‘Doughnut economics’ shows how global growth is out of balance
- Written by Warwick Smith, Honorary Fellow, School of Social and Political Sciences, The University of Melbourne
A new update to an influential economic theory called “Doughnut Economics” shows a global economy on a collision course with nature.
The influential book by Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st Century Economist, was first published in 2017. It was lauded for its ability to convey the complexity of global social and environmental issues in a single, easy-to-understand diagram.
The doughnut shape represents the safe and just operating space for humanity.
The hole at the centre of the doughnut represents a shortfall in the social foundations necessary for people to live safe and just lives.
The area outside the doughnut shows ecological overshoot across a range of domains, such as climate change, biodiversity loss and ocean acidification.
Now, Andrew Fanning and Kate Raworth have published the first update to the Doughnut Economics framework since 2017 in Nature.
The update should prompt us to ask serious questions about our society, economy and notions of progress.
A global movement
Since the book was published, doughnut economics has evolved into something of a global movement, at the centre of which is the Doughnut Economics Action Lab (DEAL). Many places, including Melbourne, are using the framework to assess their social and ecological condition and trajectory.
Doughnut economic thinking also aligns with Australian First Nations’ view of Country – the economy, society and environment all as a single, inseparable thing. An Indigenous consultancy, Dinadj, is working to develop an Indigenous doughnut for Australia.
The original global doughnut portrait was a static picture at a single point in time. The recently published update turns this into an annual time series spanning from 2000 to 2022. This means we can now monitor trends in global social and ecological health over time.
What these trends show is alarming.
While global gross domestic product (GDP) has more than doubled, progress on meeting social foundations has slowed and ecological overshoot has accelerated. In other words, we are damaging critical biophysical processes at a faster rate than we’re improving people’s lives.
The update shows an overshoot on six of the nine critical global planetary boundaries. Separate published research indicates we’ve since crossed a seventh boundary, ocean acidification.
Rich nations dominate the damage to the environment
The other important change in this update is the breakdown of data by nation, allowing comparison between groups of countries. This illustrates the unequal nature of economic development and the trade-off between social foundations and ecological overshoot that the current economic system creates.
The richest 20% of nations, home to 15% of the global population, are responsible for 44% of the global ecological overshoot (going beyond the safe space for humanity). But they have only a 2% share of the shortfall in social foundations, in areas such as food insecurity, health and education.
Meanwhile, the poorest 40% of countries, with 43% of the population, account for only 4% of the ecological overshoot but 63% of the social shortfall.
While progress has been made across a range of social domains, shortfalls remain alarming. About 75% of the global population say they perceive widespread corruption in government and business. Some indicators are going backwards, most notably a rise in autocratic regimes and food security.
What does progress really mean?
The updated doughnut framework adds to the weight of evidence that the dominant economic narrative – which equates economic growth with progress – is leading us towards multiple environmental crises. And it’s falling short on delivering social progress.
In Australia, a recently released report, Growth Mindset from the Productivity Commission, is a clear illustration of this disconnect between economic goals and social and environmental health.
The commission chair, Danielle Wood, told the National Press Club:
Governments must bake in the process of asking themselves: what have you done for growth today?
Tellingly, the report barely touches on poverty, inequality, biodiversity or the environment. It makes no mention of the impact that growth (particularly from rich countries like Australia) is having on critical planetary boundaries.
However, there are many initiatives emerging from governments, businesses and civil society around the world and in Australia that reflect the need for different definitions of progress.
At the national level, we have Measuring What Matters. This framework was developed by Treasury at the request of Treasurer Jim Chalmers and “will track progress towards a more healthy, secure, sustainable, cohesive and prosperous Australia”.
The Australian Capital Territory has a well-developed wellbeing framework that provides a holistic guide to government decision-making. Every state government is also engaging with these questions, with an explicit wellbeing focus in Tasmania, Victoria, New South Wales and South Australia.
It’s early days for all of these government initiatives, but it’s a good sign so many are starting to take these challenges seriously.
The Melbourne Doughnut city portrait was adapted for Australia by community organisation Regen Melbourne and featured as one of two examples in the Nature article. It confirms our place in the global distribution with relatively low levels of social deprivation and very high levels of ecological overshoot.
The doughnut economics image illustrates with great clarity the complex challenges faced by human society in the 21st century.
The recent update shows it’s more important than ever that we think carefully about what progress means and we repurpose our economy away from its destructive focus on growth at all costs and towards human and environmental flourishing.
Authors: Warwick Smith, Honorary Fellow, School of Social and Political Sciences, The University of Melbourne
