Doughnut Economics: 7 Ways to Think Like a 21st Century Economist by Kate Raworth (White River Junction: Chelsea Green Publishing, 2017. 320 pp)
Kate Raworth is an economist that teaches at Oxford University’s Environmental Change Institute. She has a BA in politics, philosophy, and economics, and an MSc in economics for development, both from Oxford University.
Within the rhythms of my current role, I meet daily with my fellow team members to strategize and create deliverables for our clients. These working sessions often involve whiteboarding our ideas. Having a handful of completed projects under the belt, I’ve come to see how valuable that whiteboard becomes when a group of people are trying to solve a problem. It’s true, a picture is a thousand words.
No matter how detailed I describe a possible solution, a sketched diagram always seems to convey more information than my words ever will.
A Doughnut for Your Thoughts
Using the teaching power of an image, Kate Raworth sketches a doughnut for her central metaphor around how our global society needs to reshape economic thinking in the 21st century, especially if we want to see humans flourish in the Anthropocene moving forward.
Deconstructing and reconstructing one economic sketch at a time, Raworth makes the case for rethinking seven key areas of economics, including:
- Changing the goal from GDP to the doughnut;
- Seeing the big picture from self-contained market to embedded economy;
- Nurturing human nature from rational economic man to socially adaptable humans;
- Getting savvy with business systems from mechanical equilibrium to dynamic complexity;
- Designing to distribute from “growth will even it up again” to distributive by design
- Creating to regenerate from “growth will clean it up again” to regenerative by design; and
- Being agnostic about growth from growth addicted to growth agnostic.
Taken as a whole, Raworth’s argument feels like a monumental task, a radical reshaping of how we view the world. And, truthfully, given the circumstances and the warning signs the world is giving us, radical action is probably necessary.
But, when broken down to its components. Each and every element, in and of itself, doesn’t feel like a Herculean lift. For Raworth, all these tasks combined will create a flourishing society within the safe and just space of the doughnut she has sketched. Anything less, and humanity is in for a rough go in the 21st century.
Without offering a comprehensive argument—there’s a book for that—let’s look at a few of Raworth’s key arguments.
A key tenet in Raworth’s argument is the societal addiction to growth.
“Today we have economies that need to grow, whether or not they make us thrive; what we need are economies that make us thrive, whether or not they grow” (26).
In Raworth’s language, growth a cuckoo that needs to be kicked out of the nest, a baseline assumption that forces decisions against the interests of society as a whole. In fact, I bet most people reading this are starting to freak out thinking about what society would look like if we didn’t target growth. Growth is what every politician must use as a talking point to get elected and it’s what every CEO needs to say to make shareholders happy. Raworth, though, suggests that redefining success and how we use our money might, in fact, encourage a different set of decisions.
As an example, consider investments where payment to shareholders isn’t based on profit, but on income:
“They came up with the concept of Evergreen Direct Investing (EDI), which delivers acceptable and resilient financial returns from mature low- or no-growth enterprises. Instead of paying profit-based dividends to shareholders, the enterprise pays out a share of its income stream to investors in perpetuity” (232).
While I’m sure many economists or business-minded individuals will scoff at such an idea, the basis behind the recommendation is one of redrawing our assumptions.
Questioning Our Assumptions
Society operates with a list of assumptions, often drawn in our early economic thinking, what was once a view of how the world might be has become a view of how the world is.
Time and time again, Raworth suggests we re-draw our assumptions to better fit what challenges the world will face in the 21st century. We can no longer think of the world as a limitless resource. Instead, it is a sink that will overflow if you put too much in the sink at once. We can no longer view consumption is buy, use and throw away. As a substitute, we need to design products in a cradle-to-cradle mindset.
Whiteboarding New Economic Pictures
Here, the image of a doughnut is so important. Because a picture represents a thousand words, new pictures need to bear the weight of the 21st century challenges we face.
“If we want to rewrite economics, we need to redraw its pictures too because we stand little chance of telling a new story if we stick to the old illustrations” (11).
While I don’t fully buy each suggestion with equal validity, I do buy Raworth’s central premise. Just like my team grabs a room with a whiteboard and sketches out different ideas to solve a complex problem, we are in a space where our brightest minds need to start sketching to find the images that help us solve our problems.
Verdict: 4.5 out of 5