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Kate Raworth: Creating a 21st century economy
Today's economies are giving rise to the global 1% while
running down the planet on which all of our lives depend.
How should we redesign our economies so that they start to
meet the needs of all within the means of the planet?
We will speak with famous economist Kate Raworth about the
concrete steps that should be undertaken by economists, policy makers,
companies and consumers, to make our economies fit for the future.
Raworth presents ‘The Doughnut’ of social and planetary
boundaries as a playfully serious compass for human prosperity in the 21st
century, setting out the social foundation below which no one should fall, and
the ecological ceiling that humanity should not exceed. If getting into the
Doughnut is humanity's 21st century goal, then what kind of policies will it
take to get there? According to Raworth, economic policymakers should drop
their obsessive focus on GDP growth and instead, aim to create economies that
are regenerative and distributive by design. But what will it take to make this
happen and where will change begin? Join Kate in discussion on the key ways to
think like a 21st century economist.
About Kate Raworth
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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?
Richard Toye
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?
Kate Raworth
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.
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