As we’re hearing a lot at the moment from politicians on both sides of the political spectrum, ‘growing the economy’ is a key underpinning of their economic manifestos. The recent party conferences were abuzz with promises of growth, with the Conservatives promising to ‘grow, grow, grow’ our economy and Labour arguing for their own ideas to boost economic growth. Indeed, ‘growth’ has become a buzzword associated with good economic management and a healthy economy, but, is growth really all it’s hyped up to be?
What do we mean by growth?
The current economic orthodoxy is based on the logic that a growth of Gross Domestic Product (GDP), which is a measure of the production of goods and services in a country, is closely tied to greater all round prosperity. In a piece in the Guardian, Richard Partington highlights that the use of “growth as a metaphor for prosperity has become deeply embedded in our language”.
It’s worth noting though, that this view is slightly rose-tinted. Our current global economic trajectory is one of increasing inequality between the richest and poorest, especially within countries. So, this metaphor for prosperity doesn’t necessarily benefit everyone equally.
Ok, but how does all this relate to the environment?
Well, much of this production of goods that GDP measures is reliant on the use of natural resources – and this is both in the things we make, for example wood and rare earth metals, but also how we make and transport them through the use of fossil fuels. On this basis, expecting the global economy to continually grow on a planet with finite natural resources highlights a potential conflict, right?
Not only this, but another problematic side effect of the use of GDP as a measure for economic success is that it does not consider the ‘cost’ of the environment. As covered in this article, GDP treats the environment as an ‘externality’ – in which it is not priced into calculations, and therefore oversimplifies the true cost of climate change, or natural disasters. Studies have even found that GDP is relatively unaffected by environmental disasters, with Richard Partington’s article highlighting the example of the Exxon Valdez oil spill in Alaska in 1989, where the spill actually registered as an economic gain and a growth in the US GDP owing to the money spent on the clean-up operation.
What’s the answer?
There have been many solutions presented and theorised as to how to better manage the economy for the environment, which address different areas of the growth and GDP problem – too many to cover in depth in one article! But one which has recently piqued my interest is the concept of ‘Doughnut Economics’.
What is doughnut economics?
‘Doughnut Economics’ is a concept coined by Oxford University economist Kate Raworth, and aims to provide a compass for 21st Century economic management. The conceptual Doughnut consists of an upper ‘ecological ceiling’ of resource use that cannot overshoot Rockström et al.,’s planetary boundaries, which are fundamental to our Earth’s ability to continue to support life. Meanwhile, the inner ring of the Doughnut is a ‘social foundation’ to ensure universal access to essentials for life – both tangible things like food and water, but also intangible rights such as peace and political voice.
Kate Raworth highlights that the crux of the Doughnut is that instead of economic growth defined by GDP, we instead seek a dynamic equilibrium between humanity’s needs and nature. By replacing the growth model with the Doughnut concept, success is based on getting people above the lower social foundation and into the Doughnut, addressing inequality. This is done without letting global resource use overshoot our ecological ceiling which causes climate breakdown though.
“Because today – we have economies that need to grow whether or not they make us thrive, and what we need – especially in the richest countries, are economies that make us thrive whether or not they grow” – Kate Raworth, TED Talk
With forecasts indicating that we are heading towards a global recession, the second in 14 years, does this highlight that something isn’t working with the way we measure economic success – and if so, isn’t it time we rethink our economy to better address climate change? Sounds like it could be time for the Doughnut!
Check out Kate Raworth’s TED Talk ‘A healthy economy should be designed to thrive, not grow’ for a longer introduction to Doughnut Economics.
If you fancy really getting your teeth into the subject, read Kate Raworth’s book ‘Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist’.
Learn more about companies like Tony’s Chocolonely and Patagonia who are putting people and planet above profits and embracing circular initiatives (psst – we wrote about Patagonia’s trailblazing efforts to fight the climate crisis recently, be sure to check it out!). Also, check out the Ellen MacArthur Foundation and other leading organisations looking to mainstream circularity within a wide-range of sectors!