Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

As veterinarians we are not educated about global economics or economic models; it is difficult enough to keep our own practices running and pay our bills. Then why would we add a review about a book on a new global economic model? Because this book discusses a good alternative to the modern adage of growth as a model for all economic problems, the fairy dust supposed to make all the bad stuff disappear. Never mind that this model drives ecological destruction; that it has failed to relieve structural unemployment or soaring inequality; that, in some recent years, almost all the increment in incomes has been harvested by the top 1% incomes of the world  As values, principles and moral purpose are lost, the promise of growth is all that’s left. Especially in present day disruptive environment where veterinary practices are at the mercy of the interest of Private Equity, we need to dissect and reframe the economic model, and that’s exactly what this book is doing.

In Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, Kate Raworth of Oxford University’s Environmental Change Institute reminds us that economic growth was not, at first, intended to signify wellbeing. Simon Kuznets, who standardized the measurement of growth, warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” Economic growth, he pointed out, measured only annual flow, rather than stocks of wealth and their distribution.

Raworth points out that economics in the 20th century “lost the desire to articulate its goals”. It aspired to be a science of human behavior: a science based on a deeply flawed portrait of humanity. The loss of an explicit objective allowed the discipline to be captured by a proxy goal: endless growth. The aim of economic activity, she argues, should be “meeting the needs of all within the means of the planet”. Instead of economies that need to grow, whether or not they make us thrive, we need economies that “make us thrive, whether or not they grow”. This means changing our picture of what the economy is and how it works.

The central image in mainstream economics is the circular flow diagram. It depicts a closed flow of income cycling between households, businesses, banks, government and trade, operating in a social and ecological vacuum. Energy, materials, the natural world, human society, power, the wealth we hold in common… All are missing in the model. The unpaid work of caregivers – principally women – is ignored, though no economy could function without them. Like “rational economic man”, this representation of economic activity bears little relationship to reality.

Raworth begins by redrawing the economy. She embeds it in the Earth’s systems and in society, showing how economy depends on the flow of materials and energy, and she reminds us that we are more than just workers, consumers, and owners of capital.

The recognition of inconvenient realities leads to her breakthrough: a graphic representation of the world we are part of. Like all the best ideas, her doughnut model seems so simple and obvious that you wonder why you didn’t think of it yourself. But achieving this clarity and concision requires years of thought: a great decluttering of the myths and misrepresentations in which we have been schooled.

This model ‘allows us to see the state in which we now find ourselves’. Source: Kate Raworth and Christian Guthier/The Lancet Planetary Health.

The diagram consists of two rings. The inner ring of the doughnut represents a sufficiency of the resources all humans need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare, democracy. Anyone living within that ring, in the hole in the “eye” of the doughnut, is in a state of deprivation. When there is a shortfall of all that’s needed. The outer ring of the doughnut consists of the Earth’s environmental limits, beyond which we inflict dangerous levels of climate change, ozone depletion, water pollution, loss of species and other assaults on the living world.

The area between the two rings – the doughnut itself – is the “ecologically safe and socially just space” in which humanity should strive to live. The purpose of economics should be to help us enter that space and stay there.

As well as describing a better world, this model allows us to see, in immediate and comprehensible terms, the state in which we now find ourselves. At the moment we transgress both lines. Billions of people still live in the hole in the middle and we have breached the outer boundary in several places.

An economic system that helps us to live within the doughnut would seek to reduce inequalities in wealth and income. Wealth arising from the gifts of nature would be widely shared. Money, markets, taxation and public investment would be designed to conserve and regenerate resources rather than squander them. State-owned banks would invest in projects that transform our relationship with the living world, such as zero-carbon public transport and community energy schemes. New metrics would measure genuine prosperity, rather than the speed with which we degrade our long-term prospects.

Such proposals are familiar; but without a new framework of thought, piecemeal solutions are unlikely to succeed. By rethinking economics from the first principles, Raworth allows us to integrate our specific propositions into a coherent program, and then to measure the extent to which it is realized.

By reframing the economy, she allows us to change our view of who we are, where we stand, and what we want to be. I would like to challenge veterinary practices around the globe to rethink and reinvent their practices according to Raworth’s ideas for a sustainable future of our profession.

 

Joop Loomans

 

 

 

 

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