Brad Cartwright

When we study the evolution of economic models, we see a pattern: economies and the way we think about them adapt over time.  Those of you who have purchased The Microeconomics course may already be familiar with these concepts.

What used to work, or at least seemed sufficient, eventually meets its limits, and new ideas emerge.

The Circular Economy and The Doughnut Economy represent some of the latest shifts in economic thinking, offering transformative approaches to the way we produce, consume, and share resources.

The Linear Economy

Let’s start by looking at where we’ve been. For much of the 20th century, the dominant model was the linear economy, often described as “take, make, waste.” This model is straightforward: we extract resources from the Earth, use them to make products, and, after using those products, discard them—often into landfills or worse, into the environment. Recycling wasn’t a widespread practice, and for decades, the long-term consequences of this system—like overflowing landfills and plastic in our oceans—weren’t fully understood.

I remember a moment during my time as a Peace Corps volunteer in the Dominican Republic that perfectly illustrates this mindset. A young girl unwrapped a lollipop and tossed the wrapper on the ground. Right next to her, another girl finished eating a banana and threw the peel on the ground. At first glance, the wrapper and the peel seemed like the same kind of waste. But they’re not. The banana peel is biodegradable—it’s part of nature’s own cycle. The plastic wrapper, however, will linger for centuries. That moment stuck with me because it highlighted the stark difference between natural cycles and the waste we create.

The Circular Economy

This realization—about the disconnect between our waste and nature’s ability to process it—has led to the emergence of the circular economy. Unlike the linear economy, the circular economy emphasizes reusing, refurbishing, and recycling. Think of it as a loop instead of a line. In this model, after a product has served its purpose, it doesn’t head to the landfill. Instead, it re-enters the production cycle. Materials are reused, remanufactured, and repurposed to create new goods.

Take Patagonia, for example.

This outdoor clothing company is a leader in applying circular economy principles. When you buy a new Patagonia jacket, they’ll take your old one, recycle the materials, and use them to make new products.

This isn’t just a marketing gimmick; it’s a real commitment to reducing waste and conserving resources. Imagine if every company operated this way.

The Doughnut Economy

Now let’s shift gears to an even broader concept: the Doughnut Economy, a revolutionary framework developed by Kate Raworth.

If the circular economy focuses on production and consumption cycles, the doughnut economy expands the conversation to include the broader societal and environmental limits within which our economies operate.

Picture a doughnut. The hole in the middle represents the social foundation—the basic needs and rights every human being should have access to, like food, water, health, education, and housing. No one should fall into this hole.

The outer ring of the doughnut is the ecological ceiling, the limits of our planet’s resources. Exceeding this ceiling leads to issues like climate change, biodiversity loss, and pollution. The goal, according to Raworth, is for humanity to live in the “sweet spot”—the green area between the social foundation and the ecological ceiling.

This model challenges the way we traditionally measure economic success. Gross Domestic Product (GDP) has long been the standard, but GDP doesn’t tell us whether people’s basic needs are being met or whether we’re destroying the planet in the process.

The doughnut model asks us to consider a more balanced approach: how can we ensure everyone has a fair share of resources while respecting the planet’s boundaries?

Raworth’s work is groundbreaking because it forces us to think globally. Problems like climate change and resource depletion don’t respect borders.

A polluted river in one country flows into another. Carbon emissions in one region contribute to global warming everywhere. The doughnut economy pushes us to see humanity as one interconnected community sharing a single planet.

Why it Matters

As you study these models, remember that economics isn’t just about numbers and theories in books. It’s about people and their lives. The circular and doughnut economies remind us that the choices we make as consumers, producers, and policymakers have real-world consequences.

These frameworks challenge us to rethink not just how we produce and consume, but how we can create a world that’s fair, sustainable, and thriving for everyone.

The circular economy and the doughnut economy offer exciting pathways forward, and they’re part of the larger story of how economic thought evolves to meet the challenges of its time.