Doughnut Economics

By
Kate Raworth
- Reviewed by
Marilyn Freeman

When I was 6 years old and learning about addition and subtraction, I needed to use my fingers to make those concepts real. My grade 1 teacher didn’t like that. She put my hands on the desk and rapped them with a ruler. Since then I’ve not had a good relationship with numbers. Imagine my surprise, then, when I found myself reading a book about economics and finding that I COULDN’T PUT IT DOWN! This marvel is Doughnut Economics: 7 Ways to Think Like a 21Century Economist by Kate Raworth. Raworth is a senior associate at Oxford University’s Environmental Change Institute and a Professor of Practice at Amsterdam University of Applied Sciences.

Here’s the basic question: What if it were possible to live well without trashing the planet? What if we started economics with thinking about humanity’s long term goals and sought out economic thinking that could accomplish them? Right now policy makers, educators, activists and voters are being taught an economic mindset that is rooted in the textbooks of 1950 which in turn are rooted in theories of 1850. We’re working with flawed assumptions based on constant and everlasting growth which will solve everything (it hasn’t and won’t). Raworth works at making those assumptions and blind spots explicit in order to rethink economics. She quotes Buckminster Fuller: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” Today we have economies that need to grow whether or not they make us thrive; what we need are economics that make us thrive, whether or not they grow – a radical flip.

To start with something that seems obvious but is not represented in traditional economics, human thriving depends upon planetary thriving. So what exactly is the Doughnut?

Click the image to see a full scale version.

The Doughnut’s inner ring, called Social Foundation, sets out the basics of life: sufficient food, clean water and decent sanitation, access to energy and clean cooking facilities, access to education and healthcare, decent housing, a minimum income, access to networks of information and social support – all of which need to be achieved with gender equality, social equity, political voice and peace and justice.

The Doughnut’s outer ring represents the ecological ceiling. To go beyond the ceiling will bring on climate change, ozone depletion, air pollution, loss of biodiversity, freshwater withdrawals, ocean acidification, nitrogen & phosphorus loading etc. Somewhere in the middle there is a safe and just space for humanity based in a regenerative and distributive economy.

Because mainstream economics today is still taught with scant attention paid to the living planet, it relegates ecological stresses such as soil degradation and deforestation to the periphery of economic thought only arising when damage has become so severe that attention must be paid. Twenty-first century economics shifts attention from merely tracking the flow of money to understanding the many distinct sources of wealth – natural, social, human, physical and financial – on which our well-being depends.

Raworth says we need an updated portrait of ourselves to better understand how to change economic systems. “First, we are not really so narrowly self-interested, but social and reciprocating. Second, in place of fixed preferences we have fluid values. Third, instead of isolated, we are interdependent. Fourth, rather than calculate, we usually approximate. And fifth, far from having dominion over nature, we are deeply embedded in the web of life.”

One issue to look at is how policy is made by the WEIRD – people who are Western, educated, industrialized, rich and democratic. Not exactly representative of the vast majority of humanity.

So let’s get back to the title of this book. Raworth sets out 7 ways to change economic thinking in order to get into the doughnut.

First: Change the Goal or how to stay below the ecological ceiling while providing a decent safe, social foundation for all.

Second: See the Big Picture by understanding what our biases in economic thinking are, how narrow they are and how to embed new narratives within nature and powered by the sun.

Third: Nurture Human Nature because 20th century economics was based on the “rational economic man” who, we were told, is self-interested, isolated, calculating, fixed in taste and dominant over nature. How we really are is described in a previous paragraph.

Fourth: Get Savvy with Systems by understanding feedback loops which lend understanding to things like booms & busts, the self-reinforcing nature of economic inequality and the tipping points of climate change.

Fifth: Design to Distribute in order to erase the erroneous theory that things must get worse before they get better. But it turns out that inequality is not an economic necessity but a design failure. There are better ways of redistributing wealth, particularly wealth that lies in controlling land, enterprise, technology, knowledge and the power to create money.

Sixth: Create to Regenerate. Ecological degradation is just the result of degenerative industrial design. What is now needed is a regenerative design that creates a circular – not linear – economy.

Seventh: Be Agnostic about Growth: Right now we have economies that need to grow, whether or not they make us thrive. What we need are economies that help us thrive, whether or not they need to grow. Our economies are currently financially, politically and socially addicted to growth.

Each of these chapters goes into fascinating detail. Ultimately, Raworth takes a glass-half-full position. She points out that this is the last generation with the chance to do something transformative about the damage we’ve done and are still doing to our planetary household. “The twenty-first-century task is clear: to create economies that promote human prosperity in a flourishing web of life so that we can thrive in balance within the Doughnut’s safe and just space.”

Marilyn Freeman is a resident of Peterborough/Nogojiwanong who has had a lifelong struggle with math and still can’t believe that she spent hours devouring this book and taking 24 pages of notes! She is also a member of For Our Grandchildren and the Peterborough Field Naturalists.