Updated: Jun 14
Running in circles is not inherently bad - here's how the economy can do it too.
Environmental damage and climate change are no longer theoretical economic externalities but disastrous realities. Economics can seem to be a complex arena that definitely needs rethinking since it has comfortably and devastatingly settled in today’s world. Kate Raworth, in Doughnut Economics: Seven Ways to Think Like a 21st Century Economist (2017), highlights that “The most powerful tool in economics is not money, nor even algebra. It is a pencil. Because with a pencil, you can redraw the world.” In 2012, the renegade economist Kate Raworth did formulate an alternate economic compass that looks like a doughnut to set out for this century’s journey.
Need for an alternate model
One in three people in the world (2.37 billion) did not have access to adequate food in 2020. Closing the global gender gap has increased by a generation from 99.5 years to 135.6 years. The world’s richest 1 percent own 45.8 percent of the world’s wealth. Human activity or the anthropogenic exploitation of earth’s systems has led to a widespread, rapid and intensifying global climate crisis. The covid-19 pandemic has highlighted the fragilities in our economic system has not ensured social security and has put an immense strain on global resources.
The “for-profit” and growth-addicted model which aims to generate wealth to redistribute later has not worked. It has exacerbated the inequalities to a large extent. In order to achieve the Sustainable Development Goals set up by the United Nations Development Programme, an alternative economic model is required.
(Also Read: The Anthropocene Extinction – Are We At Fault?)
While various models have developed, the doughnut is promising and serves as a safe and just space for humanity.
The Doughnut Economic Model
Doughnut economics draws its inspiration from several economic schools of thought and clubs them together in a succinct model. The aim is to ensure human prosperity in a flourishing web of life. The visual of the doughnut augments the goal and redirects the priorities of the global economy.
The visual of the doughnut encompasses two surfaces: inner (social foundation) and outer (ecological ceiling). The social foundation maps out the twelve basic needs of humanity: social equity, political voice, peace and justice, income and work, education, health, food, water, energy, networks, housing and gender equality. A shortfall in these aspects indicates a shaky social foundation, which is an unfortunate reality by design. The ecological ceiling represents the nine planetary boundaries as recognised by Stockholm Resilience Centre: climate change, ozone layer depletion, air pollution, biodiversity loss, land conversion, freshwater withdrawals, nitrogen and phosphorus loading, chemical pollution and ocean acidification. The overshoot above the ecological ceilings implies that human activity has put colossal pressure on the planetary home. In between the social foundation and the ecological ceiling is a safe and just space for humanity. This space ensures that everyone’s needs and rights are met and protected within the means of the planet.
(Also Read: Your one-stop guide to the SDGs)
The transition to this space requires the management of five key aspects: population, distribution, aspiration, technology and governance.
Moreover, while rebuilding the world for a post-covid world, it is important to carry forward the seven ways to think like a 21st Century Economist.
Jalebi - Economic Model For India
The doughnut is open to exploration, and in India, jalebi serves the sweet and safe society we envision. The social, environmental, political and economic woes call for a decentralised system that satisfies diverse needs. Like the doughnut, the outer surface represents the nine planetary boundaries. The inner rings of the jalebi highlight the multi-faceted and overlapping issues that India's diverse geographies and demography pose. Nevertheless, the overshoot (of planetary boundaries) and shortfall (in the social foundation) remain the same. At the heart of this 'sweet-tedha-medha' model are active citizens and the political will of leaders. It is crucial that the political will bends and curves back to priorities other than GDP growth to ensure human prosperity. To facilitate this bend, citizens have to adopt and savour the jalebi. Vote, eat, commute, organise and volunteer, keeping the model at the centre of decision-making. The jalebi also highlights how humanity is interconnected. Communities must nurture this interwoven structure to offer solidarity and aid in a crisis.
How can the Indian Economy adapt to the doughnut or jalebi?
India has set up its net-zero target to be 2070 at COP26. The pandemic has been hard-hitting for the most marginalised in the country. As of now, the economic outlook and priority are affixed on Gross Domestic Product growth. Moreover, the impact of the climate crisis is devastating, India ranks in the top ten countries as most affected by climate change. It is imperative that the priorities shift to tackle the simultaneous crises.
Previously, the doughnut economic model has been adopted by a few United Nations conferences. In India, several rural economic models are regenerative and climate-resilient. Several policy frameworks need to be redeveloped to focus on the weak social foundation and degrading environmental indices. Since India has a large and diverse population and geography, the social, ecological, political and economic models need to be adapted accordingly. Lastly, economics as a discipline is expansive, explorative and diverse. In the Indian context and in the institutional context, it must escape today’s neoliberal era.
(Also Read: Circular Economy Discussion)
GermanWatch. (2021, January). GLOBAL CLIMATE RISK INDEX 2021.
Food and Agriculture Organization. (2021). The State of Food Security and Nutrition in the World 2021. Www.Fao.Org.
Stockholm Resilience Centre. (2009). The nine planetary boundaries.
Raworth, K. (2018). Doughnut Economics. Penguin Random House.
World Economic Forum. (2021, March). Global Gender Gap Report 2021.
GORDON LIBRARY. (n.d.). Sustainable Development Goals [Illustration].