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Helpful prior learning and learning objectives
Helpful prior learning and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems.
Section 1.1.3 Degenerative economies, which explains how our linear, extractive and ever-growing economic systems threaten social and ecological systems
Section 1.3.4 Doughnut Economics model, which explains a model for considering meeting human needs within planetary boundaries
Section 1.4.1 Biomimicry for economic design, which explains how Nature’s Unifying Patterns provide principles for regenerative economic design
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)
Learning objectives:
explain the connections between economic inequality and ecological overshoot
discuss the role of distributive design to support regenerative economic practices
discuss the barriers to distributive economic design
Oxfam is an international non-governmental organisation that works to reduce inequality. The organisation regularly releases reports on global economic inequality.
Oxfam’s January 2024 report was shocking. Between 2020 and 2023, a time of social, economic and political turmoil around the globe, the world’s five richest men more than doubled their wealth. If each of those men spent one million US dollars per day, it would take 476 years to spend their combined wealth! During the same period, almost five billion people became poorer.
Figure 1. Money well spent? A US$150 million yacht owned by a billionaire
(Credit: Filip Frącz CC BY-SA 2.0)
How are inequality and ecological overshoot related?
How are inequality and ecological overshoot related?
Globally the wealth and incomes of the world’s richest people are rising rapidly. They use their rising incomes and wealth to buy more products that require the Earth’s energy and matter resources to produce and emit more carbon dioxide (CO2) into the atmosphere. According to Oxfam, the wealthiest 1% are responsible for 16% of global CO2 emissions, the same emissions as the poorest 66% of the global population, about 5 billion people (Figure 2). Beyond a certain level, further increases in income or wealth do not contribute significantly to human wellbeing. But the excessive consumption of the world’s wealthiest is causing our economies to overshoot planetary boundaries in climate change, biodiversity, land-use, water extraction and pollution (Section 1.2.7).
These negative ecological impacts are felt mainly by the world’s poorest people. Ecological breakdown is reversing decades-long development gains in poverty, health, education, womens’ equality, and political stability. While there is still some progress on the Sustainable Development Goals (SDGs), 30% of the SDGS see no progress or are in reverse.
Rising economic inequality worsens ecological breakdown, and ecological breakdown further worsens inequality in a reinforcing feedback loop (Figure 3). To meet human needs within planetary boundaries, we must break this cycle.
Figure 3. Positive (reinforcing) feedback loop between economic inequality and ecological breakdown
Why are distributive economies important for meeting human needs within planetary boundaries?
Why are distributive economies important for meeting human needs within planetary boundaries?
A distributive economy shares the value created in economic activity more widely among all stakeholders. Like all organisms in nature, humans have reciprocal relationships with other humans and with the rest of nature. We rely on care from others to survive and thrive, and we must also care for others. Sharing and care are core values of most societies and religions around the world.
Unfortunately, our modern degenerative economies encourages people to take more than they give (Section 1.1.3). If people take too much from the economy, society and nature, and give too little in return, then our social and natural resources will deplete over time. So it is important that we raise people’s awareness of our overconsumption and work together to design our economies to support regeneration of our social and ecological systems through distributive practices and policies.
Kate Raworth, creator of the Doughnut Economics model (Section 1.3.4), describes a distributive economy in the short video below.
Distributive economies are better able to meet human needs within planetary boundaries. If we distribute more income and wealth from the top 1% to the bottom 50% of the population, then the wealthy will have less to spend on environmentally damaging activities. Meanwhile, low income groups will be able to meet more of their needs.
Distributive economies are also likely to reduce unnecessary aspirational consumption, where people buy more material goods, such as larger cars and homes, to increase social status. Aspirational consumption does not substantially improve human wellbeing, but it does enormous damage to ecosystems. In more equitable societies, there is less incentive for aspirational consumption.
How can economies become more distributive?
How can economies become more distributive?
Market-based businesses, the state, households and the commons can all contribute to a distributive economy. The strategies discussed below focus on distribution of monetary benefits, focusing on markets and the state.
The distribution of care work in households is outlined in the next Section 1.4.4 and in Topic 2. The commons, which is self-organised management of a shared resource for the benefit of a community, is by nature distributive.
Figure 4. Our economics can move from being divisive to being distributive (Credit: DEAL)
Distributive design: businesses / markets
Businesses can share their gains more widely with the stakeholders who contribute to it by:
paying workers living or generous wages and benefits, helping workers meet their needs; shortening the workweek so workers have more time for family and community
forming a cooperative where ownership is shared between workers, or sharing profits with workers
paying suppliers fairly for the resources they provide, and negotiating long-term contracts to give suppliers reliable partnerships
directing profits towards social and ecological regeneration rather than giving them exclusively to shareholders / owners
being positive members of local communities, by selling goods and services that meet real human needs (Figure 5), offering training to youth, and regenerating local ecosystems.
Figure 5. Businesses should aim to provide for genuine human needs and widely share the value of what they produce
(Credit: Artem Yellow CC0)
These strategies and others are discussed in greater detail in Topic 3 on markets.
Distributive design: the state
The state plays a major role in a distributive economy. It can pass laws and create structures to support wider sharing of economic benefits through:
progressive taxes: most states tax their residents in order to provide social services to those who need them and infrastructure like roads and energy networks that makes economic activity possible. Progressive taxes take a greater percentage of income (or wealth) as income increases, which can increase the amount of money the state has to distribute to the rest of society.
job guarantees: states can employ people directly to engage in regenerative economic activities like human care work, rewilding ecosystems, or other work that strengthens human and ecological systems. This helps people meet their basic needs while also delivering important services.
universal basic income: The state can guarantee a minimum basic income to all residents. This ensures that people can meet basic needs, and gives them more power to decide when, for whom and how to work, which improves their ability to negotiate with businesses for higher wages and better benefits.
universal basic services and public luxuries: The state can directly provide for human needs in the social foundation of the Doughnut Economics model (Section 1.3.4) including health care, housing, education, transportation, access to information and energy. The state can go even further to provide shared luxuries such as parks, leisure facilities (Figure 6), libraries and cultural events. These shared luxuries are a more efficient use of resources and bring communities together to build relationships.
laws that support unions: A union is when workers join together to collectively negotiate wages and benefits. Unions balance power in markets and prevent business owners from taking too much value from the business for themselves.
anti-trust laws to prevent monopolies: A monopoly is when one business controls a huge share of a market and has power over the prices they charge households for products, and over the price the business pays for its supplies. This market power enables monopolies to extract value from households and suppliers, taking too much from market exchanges. States can pass laws to prevent monopolies, distributing more power and value to more stakeholders.
These strategies and others are discussed in greater detail in Topic 5 on the state.
Figure 6. Who needs a private swimming pool when you have a clean river? Oberer Letten free public swimming area, Zürich, Switzerland
(Credit: Yago Veith CC BY-SA 3.0)
What are the barriers to distributive strategies?
What are the barriers to distributive strategies?
Distributive design is fundamental to meeting human needs within planetary boundaries, but changing our economic systems can be difficult because of:
resistance from the wealthy: People with high income and wealth often fear losing what they have, a feeling known as loss aversion. To protect their interests, they might influence political decisions and regulations in their favour. This action, known as regulatory capture, makes it harder for the state to pass laws and policies to distribute income and wealth more fairly.
lack of social support funding and institutional capacity: For wealth to be distributed fairly, social support systems, like education and healthcare, need proper funding, which may be lacking. This lack of funding means that not everyone can access the support they need, making it difficult to create a more equal society. States may also lack the personnel or processes to do their job well.
economic worldviews: Many economists believe that the main goal of businesses should be to make as much profit as possible and give it to shareholders. This viewpoint shapes our economic system, making it hard to prioritise distributing incomes and wealth fairly. There is progress with the development of business types that share profits more widely, but changing this mindset is challenging.
Understanding these barriers is the first step towards overcoming them and building a more distributive economic design that benefits everyone.
Activity 1.4.3
Activity 1.4.3
Concept: Systems
Skills: Thinking skills (transfer)
Time: Varies depending on option
Type: Individual, pairs, group depending on option
Option 1 - Researching distributive design in your region or country
40+ minutes, depending on how much prompting and resources a teacher may provide
Do some research about the distributive strategies mentioned in this section in the country where you live. You can use the strategies as search terms along with your c
Can you find evidence of them being used by businesses or the state?
If so, which strategies are being used?
If not, what do you think is preventing them from being used?
Discuss what you find with a partner, or the entire class.
Option 2 - Discussion - how is distributive economic design related to biomimicry?
20 minutes
If you have read Section 1.4.1 Biomimicry for economic design, consider the relationship between the distributive economic strategies and Nature’s Unifying Patterns listed below. How do the strategies help our economies behave more like nature?
Nature uses only the energy it needs and relies on freely available energy
Nature is resilient to disturbances
Nature tends to optimise rather than maximise
Nature provides mutual benefits
Nature is locally attuned and responsive
Nature uses chemicals and materials that are safe for living beings
Nature builds using abundant resources, using rare resources only sparingly
Nature uses shape to determine functionality
Ideas for longer activities, deeper engagement, and projects are listed in Subtopic 1.5 Taking action
Checking for understanding
Checking for understanding
Further exploration
Further exploration
These companies with no CEO are thriving - a TED Ed video that explains cooperatives. Difficulty level: easy
The Universal Basic Income experiment in Kenya, NPR - podcast episode on the world’s largest universal basic income experiment in Kenya. Difficulty level: easy
“The case for universal basic income”, a video from the Financial Times explaining universal basic income. Difficulty level: easy
Sources
Sources
Khalfan, A. et al. (2023, November). Climate Equality: A planet for the 99%. Oxfam International. https://oi-files-d8-prod.s3.eu-west-2.amazonaws.com/s3fs-public/2023-11/Climate%20equality%20report%20executive%20summary.pdf
Raworth, K. (2017). Doughnut economics: seven ways to think like a 21st century economist. London: Penguin Random House
Riddel, R. . (2024, January). Inequality Inc. Executive Summary. Oxfam International. https://oi-files-d8-prod.s3.eu-west-2.amazonaws.com/s3fs-public/2024-01/Davos%202024%20Executive%20Summary%20English.pdf
Sahan, E. et al. (2022). What Doughnut Economics means for business: creating enterprises that are regenerative and distributive by design. Doughnut Economics Action Lab and Center for Economic Transformation. https://t.ly/2qWyy.
Terminology (in order of appearance)
Terminology (in order of appearance)
non-governmental organisation: an organization that is independent from government
economic inequality: unequal distribution of income and opportunity between different groups in society
wealth: the total value (stock) of someone’s assets such as money, house, or investments
income: the ongoing money earned (flow) from work or investments
energy: the ability to do work or cause change
matter: anything that takes up space and has mass
carbon dioxide (CO2): gas produced by burning carbon or organic compounds and through respiration, naturally present in the atmosphere and absorbed by plants in photosynthesis
atmosphere: the gases surrounding the Earth
consumption: using resources and products to meet needs; or in food chains, eating another organism
economy: all the human-made systems that transfer and transform energy and matter to meet human needs
planetary boundaries: the limits of human disturbance to the nine Earth systems that sustain all life
climate change: a change in the temperature and precipitation patterns in an area, in recent times due to human economic activities
biodiversity: the variety of living organisms on Earth
extraction: taking something away from somewhere else, especially using effort or force
pollution: the presence of a substance that has harmful effects on the environment
poverty: the state of being poor
Sustainable Development Goals (SDGs): 17 social and environmental goals established by the United Nations in 2015
reinforcing feedback: a situation where change in a system causes further changes that amplify the original change which can lead to tipping points in a system
distributive economy: an economy that shares economic benefits and power more evenly among individuals
stakeholder: a person who has an interest in or is impacted by some activity
reciprocity: exchanging things and favours with others for mutual benefit
care: the act of providing what is necessary for the health, welfare, upkeep, and protection of someone or something
degenerative economy: an economic system that meets human needs in a way that degrades and destroys social and ecological systems
overconsumption: buying and using more products and resources than you need
regenerate: to restore or strengthen ecosystems or social systems
system: a set of interdependent parts that organise to create a functional whole
distributive: when something is widely or evenly among individuals
Doughnut Economics model: a model for sustainable development shaped like a doughnut, combining the concept of human needs with planetary boundaries
planetary boundaries: the limits of human disturbance to the nine Earth systems that sustain all life
aspirational consumption: buying goods in order to increase self-esteem and social status
ecosystem: the interaction of groups of organisms with each other and their physical environment
market: a system where people buy and sell goods and services for a price.
state: a system that provides essential public services, and also governs and regulates other economic institutions
household: a system where people living together care for each other and do domestic work, often termed the 'core economy'
commons: a system where people self-organise to co-produce and manage shared resources.
monetary: to do with money
wage: payment for work
cooperative: a business or other organisation that is owned and managed jointly by its members, who share the profits or benefits
profit: the difference between the amount of money earned from selling something and the cost to produce it
shareholder: a partial owner of a business
progressive tax: tax rates that increase as income or wealth increases
tax: payment from individuals or organisations to the government, used to provide public infrastructure and services
job guarantee: a situation where the state makes a job available to any qualified person who is willing to work
rewilding: protecting an environment and returning it to its natural state, passively by leaving it alone or actively by reintroducing native organisms that might have disappeared
universal basic income: financial support from the state in the form of recurring payments to everyone to meet basic needs
universal basic services: a form of social welfare where all people receive access to free, basic services, like education and health care, funded by taxes and provided by the state
public luxury: access to goods and services that make life enjoyable, such as public parks and recreation, provided by the state
social foundation: human needs that need to be met for human survival and wellbeing
efficiency: the ratio of resource inputs compared to outputs
union: an association formed by people with a common interest or purpose
power: the ability to influence events or the behaviour of other people
anti-trust law: laws that support competition by limiting the power of one or a few businesses
monopoly: a market structure where a single seller or producer is dominant and has price-setting power
extraction: taking something away from somewhere else, especially using effort or force
loss aversion: the tendency of people to prefer avoiding losses to acquiring equivalent gains
regulatory capture: when the government prioritises the interests of economically powerful groups over the general interests of the public
institution: human-made systems of rules and norms that shape social behavior
worldview: an all-inclusive outlook on the world held by an individual or group, and through which they make sense of reality and gain knowledge
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