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
Thursday 8
June 2017 09.30 BST Last modified on Wednesday 29 November 2017 09.33 GMT
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.
growth
economics – the doughnut
George
Monbiot
Instead of
growth at all costs, a new economic model allows us to thrive while saving the
planet
street boy collects stones in Dhaka,
Bangladesh.
@GeorgeMonbiot
Wednesday
12 April 2017 06.00 BST Last modified on Tuesday 28 November 2017 02.10 GMT
So what are
we going to do about it? This is the only question worth asking. But the
answers appear elusive. Faced with a multifaceted crisis – the capture of
governments by billionaires and their lobbyists, extreme inequality, the rise
of demagogues, above all the collapse of the living world – those to whom we
look for leadership appear stunned, voiceless, clueless. Even if they had the
courage to act, they have no idea what to do.
The most
they tend to offer is more economic growth: the fairy dust supposed to make all
the bad stuff disappear. Never mind that it drives ecological destruction; that
it has failed to relieve structural unemployment or soaring inequality; that,
in some recent years, almost all the increment in incomes has been harvested by
the top 1%. As values, principles and moral purpose are lost, the promise of
growth is all that’s left.
You can see
the effects in a leaked memo from the UK’s Foreign Office: “Trade and growth
are now priorities for all posts … work like climate change and illegal
wildlife trade will be scaled down.” All that counts is the rate at which we
turn natural wealth into cash. If this destroys our prosperity and the wonders
that surround us, who cares?
We cannot
hope to address our predicament without a new worldview. We cannot use the
models that caused our crises to solve them. We need to reframe the problem.
This is what the most inspiring book published so far this year has done.
In Doughnut
Economics: Seven Ways to Think Like a 21st-Century Economist, Kate Raworth of
Oxford University’s Environmental Change Institute reminds us that economic
growth was not, at first, intended to signify wellbeing. Simon Kuznets, who
standardised the measurement of growth, warned: “The welfare of a nation can
scarcely be inferred from a measure of national income.” Economic growth, he
pointed out, measured only annual flow, rather than stocks of wealth and their
distribution.
Raworth
points out that economics in the 20th century “lost the desire to articulate
its goals”. It aspired to be a science of human behaviour: a science based on a
deeply flawed portrait of humanity. The dominant model – “rational economic
man”, self-interested, isolated, calculating – says more about the nature of
economists than it does about other humans. The loss of an explicit objective
allowed the discipline to be captured by a proxy goal: endless growth.
The aim of
economic activity, she argues, should be “meeting the needs of all within the
means of the planet”. Instead of economies that need to grow, whether or not
they make us thrive, we need economies that “make us thrive, whether or not
they grow”. This means changing our picture of what the economy is and how it
works.
The central
image in mainstream economics is the circular flow diagram. It depicts a closed
flow of income cycling between households, businesses, banks, government and
trade, operating in a social and ecological vacuum. Energy, materials, the
natural world, human society, power, the wealth we hold in common … all are
missing from the model. The unpaid work of carers – principally women – is
ignored, though no economy could function without them. Like rational economic
man, this representation of economic activity bears little relationship to
reality.
So Raworth
begins by redrawing the economy. She embeds it in the Earth’s systems and in
society, showing how it depends on the flow of materials and energy, and
reminding us that we are more than just workers, consumers and owners of
capital.
The
embedded economy ‘reminds us that we are more than just workers and consumers’.
Source: Kate Raworth and Marcia Mihotich
This
recognition of inconvenient realities then leads to her breakthrough: a graphic
representation of the world we want to create. Like all the best ideas, her
doughnut model seems so simple and obvious that you wonder why you didn’t think
of it yourself. But achieving this clarity and concision requires years of
thought: a great decluttering of the myths and misrepresentations in which we
have been schooled.
The diagram
consists of two rings. The inner ring of the doughnut represents a sufficiency
of the resources we need to lead a good life: food, clean water, housing,
sanitation, energy, education, healthcare, democracy. Anyone living within that
ring, in the hole in the middle of the doughnut, is in a state of deprivation.
The outer ring of the doughnut consists of the Earth’s environmental limits,
beyond which we inflict dangerous levels of climate change, ozone depletion,
water pollution, loss of species and other assaults on the living world.
The area
between the two rings – the doughnut itself – is the “ecologically safe and
socially just space” in which humanity should strive to live. The purpose of
economics should be to help us enter that space and stay there.
As well as
describing a better world, this model allows us to see, in immediate and
comprehensible terms, the state in which we now find ourselves. At the moment
we transgress both lines. Billions of people still live in the hole in the
middle. We have breached the outer boundary in several places.
This model ‘allows us to see the state in
which we now find ourselves’. Source: Kate Raworth and Christian Guthier/The
Lancet Planetary Health
An
economics that helps us to live within the doughnut would seek to reduce
inequalities in wealth and income. Wealth arising from the gifts of nature
would be widely shared. Money, markets, taxation and public investment would be
designed to conserve and regenerate resources rather than squander them.
State-owned banks would invest in projects that transform our relationship with
the living world, such as zero-carbon public transport and community energy
schemes. New metrics would measure genuine prosperity, rather than the speed
with which we degrade our long-term prospects.
Such
proposals are familiar; but without a new framework of thought, piecemeal
solutions are unlikely to succeed. By rethinking economics from first
principles, Raworth allows us to integrate our specific propositions into a
coherent programme, and then to measure the extent to which it is realised.
I see her
as the John Maynard Keynes of the 21st century: by reframing the economy, she
allows us to change our view of who we are, where we stand, and what we want to
be.
Now we need to turn her ideas into policy. Read
her book, then demand that those who wield power start working towards its
objectives: human prosperity within a thriving living worl
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