A Doughnut Way to Think

Describing an evolving approach in the literature of economic development.

Shereein Saraf

Shereein Saraf

July 13, 2020 / 8:00 AM IST

A Doughnut Way to think

Describing an evolving approach in the literature of economic development

Take out a sheet of paper. Draw two concentric circles. And here you go – a Doughnut, solving economic, social, and perhaps political issues as well. 

The indigenous idea of the doughnut revolves around the relationship between the social foundation and ecological ceiling, denoted by the two concentric circles and a safe space prevailing within. A Doughnut is where our problems lie and where solutions to them arise. First presented by Kate Raworth in her book Doughnut Economics: Seven Ways to Think Like a 21st Century Economistthis idea revolutionized approaches to economic theory. 

With a shift from the free-market hypothesis to neo-liberalism, there have been concerns arising about climate change worldwide. The Earth’s resources, as pedagogues of the free-markets view, were unlimited, and the competition made everyone better-off. Society was deemed non-existent, and government intervention unwanted. Prices were flexible and derived by the market forces of demand and supply. However, in this case, regulation is the necessary evil. It was not due to the exploitation of resources alone but due to the inherent instability of this whole system to sustain itself. The ideas of state and government came into being. It was only later that within the so-called cost-benefit analysis approach, we have started to accommodate social costs, such as costs of pollution.

Besides, the rising level of inequalities among classes and genders came into existence, stirring a need for redistribution of not only income but even wealth. Developed countries, such as the United States and the United Kingdom, were victims of such a disparity in income and wealth levels. Developing countries, on the contrary, faced severe problems of acute poverty and hunger. Gender inequalities added fuel to the fire. 

Be it households or work or politics, differences in treatment prevailed. 

Development cannot neglect any section of society. Because of this, the doughnut got construed, preserving this idea of growth and progress for all. 

Lately, there has been a constant debate between promoting growth and preserving the environment. With rising pollution levels, melting glaciers, increase in wildlife habitat loss, the concerns are becoming real as well as troubling day by day. Earlier, and even true today, that the western economies and capitalists favored expansion at the cost of ecological balance. There have been projects sanctioned without taking its effects on the environment into consideration. Constant profits and capital accumulation has been the primary goal of these large-scale businesses, empowered by investments from political leaders. It is a nexus of power-sharing among these stakeholders that make these conditions even worse. 

On the other side, the Asian and the African economies have focussed on their initial development, ignoring the environmental aspects altogether. The West pressurizes the East by constructing factories and outsourcing assembly accruing to the presence of cheap and abundant labor. The East bends to this superposition, and inherent exploitation attached to it, for its profit-motive intent to support the process of the rapid growth of the gross domestic product, the GDP.

According to the Environmental Kuznets curve, showing the relationship between the level of environmental degradation and the GDP per capita, such an outcome is favorable. Theoretically, it is an inverted U-shaped curve, denoting that as the process of industrialization matures in an economy, there is a shift of focus from monetary growth to a reduction of environmental degradation. Thus, it is reasonable for the East to focus on the development of infrastructure. And for the West to start caring for the environment.

Easy it may sound, but it assuredly is not. With the United Nations conventions about sustainable development and protection of the environment, even the Third World countries, forced to abide by these rules. The question that arises here is whether growth is desired or is saving the environment; whether achieving a particular benchmark in growth is crucial to be competitive or sustaining the ecology for our future generations is. Even if the concept of sustainable growth and development has singled in our textbooks, theory and evidence suggest otherwise. 

The doughnut, as proposed by Kate Raworth, promotes this line of thought. As the process of development furthers, the shape of the doughnut becomes more pronounced, at least it must be the case even if it doesn’t seem to be. After all, any such theory is a harmless misrepresentation of the tangible world or a representation of utopia. It provides us with hope and a fresh perspective to view the world, without which we would be in utter ignorance. Even if we cannot achieve complete doughnut, we can bring ourselves close to it by proper targeting and policy interventions.

Source: https://www.kateraworth.com/doughnut/
Source: https://www.kateraworth.com/doughnut/

The doughnut has the social foundation and the ecological ceiling as the inner and the outer bounds. The safe space within marks a variety of social issues faced by humanity. The red wedges show either shortfalls in the social foundation or overshoot of the ecological ceiling. The elements included in the doughnut can or cannot be quantified. When quantifiable, the height of the red wedge denoted the severity of that element. 

Developing economies like Asian and African countries focus on building the social foundation stronger. Developed economies, with a well-established social foundation, have shifted to the building of the ecological ceiling. The aim of both these economies, in the long-run, is to sustain the shape of the doughnut. And, it is possible by a congruous elimination of shortfalls as well as the overshoots. 

It implies political prioritization of the growth of gross domestic product to be replaced by an economic vision that seeks to transform global and local economies. A regenerative and distributive economy by design can bring humanity into the doughnut. It would also act as a 21st century compass, with the task to create a map of the terrain ahead. Conclusively, we endeavor such a Doughnut economy for the well-being of society at large.