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Road to twenty-first-century economics

The Sustainability in Finance Interreg project brings twenty-first-century economics into the class room. Here is a closer look at a framework that redefines economy, the Doughnut model by Kate Raworth.

Published : 19.02.2021

Kate Raworth (2017) identified different ways to rethink the role of economics and created the Doughnut model as a framework for twenty-first-century economics. Let´s take a closer look at the viewpoints of her model.

Redefining economy

According to Raworth some of the new ways to redefine economy are: to change goals, to see the big picture, to nurture human nature, to support circular economy and systems thinking.

We have been told that we should grow our GDP. Over a half century the unlimited growth of GDP has been the ultimate goal of societies. But, it is not nearly enough. We need bigger goals than GDP. The twenty-first century economics should support the ultimate goal to meet the human rights of every person within the means of our life-giving planet. Instead of focusing on unlimited growth of GDP, Raworth urges us to find a way to reach a balance.

Embedded economy is the basis for future economy. We are, as individuals, households, communities and societies not separated from nature. Thus, we should not look at economy as something separate but rather in the context where social and environmental aspects define the inclusive and sustainable economic development.

Michael Douglas will always be remembered as a Gordon Gekko in the movie Wall Street and by his character’s legendary allegation “Greed is good”. The portrait painted of a rational economic man is self-interested, isolated, and calculating and dominant over nature. However, we are as human beings much more than that. We are social, interdependent and altruistic. We build our lives on values and ethics respecting human rights and dependence upon the living world.

Ecological degradation is simply the result of degenerative industrial design. It must be seen as a design failure. This century needs economic thinking that unleashes regenerative design in order to create a circular – not linear – economy. Understanding the complexity of economy gives way to understanding the importance of systems thinking. The understanding of complex social-ecological systems that call for solutions-oriented 21th century economics to build the road toward a carbon-neutral sustainable future.

What exactly is the Doughnut model? 

According to Kate Raworth, it is a radically new frame for guiding humanity through this century. Her model points towards a future that provides for every person´s needs while safeguarding the living world on which we all depend.

Under the Doughnut´s social foundation are the shortfalls of human well-being, faced by those who lack life´s essentials such as food, education and housing. Beyond the ecological ceiling lies an overshoot of pressure on Earth´s life-giving systems, such as climate change, ocean acidification and chemical pollution. But between these two sets of boundaries lies a sweet spot – shaped unmistakably like a doughnut – that is both an ecologically safe and socially just space for humanity. The twenty-first-century task is an unprecedented one: to bring all humanity into that safe and just space.

The Doughnut´s inner ring – the social foundation – set out the basics of life on which no one should be left falling short. These twelve basics include: sufficient food; clean water and decent sanitation; access to energy and clean cooking facilities; access to education and to healthcare; decent housing; a minimum income and decent work; and access to networks of information and to networks of social support. They are all included in the United Nations Sustainable Development Goals agreed upon by 193 member countries in 2015.The aim is to achieve a majority of these goals by 2030. (Raworth 2017, 44-45.)

Welcome to twenty-first-century economics!

Haaga-Helia’s School of vocational teacher education coordinates the Sustainability in Finance (SuFi) Interreg project during 2020-2022. In this project a vocational Sustainability in Finance open online course (15 etcs) will be developed for vocational education and training (VET).

The course consists of three 5 etcs modules: Sustainable development and climate change, Sustainable finance and Future megatrends and vocational competences. Modules will be offered in Haaga-Helia´s Curriculum of the Degree Programme in Business Administration as free-choice studies starting next term.

I am sure we will learn more about twenty-first-century economics and the Doughnut model then.

References

  • Raworth, K. 2017. Doughnut Economics – Seven Ways to Think Like a 21st-Century Economist. London. Random House Business Books.