Book review: Doughnut Economics

Doughnut Economics: How to Think Like a 21st Century Economist, by Kate Raworth. Random House Business, 384pp, £9.99. (Published in Public Service Magazine, Spring 2018)

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Oxford academic Kate Raworth’s Doughnut Economics, now out in paperback, caused quite a stir when it was first published last year, with Guardian eco-warrior George Monbiot comparing it, somewhat fancifully, to Keynes’s General Theory. That seems like a misreading of the book’s purpose, as revealed by its subtitle: Raworth isn’t offering a a theory or a model, but a well-grounded appeal for us to think differently about economics.

Raworth’s ‘doughnut’ attempts to describe, in a simple picture, a goal for economics; it’s that lack of purpose, Raworth argues, that allowed “the economic nest [to be] hijacked by the cuckoo goal of GDP growth”. The inner ring of Raworth’s doughnut (there’s no jam, today or tomorrow), “the social foundation”, represents the basics we need to lead fulfilling lives – enough food, good education, decent healthcare and housing, political participation and so on – while the outer ring represents the limits of what the planetary ecosystem can bear. The aim of economics is to get us into what Raworth calls the “safe and just space” between them – and to keep us there.

To do this, Raworth argues we’ll need to “design” an economy – she uses the word pointedly – which works in harmony with the natural and social world in which it is embedded. And that work of design has to recognise that much important economic activity takes place outside of the market, in the household, the government and the “commons” – the sphere of sharing, voluntary work and community co-operation.

Along the way, Raworth says we will have to discard “an economic mindset rooted in the textbooks of 1950, which in turn are rooted in theories of 1850”. What if demand curves don’t always slope down? Suppose our complex and ever-changing economy is never at equilibrium. Imagine that what mainstream economists call “external shocks” – environmental degradation, financial crises, social unrest and technological change, for example – are actually inherent to the system. What happens if perpetual economic growth is no longer necessary or even desirable – or, more uncomfortably still, necessary but no longer possible?

Such thinking has been gaining ground for some years, through the work of dissident economists like Steve Keen, Ha Joon Chang and the late Elinor Ostrom – and in response to the global student movement Rethinking Economics. Economics must also join other sciences in embracing “systems thinking”, and “stop searching for the economy’s elusive control levers and start stewarding it as an ever-evolving complex system,” Raworth says. Economists, she suggests, need a metaphorical career change: “discard the engineer’s hard hat and spanner, and pick up some gardening gloves and secateurs instead”.

As well as these sources, Raworth draws heavily on the greatest economic dissident of all, John Maynard Keynes himself. When we finally get to grips with all this, Raworth feels sure Keynes will be “waiting to greet us, ready to get to work on figuring out the economics – and the philosophy and politics too – of the art of living in a distributive, regenerative, growth-agnostic Doughnut Economy”.

How we get there will be up to us – “we are all economists now”, Raworth says. Despite the “very real” possibility of complete breakdown, she believes “there are enough people who still see the alternative, the glass-half-full future, and are intent on brining it about”. With Trump in the White House and so much of new economy in the hands of powerful oligarchs, it can be hard to share Raworth’s optimism. But then again, we may have no choice.