A review of Kate Raworth’s book, Doughnut Economics: Seven Ways to Think like a 21st Century Economist. This article was originally written for and published on my Medium channel.
It was almost ten years ago that I first came across the idea that growth is not an economic metric for which we should aspire. We don't have the luxury of "sustainable development", according to the late James Lovelock in his compelling book, The Revenge of Gaia. Instead, Lovelock called for a "sustainable retreat". He argued it was already too late to make incremental reductions to carbon emissions, so switching to electric vehicles and more renewable energy sources or CCS energy would not be sufficient to reverse the damage. Instead, we need to plan how we will change how we live and produce food and energy to survive—for example, preparing for mass migrations into cities of Europe as countries like Bangladesh become uninhabitable. It was a stark message from Lovelock, and it stuck with me.
I went on to study Economics as part of my A-levels and an undergraduate degree, yet the idea of a sustainable retreat never came up. Not a single module, not even environmental economics, entertained the idea that considering the world's fundamental challenges, exponential GDP growth may not be the right measure for global economies. Hence, although I was receptive to Lovelock's view, the idealist in me hadn't shared his more apocalyptic view of the future, yet, I also had yet to have the chance to further reflect on the idea of sustainability, growth and development. That was until I came across Doughnut Economics: Seven Ways to Think like a 21st Century Economist, written by the Oxford Economist, Kate Raworth.
Doughnut Economics is a visual economic framework that brings together the constraints of planetary boundaries and meets the requirements for human flourishment. The space between those boundaries represents the space that global economies should be heading towards as their target. Raworth sets out a framework with steps on how we can get there.
I won't spoil you with the details, but the seven principles she lays out in her framework are:
Put people and planet at the centre: Raworth argues that the economy should serve the needs of both people and the planet rather than prioritising economic growth at the expense of social and environmental well-being. She argues we should drop GDP growth as the target and aim for the doughnut instead.
Recognise interdependence: Raworth highlights the interdependence of economic, social, and environmental systems and argues for an integrated approach to economic development.
Respect limits: Raworth argues that the economy must operate within the limits of the planet's resources and ecological systems and not exceed the boundaries that would cause irreversible harm.
Foster distributive justice: Raworth emphasises the importance of distributive justice and argues that the economy should provide a decent standard of living for all without leaving anyone behind.
Ensure intergenerational equity: Raworth argues that the economy should provide opportunities and resources for future generations rather than consuming them.
Encourage diverse forms of well-being: Raworth argues that well-being should be measured and valued in diverse forms, including non-monetary forms of wealth such as health, happiness, and community.
Foster holistic development: Raworth argues for an integrated approach to economic development that considers the interdependence of economic, social, and environmental systems and aims to achieve sustainable and equitable outcomes.
The book challenges the traditional wisdom of economic models, which assume humans are rational economic consumers. That we are not emotional when making decisions, we always have the full facts in front of us, and we always make decisions in our rational economic interest. In reality, we are complex, emotional beings interested in community, relationships, belonging and non-monetary fulfilment, not only looking to maximise our utility. Here, the Doughnut provides a framework for thinking about economic development whilst also considering how we prioritise social and environmental fulfilment. For example, Raworth argues we need to drop the idea of a rational economic man since that isn't who we are, and the more we talk about him, the more we behave self-interestedly. Instead, we need to nurture our humanity and recognise that we are social and adaptable beings.
The most substantial idea that I took away was her argument that GDP is not the be-all and end-all. Raworth criticises the use of GDP as the full measure of economic progress since it doesn't consider inequalities and environmental sustainability. For example, I was surprised to learn that the famous income inequality curve was based on the scantest of evidence and has been perpetuated over decades by multiple neoliberal economists. The curve is taught to all economics students, and it suggests that as nations get wealthier, inequality will inevitably grow until they begin to reduce that gap. We've already seen empirical evidence from history challenge this myth, but Rawworth provides further evidence to show the initial theory was put forward with very little evidence.
The idea of unlimited economic growth also goes unchallenged. We expect our economies to grow constantly, and any deviation from year-on-year growth signals trouble. Raworth rejects the notion of infinite growth. She argues that our limited resources make this undesirable and unrealistic. Instead, the economy must operate within the limits of the planet's resources and ecological systems. As such, a systems approach to economics is required instead of a tunnel focus on efficiency and GDP growth. She argues that economics needs to recognise the interdependence of economic, social and environmental systems. Thus economic development should be considered more holistically about how it impacts people and our planet's well-being.
Raworth emphasises the importance of distributive justice and challenges the traditional economic thinking of efficiency over equity and instead argues that the role of an economy should be to provide a good standard of living for everyone. It reminded me of the Rawslian concept of the "veil of ignorance", which argued that we should design our society in such a way that we'd be happy to be placed at the bottom end of it. According to the Doughnut, fulfilment and equity should be indicators from which we assess the strengths of an economy. How happy we are, how healthy we are and how strong of a community we live in are valuable
Overall, Raworth's approach challenges the conventional wisdom of traditional economic models and offers a new vision for economic development that prioritises social and environmental well-being. Her holistic approach to economics is better suited for understanding inequality and climate change challenges. It gives hope because, beyond just an economic theory, she provides practical suggestions to policymakers, communities and businesses for addressing the challenges and has subsequently set up an entire community of like-minded changemakers through the Doughnut Economics Actions Lab (DEAL).
The best ideas seem obvious when you read them, and the Doughnut provides such a framework. It needs to be taught to every economics student because it renders existing economic orthodoxy utterly unfit for purpose for problems of the 21st century. Whereas reading the revenge of Gaia 10 years ago left me feeling worried and confused, Raworth's work has left me feeling assured and hopeful that there is a framework we could all adopt, which is why I encourage you to read it too.
For those who prefer to avoid reading, there's a helpful series of animations representing the seven Doughnut principles. You can find it here.