For all the high-powered roundtables that were held in Davos last week, here’s one roundtable that couldn’t be found there – but should have been.
Photo credit: Igor Emmerich, given a spin by Lisa Dittmar
Imagine a company’s top executives sitting down around this table of planetary and social boundaries (’Ladies and Gentlemen, please, take your seats at the doughnut’…).
The CEO places one of their most iconic products right in the middle of the table – be it a hamburger or kids’ clothing, a solar panel or sun-tan lotion.
And then they discuss that product’s story – all the way from its supply and distribution to its consumption and disposal – in terms of whether or not it is helping to bring humanity into the safe and just space between social and planetary boundaries.
There’s plenty to talk about.
- Of all the nine planetary boundaries, which are the boundaries that this product is really adding pressure to? (Intensive use of water? Or large-scale land-use change?) Or which are the ones that it is helping to reduce pressure on (Renewable energy technology; water-saving devices?)
- Of the eleven social boundaries, which ones does this product really affect? (Are the women and men who make it paid a living wage, and free to organise? What is the impact on consumers’ health or nutrition from consuming it?)
- Next, tell the story of this product’s evolving social and environmental impact over the past ten years. How has the company improved its business practices so that it has positive impacts on the social dimensions, and simultaneously reduced resource use and hence pressure on planetary boundaries? Where, in contrast, have been the social and environmental steps backwards, pushing the product out of the safe and just space.
- And then, importantly, tell the story of the company’s ambition for this product over the coming ten years. In which dimensions can the company make transformative change both in improving its social impact and in reducing its environmental impact.
I can think of several companies that could proudly put their products on the doughnut table, telling an impressive story of the progress they have made and an honest assessment of how far they still have to go. And I can think of plenty of other companies that would probably refuse even to approach the table because it would starkly show the extent to which they are operating outside of the boundaries on both sides.
So could this kind of visual roundtable dialogue help drive commitment and action within companies? Listen in to discussions of this I had with Johan Rockström of the Stockholm Resilience Centre (SRC) and Gail Whiteman of the World Business Council for Sustainable Development (WBCSD) in a recent Guardian podcast on planetary boundaries and business.
Indeed, the SRC and WBCSD have just entered into an interesting collaboration. They plan to spell out a set of “planetary boundary must-haves” by 2020, and then turns these into a set of Key Performance Indicators for companies to assess their performance by. So I’m interested to see how the WBSCD’s member companies will use those KPIs in their daily work.
But meanwhile, if you think these corporate Doughnut Dialogues sound off the wall, well at least I’m in good company. Robert Jones of Wolff Olins – one of London’s leading branding agencies – blogged to suggest that every company should be asking itself: Is your brand a doughnut?
Leave a comment
The RSA have just put out a really well produced video of a talk I gave there recently on why we need a new paradigm for economic thinking in the 21st century – or why we need Doughnut Economics.
It is just 15 minutes so gives a handy overview of the concepts of planetary and social boundaries, and the implications for rewriting the meaning of ‘economic development’.
Enough said, here it is.
Leave a comment
There’s no doubt that this planet is under pressure – but where is that pressure coming from? Who or what has driven three planetary boundaries to be breached, and caused the stress to be rising on many others?
This 9 minute video dives into the extraordinary inequalities of resource use – within and between countries – that lie behind the story of humanity’s pressure at the global scale. Focusing on nitrogen pollution, freshwater use, climate change, and land use change, it starts to reveal who is putting pressure on the planet.
Did you know:
• Thanks to nitrogen fertilizer run off from America’s agricultural heartlands, there is a deadzone the size of Massachussetts in the Gulf of Mexico.
• If Europe turned vegetarian, its nitrogen pollution would fall by 70% (OK, some people say they would miss the parma ham, but you get the point)
• The UK imports two thirds of the water it uses – mostly in agricultural products – and some of it comes from countries that face water stress or that are home to communities facing water poverty.
• The average Qatari produces the same greenhouse gas emissions as 3 Americans, 11 Mexicans or 80 Ghanaians.
• In the UK, the richest 10% of people produce twice the CO2 emissions of the poorest 10%. In Sweden, it’s four times as much. In China, 18 times.
• China’s land footprint per person is one fifth of America’s – and America’s is one sixth of Australia’s.
Fascinating stuff. But there’s not nearly enough accurate and disaggregated data available at the moment on how unequal and how concentrated humanity’s use of natural resources is, either within or between countries. This will surely change over the next decade, as the pressure to create equitable governance of the planet’s resources (at every scale, local to global) drives demand for more information on who is using what. And that information will be measured in ‘natural metrics’ such as water, nitrogen, land, and carbon footprints per person. In fact I’ll bet that the extremes of resource-use inequalities within and between countries will come to be seen to be as important as income inequalities. And if this gradual shift towards assessing development pathways in natural metrics plays a part in widening policy-making attention beyond monetary metrics, that’ll be no bad thing.
Many thanks to Lisa Dittmar for researching and producing this video with me.
Leave a comment
If you like trying to fit square pegs in round holes, you’ll love this little challenge.
Can we (that’s humanity I’m talking about) figure out how to use Earth’s resources sustainably while ending poverty and extreme inequality at the same time – and achieve both of these in a world with a growing global population and an ever-growing global economy?
Here’s that four-fold challenge, set out in a snappy 5 minute video (many thanks to Ian McClelland).
What’s it look like in words and stats?
- Achieving environmental sustainability. Today we are using Earth’s resources as if we had one and a half planets to depend upon. So to be sustainable, we need to cut our total natural resource use back by 30% by 2050.
- Ending poverty and extreme inequality. Today the poorest 20% of people have less than 2% of the world’s income. And the richest 10%? They’ve got 57% of the world’s income in their pockets. No wonder so many millions of people still can’t afford the food, water, land and energy they need to get out of poverty. By 2050 we need to achieve a far more equal distribution of global income, and of the world’s natural resource use.
- Global population growth. Today’s population of 7 billion is expected to rise to around 9 billion by 2050 – that’s a 30% increase – then plateau at 10 billion by 2100. So the world’s resources not only need to be shared far more equally, but also with many more people too.
Think that’s a big enough triple challenge? Then add this for topping.
- Global economic growth. The global economy has quadrupled in size since 1970. And, on mainstream forecasts, it’s set to quadruple again by 2050, reaching $300 trillion. In contrast to the coming peak and plateau of population growth, every country aims to keep on growing its GDP, no matter how well off it already is today.
So can we achieve environmental sustainability and an end to poverty and extreme inequality, with a growing global population and ambitions for unlimited economic growth?
If you think we can do it all, how?
If you think not, what’s gotta give?
Answers on a square peg, please…
Leave a comment
The UK’s new Secretary of State for International Development, Justine Greening, must be on a steep learning curve in deciding how to take forward the UK’s approach to tackling global poverty. Word has it that staff at DFID have put just one book in her welcome pack: Getting Better by Charles Kenny of the Center for Global Development. So what impression will it give her of the state of development, and the task ahead?
Judge a book by its cover
First impressions matter – as do headlines, and book titles. And Getting Better is not shy in its message of “why global development is succeeding – and how we can improve the world even more”. To boot, the cover image shows Planet Earth nestled snugly in the middle of a sunflower. Apparently we are blooming.
Don’t get me wrong. The book has an important story to tell. Despite slow-growing or stagnating GDP in many low-income countries, the quality of life – especially health, education, and security – has improved significantly for many millions of people over recent decades. That is important news and good news.
One of the book’s most compelling messages is that, after oodles of theory, policy experiments, and statistical analysis, economists still can’t agree on what makes economies grow, and policymakers everywhere have less control over the growth lever than they would like to admit. The implications according to Kenny?
1. Have Humility. Economic commentators would be wise to hesitate before castigating this or that growth policy, given that success in stimulating growth has turned out to be so very hit and miss.
2. Do No Harm. We know far more about how to improve healthcare and education than we do about raising GDP. So don’t sacrifice reliable investments in clinics and schools in the name of uncertain future economic stimulus.
Oh, how we needed this book in the 1980s and 90s when the self-confidence of the Washington Consensus was rolling out structural adjustment across sub-Saharan Africa, cutting essential social investments for the sake of its elusive economic goals. And we need it now, too, to ensure that health and education remain donor and government priorities for tackling poverty in all its dimensions.
The Chapter That Fell Out
So far, so good. But there is one big fat chapter missing from this book, and it’s the one that should be called How Breaching Planetary Boundaries Threatens to Undermine Decades of Development Success.
Charles Kenny clearly knows that environmental degradation matters, but it jars with the mood, rains on the parade, and spoils the good news story. So he rather sneakily refers to all environmental concerns as ‘neo-Malthusian’ (who wants to be tarred with that brush?) and sums them up in a sentence – something of an understatement – by acknowledging that:
”There is a considerable policy agenda to speed up the world’s transition to global sustainability if quality of life is to continue getting better.”
Yes. That’s a very big agenda, plus a very big transition. With a rather big ‘if’.
Any book claiming to discuss the state of global development has to recognize the worrying trends as well as the happy ones. Because global development isn’t just the story of what’s happening to the bottom billion. It’s also the story of what’s happening thanks to the richest billion, and the several billions now aiming to live like them.
Critical Earth-system processes – such as climate regulation, the freshwater cycle, and the nitrogen cycle – are under extraordinary stress, and it’s consumption patterns driven by the world’s richest people that are behind it. Check out the diagram of how we are breaching planetary boundaries below. According to Steve Pacala of Princeton University, around half of the world’s CO2 emissions are produced by just 11% of people worldwide. According to the European Nitrogen Assessment, one third of the world’s sustainable ‘budget’ for using nitrogen is currently taken up in fertilizing animal feed to produce meat for the EU alone. This is not a smart or fair way of stewarding the planet’s resources.
Much of the future of global development hangs on whether or not we recognize the importance of natural resources for humanity’s own well-being. Ensuring low-income households have clean water and sanitation is pretty tough when the wells and rivers run dry. Coastal communities lose their main source of protein when the sea and its fish are poisoned with fertilizer run-off. And, as Oxfam’s recent report Extreme Weather, Extreme Prices suggests, ending hunger will be no easy task if sudden droughts and floods keep sending grain prices spiking through the ceiling.
Look at what’s happened to Lake Chad: due to excessive water withdrawals by the four countries that border it, and thanks to climate change, the lake has shrunk to less than 10% of its size forty years ago. “The situation with Lake Chad is desperate,” Oxfam’s Country Director for Niger, Samuel Braimah, told me recently, “We see the desert running closer towards us every day”.
There’s no way round it. High-income countries have to reduce their excessive resource use and decouple it absolutely from their GDP growth. Emerging economies need to get on pathways towards decoupling too. And all countries need to establish shared governance for managing shared resources. Because natural resources are the wealth on which human development ultimately depends – and we are fast running out of time to realize it.
In fact I think we need a book to tell this other story too – and how about this for the cover?
Getting Better 2.0 – The Remix
OK, it’s not only doom and gloom out there. But let’s get real – we’re not exactly in a bed of roses either. After reading his book, I suggested to Charles Kenny that he quickly needs to come out with a revised edition, with that missing chapter on breaching planetary boundaries added in – and he (generously) agreed.
While we’re at it, let’s give the book a more accurate title too, one that tells both sides of the story. How about:
Getting Better But Getting Hotter:
how global development is succeeding –
but is under threat from environmental degradation.
We need to get this revised edition printed quickly and into Justine Greening’s hands (folks at DFID, any chance you could pop a copy of this updated version into the ministerial bag, please?).
Why the rush? Because the storyline defining the state of global development matters, especially when it is informing an influential new policymaker’s perspective. Yes, this makes for a more complex narrative (and a less snappy title) but it will better equip the Secretary of State, and the rest of us too, to figure out a happier ending.
This blog was inspired by a Chatham House Breakfast Discussion with Charles Kenny of his book Getting Better, at which I was the discussant. Many thanks to Rob Bailey and Owen Barder for creating a great debate.
Leave a comment
I recently ruined an economist’s morning lie-in, and for that much I am sorry.
Over at aidthoughts.org, Matt Collin read my blogpost on vandalizing economics textbooks and he got very annoyed. Why? Because I shared the view of many leading economic thinkers and critiqued this diagram, central to macroeconomics, for ignoring the environment, the unpaid care economy, and social inequality.
Matt says he’s never seen this diagram in an economics textbook. Really? Go look at some. It is six pages into the macroeconomic section of my 1987 edition of Economics by Begg, Fischer and Dornbusch (the standard Econ 101 book in my day). The text with it says “This framework will allow us to explore the behaviour of the economy as a whole” and then shows how this diagram is the basis for calculating GDP and national income accounts. This diagram defines the concept of national income used in everyday debate today about the state of the economy: that makes it the foundation of public understanding of economics, and so it matters.
What did my 1987 textbook have to say about the environment and the care economy? I checked the index. Between Entry barriers and Equilibrium, there was apparently no need for adding Environment. Between Capital Stock and Car Industry, there was no room for a reference to Care Economy.
But is my old textbook just decades out of date? No. When I popped into my local bookshop (which is also the bookshop for Oxford University students), I found The Circular Flow of Goods and Money diagram still going strong in all the major introductory texts, like Mankiw’s Macroeconomics (2010), Lipsey and Crystal’s Economics (2011), and Krugman and Wells’ Macroeconomics (2012).
So does it matter that the care economy, the environment, and social inequality are all still missing from the diagram?
1. Why should we care about care?
Matt says that the unpaid care economy is left out of macroeconomics because it’s hard to measure and that “the household economy isn’t fundamental enough to be covered in Econ 101”. Matt, you work inTanzania. When you see scores of women carrying water and firewood on their heads, and carrying crops and kids on their backs, do you think they are adding nothing fundamental to national output? Sure, like many things, it’s hard to measure, but that’s a bizarre reason to say we should leave it out of the picture altogether. The work of feminist economists such as Nancy Folbre and Diane Elson make clear the importance of bringing the care economy into the heart of macroeconomic thinking and accounting if we are going to create economies and societies that deliver long-term well-being.
2. What about the environment?
Matt says microeconomics has the tools for sorting that out (things like taxes and quotas), they just aren’t being applied. Is it that simple? I was pleased to see that tackling climate change is used as a case study in two of the three modern textbooks I reviewed, but they give the same answer as Matt: we have tools in microeconomics for dealing with that.
So what about the macroeconomic version of the question: can stopping climate change be reconciled with indefinite economic growth? Here’s how (if at all) today’s textbooks handle it:
Mankiw: No comment.
Krugman and Wells: “Most economists who have studied it think yes, it should be possible.” (Hmm, that sounds a bit uncertain. What’s the theory? Where’s the evidence?)
Lipsey and Crystal: “Let us hope that containment [of climate change] is possible and that appropriate action is taken.” (Wow, I didn’t realise that crossing your fingers and hoping was part of the economics toolkit).
None of these books actually grapple with what it means to take on the question of whether or how indefinite economic growth could be absolutely decoupled from natural resource use. But if The Circular Flow of Goods and Money diagram were drawn inside a box labeled The Environment, recognizing that question would be unavoidable (at least someone in every class would put up their hand and ask the awkward question). This is, of course, the conceptual starting point for ecological economics, and is explored in the writings of Herman Daly and Tim Jackson.
3. Lastly, inequality.
I agree, social inequality is a different kind of concern from the other two – not a flow of resources that’s missing from the conceptual framework, but a problematic outcome of the way many economies operate. But it still needs to be made more visible in macroeconomic frameworks and measurement. As the 2009 Stiglitz-Sen-Fitoussi Commission on The Measurement of Economic Performance and Social Progress concluded, policymakers would be far better served by national accounts that focused less on aggregate national production and more on the distribution of income and consumption across households.
Time for a better compass.
And this brings me to the real source of dispute between me and Matt. He is leaping to the defense of the marvelous toolkit of microeconomics, but my problem is with the macroeconomic compass of GDP which underpins national accounts. Of course many economists care about climate change, the care economy, and inequality. But macroeconomics makes it hard to care, and hard to debate about them, because it leaves these issues out of how the economy is defined in national accounts and in public discourse.
The Stiglitz-Sen-Fitoussi Commission (made up of 25 big thinkers on economy and society) concluded:
“..Those attempting to guide the economy and our societies are like pilots trying to steer a course without a reliable compass. The decisions they (and we as individual citizens) make depend on what we measure, how good our measurements are and how well our measures are understood. We are almost blind when the metrics on which action is based are ill-designed or when they are not well understood. For many purposes, we need better metrics. Fortunately, research in recent years has enabled us to improve our metrics, and it is time to incorporate in our measurement systems some of these advances.”
And it set out a series of recommendations for developing national accounts beyond GDP– including bringing in natural resource stock and flows, bringing in the unpaid care economy, and putting a spotlight on household income inequalities. That sounds like my kind of vandalism.
There are, of course, many really interesting innovations going on in an attempt to broaden the metrics of national accounts in these ways, in order to reflect the wider set of natural, human and social resources on which the economy (and human well-being) depends. Examples like the UK’s attempt to value its ecosystems, the World Bank’s efforts to measure human, social and natural capital, and UNRISD’s work on valuing the unpaid care economy. Some of these approaches are controversial (that’s for a future blogpost) – but they are evidence that policymakers want the concepts and tools needed to paint a richer picture of the economy.
Yet, despite all these innovations, and despite broad international agreement on the need to move “beyond GDP” in assessing economic performance, when the next intake of first year economics students turn up at university this autumn, they will be introduced to the same old circular flow diagram of national accounts that doesn’t even give the other issues a place on the page. Indeed, if the textbooks have their way, those students may never get to hear of these critiques and innovations in metrics within the course of their degree.
They deserve a far better compass than that.
Leave a comment
Get ready to join the world’s first guerrilla campaign to rewrite economics. The only weapon you need is a pencil…here’s why.
When I studied economics at university twenty years ago, the concept of The Circular Flow of Money and Goods was the gateway to understanding macroeconomics – and it still is. It shows how households provide labour to firms, in return for wages, and then use their income to buy the stuff that firms make.
The money flows round and round and so do the resources. When the arrows are going round and round like that, the only question to ask seems to be, how can you make those arrows get bigger? And from there on out, the aim of the game is GDP growth. Very simple. (And if you think it’s so simple that I’m making it up, go open an economics textbook – hey presto, there it is).
It’s such a deceptively simple model of the economy that it quietly inserts itself into the back of the head of every economics student – so quietly that you don’t even realize it is there. But it is there, and that’s a problem because it’s a deeply flawed view of the economy we actually live with. By focusing only on resource flows that are monetized, it misses much that matters in our lives.
In fact it misses the big picture three times over.
1.It’s not free floating
First, the economy does not float freely against a white background. It is embedded within the planet’s environment, drawing on its natural resources and dumping pollutants back out into it. Mention that and an economist will say – ah yes, environmental externalities, we’ll come to those later. But calling nature’s resources ‘externalities’ and leaving them till later has led us to this crisis of climate change. How can it make sense to treat the fundamental resource on which all life depends as a factor external to the system? We have to draw a box around the economy and label in The Environment (a point that Herman Daly made some decades ago).
2. It’s not all in the money
Second, the monetized economy is heavily supported by the unpaid care economy: the services provided by parents and carers (usually women) in raising children, getting the sick back to work, and caring for the elderly. In many low-income countries, that unpaid caring work also includes providing the family’s water, firewood, and food every day – in other words, providing the most essential goods and services for well-being. And it’s all outside the monetized economy. If we ignore it, we ignore many of life’s most valued goods and services, and misunderstand the working lives of many of the world’s women. So the unpaid care economy has to be drawn in.
3. It’s the inequality, stupid
Thirdly, firms pay wages, rent and dividends to households, yes. But thanks to the kind of capitalism that most governments have been constructing, many people get low wages while a few get high rents and dividends. And, as the worldwide Occupy movement has made clear, that matters. Social inequality has been opening up at the heart of economies and needs to be brought to the fore. So it’s time to draw it in.
Now imagine if this was the diagram that economics students encountered on Day One. For starters, it opens up so many more interesting questions. How big should the economy be in relation to the environment? How can policies in the paid economy best support the services that the unpaid economy provides? What could reverse the increase in social inequality? And – going for the really big picture – let go of ‘growth’ for a moment: what would economic development look like from this perspective?
I think economics students deserve this more realistic starting point – and the world deserves economists who have a more realistic model like this inserted into the backs of their heads. It would certainly give us a far better chance of living between the social and planetary boundaries of the doughnut.
So here’s a guerrilla campaign to make it happen. Anyone can do it because all you need is a pencil. Here’s the plan (umm, I have to say at this point, this is not Oxfam Policy…). Sneak into the bookshops, the libraries and classrooms, and into the office of every economics professor you know. Get out the macroeconomic textbooks and find that diagram. Take your pencil. Now draw in the environment. Draw in the unpaid care economy. Draw in social inequality.
With these few strokes, we could stick a great big spanner in the wheel of mainstream economic thinking. We’d save the next generation of economics students from having the wrong model of the world stuck in the back of their heads. And that would help save us all from another era of economic policymakers who unknowingly have the wrong model of the economy shaping their decisions.
I made a pitch for vandalizing economics textbooks like this at IIED’s Fair Ideas conference at Rio+20 in June – here it is in a 10 minute video (starting at 59 minutes)
So it’s time for a guerrilla campaign – and I propose these three pen strokes to launch it. Got any suggestions for more?
Leave a comment