Renegade economist Kate Raworth cites the problems that today’s economic system generates and offers radical but practical solutions.
To help you visualize a sustainable global economy, economist Kate Raworth offers “the Doughnut” – the figurative sweet spot in which all people can meet their basic needs without transgressing the Earth’s natural constraints.
Raworth, who teaches at Oxford University and the Amsterdam University of Applied Sciences, readily admits this will require radical changes – such as discarding long-held economic beliefs, stopping consumerism in its tracks and ending the financial industry in its current form. Despite her controversial ideas, most readers will find Raworth’s iconoclastic, renegade perspective invigorating and her arguments powerful, instructive and applicable.
The Financial Times named Raworth’s work its Best Book of 2017, as did Forbes, which called it “a fascinating reminder to business leaders and economists alike to stand back at a distance to examine our modern economics.” Publishers Weekly described it as a “sharp, insightful call for a shift in thinking” and said, “Raworth’s energetic, layperson-friendly writing makes her concept accessible as well as intriguing.” Many reviews cited the author’s ability to render complex economic questions in terms anyone can understand.
Raworth underscores that, in 2015, the world’s richest 1% possessed more wealth than the remaining 99% combined. She opens with symptoms of the Earth’s degradation – global warming, fishery depletion and plastic pollution of the seas – and sets the stage with stark numbers: From 1950 to 2010, the world’s population tripled, global GDP increased seven-fold and energy consumption quadrupled.
Raworth notes that this growth overstresses nine ecological systems critical to supporting human life, including the climate, fresh water, land and biodiversity. The author also calls out the squandered 30% to 50% of the global food supply, just 10% of which could feed every hungry person on Earth.
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.Kate Raworth
Raworth urges you to consider the Doughnut: “A safe and just space” that provides for everyone while preserving the Earth and its diverse ecosystems.
Raworth states simply that the free market doesn’t exist. She says that purchasing stocks, medicines, guns or many other products takes place within a constraining web of rules. Society’s laws and institutions, she insists, direct economic costs and benefits. Free trade, Raworth further asserts, is a myth dependent on historical influences, international power balances and institutional might.
Raworth believes that people are more reciprocating than selfish, but she wants them to change their self-perceptions as economic actors. The author urges a rethinking of how economies put a price tag on everything and of how people regard themselves foremost as market participants. She reminds readers that they are parents, neighbors, community members and global citizens as well.
Raworth argues that the people at the center of economies are complex, dynamic and adaptive; they do not conform to mechanistic economic models. She prefers the model of organic systems – interconnected, interactive entities such as flocks of birds or the members of a financial network.
From this perspective, the 1989 fall of the Berlin Wall, the 2008 collapse of Lehman Brothers and the imminent collapse of the Greenland ice sheet have much in common. All three are reported in the news as sudden events but are actually visible tipping points that result from slowly accumulated pressure in the system.Kate Raworth
She posits that feedback loops and adaptive behavioral adjustments evolve to balance and stabilize systems. But, Raworth cautions, a system’s dynamics can suffer stress beyond a recovery point, and then the system will crumble.
Unequal societies, Raworth discloses, produce more obesity, drug abuse and prisons than more equal ones do, and inequality drives ecological degradation. She warns that inequity destabilizes economies through high-risk financial systems that are vulnerable to booms and busts.
Raworth notes that economies can become “distributive by design” through raising minimum wages, introducing more progressive taxation, and ensuring access to health care, education and housing. Central banks, Raworth contends, could pay households via a “people’s quantitative easing.” She also calls for breaking up the digital monopolists that run the internet.
Interest today rewards no genuine sacrifice, any more than does rent of land.John Maynard Keynes
The author also supports a global wealth tax to provide resources to all low-income countries, so that every child can have access to health care and education. She proposes that the world’s 2,000 billionaires pay for this through an annual levy of 1.5% of their net worth.
Given the litany of grasping selfishness and unfettered materialism that the world’s media highlights, can humanity ever take a step back and regard itself as one conjoined community? Raworth thinks it can, and she offers some highly implementable solutions. Even the most enthusiastic and supportive readers, however, will agree that the greatest obstacle to the Doughnut is pesky old human nature and its atavistic desires. The author poses her solutions as a practical, credible series of dominoes falling: If people could change this, that might follow.
Your faith in the generosity of the person next to you – or your lack thereof – won’t determine whether Raworth’s ideas grant you economic insight or worthy consideration of the big picture. Both will flow from Raworth’s persuasive, passionate voice and easy, conversational style. She challenges pretty much every economic orthodoxy without haranguing or leaning more on emotion than rational thought. That’s a rare talent, and it informs this significant, profound work.
Those seeking greater understanding of the problems and solutions Raworth raises may want to also read The Value of Everything by Mariana Mazzucato or Stephanie Kelton’s The Deficit Myth.