On its website, the Doughnut Economics Action Lab describes Doughnut Economics as “a compass for human prosperity in the 21st century.” Its proponents prioritize economic solutions that meet both the basic needs of all people—food, housing, equity, democratic inclusion—and the ecological needs of the planet that we all call home. Economist Andrew Fanning joins the show to discuss how Doughnut Economics can redefine economics for the 21st century, and he doesn’t sugarcoat the importance of implementing the doughnut model in order to successfully combat climate change.
Andrew Fanning is an ecological economist and the Data Analysis & Research Lead at Doughnut Economics Action Lab at the University of Leeds.
Twitter: @AndrewLFanning, @DoughnutEcon
Doughnut Economics Action Lab (DEAL) https://doughnuteconomics.org
Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist https://www.chelseagreen.com/product/doughnut-economics-paperback
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
David Goldstein:
We talk a lot about middle out economics. It is a metaphor. Donut Economics is a different metaphor that I think is consistent with middle out in many ways.
Andrew Fanning:
What the donut aims to show is a goal, and that goal is that we want to meet the needs of all people within the means of the living planet.
Nick Hanauer:
We have to move from a conversation of economics that centers around profits for corporations and move to these much more important outcome based metrics.
Announcer:
From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
One of the big requests we get here on Pitchfork economics is to talk about Donut Economics. Nick, you’re familiar with Donut Economics.
Nick Hanauer:
Yeah. And we had Kate Raworth, the originator of Donut Economics on our previous podcast, The Other Washington, and we’ve been remiss in probably not having her back on. But today we’re having one of her colleagues, Andrew Fanning, who’s an ecological economist, and the data analysis and research lead at Donut Economics Action Lab, at University of Leeds, with us to talk about their work and how they’re putting Donut Economics into, well, into action. Taking this idea, this metaphor, and turning it into ideas and policies that can shape outcomes. And it’ll be really interesting to talk to him about how they’re doing that. So let’s get to it.
Andrew Fanning:
I’m Andrew Fanning, an ecological economist leading the research and data analysis at Donut Economics Action Lab.
Nick Hanauer:
So, Andrew, tell us what the action lab is.
David Goldstein:
Or do you want to start with the elephant in the room? Explain what Donut Economics is.
Nick Hanauer:
Yeah, there you go.
David Goldstein:
So people don’t think we’re talking about donuts necessarily.
Andrew Fanning:
Well, we could talk about donuts. I tend to do that quite a bit. But no, the Donut Economics it’s a framework that was really created by my colleague Kate Raworth. It’s a concept that she invented in 2012. It looks like a donut. That’s why it’s called Donut Economics. It’s because of the shape.
So if you imagine drawing on a sheet of paper, a donut, those two rings, and you also imagine resource use emanating out from the center of that donut. Then what the donut aims to show is a goal. And that goal is that we want to meet the needs of all people within the means of the living planet. And how it shows that is by saying that, okay, we want to make sure that resource use is above a social foundation, that it reaches that first ring of the donut, that we don’t want anyone to be lying in the hole of the donut, because that means that people are falling short on the essentials of life, like food, or water, or healthcare, or education, political voice, gender equality, and so on and so on.
These social priorities, Kate crowdsourced from the Sustainable Development Goals. So we know that they’ve been agreed upon by essentially all the world’s governments. So we want to make sure that everyone is above that social foundation and into the doughie space of the donut, while simultaneously make sure that we don’t overshoot that outer ring that we think of as an ecological ceiling, because then we start generating excessive pressure on our planetary home. We cause climate change, we acidify the oceans, we’re destroying ecosystems and the critical biodiversity that they house.
And within these ecological dimensions, we have crowdsourced those from what leading earth systems call the planetary boundaries that govern the stability of our planetary home. So we will need to make sure that we stay within that ecological ceiling, but make it over the social foundation, and that we’re all living in this space of the donut, which is really more about a space of thriving in balance with both people and planet.
Nick Hanauer:
Awesome. So tell us about your Action Lab. What are you up to?
Andrew Fanning:
Yeah, that’s a great question. So we are keeping busy. Donut Economics Action Lab, it’s an organization that was co-founded by my colleagues, Kate Raworth and Carlota Sanz in 2019. And really it exists to help turn the ideas of Donut Economics from words in a book that was written in… There’s a book that Kate wrote in 2017, now been translated to over 20 languages called Donut Economics, Seven Ways to Think Like a 21st Century Economist. And we want to take those words, and Donut Economics Action Lab exists to transform them into transformative action, so that we work together with inspiring change makers that we see all around the world who aren’t waiting to be given permission to essentially to pick up these ideas and go. And they’re working in communities, in cities and regions, in education and businesses, and in government. And it’s all really, really quite inspiring, and trying to keep up with all the energy that’s bubbling around this idea.
And we work in a few ways. One of them is really about reframing economic narratives. And the way that we frame it is that we need to have an economic narrative in an economic system that is aligned with this 21st century goal that is to meet the needs of all within the means of the living planet. And that our 20th century economic system that we have inherited is abjectly failing to achieve these goals. And one of the ways that I try to contribute in this space of reframing economic narratives is by trying to create metrics and visualizations that help to make the performance of both socially and ecologically towards this goal visible, especially at different scales, like at cities and at country. So one is reframing economic narratives.
The second one is by invitation. We work to support strategic policy conversations in internal processes, really by people who are inside struggling for change within their institutions, within their businesses, and so on. And in those cases, really what we aim to do is to follow the lead of those who are holding such processes, that we don’t mean to come in and dictate a situation, especially if we don’t know the context.
And finally, where we dedicate a lot of our energy is around co-creating tools and making them available in the commons for anyone to use and to adapt. And so for these tools, when I call them that, they could be explainers around what is Donut Economics, or lesson plans to teach to students, or workshop activities to run with communities or businesses, or other things that someone could pick up and apply in their context.
David Goldstein:
And how’s it going? Because I don’t know about the UK, but here in the US the introductory economics textbooks are still teaching that old 20th century economics. Any progress in the UK on moving academia?
Andrew Fanning:
So that, as you guys know, it’s slow going, especially in the world of economics curriculum. So there’s a wonderful organization that really we aim to point people towards in that space called Rethinking Economics, that they’re quite active in Europe, and I believe in the United States too, who are really struggling with that big system change of how do we transform the curriculum.
We’re starting to see, there’s actually an open letter organized by a changemaker right now who’s calling for an economics curriculum in regenerative economics that I just saw, I think it was last week, that is starting to pick up the concepts, not just of Donut Economics, but I would say this broad umbrella of progressive economic thinking in aiming to meet this goal that I mentioned about having wellbeing economies that are within the scale that our planet can sustain.
So that’s one, but there’s no question that certainly the departments of economics… I was trained as a conventional economist, and they’re very much still teaching that same 20th century economic thinking.
Nick Hanauer:
Yeah, it is a tough nut to crack.
Andrew Fanning:
Yes, it is. Yes.
Nick Hanauer:
They love them, their old timey economics, don’t they?
Andrew Fanning:
Yeah, yeah. But one of the ways that we’re aiming to move beyond that, again, is that space of just not necessarily targeting the Department of Economics themselves, because one of our strategic principles for working is to the extent possible, of course, not everyone can do this, but we aim to go where the energy is. So what that means is, we’re not really spending a lot of time knocking on closed doors in order to get these ideas and these concepts out there. Even though it would be wonderful if we found departments of economics were much more receptive, but we have no shortage of people who are willing to pick up these ideas and explore what they could look like.
Nick Hanauer:
Can you give us some specific examples of how you would work with an institution, and what do you do and what do they do?
Andrew Fanning:
I’ll give an example. Just recently my colleague launched a tool that specifically focused on redesigning business in line with the principles of Donut Economics. And this tool is essentially a workshop activity that companies can use to look at the design, not of their products, but actually the design of themselves as institutions. And it’s through these five core design traits, which are inspired by the work of Marjorie Kelly. And it’s around looking at what is the purpose of your company? How is your company networked? How is it governed? How is it owned? And critically, how is it financed?
And across all of those five layers of design, what we invite companies to do is to identify the most bold and transformative ideas to transform themselves towards a vision of being regenerative by design, so working with and within the cycles of the living world in their processes, as well as being distributed by design, which is about aiming to share the opportunity and value created in their activities with all who co-create. So that process in and of itself is a tool that we have put out there that consultants or businesses themselves are welcome to pick up and apply in their own context, or work with others and other consultants who are using this process to help them work it through themselves. So that’s one space that we’re working in the business sphere. And it’s the only tool that we are currently advocating using with respect to businesses and enterprise.
And one of the reasons because of that is that the donut, I described it in conceptual terms about this space, of a safe and just space for humanity where we meet the needs of all within the means of the living planet. But critically, it’s also used as a quantitative tool to illustrate how we’re performing with respect to those goals. And what we see at the global scale is that there are billions of people falling short of meeting their most essential needs for food, and health, and so on.
And collectively, we are now more overshooting more than six planetary boundaries. So we are causing climate change and creating critical biodiversity loss and so on. So the donut actually provides this visual diagram that shows humanity’s performance. But when it comes to businesses that’s less clear because there’s less of a rationale in my view that a business could be entitled to a share of resource use, for example. So what we’re actually focusing on is businesses not using the donut as a quantitative tool, because we see, frankly, quite a high risk of greenwashing in that space, and actually to much more focus on how these businesses can redesign themselves.
Nick Hanauer:
So redesign themselves in what way?
Andrew Fanning:
There’s, there’s many different ways, but of course, those five design layers that I mentioned almost get easier at the top and harder the further you go down. So having a regenerative and distributive purpose, like that you announce in your mission or in your values is something that many companies can do. There’s a lot of efforts, a lot of focus around the networks that businesses have agency over, for example, in their supply chains, or how we can form alliances with other businesses and so on.
When it comes down deeper, so that’s purpose then networks then governance, this is where it starts getting into how decisions get made, who has voice in terms of decision making. Do we have different types of voting structures on boards, or does nature have a voice, and so on. Even lower is ownership. Who owns the company? Who owns the infrastructure? Who owns the data? Who owns all of these parts of a business? And how can it be redesigned or insured so that those who own the business are not simply extracting the value and opportunity from it, but that are actually reinvesting or putting their returns from that ownership towards the purpose. And critically and deepest is finance. Who is finance serving? And is that also aligned with the purpose of the company itself?
And in all of those spaces, I think that there’s decisions that can be made that are more aligned with Donut Economics and others that we can stop doing that are less aligned with Donut Economics.
David Goldstein:
So we’re really talking about defining the social purpose of the corporation to be maintaining the donut as opposed to maximizing shareholder value, which is what 20th century economics teaches?
Andrew Fanning:
Yes, that’s right.
Nick Hanauer:
What are the projects you’re most excited about in the future?
Andrew Fanning:
So one of the things that I get really quite excited about is our work at Donut Economics Action Lab at the city scale. So we are seeing a lot of interest in energy from cities in particular, less at the national level, although that’s starting to come in now, possibly because cities are inspiring the national leaders to take notice. But in 2020, the city of Amsterdam unveiled their Amsterdam Donut Report. And essentially what they did was to apply a framework that looked at their local aspirations, both the be a thriving community in Amsterdam, as well as embedded in a thriving ecosystem, but at the same time take into account that every city is connected with the rest of the world and has global responsibilities that also deserve to be taken into account both ecologically and socially once again.
And so they unveiled this report in April, 2020, which is at the height of the first wave of the Covid Pandemic. And it created quite a lot of traction in the media almost through the accident that it happened at that moment in time, because they’ve been working on it for some time previously. But they inspired many other cities to sit up and take notice, essentially. That has been really quite inspiring because today we now have almost 70 cities that are picking up the tools and the concepts of Donut economics, using this indicator based framework that looks at local aspirations and global responsibilities, or also adopting from workshop based activities, or working together with policymakers, or participatory workshops and so on, exploring what it could mean to start achieving this 21st century goal of how do we meet the needs of our residents within the means of the living planet, both at home as well as abroad.
And so that’s really inspiring. And those methods, from a data led perspective, they’re still only just beginning to be created. There’s all kinds of issues around data availability, that we’re not measuring the types of things that matter. While at the same time, there’s a lot of data that is arguably not very useful for the types of language that we want to be measuring both socially and ecologically. So that’s something that’s evolving, and I’m hoping to be able to contribute more to it by developing metrics, by making visible the type of goal that we’re aiming for with Donut Economics.
Nick Hanauer:
But Andrew, can you describe a thing that they did that was different other than analyzing stuff in this way? Were there behavior changes or-
David Goldstein:
Yeah, how does it impact policy at the same level?
Andrew Fanning:
Yeah, that’s a great question. So the first step that we have started with in Amsterdam and in other places, it has been this data led approach that’s essentially looking at targets across quite a number of domains like food and health and water, but also what are impacts on biodiversity, on our planetary home, and critically on our relationships with other communities. But if you start analyzing not just performance, but looking at targets, your performance with respect to targets across those, you start constructing what we call a portrait of the performance of how your city or your place is doing.
But that’s really just the first step. And the way that we have presented that is that we want to make that portrait as locally relevant as possible so that it can serve as an input to discussions with policymakers, and with stakeholders, and at workshops and so on as a starting point to say, “Where can we focus our actions?” Or, “How will this strategy possibly create if it’s in mobility, or in transport, or in housing?” Or a great example from Amsterdam is their circular economy strategy. So for example, they’re aiming to be 50% circular in terms of their use of raw materials by 2030. So when they’re plugging in those strategies, they can start mapping how their goals to be circular fit in with their broader aspirations to have thriving people in their thriving place while respecting the wellbeing of all people and the health of the whole planet.
David Goldstein:
It’s been a few years since I read the book, but I understand Donut Economics as a really useful illustration and metaphor for, as you say, for target. So you want that economy to be within the dough of the donut. You want to bring everybody into it, but not exceed our environmental capacity. I’m wondering though, does it lead to any specific policy heuristics? Is it just about defining what the targets are, or does Donut Economics speak to a particular way of running the economy?
Andrew Fanning:
So the donut itself was created in 2012 in the run up to the Sustainable Development Goals. And that’s the visual framework that’s showing performance with respect to targets. And Kate followed that up with the book in 2017, that the subtitle is Seven Ways to Think Like a 21st Century Economist. So it’s not setting out a set of policies or prescriptions, but rather aiming to contrast the 20th century economic system that we have inherited with the types of thinking that would be more conducive to regenerative and distributive economies.
And I won’t go through each of the seven ways, but I think a few of them are key. So if you look at the starting point of economics, what’s the first image that comes to mind when you think of our first economics class? The X graph of buyers and sellers coming together in markets where we find an efficient equilibrium. It’s based on price and it’s on quantity. And because we have perfectly functioning markets, everybody’s happy, or at least they’re minimally unhappy.
So that image that we’ve inherited from conventional economics is deeply flawed. And so we know that you can’t just say, “Move aside government and let market prices be the sole measure of value.” That actually Donut Economics is very critical of this whole concept as well as many heterodox schools of economics. And that the idea that mechanical equilibrium borrowed from Newtonian physics can be a useful heuristic for, or a model for 21st century economic systems, we think that there’s a much greater need to embrace complexity and systems thinking with its focus on path dependence, and relations, and feedbacks, and so on. And so that’s one example of the need to shift how our economic thinking is taught.
David Goldstein:
We completely agree. That’s totally consistent with our approach to narrative in terms of middle out and the new economics that supports it. It’s interesting. I think when I look at the donut, the main principle that we talk about, we have this pivot to growth. We always like to talk about, what’s in for it for the people when we pursue these policies.
And the way I look at the donut, and this is the way I originally interpreted it, is our main principle, our golden rule is inclusion. The more people you fully include in the economy, the faster and more prosperous it grows. And I see that bottom circle, the inner circle, that you want to bring people above into the dough. That’s including people in the economy. And the way I view it, when you exceed that outer circle, that’s extraction and exclusionary, because of course the impacts of exceeding our capacity are always felt unequally. You talked about the global north versus the global south. The global south is going to suffer the worst impacts of climate change. The global north will be able to take care of itself a little better, but you’re going to have a lot of people who are going to suffer from climate change from countries that weren’t responsible for climate change. So when I look at that donut, what I would say is, “You want more donut, you include more people in that donut, and that’s how you get a bigger donut.”
Andrew Fanning:
I think that we need to be careful about the language around growth, because I think that the way that you framed it there is I can get on board with, of course, if we can include more people and ensure that everyone is meeting their needs, then that is certainly something we all need to strive for. But I guess when it comes to conventional economic understanding of growth, it’s typically like that we don’t-
Nick Hanauer:
Yeah, growth is problematic. So yeah.
David Goldstein:
The problem with abandoning growth as part of your narrative is yes, it’s really problematic, and we think of growth totally differently than what the textbooks teach growth to be. But that word is really useful because if you’re actually trying to enact policy because people want growth.
Nick Hanauer:
Yeah, they want-
David Goldstein:
They want their lives to get better.
Nick Hanauer:
Get better, yeah.
David Goldstein:
And that’s what growth is. It doesn’t necessarily mean consuming more stuff. It’s about improving people’s lives, that’s how we view growth. But from a practical, we deal with politicians and policymakers. From that practical perspective, you can’t abandon growth because you don’t want the donut to look like a kind of progressive austerity.
Nick Hanauer:
And the reason for that is you can’t sell it. People will never get on board. So you have to find a way to make the economy improve the lives of all people. And one of the words we use to describe that process, in English anyway, is growth. But we absolutely acknowledge with you that the conventional understanding of growth is increases in GDP is both inadequate and almost certainly harmful.
Andrew Fanning:
Well, then I don’t see any contradiction really. Some of the narrative that we use around growth, one of the seven ways of Donut Economics is about moving beyond growth. I think a great metaphor is if we look to the natural world, or indeed to our bodies themselves, that things in nature grow and it’s a healthy phase of life, but at a certain point, things grow up, at which point only then are they actually fully mature, and thriving, and flourishing within their overall ecosystem.
And I tend to think of the economic system in a similar way, at least insofar as certainly in physical terms, that we can’t have a growing economy forever on a finite planet. But also I think that from a social perspective, it can be useful to recognize that when a certain phase may already have been completed, and that now we need to be talking much more about how can we maintain what we have and develop better, but not in material terms.
David Goldstein:
Yeah, we don’t disagree with that at all, but I would say that there is so much room to enhance human flourishing. There’s so much more progress to be made. And again, that doesn’t necessarily mean consuming more stuff. We’re increasingly dematerializing the economy, but there’s a lot of room to enhance human flourishing across the board. And that’s what we mean by growth.
Andrew Fanning:
I guess that in a country like the United States and in high income nation with very, very high levels of resource consumption, it’s not just about the rate at which resource use is dematerializing in the United States, but it’s whether that rate is sufficient to actually avoid ecological and climate crisis, and the types of breakdown that we’re already observing. So I think that moving beyond growth in that sense is actually an imperative for high income and wealthy nations in particular, just because they’re holding such a high portion of that responsibility.
David Goldstein:
It also sets a different target for developing countries so that everybody’s not driving giant cars and living in track houses with yards and so forth.
Andrew Fanning:
Yeah. What we actually find in some of my research that compares across countries, and we looked at 150 countries and we tried to measure their performance both ecologically and socially. And we see a lot of these high income nations like the United States, like Canada, like Western Europe, overshooting their pressure on the planet significantly, but achieving quite high levels of social performance, at least based on international standards. And then we see another group of countries with quite low pressure on the planet, but falling far short of meeting their social needs. And a group of emerging and middle income countries, some of the most progressive of which, I mean the best performing country, no country is actually in the donut, but the best performing country that we find is actually Costa Rica, which is seemingly doing the best of transforming levels of resource use into social wellbeing more effectively than any other countries that we observe. And also a number of countries that are like China and others that are almost shooting past that donut space and heading towards that trajectory that the United States and other countries are already on.
David Goldstein:
Final question, Nick.
Nick Hanauer:
Yeah. Why do you do this work?
Andrew Fanning:
That’s a great question. So I honestly cannot find a better thing for me to be dedicating my time and my energy towards working on just because I believe that it’s the ultimate challenge, that we need to transform our economic systems, and it’s what gets me up every day in the morning, and it’s what helps me work towards hopefully a better world for my kids and for everyone.
Nick Hanauer:
That’s great. Well, thank you very much for being with us today. Say hi to Kate for us.
Andrew Fanning:
I will. Thank you very much.
David Goldstein:
We talk a lot about middle out economics, Nick. And let’s be clear, it is a metaphor. We use metaphors to describe the world and try to wrap our brains around it. That’s part of how the human mind works. And Donut Economics is a different metaphor that, I don’t know about you, but I think is consistent with middle out in many ways.
Nick Hanauer:
Yeah, I agree. I think that the donut metaphor is much more climate focused. The weight of the metaphor is more oriented around resource extraction, and emissions, and so on and so forth. And wellbeing is also embedded in that metaphor in the sense that anybody who’s in the hole of the donut is falling out of the donut itself. I’m largely sympathetic to this approach. I think it makes a shitload more sense than the neoclassical approach, which is pointed in exactly the wrong direction.
And I think that there will be no perfectly right approach to getting people to start to incorporate wellbeing and the limitations of the Earth’s ability to sustain life that have to be part of our economic conversation at all times, that they have to be the focus of our conversations about economics. And we have to move from a conversation about economics that centers around profits for corporations and income for high earners, and how high the stock market is, and whether GDP is going up, and move to these much more important outcome based metrics.
David Goldstein:
As I mentioned to Andrew, I think there’s a risk to the Donut Economics metaphor in the way that Andrew was describing it, that it ends up looking like a progressive austerity, that well, these are the limits of the planet and we can’t go beyond that. And that means you have this narrow band where we get everybody up to a comfortable level, but we can’t go beyond that.
And we don’t believe that in terms of real life lived experience, human flourishing. We don’t believe that having physical limits on the planet… We believe there are. We don’t believe that those physical limits actually limit human wellbeing. In fact, we believe that staying within those physical limits enhances our wellbeing, because obviously when you exceed it and you have climate change, and you have these horrible heat waves, and floods, and droughts, and monsoons, and hurricanes, and flooding, crop failures and so forth, that’s bad for human wellbeing.
So it’s actually staying within that donut is good on both sides. On the one hand, it prevents the disasters and physical impacts to the world that reduces human flourishing. And on the other hand, by bringing more people into, I’ll say it again, that donut of inclusion, we actually are enhancing human flourishing more broadly. And because of the way the economy grows from the middle out, the way that the more people you include the faster and more prosperous the economy grows in the sense that we’re talking about growth, it actually makes it easier to stay within that donut because you have the contributions of everybody. So there is that risk that it looks like, oh, we’re just constrained within this narrow donut.
Nick Hanauer:
And I think that one of the points I think that you and I agree on is, it’s not just that it’s technically wrong, that we have to stop improving people’s welfare by living within the constraints of the planet, that it is possible to build an economy where you can improve welfare for all, even staying within the bounds of the planet. But because we live in the world of politics and policy, I think what we believe and our experience has shown, that you can’t win the day politically by saying to people, “Suck it up.” If you’re just being realistic about the world, that is not a political platform that will win. So we have to find a way to deliver the goods for people in a way that works for them and works for the planet. And that’s the only scenario within which we are likely to be successful in building a sustainable economy long term.
David Goldstein:
Right. Just like there are constraints on the physical world, there are constraints on the political world that we-
Nick Hanauer:
Yes, there are. Yes, there are.
David Goldstein:
Now, the difference is those physical constraints, those are hard constraints. There’s no getting around physics. Politics-
Nick Hanauer:
Politics is smushier.
David Goldstein:
Yeah, you can move it, but it takes time and you can’t do it all at once.
Nick Hanauer:
Yeah. So anyway, interesting conversation.
David Goldstein:
And recommend the book, Donut Economics. Of course, we will put a link to everything in the show notes, but you can buy the book wherever you want. You can get it at that big online company that made Nick rich. Yeah. Or you could go to your local independent bookstore which is where we prefer to shop.
Announcer:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works. And peek behind the podcast scenes on Instagram at Pitchfork Economics.
As always, from our team at Civic Ventures, thanks for listening. See you next week.