 | |
| Author | Kate Raworth |
|---|---|
| Original title | Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist |
| Publisher | Random House |
Publication date | 2017 |
| Pages | 309 |
| ISBN | 1847941370 |
| OCLC | 1006404349 |
Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist is a 2017 non-fiction book by Oxford economist Kate Raworth. [1] The book elaborates on her concept of doughnut economics, first developed in her 2012 paper, A Safe and Just Space for Humanity. [2]
Oxford economist Kate Raworth presented her 13 February 2012 Discussion Paper, "A Safe and Just Space for Humanity: Can we live within the Doughnut?", prior to the Rio+20 United Nations Conference on Sustainable Development. The doughnut-shaped visual framework illustrates a safe space between "planetary boundaries" and "social boundaries" in which "humanity can thrive." [2]
From the frustrations of students who don't find the answers in their taught courses, Raworth recounts some of her own experiences, from university to working in Zambia, writing the Human Development Report at the UN and deciding to start by looking at economics by its goals rather than its mechanisms. She also reflects on the power of images.
By the end of the 1950s, output growth had become the overriding economic policy objective in industrial countries, with the concept of utility at its heart. It is normally represented by the Gross Domestic Product, despite the very partial picture this provides of the whole. Nobel economists Amartya Sen and Joseph Stiglitz and 23 other leading economists concluded that "those attempting to guide the economy and our society are like pilots trying to steer a course without a reliable compass". The Doughnut is an attempt to provide such a compass. The inner ring sets out 12 social foundations for humanity identified as sustainable development goals; the outer ring is formed of 9 planetary boundaries that earth system scientists have identified as being necessary for planetary stability. It replaces an impossible goal of endless growth by one of thriving in balance.
This chapter contrasts the standard neoliberal agenda staged by Samuelson's circular flow diagram and scripted by the Mont Pelerin Society of Friedman, Hayek et al., with the Embedded Economy which sets the economy within society and the living world. It points out that the economy's fundamental resource flow is not a roundabout of money, but a one-way street of energy. The economy also depends on a properly functioning society, households with all their unpaid elements, and the commons, which Elinor Ostrom had rescued from tragedy.
Rational economic man was a portrait sketched by Adam Smith—solitary, calculating, competing and insatiable—refined by John Stuart Mill, elaborated by Jevons and made into a cartoon character by Frank Knight, founder of the Chicago School, who endowed him with perfect knowledge and perfect foresight. But it turns out that homo sapiens is the most cooperative species on the planet and the economy develops via interdependency.
From Alfred Marshall’s supply and demand graph of the 1870s, economists have preferred simple equations to express economic ideas. Prompted by 2008 crash new dynamic models are being developed and there is a need for economists to work ethically.
Thomas Piketty finally destroyed the optimism of the Kuznets Curve which suggested that inequality would be automatically solved by rising affluence. As a consequence, issues including higher marginal rates of taxation and land value taxes need to be reconsidered. Other concerns include the digital revolution, robotics, intellectual property rights and the effect on the Global South.
The fact that more advanced economies have at least partially solved pollution problems faced by developing societies led some economists to believe this was inevitable rather than a determined effort and used it to mock studies such as Limits to Growth. Industrial systems have been built around an extract-manufacture-use-throwaway sequence and economics has developed a system of quotas, taxes, and tiered pricing to alleviate the problems, although corporations lobby hard against them.
Although indefinite growth is the assumption of modern economics, it's rare to find an exponential graph in a textbook. Rostow's influential Five Stages of Growth pictures a plane journey whose fifth stage (the age of high mass consumption) leaves us in the air without a landing point. In practice, most natural systems follow an S-curve as a particular niche is filled. It is hard to predict a successful landing point for growth that meets the financial addiction to growth. Various ideas, such as Steady-state economy, demurrage, and breaking out of consumerism, are explored.
“The twenty-first-century task is clear: to create economies that promote human prosperity in a flourishing web of life, so that we can thrive in balance with the Doughnut’s safe and just space.”
The hole or inner ring of the doughnut represents the space where those who lack the minimum requirement for leading a good life, reside. These minimum requirements are based on the UN's sustainable development goals (SDGs). [3]
The outer ring of the doughnut "represents the ecological ceiling drawn up by earth-system scientists". Beyond that boundary, humankind damages the "climate, soils, oceans, the ozone layer, freshwater, and abundant biodiversity." [3]
The dough in between is "where everyone's needs and that of the planet are being met." [3]
The University of Pennsylvania's Knowledge Wharton, said the book, Doughnut Economics offers a "mountaintop view of the world" with a central idea that "gross domestic product is an ineffective way to measure an economy because it's only one-dimensional." [4]
Alex Bernhardt, Principal, US Responsible Investment Leader, Mercer, said "It contains an excoriating critique of neoclassical economic theory and proposes a compelling and elegant alternative to the growth-at-any-costs mentality pervading political-economic thinking and practice today. There is much to be said for the practicality of this framework from the standpoint of global policymakers and their economic advisors." [5]
Maria Zhivitskaya, from the London School of Economics, stated that "[Kate Raworth] wrote Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist to provide a ‘compass’ to help ‘policymakers, activists, business leaders and citizens alike to steer a wise course through the twenty-first century’. An ambitious aim...Raworth focuses on offering an alternative model, her doughnut image. If she can create a new image that will stick in our minds, she has a chance of making change happen." [6]
According to Richard Toye, "If you are familiar with the ideas of Hyman Minsky, Daniel Kahneman, Joseph Stiglitz and Ha-Joon Chang, you will not be in for too many surprises, but if not, this book serves as a compact synthesis of modern heterodoxy. Raworth’s distinct contribution is in her emphasis on environmental themes. Too many writers, even radical ones, tend to treat “the economy" and "the environment" as separate issues, even though they admit that one has an impact on the other. Yet, as she rightly stresses, the conventional notion of "externalities", or economic side effects, serves to imply that problems such as pollution are not ones that economists need to make central to their concerns. [7]
Joseph Eugene Stiglitz is an American New Keynesian economist, a public policy analyst, political activist, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank. He is also a former member and chairman of the US Council of Economic Advisers. He is known for his support for the Georgist public finance theory and for his critical view of the management of globalization, of laissez-faire economists, and of international institutions such as the International Monetary Fund and the World Bank.
Development economics is a branch of economics that deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural change but also on improving the potential for the mass of the population, for example, through health, education and workplace conditions, whether through public or private channels.
Robert Merton Solow, GCIH was an American economist and Nobel laureate whose work on the theory of economic growth culminated in the exogenous growth model named after him.
John Harold Williamson was a British-born economist who coined the term Washington Consensus. He served as a senior fellow at the Peterson Institute for International Economics from 1981 until his retirement in 2012. During that time, he was the project director for the United Nations High-Level Panel on Financing for Development in 2001. He was also on leave as chief economist for South Asia at the World Bank during 1996–99, adviser to the International Monetary Fund from 1972 to 1974, and an economic consultant to the UK Treasury from 1968 to 1970. He was also an economics professor at Pontifícia Universidade Católica do Rio de Janeiro (1978–81), University of Warwick (1970–77), Massachusetts Institute of Technology, University of York (1963–68) and Princeton University (1962–63).
Joan Violet Robinson was a British economist known for her wide-ranging contributions to economic theory. One of the most prominent economists of the century, Robinson incarnated the "Cambridge School" in most of its guises in the 20th century. She started out as a Marshallian, became one of the earliest and most ardent Keynesians after 1936, and ended up as a leader of the neo-Ricardian and post-Keynesian schools.
Sir Hans Wolfgang Singer was a German-born British development economist best known for the Prebisch-Singer thesis, which states that the terms of trade move against producers of primary products. He is one of the primary figures of heterodox economics.
Herman Edward Daly was an American ecological and Georgist economist and professor at the School of Public Policy of University of Maryland, College Park in the United States, best known for his time as a senior economist at the World Bank from 1988 to 1994. In 1996, he was awarded the Right Livelihood Award for "defining a path of ecological economics that integrates the key elements of ethics, quality of life, environment and community."
A steady-state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. In effect, such an economy does not grow in the course of time. The term usually refers to the national economy of a particular country, but it is also applicable to the economic system of a city, a region, or the entire world. Early in the history of economic thought, classical economist Adam Smith of the 18th century developed the concept of a stationary state of an economy: Smith believed that any national economy in the world would sooner or later settle in a final state of stationarity.
Heterodox economics is a broad, relative term referring to schools of economic thought which are not commonly perceived as belonging to mainstream economics. There is no absolute definition of what constitutes heterodox economic thought, as it is defined in constrast to the most prominent, influential or popular schools of thought in a given time and place.
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources. A given economy is a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure, legal systems, and natural resources as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. In other words, the economic domain is a social domain of interrelated human practices and transactions that does not stand alone.
Innovation economics is new, and growing field of economic theory and applied/experimental economics that emphasizes innovation and entrepreneurship. It comprises both the application of any type of innovations, especially technological, but not only, into economic use. In classical economics this is the application of customer new technology into economic use; but also it could refer to the field of innovation and experimental economics that refers the new economic science developments that may be considered innovative. In his 1942 book Capitalism, Socialism and Democracy, economist Joseph Schumpeter introduced the notion of an innovation economy. He argued that evolving institutions, entrepreneurs and technological changes were at the heart of economic growth. However, it is only in recent years that "innovation economy," grounded in Schumpeter's ideas, has become a mainstream concept".
Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions : environmental, economic, and social. Many definitions emphasize the environmental dimension. This can include addressing key environmental problems, including climate change and biodiversity loss. The idea of sustainability can guide decisions at the global, national, organizational, and individual levels. A related concept is that of sustainable development, and the terms are often used to mean the same thing. UNESCO distinguishes the two like this: "Sustainability is often thought of as a long-term goal, while sustainable development refers to the many processes and pathways to achieve it."
Redistribution of income and wealth is the transfer of income and wealth from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals.
Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not affect real factors such as real output. John Maynard Keynes attacked some of these "classical" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle.
Planetary boundaries are a framework to describe limits to the impacts of human activities on the Earth system. Beyond these limits, the environment may not be able to self-regulate anymore. This would mean the Earth system would leave the period of stability of the Holocene, in which human society developed. The framework is based on scientific evidence that human actions, especially those of industrialized societies since the Industrial Revolution, have become the main driver of global environmental change. According to the framework, "transgressing one or more planetary boundaries may be deleterious or even catastrophic due to the risk of crossing thresholds that will trigger non-linear, abrupt environmental change within continental-scale to planetary-scale systems."
Hla Myint was a Burmese economist noted as one of the pioneers of development economics as well as for his contributions to welfare economics. He stressed, long before it became popular, the importance of export-orientation as the most useful "engine of growth".
Kate Raworth is an English economist known for "doughnut economics", an economic model that balances between essential human needs and planetary boundaries. Raworth is senior associate at Oxford University’s Environmental Change Institute and a Professor of Practice at Amsterdam University of Applied Sciences.
The Doughnut, or Doughnut economics, is a visual framework for sustainable development – shaped like a doughnut or lifebelt – combining the concept of planetary boundaries with the complementary concept of social boundaries. The name derives from the shape of the diagram, i.e. a disc with a hole in the middle. The centre hole of the model depicts the proportion of people that lack access to life's essentials while the crust represents the ecological ceilings that life depends on and must not be overshot. The diagram was developed by University of Oxford economist Kate Raworth in her 2012 Oxfam paper A Safe and Just Space for Humanity and elaborated upon in her 2017 book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist and paper.
Progressive capitalism is an economic framework that seeks to recalibrate the roles of the market, state, and civil society to enhance societal well-being. This approach advocates for a new social contract that leverages market forces and entrepreneurship while addressing issues such as market dominance, inequality, and the consequences of globalization. Progressive capitalism emphasizes the need for government investment in technology, education, healthcare, and green infrastructure, alongside implementing public options for essential services.
Sandrine Dixson-Declève is an international climate change, sustainable development, sustainable finance and complex systems thought leader. She is currently the co-president of the Club of Rome, together with Mamphela Ramphele, the first women to lead the organization in its history.