Amsterdam: The Economy is a Doughnut

coffee and chocolate

Amsterdam is embracing an ecological approach to their economy by looking at it as if it’s a doughnut. Of course, it’s not a literal snack they are using, it’s a metaphor to visualize how different aspects of life interact with each other in an economic model. Classical economic models assume there’s always an external source of input and an external output where waste can be dumped (like the sea, air, landfills, etc.); but ecological models take into consideration the whole economic system. As a result these doughnut models capture reality much better since it’s no longer possible to socialize the costs of waste from running a modern economy.

“Within these two boundaries, between the social foundation that is on the inside and the ecological ceiling, there is this doughnut-shaped space where it is possible to meet the needs of all within the means of the living planet,” says Ilektra Kouloumpi, a senior strategist at Circle Economy, a nonprofit that has been working with Raworth, along with the nonprofits Biomimicry 3.8 and C40 Cities, to help the Amsterdam government adopt the doughnut model to make policy decisions. “The overarching question is: How can our city be home to thriving people, in a thriving place, while respecting the well-being of all people and the health of the whole planet?”

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The Future of Economics is a Doughnut

Economists have focussed on just one thing for the last hundred years or so: making money. That might sound fine, but classically these economists have ignored the societal and environmental costs of their proposed money making schemes. Their willful ignorance has unleashed climate change on us all, and that’s precisely where Kate Raworth comes in. Raworth proposes that 21st century economics focusses on the inequality and lack of equilibrium in the world. Once we focus on balancing our global economic system with our global life systems will we all benefit (instead of just the rich getting richer).

Humanity’s 21st century challenge is to meet the needs of all within the means of the planet. In other words, to ensure that no one falls short on life’s essentials (from food and housing to healthcare and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend – such as a stable climate, fertile soils, and a protective ozone layer. The Doughnut of social and planetary boundaries is a playfully serious approach to framing that challenge, and it acts as a compass for human progress this century.

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Thanks to Delaney!

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