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

REWRITING ECONOMICS

We find it impossible to overstate how important this last element of Raworth’s work is. The rewriting of economics from a picture of success defined by growth to one shaped by balance within a fragile ecosystem requires adoption of a mindset that is alien to classical economics. It may not be quite so alien to the 21st-century reader, whether they be a student of social policy or a family doctor. In the past century, we have asked a great deal of economics. In particular, we ignore health inequalities, environmental pollution, and gender equality. Despite the active role these aspects play in our economy, popular indicators of economic success do nothing to effectively measure their importance in our lives. If we cannot properly visualise the problem, we have no effective way of solving it. Solutions such as carbon taxing and the subsidisation of green energy have gained some traction in the lessening of the impacts of climate change.

Yet these policies are aimed at quantifying our environment within a practical value system so that it might fit within the existing economic system. This and simple welfare policies are nothing without the behavioural shift required to decide that; yes, our environment is worth something; yes, affordable care for all is worth something; or yes, the work of homemakers and others whose value to society GDP fails to capture is worth something.

Raworth argues that growth should not be the ultimate goal for a thriving economy. The shift in mindset that she advocates revolutionises how we think about economic success. The very idea that it might be possible to expand our rate of consumption indefinitely without consideration for the limits of resources or the effect on others’ wellbeing and the environment (economists call such factors externalities when they do not feature in transactional costs) is a simple matter of hubris — an act of arrogance that precedes disaster. Anyone can understand the reality behind the limits of consumption, so why do we continue to define success by this myth? Balance between the wellbeing of individuals and the planet is a much better indicator of how the economy is doing.

HOW DO YOU ACHIEVE A HEALTHY ECONOMY?

Raworth’s quite revolutionary model (no pun intended) can come across as simplistic. By contrast, she urges economists, policymakers, and citizens alike to think of the world in a more complex manner. For instance, the poorest people of every economy clearly exist on the inside of the social foundation ring. They are also harmed by activities that go outside of the environmental ceiling. For example, individuals on a low income around the world live in environments affected by pollution and other environmental damage resulting from the demand for consumer goods by the wealthy. Somehow it is also hard to compute that even in affluent societies there is inequality such that individuals are outside the doughnut. Is this a problem with the model or with society? Trying to think on a global and a local scale with consideration of human needs and desires, as well as the effects of meeting these while offering alternative goals for economies, is itself disorientating and difficult. Raworth’s new ideas in economics ‘dance on the page together’ but we are left thinking that ‘Doughnut Economics: the well-choreographed musical’ is a life’s work.

Raworth hits on the largest issues in the way of achieving a healthy economy, readily invalidating the pedestal on which we have placed the one-dimensional measurement of GDP. This is mirrored on a smaller scale by the way many small businesses aspire to become big businesses. Raworth is a testament for the need to progress our economic thinking. Time has changed and we need new tools if we are to think like 21st-century economists and behave as 21st-century citizens.