Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist

"Two of the books I recommend are written by economists. Raworth calls herself a ‘renegade economist.’ What she did is an interesting work of synthesis. She looked at the work of the Stockholm Resilience Centre, which defined nine planetary boundaries we can’t exceed without inducing planetary peril. These include climate change, toxic pollutants, and the overabundance of nitrogen and phosphorus that comes from industrial farming of fertilizer. Those are all ecological ceilings we can’t transcend. Then, she looked at the UN’s Sustainable Development Goals (SDGs) adopted in 2015, which were signed onto by 183 different countries. These include the right to peace and justice, housing, good food, access to water, education for women. There are seven basic building blocks of the SDGs, and Raworth refers to these as social foundations. She puts the social foundations together with this idea of the ecological ceiling and says there’s a space in between, where you have the possibility for a regenerative economy that serves both natural systems and human wellbeing. Doughnut Economics also talks about the processes by which you can start to change the economic goals and move toward an economy that actually does serve nature and human beings. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . Raworth argues for a larger systems approach to how we think about what we do as a society. I don’t think she uses this quote, but there’s one I love from Dwight Eisenhower, who was America’s chief logistician for World War II. He said, “Whenever I can’t solve a problem, I make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.” Another thing that interests me and relates to another book on the list is that, like Judy Samuelson, Raworth is looking at the role of business in society. The entities that have taken up the idea of doughnut economics are not so much individual businesses, but places. Amsterdam, for instance, has adopted doughnut economics as its model for economic growth. That’s interesting because globalized business has no loyalty to a specific place, but its harms are felt in specific places—through the pollution of a particular river or the poisoning of the air in Beijing or Seoul. I think that looking at place—the welfare of places, the wellbeing of human community and of the natural systems—is absolutely essential to change in the way we do business. Raworth doesn’t really talk about that, but she leads us there."

"Doughnut Economics takes us quite a long way towards redeeming some of the economic issues that we’re talking about and, at the same time, ensuring that the better distribution of wealth and social justice does not destroy the living world on which we depend. That is, it tries to reconcile the environmental vision with the vision of widely shared prosperity. What she has done is quite literally to redraw economics . She starts by saying that the diagrams around which we base our economic imagination are simply wrong. They do not describe the world in any of the ways in which it really works. They exclude huge sectors such as, for instance, the economics of the home and the work of women. They exclude the living world and see any damage that we do to the living world as merely an ‘externality’. Raworth rejects the old circular flow diagrams that are central to mainstream economics. She argues that we need to show that we depend on energy inputs and materials from the natural world, for example, which circular flow diagrams don’t demonstrate. And we need to show all the different spheres—state, commons, household and market—and how they interact with each other. From there, she says we’ve got to decide what economics is for . One of the important points she makes is that economics has lost its goals. It claims to be just a description of human behaviour, yet it has got all sorts of hidden agendas, many of which are hidden from economists themselves. Of course, even taken as a description of human behaviour, economics is generally a very bad one. Most economists have a woeful misconception of human behaviour. An extreme example is their model of people as homo economicus : self-maximising man just pursuing his own interests at the expense of everybody else. That’s simply not how human beings work. By contrast, Raworth says economics should have an agenda and the agenda should be to create a better life for everyone, without destroying the living world on which we depend. And if creating a world in which all can thrive without exceeding natural limits is the purpose, then let’s draw that. So, she creates this doughnut diagram whose outer ring is the planetary boundaries that we shouldn’t cross if we—and our descendants—are to have a good and prosperous life and if we are to allow other species to live on earth alongside us. The outer ring is constituted by factors identified by a group of scientists, such as biodiversity loss, ocean acidification and climate change . The inner ring of the doughnut is the social floor below which we shouldn’t fall. This inner ring is described by sustainable development goals. So, we should all have decent quality of housing, water, education, political voice, and so on. We should live within the safe and just space between the two rings. Now, there’s a lot more work to be done to explore how this is going to be realised, but she has made a very good start. The commons is an essential sphere that is routinely overlooked by economists. It’s quite hard to define. It’s neither the state nor the market. Rather, it can be thought of as a particular set of assets, the people possessing those assets, and the rules that those people develop in order to manage those assets cooperatively. So, the commons is not just the pasture, the coral reef or the free software that you and your group of friends and neighbours might be managing together and surviving from, but it’s also you and your group of neighbours, and the common rules that you have developed to manage those things. “We should create new commons.” The commons have been greatly maligned in all sorts of ways but particularly by the doctrine of ‘the tragedy of the commons’, formulated by Garrett Hardin in 1968. This doctrine proposes an entirely theoretical situation in which you have pastoralists using some pasture. Every one of them has an incentive to add another animal to their flocks because they get the full benefit of that animal, but the commons as a whole loses as a result of overgrazing. Well, that’s not how it actually happens in the real world. Had Hardin had any experience of the real world, he would have recognised that. I saw this myself in Turkana district in northern Kenya. The commons are extremely closely regulated by the people who keep their animals on them. This directly speaks to Hardin’s example because this is a pastoralist society. If somebody came into the commons and started grazing their animals without the permission of the elders, and without an allocated pasture right, in the first instance they’d be driven off with sticks. In the second instance, they’d be caught and tied to a tree and beaten with sticks. In the third instance, they’d be killed. This was an extremely closely-regulated situation because on those regulations people’s survival depended. If the commons were overgrazed, everyone would die of starvation, which is what Hardin predicted. But it doesn’t happen there because of that regulation. Elinor Ostrom has demonstrated repeatedly over many years just how false this picture was. But it was one of those convenient arguments—like those that appeal to the Kuznets curve—which was used by people who wanted to enclose the commons and grab common wealth in order to enhance their personal fortune. I think we have to do several things. One is to defend the commons we already have. A second is to reclaim commons which have been taken from us. That might be everything from our local forests to academic journals which have been seized by one of the most ruthless bunch of privateers in the modern world—groups like Elsevier and Springer. Thirdly, we should create new commons. In Martin Adams’s book Land: A New Paradigm for a Thriving World there are some very good proposals for how we can gradually and peacefully—in a completely compensated way—take land back into common ownership and control. I think that’s an essential step towards building a more just and environmentally responsible society. If we are to confront the current environmental crisis, we need a positive vision as well as versions of doom. And rewilding is one of those positive visions. Rewilding envisages a mass restoration of ecosystems in places where we can do that without greatly impinging on human welfare and in ways which could greatly enhance human welfare. To give one example, in Britain there are vast areas that are grazed extremely unproductively, with only one or two sheep per hectare. There are roughly four million hectares of upland sheep grazing in Britain which is roughly equivalent to the amount of land we use for all arable and all horticulture production. And yet, it produces just one per cent of our food. This is grossly misused land. And it’s only sustained through agricultural subsidies. This is a terrible misuse of public money and I believe that that money would be much better spent paying the same people to restore that land, to bring back trees, to bring back our missing wildlife, and to make magnificent habitats once more. People would then wish to visit these habitats, and we could create a new economy around that. Again, at sea, there is overfishing almost everywhere. We could create large marine reserves in which no fishing takes place. These could then become the breeding grounds which enhance the fishing industry, as well as creating wonderful marine ecosystems which large numbers of scuba divers, recreational anglers, and whale watchers would want to visit, again creating a new economy. ADDITIONAL RECOMMENDATION FROM GEORGE MONBIOT, June 23rd, 2020 ( via Twitter ) No. 1. The Patterning Instinct by Jeremy Lent — life and world changing."