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When a doughnut is the only healthy option

What does a healthy economy look like? In a world full of division and conflict, there is almost universal consensus that all answers to this question must involve growth. Some more enlightened thinkers may throw in a mention of green growth, or smart growth, but growth will always be there.


How quickly we can expand GDP remains one of the most important measures of success for politicians in most countries, regardless of the system of government. Growth usually means increased tax revenues from the same rate of tax. And the size of the economy buys a country influence in groups such as the G7 or G20. The idea there can be no real expansion of wealth without endless economic growth has become ubiquitous and unchallenged.


Earth Day is a good time to challenge this consensus. Rather, it's a good time to add volume to those who have been challenging it for at least a decade already. As economies grow, they use more resources, including natural resources. We know the earth’s resources are finite. And yet we conveniently ignore this when it comes to accepting the assessment of what a healthy economy looks like.


A decade ago, Kate Raworth wrote a report for Oxfam addressing this conundrum. The best explanation of her theory is her own TED Talk on the issue. There is also an excellent website full of useful information and links. For those without 15 minutes to spare, her theory is nothing less than a reframing of our entire economic model. She challenges the notion of an endless line of never-ending growth and presents instead a circular model, in which the economy is viewed as a doughnut, with an inner and outer ring. The inner ring represents “the social foundation” or the universal minimum standards of living required to allow everyone to live a life of dignity and opportunity. The outer ring is “the ecological ceiling”, the limit of earth’s natural resources, beyond which we can’t go without doing permanent harm to the planet.


A healthy economy under this approach is one that meets the needs of all the people but does so within the means of the planet. “It is no longer this ever-rising line of growth, but a sweet spot for humanity, thriving in dynamic balance between the foundation and the ceiling. It’s time to think again, to reimagine the shape of progress,” she says. “Because today we have economies that need to grow, whether or not they make us thrive and, especially in the richest parts of the world, we have economies that need to thrive whether or not they grow.”


Under Raworth’s assessment, the current model is broken, as the world is undershooting and overshooting at once. Millions live below the social foundation and yet globally we are exceeding our ecological ceiling. “No economist from the last century saw this picture, so why do we think that their theories would be up for taking on its challenges?” she asks. “We need our ideas of own because we are the first generation to see this and probably the last with a chance of turning this around.”


The key is that the tools to bring about this radical change are available today. We need economies that are built to be regenerative and distributive, built on new, distributed technologies and institutions. To be successful and healthy in the long term economies will have to move away from existing linear models of excessive consumption towards a model built around restoring and regenerating. On Earth Day, it’s fitting that this message gets heard and shared more widely. As the world copes with immediate economic, social and political crises, the tendency is to focus on short-term fixes. But the only way to secure a fair and healthy long-term future is to change how we think today.