The Dutch did it again, they went ahead the rest of us. Four centuries ago they were one of the first nations in Europe to opt for capitalism when facing the General Crisis. Nowadays, when we all keep wondering whether the coronavirus and a recession that follows in its footsteps spell the apocalypse, the Dutch capital looks forward to the future: ready to abandon well-trodden paths and well-known narratives of perpetual economic growth and try out a new strategy of sustainable eco-growth, i.e. doughnut economics.
Future Amsterdam will both taste and look like a doughnut – wrote Edwin Bendyk, a journalist and author of the recently published W Polsce, czyli wszędzie. Rzecz o upadku i przyszłości świata (In Poland, or Everywhere: The Fall and The Future of the World). To keep its residents safe, the city decided to ask the British economist Kate Raworth from Oxford University’s Environmental Change Institute for help in devising a novel reconstruction plan to mitigate the economic downturn caused by the present coronavirus epidemics. The Dutch capital wants to kill two sweets with one stone, reconciling the interests of humans and the planet, taking care of development, prosperity and equality within the society, while protecting the Earth’s natural ecosystems and resources
Sounds utopian? Perhaps. However, as Amsterdam’s deputy mayor Marieke van Doorninck said in an interview published by The Guardian, the economic model they adopted last week – which makes Amsterdam the first “urban doughnut” in the world – was not “just a hippy way of looking at the world”, but a holistic and modern transformation concept that takes into account the social and ecological challenges of the 21st century. “I think it can help us overcome the effects of the crisis”, said the deputy mayor following the Amsterdam City Hall’s official publication of the document The Amsterdam City Doughnut, which will shape the city’s new long-term development policy and vision. The newly created Amsterdam Donut Coalition, comprising local authorities, scientists and the city’s ecological and social activists will watch over the implementation and monitoring of the activities included in this program.
According to Edwin Bendyk, humanity cannot afford the prosperity as defined by contemporary mainstream economics. We live in debt, which means that our creditor may come at any time and demand to be paid back. The creditor, in this case, is Nature itself, currently sending us the first of its bailiffs – the coronavirus. Soon, however, others will come knocking on our door – drought, forest fires, next pandemics and floods. In Amsterdam, they know it. They realize that a quantitative assessment of prosperity is delusory and that increasing the debt we hold towards the Earth is dangerous.
“In the eyes of the Dutch, a big fat wallet is no longer a prerequisite for a good life. Instead, they wish to have high quality public services and to have their basic social needs satisfied. Seeing how the pandemics is stripping everyone of basic stability, Amsterdam is preparing for profound economic transformations, so as not to waste the crisis and to approach it as a rite of passage leading to the new order” Bendyk added.
Doughnut economics relies on the rejection of the current concept of prosperity, which is only possible to achieve through perpetual economic growth and where actions are driven by the law of supply and demand. In an article published in 2012 by Oxfam A Safe and Just Space for Humanity, and three years later in her famous book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, the author of the concept, Kate Raworth argued that global economy can indeed prosper within a different kind of paradigm, or, more precisely, when based on different social foundations that take into account “ecological ceilings”.
These interdependencies are represented by a circular diagram resembling a doughnut, where the inner ring delineates the minimum required for people to lead a good and healthy life. It relates to basic resources which – according to the UN’s Sustainable Development Goals 2030 – should be available to everybody on the planet. These standards include food, clean water, shelter, sanitation, education, healthcare, as well as gender equality, social justice and political voice.
The outer ring of the economic doughnut is set out by the environmental boundaries that the humanity should not go beyond if it wants to avoid disasters. Raworth listed nine such planetary environmental boundaries (including climate change, air pollution, loss of biodiversity and ocean acidification) using the term coined in 2009 by the Swedish-American scientific duo of Johan Rockström and Will Steffen.
The core of the theory devised by the British economist actually lies in what is between the inner and the outer ring of the doughnut, i.e. the conviction that human safety is dependent upon the condition of our planet, and thus needs to be based on a novel way of thinking about economic processes.
“Economics is a dynamic system that’s constantly evolving and so there are no laws, there’s only design. In the 21st century, this design should be regenerative, so that our material and energy use work within the cycles of the living world and within planetary boundaries. But it also needs to be distributive, so that the dynamics of the way markets behave don’t concentrate the value and returns in the hands of a 1-percent minority – which it’s currently doing – but distributes them effectively amongst the people.” – said Kate Raworth last year in an article, made available for Polish readers by Krytyka Polityczna (republished from Green European Journal).
"It is not an aberration, but an instance of translation of the language of social democracy for the times of an ecological crisis. I would call Raworth’s proposals eco-social democracy or environmental socialism, which to many mainstream and orthodox economists now seem absurd. But at the end of the 1960s, Friedman’s and Hayek’s views were also thought strange, but they are now cornerstones of contemporary economies. Right now, we need to open up our intellectual horizon and normalize eco-socialist thinking within the system of social justice and environmental accountability. That is the aim of doughnut economy” says Edwin Bendyk.
Even though Raworth’s doughnut was devised as a response to the international global need for transformation, the economist received many inquiries about the possibility to use her model on a smaller scale – for a region or a city. In case of Amsterdam, the first urban centre to apply the doctrine of doughnut economics, such strategy was devised as part of a conceptual collaboration, including among others the biomimicry (biomimetics) advocate Janine Benyus.
“(…) we sought to combine the essence of our contrasting ways of thinking about people and place” wrote Kate Raworth on her blog. “The result is a holistic approach that embraces social and ecological perspectives, both locally and globally. Applied at the scale of a city, it starts by asking this very 21st century question: How can our city be a home to thriving people in a thriving place, while respecting the well-being of all people and the health of the whole planet?”, the author of Doughnut Economics explained.
Amsterdam went a step further and divided this question into four categories of urban-life areas – local-social (e.g. ensuring good quality and free healthcare to residents), global-social (e.g. imports of ethically manufactured goods), local-ecological (e.g. investment into “green” urban infrastructure) and global-ecological (e.g. zeroing on greenhouse gas emissions). These tools, also called lenses, provide the Dutch metropolis with a possibility to have a thorough insight into itself and create a public portrait of the city, later transformed into a “selfie”, depicting “residents’ lived experiences, their values, hopes and fears, their ideas and initiatives, their own understanding of their deep interconnections with the rest of world”.
The doughnut also provides an answer to one of the most urgent problems faced by contemporary cities – shortage of housing and a dramatic rise in real property prices that are now seen as the most lucrative investments. Buying out big plots of land inside the biggest metropolises with a view to achieving capital liquidity subjects the property market to absurd laws. Homelessness is a problem, which it doubled between 2009 and 2018, and so is short-term rental (Airbnb) and exorbitant rents.
According to the city’s statistics quoted by The Guardian, as many as 20% of people renting their homes cannot satisfy their basic needs after they have paid the rent. Social housing is only made available to the 12% out of the 60 thousand applicants requesting such housing. Amsterdam residents seem to be barely able to make ends meet after they have paid their rents. It is a big, palpable social problem, which should not be bothering people living in an affluent and one of the world’s most important urban centres. Raworth’s economic model assumes that a roof over one’s head is a basic standard which the city should guarantee to its residents.
Let us not forget that Amsterdam, which now has great innovative ambitions, has been preparing to implement them for several decades. The city’s situation enables a successful revolutionary transformation. It is also about the money. The Dutch capital is a very wealthy, major global city due to its ports and airports that are hubs for the global agricultural and flower markets, the latter just as far reaching as the former.
According to Edwin Bendyk, „What Amsterdam is doing right now is a continuation of the path chosen in the past and the novel thinking manifested by the Dutch as early as at the end of the 16th century”.
It was the beginning of what the historians call the General Crisis. In his book, Geoffrey Parker noted that the main cause of the changes – famine, wars, the fall of many countries and communities – was the aftermath of global cooling. The analogy to the current situation is clear, as we are, once again, facing dangers that the Dutch, again, decide to tackle sooner and differently than the rest of us.
"Four hundred years ago they moved on and went ahead. Instead of reinforcing well-trodden paths, they found their own” Bendyk points out. “They went for middle class, science, free thinking. They laid the foundations of a new civilization, which later turned out to be capitalism. They tackled hunger that resulted from changing climate by, e.g. intensifying and transforming agriculture. They imported goods of small value from abroad (e.g. from Poland), while shifting domestic production to dairy farming and growing tulips, which generate more value. Nowadays, the Netherlands, which is only slightly bigger than the central Polish province of Mazovia – is the second largest food exporter in the world, right after the US." Bendyk also notes that the Dutch are very fond of civil liberties and remain very aware of their dependence on nature.
According to the author "The functioning and character of Amsterdam is shot through with a deep respect for individual qualities and with an openness towards avant garde solutions related to behavior, social life or human rights, including legalization of soft-drugs, prostitution, euthanasia or same-sex marriages. On the other hand, the Dutch (not only those residing in the capital) are characterized by a strong and unique spirit of collaboration, not to be found anywhere else or under any other name – it is not classic socialism, nor textbook liberalism. More importantly, Amsterdam residents think ahead. Being the inhabitants of a city located on the seashore and vulnerable to this powerful element they consider the consequences of climate change. They know that over the next one hundred years, the sea levels will rise by half a metre or as much as two metres. They are aware of the costs and treat environmental issues seriously.”
Bendyk also points out that the city had been looking for solutions that could deal with environmental challenges for many years. Over the last decade, Amsterdam has been working on the implementation of the so-called circular economy. The capital city and the whole country is now striving to make the goods and services manufacturing chain shift from recycling to cutting waste generation to zero, just like in nature.
“It is a follow up on the strategy of biomimicry they had adopted earlier, which is now visible in both the design of urban processes and in the city infrastructure that blends the boundaries of the urban and the natural. The residents and authorities consider the city to be part of an ecosystem, and not a separate entity. It thus needs to work the way nature does. Right now, with the doughnut economy, which is a synthesis of their thinking, they can successfully implement this vision, because what Raworth suggested provides a holistic combination of the social and ecological targets” notes Edwin Bendyk, adding that the Amsterdam doughnut project is also likely to be successful for demographic reasons. The Netherlands have an aging population that is now entering the post-material stage and is just about to reach a state the Japanese faced back in the 1980s, i.e. secular stagnation.
According to Bendyk, lack of economic growth is not necessarily bad news for the society. Macroeconomic factors may stagnate, but this does not cancel our chances for a good life. “It is true that older residents tend to consume less material goods, but they also need more health and care services, etc. – something from the intangible sphere. The context of aging turned out to be a game-changer throughout Europe, so there are many indications that we will need to focus on it when designing our future. In an aging society, it is easier to shift towards doughnut economics, as the model reflects the needs of the elderly. There will, therefore, surely be less opposition towards it than – let us say – in India, where 600 million people are younger than 25.”
From such point of view, doughnut economics may represent a Western perspective, especially as it rests on the premises of the European Green Deal and the arguments about its American counterpart. On the other hand, Raworth also relies on global social justice which increasingly becomes one of the major – alongside climate change – challenges faced by the governments that wish to work together, and which requires accountability on the part of developed countries for their own actions (participation in unethical mass production, benefitting from exploitation and CO2 emissions) and their impact on their poorer neighbours. The current pandemics demonstrates that emergencies do not respect division lines nor borders.
"The crises have the biggest impact on the poorest, but the rich also lose. That is why we need a global paradigm shift” says Bendyk. “For sure, we may just look the other way when opportunities for transformation appear, as the majority of economists and politicians seem to do when they claim that we need to go back to the path of economic growth spelt out in terms of credit and currency expansion. Following this path, however, will lead us towards energy crisis. We need to realize that economy as we know it is not going to survive, that there is no going back to “business as usual” after the pandemic is over. It is difficult, because we are telling a person with a drinking problem that they need to stop drinking alcohol and start sipping tea. Whether we want to believe it or not, the humanity will sooner or later reach the limit. The question is – when, and whether we wish to tackle it in a controlled way, like Amsterdam, or face a catastrophe”.
Article by Paulina Januszewska, translated from Polish by Katarzyna Byłów