Who Wants to Be an Economist?

This post is part of a reading series of Doughnut Economics, by Kate Raworth. It does offer a base for discussion, not a thorough understanding of the author’s ideas, for which the book itself remains indispensable.

As in any book club, the purpose is to help you share your views. You are, therefore, kindly invited to answer the question(s) asked at the end. Let the rest of us know what you think!

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Introduction: Who Wants to Be an Economist?

What needs to change in our understanding of economics, in order for humanity to thrive without destroying the planet? Let’s first feed our imagination with the picture of a doughnut…

Kate Raworth makes the case for a new intelligence of economics by first explaining why we should be concerned. This relates not only to the present state of the world—however appalling the diagnostic might be—but, as importantly, to the transition to a valid economic framework and the new narrative that needs to replace conventional economics.

Today, the richest 1% of people on the planet own more wealth than the other 99% put together. According to 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. The financialization of the economy is a permanent risk at the core of the system, as illustrated by the depressions of 1929 and 2008, as well as by the stunning income inequality in almost every country of the world.

At a deeper level, the reference to money as the primary metric of economic development implicitly means that progress is equated to more consumption of everything and anything ad infinitum. This race to nowhere taking place in total disregard of actual answers to the genuine needs of the human population and, all the while, amounting to systematically destroying Earth’s capacity to sustain the conditions of life as we know it. The world is now in a state of environmental collapse. Bio-diversity is disappearing at an alarming rate, climate change is likely to turn soon in 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.

Doughnut economics - One Home Planet

What you see here is the “doughnut”. By recognizing the boundaries within which the economy has to operate, this model also puts it back into the system of systems that the world really is. Far from being a constraint to human development, it promotes an integrated approach to the economy that can only provide the best social, environmental, and economic output. When reviewing Kate Raworth’s book, the journalist George Monbiot adequately summed up this Copernican revolution by saying “Instead of growth at all costs, a new economic model allows us to thrive while saving the planet”.2

In order 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:

Conventional Economics
Doughnut Economics
Gross Domestic ProductEconomic Doughnut (environmental outer boundary and human needs inner boundary)
Circular FlowEmbedded economy (in society and in nature)
Rational Economic ManMan (human)
Mechanical equilibriumDynamic complexity (systems of systems)
CumulativeDistributive by design (network of flows [not just money])
LinearRegenerative (circular)
Growth addictedGrowth agnostic (thriving instead of growing)
Your turn! Do you think that the holistic approach of “doughnut economics” makes economic sense? Why or why not? Share your thoughts in the comment section below.

PS: While you are at it, please consider sharing this post too. 🙂

Footnotes

  1. Larry Elliott, The Guardian 20 Jan 2019: World’s 26 richest people own as much as poorest 50%, says Oxfam
  2. George Monbiot, The Guardian 12 Apr 2017: Finally, a breakthrough alternative to growth economics – the doughnut
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