Kate Raworth has a popular book on sustainability and economics. In it, she argues that economics needs an overhaul. It is an admirably ambitious book with some flaws but with excellent parts to more than makeup for them. What does Raworth say about working in the doughnut?
How To Understand Working In the Doughnut
Raworth (not unreasonably) sees the economy as operating within greater social and environmental systems. We shouldn’t see the economy as something that happens in isolation. It is embedded within other systems. As such, it is important to ask what is the economy doing for society and the planet. She developed a model to demonstrate that, called the doughnut. Hence the whole doughnut economics label.
Social Foundations and Planetary Boundaries
We can see society represented by the inside edge of the doughnut. We need to be above basic levels of social decency to be in the doughnut, i.e., to achieve minimum social foundations. There are key factors that help in this, e.g., population, distribution, aspiration, technology, and governance. Achieving the social foundations is about getting into a just space.
The outer side of the doughnut gives us environmental constraints, the planetary boundaries. Keeping within these allows us to be a safe space. (That is ‘safe’ as in a liveable planet).
I should say the doughnut has specific measures of whether we are in a safe and just space. The point is that this isn’t just a neat picture but a full visual representation of where humanity is. There are 12 social foundations from the social priorities in the UN SDGs (sustainable development goals). There are also nine planetary boundaries specified (from earlier research).
It is a very helpful idea, you can plot where we are. The message is that humanity wants to be in the doughnut.
Equilibrium Thinking In Economics
Raworth has some criticisms of traditional economic logic because of its reliance on equilibrium. An equilibrium is a point where markets and other systems are supposed to settle at given enough time. There are a lot of interesting points that can be shown in analyzing equilibrium, so I wouldn’t say it is a total waste of time. That said, it is hard to argue with Raworth’s basic point. Markets and environmental systems don’t tend to be in equilibrium at any point. So it is intellectually interesting to discuss the equilibrium points but not often super practically relevant.
The iconic cross-cross of the market’s supply and demand curves is the first diagram that every economics student encounters, but it is rooted in misplaced nineteenth-century metaphors of mechanical equilibrium.Raworth, 2017, page 25
The point is that economists need to study unsettled points, where we are before we get to a settled spot (an equilibrium). When assessing things we need to look at changes over time not obsess over a single point in time that a market might get to in the long-term (when we are all dead).
Ironically, the doughnut is really good at illustrating where we are at a point in time given you can plot snapshots taken at a specific time. The Doughnut is excellent for showing how we are doing on the social foundations now and how we performing relative to environmental constraints (planetary boundaries). Are we now in a safe and just space? (Spoiler alert, no). Change seems harder to factor into the doughnut though. For example, our social aims might increase over time moving out the inside edge of the social foundations of the doughnut, i.e., as our aspirations for education increase. This will make the doughnut, where humanity should be aiming to be, smaller given the planetary boundaries aren’t increasing. (Does it become a single circular line over time?)
Showing change might require a series of doughnuts, where we can see if we are getting nearer to, or further from, the doughnut. (Remember humanity wants to be in the doughnut). This isn’t a major problem as most people will think a series of doughnuts sounds like a good thing.
Raworth tackles decoupling. Decoupling is the idea that the economy could grow while reducing the negative impact on the environment. She stresses that we need not just some decoupling but sufficient absolute decoupling so that the environmental impact can go down while incomes go up. I think it is fair to say she isn’t confident about this happening. Overall, she argues for neither growth nor degrowth but being agnostic about growth. She sees a post-growth future. (She has an extended metaphor about landing a plane that illustrates this).
Her writing style can be a bit much at times. There are gimmicks in there, such as the economy being described through stage directions. Some of these are a tad cheesy to my mind but maybe I am just boring.
Furthermore, Raworth is not writing a book to persuade the unpersuaded. She can be pretty pugnacious. Plus, she often sounds quite pleased with herself. The idea that she has reinvented economics for the 21st century seemed a little grandiose to me.
Was 20th-Century Economics Proved Wrong?
What is more, at times her claims are bolder than I would feel comfortable making. She talks about things being ‘proved wrong’. This is enough to alienate most academics. Generally, academics tend to prefer the milder term ‘not supported’ to ‘proved wrong’. The definitiveness of ‘proved wrong’ sounds more decisive than most tests can reasonably be said to demonstrate. How can you prove a math model wrong? A valid criticism seems to be that many math models don’t apply to most situations but this does not mean that the math model is proved wrong per se. (Economists’ math is, usually, not technically wrong). To my mind, you generally shouldn’t say that a model’s implications are proved wrong but they just aren’t as prevalent and important as suggested.
Maybe annoying academics was the point as she isn’t a fan of universities, especially the more prestigious ones. There were certainly a few times when I felt she was being a little too simplistic in her descriptions of people who disagree with her. This is despite the fact that I love a good polemic.
Overall though I wouldn’t want the basic usefulness of describing working with the doughnut to be lost. Raworth certainly has an interesting and important take.
Read: Kate Raworth (2017) Doughnut Economics: Seven Ways to Think Like A 21st Century Economist, Chelsea Green Publishing