My Book Of The Year is all about doughnuts. It could be mistaken as the history of Greggs The Bakers but is actually about a doughnut that is really good for you.
Doughnut Economics wins the Award for stimulating, provoking and encouraging me to feel that economics has turned a corner and there may be a future for the planet. Unlike other similar tomes, I enjoyed and mostly understood it.
The author is Kate Raworth who describes herself as a renegade economist. She has worked for the United Nations and for Oxfam and is now an academic at Oxford and Cambridge but still talks about the real world in a forthright and punchy way. Get a taste from her TED talk.
For too long economics has been dominated by the thinking of the two giants of the last century, John Maynard Keynes and Friedrich Hayek , whose ideas are still the bedrock of mainstream political thinking, but their time has passed. It is the day of the doughnut.
Kate copied another great economist of the last century, Paul Samuelson, who when challenged to write a textbook that engineers could follow, used diagrams rather than words. It became a best seller and sat on my desk in the sixth form.
Raworth drew a doughnut to sum up the kind of economy needed to tackle the world’s problems. It is an American doughnut with a hole in the middle. The aim of the economy is quite simply to keep everyone in the ring of dough which is the Holocene era where crops will grow, ice will not melt and everyone can thrive.
One in three people on the planet still do not have access to a toilet, Raworth tells us. Economists should stop people falling into the hole in the middle of the doughnut by ensuring a basic level of subsistence and they should equally prevent anyone living in the lap of luxury beyond the outer ring of the doughnut where the planet is put at risk..
In describing seven ways to think like a 21st century economist, Raworth shows how homo economicus is not as self seeking as is traditionally assumed. She lists the cast needed for her modern day economic play which includes a few newcomers like’ the household’ , ‘the commons’ and ‘the powerful’ – who must be constrained. She drops in facts that make you stop and think. For example, the resources of five planets would be required if everyone lived like an Australian or a Kuwaiti. She uses metaphors like airplanes that may never land. It is a romp of a read.
The heart of her argument is that economic growth has been the cuckoo in the economists nest ever since the Great Depression. John F Kennedy pledged to grow the U S economy by 5% a year back in 1960. Growth is a proxy for progress. No one has ever been brave enough to forecast whether growth can go on forever and now growth rates in advanced economies are flattening out.
In popular parlance, ‘upwards’ is good. ‘Feeling down’ is bad. Growth is a political necessity, conventional economists tell us. Just imagine an election pledge to restrict growth and prosperity. But the same economists are no longer sure it can be achieved.
Growth also means that the rich inevitably get richer. The three richest man in the United States own as much wealth as the 160 million people in the bottom half of the country’s population and Donald Trump’s proposed tax reforms will make them even richer. It is an inevitable spin off from the capitalist system , Raworth argues, even though we now know, thanks to Richard Wilkinson, that no one, not even the rich, benefit from inequality.
Growth means that the environment gets ever more polluted and precarious. It is not good enough for developing economies like India to go for growth and clear up the mess they make later. We are, Rowarth says, “the first generation to properly understand the damage we have been doing to our planetary household and probably the last with the chance to do something transformative about it.”
“ We have an economy that needs to grow whether or not it makes us thrive”” Raworth tells us but “ we need an economy that makes us thrive, whether or not it grows”. The economy of the future must be redistributive and regenerative by design. This is a tall order as “no country has ever ended human deprivation without a growing economy “ or “ended ecological degradation with one”.
In the final chapters, Raworth proposes a whole host of good ideas that together might just work. She commends the butterfly model of regenerative manufacturing and the generous city movement of climate positive cities like Oberlin, Ohio. She sees great potential for the internet to freely exchange innovation, for the state to invest in renewables and tax finite resources and for texting digital cash direct to the world’s bottom billion – to name but a few.
Kate Raworth has an infectious optimism about economic change even when faced with formidable challenges which inspires me to put a copy of Doughnut Economics into everyone’s Christmas stocking and to encourage you to give broad hints to Santa too. Here are the details: Kate Raworth, ‘Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist , (Random House) £20 with the paperback due in the Spring.
Published in Newcastle Journal 14th November 17