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Doughnut Economics - Kate Raworth
Doughnut Economics by Kate Raworth review – forget growth, think survival
Raworth seeks to change the language of economics, which is biased towards neoliberalism. Is her eco-model the answer?
Survivors of a shipwreck find themselves on a desert island with a large quantity of tinned food – but no means to access the contents. Among them is an economist, who declares he has a solution: “First, let us assume that we have a can opener ... ”
The joke is an old one, long used to mock the unrealistic nature of many economic models. But we will introduce a new character into the story, who jumps up to explain the economist’s error. “Economics has failed,” this person declares. “What we need is a new paradigm!”
The hungry mariners might be forgiven for feeling a little dissatisfied. Although conventional economics has many well-known limitations, the unorthodox or radical alternatives are not without their drawbacks either. So Kate Raworth’s guide to rethinking the discipline is at one level entirely sensible. She is right that not everything can or should be left to the market, that the “rational actor” model of economic conduct is problematic and that we cannot rely on the processes of growth to redress inequality and solve the problem of pollution. On the other hand, she seems overoptimistic about the possibility of changing the predominant neoliberal mindset, essentially through persuasion.
We may be far from rational in our individual economic behaviours, yet – she appears to say – if only the problem is framed in the right way, the population can potentially be induced to support the sustainable and fulfilling human goals from which mainstream economics has led us so cruelly astray.
How is this to be done? Enter the doughnut – a sort of miracle diagram that is apparently going to change the world. The inner ring represents the “social foundation”, the situation in which everyone on the planet has sufficient food and social security. The outer ring represents the “ecological ceiling”, beyond which excess consumption degrades the environment beyond repair. The aim is to get humanity into the area between the rings, where everyone has enough but not too much – or, as Raworth calls it, “the doughnut’s safe and just space”.
If you are familiar with the ideas of Hyman Minsky, Daniel Kahneman, Joseph Stiglitz and Ha-Joon Chang, you will not be in for too many surprises, but if not, this book serves as a compact synthesis of modern heterodoxy. Raworth’s distinct contribution is in her emphasis on environmental themes. Too many writers, even radical ones, tend to treat “the economy” and “the environment” as separate issues, even though they admit that the one has an impact on the other. Yet, as she rightly stresses, the conventional notion of “externalities”, or economic side effects, serves to imply that problems such as pollution are not ones that economists need to make central to their concerns.
As long ago as 1972, the Limits to Growth report showed that GDP may not be able to increase forever in a world of finite resources. Raworth calls on us to “become agnostic about growth”, noting that the option of halting it and the option of trying to make it continue indefinitely both seem, in their different ways, intolerable. She highlights the dilemma without proposing a clear solution, but this is no criticism.
What if we started economics not with established theories, but with humanity’s long-term goals and how to achieve them?
Raworth asks: “What if we started economics not with its long-established theories, but with humanity’s long-term goals, and then sought out the economic thinking that would enable us to achieve them?” But surely, we first need to work out if they are achievable. What if humankind can only survive in the long-term at subsistence levels of consumption that would seem unendurable to most of us? What if, as recent work suggests, greater equality is most likely to come about through massive destruction of capital induced by war and social breakdown, rather than through the peaceable processes of social democratic redistribution?
Ignoring the large parts of the Earth that continue under authoritarian rule, and the rise of kleptocracy elsewhere, Raworth dismisses the political problem of bringing about change with a wave of the doughnut. Yes, she admits, proposals for a fairer global tax regime look impossible now, “but so many once-unfeasible ideas – abolishing slavery, gaining the vote for women, ending apartheid, securing gay rights – turn out to be inevitable”. This seems close to assuming that a can opener will inevitably wash up on the beach.
To the extent that Raworth has a political programme it is about changing the language in which we discuss economics. Of course she is right to protest about the narrow ways in which the discipline is framed; of course it is true that the media predominantly casts the issues in ways that play to a neoliberal agenda; and of course rightwing politicians often skew arguments by labelling tax cuts as “tax reform”. But although language is important, there is a risk that overstating its power might lead us to neglect certain fundamental economic interests and desires. “Change one word and you can subtly but deeply change attitudes and behaviour,” Raworth tells us. Perhaps, but is that new word “doughnut”? There just might be a hole in the argument.
• Doughnut Economics by Kate Raworth (Random House Business Books, £20). To order a copy for £17, go to bookshop.theguardian.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min. p&p of £1.99.