Doughnut Economics - Kate Raworth - Part 7 of 8

2020 Reading Challenge - Day 215

August 4, 2020

Book 58 - Doughnut Economics
Kate Raworth
Chapter 6 - pages 175-205

I took tonnes of notes on this chapter - Create to Regenerate - which is all about shifting from a degenerative linear economy (cradle to grave for material products) to a regenerative circular economy (cradle to cradle).

The current economic thinking is based on another Kuznets curve which, similar to the curve on inequality, seems to suggest no pain, no gain. Pollution will get worse  and worse but at some magical point in the future, it will get better as economic growth cleans up pollution and replaces the resources that it runs down.

This idea was based on some local air and water studies in the 1990s which seemed to show that pollution in those limited areas did go down as income went up. But... and it's a big but... this did not apply to global issues such as deforestation, land degradation, greenhouse gases, loss of biodiveristy, etc. Despite the limitations of the study, it has been turned into a widely cited economic mantra.

As you and I already suspect, the idea that pollution (at a global scale) will go down as income rises, is a myth. Growing the economy now and cleaning up later doesn't work. Ecological degradation is not a "luxury" concern and we need to create economics that are regenerative by design.

But.. then we have the traditional or classical economists who mock "alarmist" cries of environmental critics. They basically think that what is good for the economy will be good for the environment, placing their trust in the diagram above. The thing is... even if pollution peaks in some countries... at that level of economic growth, we would need three or more earths to bring other countries to that same level (e.g. the level of the UK).

Raworth argues that economics is not a matter of coming up with laws but of coming up with designs. Today, economics is based on a linear industrial model: Take Make, Use, Lose - which is inherently degenerative. It's a cradle to grave model in which resources are ingested at one end and waste spit out at the other end. She also calls it the caterpillar model...

Such a model, however, runs counter to how the natural world works - there is a geological cycle, a hydrological cycle, a biological cycle. Everything gets recycled and recirculated. Businesses could learn a lot from the earth and perhaps even try things differently. Raworth suggests there are five different responses from business:

1. Do Nothing - just keep doing the same old thing... but some businesses realize this is not a smart strategy
2. Do what Pays - some ecological measures cut costs and boost brands ("We are Green!") but some businesses deceive (e.g. VW and their diesel emissions fiasco).
3. Do our Fair Share -is self-determined by each business but can also slip into the mode of taking our fair share...
4. Do No Harm - design a business for zero environmental impact - but being less bad is not being good - if a business can be designed to produce its own clean energy... why not go even farther... why simply take nothing when you could give something?
5. Be Generous - create an enterprise that is regenerative by design and gives back to living systems - leave the world in a better state than how we found it - only generous design is going to get us below the ecological ceiling and into the doughnut. Rather than just stopping all CO2 emissions into the atmosphere... go further and actually remove it from atmosphere. Nature gives us the measure of how one organism's waste becomes another organism's food/fuel. We can do the same. Transform the caterpillar into a butterfly...

The butterfly is how Raworth describes the Circular Economy which still has the caterpillar at its core... but adds wings, one for biological and one for technical. The idea that various products (biological and technical) can be used again and again through cycles of reuse and renewal. She gives the example of coffee grounds which, instead of going straight to compost or the garbage can be used to grow mushrooms (then becoming mushroom compost) or to feed cows/pigs/chickens (then becoming manure). For the technical side of things, it's a bit more complicated in that products are often not built to be easily dismantled and disassembled, plus companies have a proprietary interest in not making them to be that way. But old cell phones have a lot of valuable materials in them and yet in the EU, 85% end up in landfills or the backs of drawers. In Japan, however, they have 95% capture of technical materials... which is pretty darn good.

As we might suspect, capitalism is the opposite of generous. It creates one form of value, financial, for one group, shareholders. But there are other values - human, social, ecological, cultural. The fact that many companies horde their proprietary knowledge means that a lot of them will only recycle their own products... but that isn't going to work. She suggests that open design, open standards, open source, open data and modularity are the key... all of which requires transparency. The idea that a phone could be easily dismantled by anyone and its components easily reused or recycled or refurbished... is a new one... and one that many companies resist.

Companies have been focused for so long on profits and returns that they don't know how to operate any differently. But what if a company had, as its goal, not increased profits, but that it could contribute to and be part of a community. To have a living purpose and contribute to a thriving world. That would be something different... and would require something else. Finance would have to look past dividends and focus on other values. How about investments that deliver long term social and environmental value? Things like community banks, credit unions and ethical banks have already started... but she suggests even having complementary currencies like the Torekes in Ghent, Belgium.

As for the State, Raworth suggests that instead of taxing labour (which increases job loss as companies work to reduce their tax bill by reducing employees), tax non-renewable resources (like steel). Use the tax dollars to invest in regenerative alternatives. China, for example, is investing billions in renewable energy companies. If China can do it... why can't we?