Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist
(Random House, 2017)
by Kate Raworth
I doubt many people would have bet that this year’s hot new concept for a healthy economy would be that bad food staple, the doughnut. But with the publication of Kate Raworth’s book, it’s come to pass. The idea of the ‘doughnut’ is that there is (1) a lower social limit for human flourishing, beneath which welfare is limited by shortfalls in such things as food, education and housing, and (2) an outer ecological limit for human flourishing, beyond which welfare is limited by overshoot in such things as climate change, ocean acidification and nitrogen and phosphorous loading. These two limits constitute respectively the inner and outer rings of the ‘doughnut’, the sweet spot within which humanity must try to remain. I have to confess I’m not greatly moved by the metaphor, which doesn’t seem to go much beyond the truth that individually people can have too little, and collectively they can take too much. And too much of what – is there really a conceptual equivalence between taking too much water or fossil energy, and taking too much health, as Raworth’s ‘doughnut’ diagram (p.51) seems to imply? Whatever the case, she hangs a lot of sensible and lucid analysis off the concept in a genuinely thought-provoking, if for me ultimately unsatisfactory, book.
In the first part of the book Raworth dissects orthodox economic theory, showing how it frames the world in questionable but powerful and largely hidden ways that buttress right-wing, ‘free’ market politics, while silencing other modes of thinking. She places a lot of emphasis on the way that our stories and pictures condition how we see the world, and generally puts this to good use in deconstructing the ideology of mainstream economics – for example in the notorious ‘circular flow’ diagram of Paul Samuelson, founding father of modern economics, which depicted the economy as a kind of frictionless and endless flow of value through society, like water through a closed plumbing system. This ignores the open character of the energetic and biotic systems, with their sources and sinks, to which human economies are mere accessories. Doubtless Raworth’s view that we now need to tell different stories, and draw different pictures, resonates with the Dark Mountain Project.
Raworth characterises the old story of economics as one that unconditionally celebrates markets, business, finance and trade, deprecates the state and ignores households, commons, society, the earth and power. In the new story that she wants to tell, those elements that were ignored or deprecated in the old story are brought centre stage, and old elements like markets, finance and trade are put in service of wider human flourishing, rather than assumed to be unconditionally beneficial.
If that sounds obvious or trite, Raworth nevertheless does a good job of tracing the implications in some depth, using clear, jargon-free language aimed at the non-specialist, but without sacrificing an impressive level of subtlety. It’s refreshing that she talks about power, the systematic inequalities in human/human and human/non-human relationships, something that she rightly says is generally missing in mainstream economics. But unfortunately her description of it lacks depth, and doesn’t go much further than the observation that the wealthy get to shape the economy’s rules in their favour. OK, but who are the wealthy, and how were they able to accumulate their wealth? I get the sense that Raworth operates in a rarefied world of NGO and policymaker high-ups, whose inevitably bird’s-eye and reformist view of the world inflects her book’s gentle equity talk, its judicious commitment to levelling the playing field and its pervasive emphasis on ‘design’ as the solution to contemporary problems (her 21st century economics is, for example, “distributive by design” and “regenerative by design”).
The problem, however, is not that the present global political economy is badly ‘designed’. On the contrary, it’s extremely well designed, locking the majority of the world’s population into specific political relationships which have worked because they’ve convinced sufficient numbers of the relevant people that they have a stake in the status quo. But like every past political economy, the present one will only endure for so long, until a complex of internal and external factors forces radical change – not least in the identity of the ‘relevant people’ who are invested in the status quo. In the present global political economy, the consumers and business leaders of western Europe and North America have had disproportionate ‘relevance’. But it seems likely that in the political economies to come, their relevance will wane – and this will not be a process of ‘design’ but of messy conflict, violence, compromise, happenstance and political calculation.
For sure, the economic story that Raworth wants to tell is a good one to try to feed into this febrile mix. But I don’t think it’ll have much traction without a richer analysis of how politics and power happens. My feeling is that Raworth pulls her punches in analysing the mechanics of power because otherwise she would undermine the basic premise from which her book proceeds – that political problems get solved in smoothly reformist ways by designers thinking (or storytelling, or drawing) at a whole-system level. It’s an appealing view, perhaps especially to high-level policymakers. But I’m not sure it’s a very convincing one. Maybe there’s some truth in the notion that our stories create our realities. But it’s also true that we only find the stories we want to tell out of the realities messily created in the glacial grind of human history.
In recounting her alternative economic story, Raworth freely borrows from preceding heterodox economists like Herman Daly, Tim Jackson and Ha-Joon Chang. I’m not sure she adds a great deal to what they’ve already said. So I was a bit surprised to be told on page 44 that her key concept of ‘the doughnut’ is a “radically new compass for guiding humanity” derived from “cutting-edge Earth-system science”. There’s a danger here of the ‘radically new’ story succumbing to one of the pathologies of the old, and insisting over-stridently on its novelty and originality – this year’s must-have concept, rather than just another iteration in the long-established idea of sufficiency. Ah well, there’s nothing wrong with re-presenting old ideas anew if it freshens them up for another generation of readers. But Raworth says little that Herman Daly didn’t say, and say better (if a little more technically), in his 1977 classic Steady-State Economics. In that book, Daly distinguished between the three concepts of ‘service’ (human flourishing, the final benefit of economic activity), ‘throughput’ (the entropic physical flow of resources, particularly non-renewable resources) and ‘stock’ (all the things that are moved in the economy). Perhaps Raworth’s ‘doughnut’ concept is more memorable, but it’s less precise, and it doesn’t much help elucidate the point that some things deliver more service per stock than others.
The spirit of Daly nevertheless invests the later part Raworth’s book, where she lucidly examines questions of economic growth. Advocates for the ability of the contemporary global capitalist economy to generalise wealth while mitigating environmental impacts through technical innovation make much of the evidence for the ‘decoupling’ of economic growth from resource use in the ‘developed’ economies. A good deal of this decoupling turns out to be only relative – in other words, we’re using less resources than we used to in order to deliver a given amount of product (though not necessarily ‘service’ in Daly’s terms), but economic growth is such that we’re still using more resources overall. In some cases, there does appear to be a level of absolute decoupling, ie. a lower total amount of resource use. But Raworth usefully points out that what’s really needed is sufficient absolute decoupling – that is, enough absolute decoupling to bring throughputs back within the safe bounds of her doughnut, which some analysts suggest could, for example, amount to emissions reductions in the ‘developed countries’ of around 10% per annum – vastly greater than is currently being achieved. It seems likely that the ‘developed’ economies can only reduce their resource use at too high an absolute level to stay inside the doughnut. Meanwhile, the only working model available to ‘developing’ economies is to increase their absolute resource use. Raworth succinctly spells out the resulting paradox: “No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one”.
Time, then, for another story? Well yes, but what Raworth offers is mostly just a set of stories-in-the-plural of people doing various positive things. I don’t mean to belittle them. Many of them are genuinely inspiring and uplifting, such as the case of Malawian William Kamkwamba, whose home-made wind turbines brought power to his local community. But Raworth fails to put them into a systemic framework that turns them into a story, rather than simply a collection of stories – a story of how the systemic structuring of contemporary economies and polities can be systemically restructured into something better. And inasmuch as she does have a wider framework, it’s quite a problematic one – based on the notion of both the commons and the state as helpmates to human flourishing. Her text is sprinkled with references to things like ‘the knowledge commons’, ‘the collaborative commons’ and ‘the creative commons’, but this doesn’t amount to much more than a technical-sounding gloss to the notion that people sometimes share things. Well, sure they do. And sometimes they don’t. Raworth refers to the work of Elinor Ostrom, who looked carefully at various commons as defined collective usage agreements, but she doesn’t seem to have taken on board Ostrom’s point that commons sometimes work, sometimes don’t and are only sometimes (quite rarely) the best solution to resource husbandry questions. In Raworth’s treatment, there’s a slippage from commons as ‘defined collective usage agreement’ to commons as ‘free stuff, freely shared’. Take this passage:
The triumph of the commons is certainly evident in the digital commons, which are fast turning into one of the most dynamic arenas of the global economy. It is a transformation made possible, argues the economic analyst Jeremy Rifkin, by the ongoing convergence of networks for digital communications, renewable energy and 3D printing, creating what he has called ‘the collaborative commons’….Once the solar panels, computer networks and 3D printers are in place, the cost of producing one extra joule of energy, one extra download, one extra 3D printed component, is close to nothing, leading Rifkin to dub it ‘the zero-marginal-cost revolution’. The result is that a growing range of products and services can be produced abundantly, nearly for free, unleashing potential such as open-source design, free online education, and distributed manufacturing (pp.83-4)
One issue that goes unexamined here is the extent to which this highly technological commons, with its solar panels, computer networks and 3D printers, is sustainable in the light of the need for a sufficiently decoupled global economy discussed above. Another is that Raworth confuses the marginal costs of circulation, which indeed in the digital age have now sometimes diminished towards zero, and the costs of creative production, which aren’t necessarily much different than pre- ‘digital commons’ times. It takes as much hard thought and hard work to put together a good curriculum, a good political essay, a good poem or a good tractor design as it ever did. But once it’s put together, it can now be distributed almost costlessly around the world, potentially to an audience of billions. The zero-marginal-cost-revolution, if there is one, is a revolution of circulation, not production. No doubt it’s a fine thing, but it’s worth considering its major beneficiaries. Those who control the circulation are in a position to effortlessly siphon off wealth, whereas those who control the production aren’t – which is why Bill Gates and Mark Zuckerberg are a lot richer than any political essayist, poet or tractor designer, delivering a ‘collaborative commons’ based on privately owned, and possibly ‘enclosed’, means of circulation. Meanwhile, much of what really matters to people as physical, biological beings – such as staple foodstuffs and bulky construction materials – doesn’t enjoy zero marginal costs of circulation, and isn’t usually best produced via commons.
Perhaps Raworth’s wider point isn’t so much about commons in the technical sense of common-pool resource use agreements. Rather, it’s a plea to create economies geared to delivering collective human benefit and to abandon the discredited old notion that the pursuit of individual self-interest somehow delivers collective benefit through the magic of the market – a magic that, if it was ever operative, now seems to be wearing off, fooling only a diminishing band of neoliberal fundamentalists. Raworth isn’t the first person, surveying the global political economy, to think “No, not this”, but then to flounder at the question of “But, then what?”, and indeed she makes a better stab than most at answering that question. However, a more comprehensive analysis is needed of the way that economic and political power works and the complex functioning of the modern state. As it is, her prescriptions involve a rather hopeful, voluntaristic and top-down rhetoric that seems destined to go unfulfilled. Her over-emphasis on ‘design’ rather than politics discussed above is one example of this. Another is the need she identifies to “bring on the partner state” to support commons and local economic regeneration, without analysing why contemporary polities so rarely do this. It surely isn’t just a matter of them choosing the wrong story.
Maybe part of the problem is our fateful modern conviction that the stories we tell have to be upbeat and optimistic – a conviction Raworth endorses, insisting on the need to see a “glass-half-full” future (p.286). It strikes me that this may be more indicative of our problems than the solutions to them. If only we could lay aside the quintessentially capitalist trope of ‘optimism’ that sends us scurrying here and there after positive stories as a kind of pick ‘n’ mix while ignoring inconvenient negativities and acknowledge that we now face potentially insurmountable ‘wicked problems’ that need to be reckoned with rather than ‘solved’, it might be easier to harbour genuine hopes for the future. Raworth herself writes that history has repeatedly demonstrated an association between economic crisis and the rise of xenophobia, intolerance and fascism (p.277). Why insist on a glass-half-full view of the future in the light of this repeated fact? It’s surely preferable to present a sober and systematic unpicking of the mechanics of political power and economic provisioning that can clarify alternative endpoints, than to regale the reader with upbeat stories of how things may just turn out well. At its best, Raworth’s book does some good unpicking. But it still leaves us a long way from home.