What needs to change in our understanding of economics so that humanity can thrive without destroying the planet? To Kate Raworth, an English economist working at Oxford and Cambridge universities, the answer is in the doughnut!
|This post is part of a reading series of Doughnut Economics by Kate Raworth. For quick access to all chapters, click here.|
As in any book club, you are warmly invited to let the rest of us know what you think!
Disclaimer: Being the result of personal work, this chapter summary cannot and does not pretend to offer a detailed and accurate transcription of all the author’s ideas.
Today, the richest 1% of people on the planet own more wealth than the other 99% put together. According to the development charity Oxfam, the world’s 26 richest people own as much as the poorest 50%.1 This is the symptom of a system using financial wealth as its sole metric of success. With such a narrow logic and in the absence of proper regulations, money interests will always be prioritized over the genuine added value of everybody else’s hard work, resulting in this growing income gap. Even if one could argue that the poverty level is globally receding, the constant wealth capture at the very top is a sure sign of the system’s defectiveness.
This defectiveness, unfortunately, is not a bug; it is the feature. The financialization of the economy was allowed thanks to the shortsightedness of conventional economics, purposefully considering money as the primary metric of economic development. But if, as humans, we can regulate and amend the system at the edges to alleviate its most damaging social consequences, nature does not have that luxury.
Equating financial growth to economic health implicitly means that progress lies in more consumption of everything and anything ad infinitum. This is a race to nowhere that not only ignores our genuine social, psychological, and physical needs but also results in systematically destroying Earth’s capacity to sustain the conditions of life as we know it. This is how humanity ends up now with a world in a state of environmental collapse. Bio-diversity is disappearing at an alarming rate, climate change is turning into a runaway global warming process, and soil and water have been degraded almost everywhere due to intensive agricultural practices and unfettered industrial pollution.
The point is not to deny the advantages of a healthy economy but, against the self-contradicting assumption of infinite growth, to make it effectively such. Health and growth are not necessarily the same thing. Ignoring the difference, conventional economics does not answer the challenges mentioned above. It created them.
The solution? “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?” (Id. pp. 8-9). This is what this book is set to be doing.
What you see here is the “doughnut.” When reviewing Kate Raworth’s book, the journalist George Monbiot adequately summed it up by saying “Instead of growth at all costs, a new economic model allows us to thrive while saving the planet.”2 By recognizing the boundaries within which the economy has to operate, this model simply puts it back into the system of systems that the world actually is. And by aiming to answer actual human needs instead of accumulating stuff, it is not a constraint to the blossoming of civilization but a liberation from deadly fetters of our own making. All in all, by promoting an integrated approach, this Copernican revolution in economic thinking is the one and only sensible path to a sustainable future.
To know how “to thrive while saving the planet” and to free the economy of its conventional abstract path, Kate Raworth explores seven mind-shifting ways of thinking like a twenty-first-century economist:
|Gross Domestic Product||Economic Doughnut (environmental outer boundary and human needs inner boundary)|
|Circular Flow||Embedded economy (in society and nature)|
|Rational Economic Man||Man (human)|
|Mechanical equilibrium||Dynamic complexity (systems of systems)|
|Cumulative||Distributive by design (network of flows [not just money])|
|Growth addicted||Growth agnostic (thriving instead of growing)|
Table 1: The social foundation and its indicators of shortfall
Table 2: The ecological ceiling and its indicators of overshoot
|Book Club Discussion: Looking at the seven points opposing conventional and doughnut economics, do you think the latter could become mainstream in economic studies. Why or why not?|
Share your thoughts and kindly build on what others say in the comment section below.
- Larry Elliott, The Guardian 20 Jan 2019: World’s 26 richest people own as much as poorest 50%, says Oxfam
- George Monbiot, The Guardian, 12 Apr 2017: Finally, a breakthrough alternative to growth economics – the doughnut