What makes an economy successful?
Americans are just beginning to realize that widespread inequalities dampen and retard economic vitality, but the more foundational–and to me, at least, more interesting–question is: what does a “successful” economy look like? In the United States, a great proportion of our economic life revolves around “stuff”–the production and consumption of consumer goods. There’s nothing wrong with producing items that people want to buy, but a model that requires constantly increasing consumption has obvious drawbacks, especially when large numbers of workers lack disposable income.
As readers of this blog are aware, one of my sons lives in Amsterdam. He has made me aware of that city’s experiment with a different economic approach. In April of last year–even while the pandemic was raging–Amsterdam became the first city in the world to formally implement what is called “doughnut economics.” Brussels then followed, as did
the Canadian city of Nanaimo.
Scholars advocating for a new approach argue that the current economic system sacrifices both people and environments at a time when everything from shifting weather patterns to rising sea levels is global in scope and unprecedented in nature.
The premise requires us to re-envision what really constitutes economic health–to define it as a system that ensures that “nobody falls short of life’s essentials, from food and water to social equity and political voice, while ensuring humanity does not break down Earth’s life support systems, such as a stable climate and fertile soils.”
The doughnut’s social goals are based upon the Sustainable Development Goals promulgated by the United Nations. These are food security, health, education, income and work (not limited to paid employment), peace and justice, political voice, social equity, gender equality, housing, networks, energy and water.
The nine ecological boundaries are drawn from proposals developed by a group of Earth-system scientists. These are climate change, ocean acidification, chemical pollution, nitrogen and phosphorus loading (inefficient or excessive use of fertiliser), freshwater withdrawals, land conversion (removal of habitat), biodiversity loss, air pollution, and ozone layer depletion.
Kate Raworth’s 2017 book “Doughnut Economics” explains the doughnut economy as one based on the premise that “Humanity’s 21st century challenge is to meet the needs of all within the means of the planet. In other words, to ensure that no one falls short on life’s essentials (from food and housing to healthcare and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend – such as a stable climate, fertile soils, and a protective ozone layer.”
Raworth recognizes that “significant GDP growth is very much needed” for low- and middle-income countries to be able to meet the social goals for their citizens.
Using a simple diagram of a doughnut, Raworth suggests that the outer ring represents Earth’s environmental ceiling — a place where the collective use of resources has an adverse impact on the planet. The inner ring represents a series of internationally agreed minimum social standards. The space in between, described as “humanity’s sweet spot,” is the doughnut.
Amsterdam formally adopted the model on April 8, 2020.
The city of Amsterdam has always been a pioneering city. It loves to be a pioneer which is a brilliant attribute because there are many cities that will not lead. They will only follow when they see someone else go,” Raworth said.
“It is not going to work to have three, four, five separate strategies all trying to connect. When they encountered the concept of the doughnut, I know that they said: ‘Aha, this is a concept that sits above and embraces everything that it is that we want to do.’”
Van Doorninck, who’s responsible for spatial development and sustainability in the Dutch capital, said the city’s circular strategy was focused on areas where local government “can really make a difference.”
These areas include food and organic waste streams, consumer goods and the built environment. As a result, the city has targeted a 50% reduction in food waste by 2030, implemented measures to make it easier for residents to consume less (by establishing easily accessible and well-functioning second-hand shops and repair services over the next three years) and pushed for construction companies to build with sustainable materials.
According to the article, a number of cities around the globe are watching, and considering whether to follow suit. It’s a very encouraging effort to marry economic growth with social equity and environmental responsibility.