit equally from this wonderful planet we live on.
It will take courage and leaps of faith, but the world is burning, the animals are dying, the leaves are falling, and time is short. If not now, then when? If not us, then who?
Save the world and embrace the doughnut life.