In 1602, in an alley in Amsterdam, a merchant began selling shares of the Dutch East India Company, bringing into existence the joint stock company- the bedrock of the capitalist economy. Today, to cope with the effects of COVID 19, the city of Amsterdam is trying to experiment with an idea and concept in economics that challenges the capitalist idea.
In a 2017 book, “Doughnut Economics” the British economist Kate Raworth brought forth a different way to look at growth. A doughnut is a round pastry item that has a hole in the middle. Instead of the linear trajectory of GDP growth that has been pursed throughout the 20th century, the idea is to think of economies in a circular manner. Beyond the outer circle of the doughnut, humanity is overstepping the environment or ‘planetary boundaries’; the inner circle line is the ‘social foundation’. The area between the two circles is the ‘safe and secure’ zone, where growth does not threaten the ecology and the social indices confirm to the UN Sustainable Development Goals. Inside the hole people are deprived, outside the doughnut, growth is at cost of ecology. The goal of getting “into the doughnut” replaces the pursuit of linear never-ending GDP growth.
In a COVID hit world, alternate ideas of moving forward are gaining attention. Taking the doughnut to the level of a city, the concept of a circular economy is being experimented to deal with problems associated with unending consumption. The emphasis is to reduce, reuse and recycle materials across consumer goods, building materials and food. The aim is to improve well-being while ensuring environmental protection.
The city of Amsterdam has adopted a “Circular strategy 2020-2025’ with the aim to become completely circular by 2050. One of the first examples of the doughnut principle in the city is a construction project. The foundations were laid using processes that ensured no harm to local wildlife and secure future residents to sea-level rise. Anyone wanting to build will need to provide a “materials passport” for their buildings, so whenever they are taken down, the city can reuse the parts.
The French government passed the Circular Economy law in February 2020. Under the law companies are banned from destroying unsold and returned items, and mandated to reuse, redistribute or recycle items.
The idea is being put into action in thirty-seven cities in the world as part of the C40 Cities Global Network. People-led groups focused on the doughnut have been formed in places including Sao Paulo, Berlin, Kuala Lumpur and California. In India, NITI Aayog is also pitching for transition to a circular economy for resource efficiency.
Like any new idea the doughnut concept has its retractors. Also, like any new idea it could make us think. As we deal with the aftermath of the pandemic and rebuild economies and lives it is an opportune moment to delve into alternate ways to grow and live. For individuals, communities, cities and nations this is a time for a reset and new beginnings.
Ideas being tried around the world to start afresh could be starting points. As Milton Friedman, the free market economist said, “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions taken depend on the ideas that are lying around.”
Published in the Dainik Bhaskar newspaper in Hindi on 23/2/2021