Seven ways to think like a 21st century economist or so the book Doughnut Economics by Kate Raworth claims to establish. Published in early 2017, this book seeks to address all the current issues we face as a global community including climate change, extreme inequality, financial crises and biodiversity loss. Kate Raworth attempts to do this by highlighting what she believes are the reasons for these issues occurring and then providing solutions to tackle them, but how practical are these solutions, especially since the world is advancing at such a rapid rate?
The author uses different themes to refer, metaphorically, to the issues she establishes throughout the content of the book. From the cuckoo laying its eggs in another bird’s nest to Leonardo da Vinci’s Mona Lisa. With GDP growth being the focus and industrialisation being the root cause of all the main issues mentioned earlier, Kate Raworth expresses her views on those in power of both the developed, and developing economies, concentrating on the policies they operate by and what economists of today should do about it. This critical review will give an insight on the concept of doughnut economics, summarising all the key elements covered, whilst aiming to analyse and evaluate Kate Raworth’s methods in depth.
Kate Raworth has also addressed the issues that she believes real world actors such as politicians have caused, and households and firms have carried out, within seven chapters with each chapter addressing a specific issue. The aim of the first chapter is to direct the reader’s attention towards the misconception that GDP is the ultimate goal instead of sustainable growth within the means of the planet. The second chapter attempts to convince the intended audience, 21st century economists, that neo-liberalism should be discarded as an ideology and the laissez-faire policy of the free market should be replaced by policies that put the economy in service to life and keeping society and the commons at the heart of these policies. The next chapter seeks to amend the depiction of rational man from a self-centred, money motivated and egoistic individual to a social member of a nature caring community.
In the following chapters, Kate Raworth draws attention to the economists in the 19th century that sought to make economics as reputable as physics in society, they intended to do so by searching for economic laws that describe the movement of the free market through mathematising their theories. However, the author expresses that these mathematical models were incapable of predicting, levelling and responding to real world business cycles. The author then goes on to speak about inequality in the form of the distribution of wealth. Raworth underlines the gap between the rich and the poor being at the highest level in 30 years, and then describes why this has occurred and where the beliefs and models that caused this gap originated from. She then states that we need to be more distributive of wealth that comes from controlling land, money creation, business, technology and ideas, which can be done through the removal of intellectual property rights and the introduction of open-source licensing. The author then introduces the issue of biodiversity loss through the degenerative misuse of the Earth’s natural resources within industrial activities. Raworth suggests that humanity needs to become more regenerative, running on renewable energy, by turning waste from one process into inputs for another, so all materials are used again and again. Further recommending that 21st century economists need to take advantage of the potential of business and finance, the commons and the state, and of human nature, to lead the world into a more regenerative future. In the final chapter, Kate Raworth stresses the importance of moving away from a growth dependent mentality and learning how to live without it and move towards a doughnut-compliant global community.
Kate Raworth strives to inform and persuade, through studies and reasoning, contemporary economists that the growth orientated policies they have been studying and abiding by since the 19th and 20th centuries, are endangering the likelihood of a safer, sustainable and a more environmental future for the coming generations. The author uses her research to explain and get the messages, conveyed in the text, across to her audience. However, her arguments do seem biased at times and her solutions come across as near impossible since she talks about reform on such a large scale.
Being derisive to a century’s worth of efforts to make economics a science consisting of complicated formulae and needles diagrams aiming to depict the idea of equilibrium, as well as disregarding real life problems, doughnut economics reinvents economics as a discipline that takes people’s affairs into consideration. Raworth’s arguments against neo-liberalism and the issues with GDP growth are consistent throughout the book, and are focused on, in depth, within chapters one and seven. This structure has helped emphasise her views on the negativity surrounding the issues with the out dated, 1950’s mindset. Raworth (2017) mentions that even Simon Kuznets, the “hallowed creator of national income”, has cautioned us to take into consideration the difference between quantity and quality of growth.
On the other hand, instead of focusing on the few economically superior economies, the writer strives to nurture human nature on a much wider, global scale. This has resulted in portraying the idea that her solutions may be deemed infeasible, hence why they are yet to be adopted, even after the author presented her ideas on where the world’s countries have got to on living inside the doughnut at the G20 meeting in Argentina this year. Raworth has focused on issues that have affected the planet on a global scale yet failed to notice the advantages they provide to helping societies gain the basic necessities of life. An example of this would be the focus on a free market being harmful to societies because it does not consider negative externalities. Yet, from basic research readers are able to identify advantages of a free market to societies that suffer from poverty as an example, this is because a free market brings about trade, therefore offering jobs to those in need of money to afford basic human necessities such as food, access to clean water and electricity. Raworth fails to acknowledge this, only briefly mentioning a plea for fair trade. Furthermore, the author has brought up the issue of neoliberalism treating the Earth as an inexhaustible source for free and unaccounted-for exploitation. Which she believes can be solved by recycling materials, even though it may be difficult to do so, especially in economies where this would be deemed impossible since they do not have the capabilities or facilities do so. The author writes about her encounter in Europe with an advanced engineering student from India, who explained to her that poor countries are not rich enough to worry about being green. She fails to provide a sufficient solution to end this issue and instead decides to criticise when these countries adopt a GDP growth mindset in order to survive.
In addition to this, Raworth’s focus on GDP could probably have distracted her from the reality that GDP growth is not desired simply because it allows economies to consume more, and make them more internationally competitive, but because it is a necessary means of reducing poverty and economic destruction. Moreover, it allows all economies, especially those that are less economically developed, to increase the level of education and health, in addition to the general improvements in standards of living. The neoliberalist economies we live in today have also allowed women, whom the author states are underappreciated in her feminist beliefs, to be educated and play significant roles in modern economies, instead of the housewives the author depicts them to be.
Raworth’s writing style and well-structured arguments have allowed her to project her ideas successfully to the intended audience, especially through the use of her metaphorical themes for each chapter. Yet, her solutions are fairly vague and the doughnut model fails to conceptualise human actors, which makes her line of reasoning seem ambiguous, since she continuously criticises modern economists for their use of aggregative models on a macroeconomic scale.