The Doughnut Economy

George Monbiot is very taken with a new book, the Doughnut Economy.

So what are we going to do about it? This is the only question worth asking. But the answers appear elusive. Faced with a multifaceted crisis – the capture of governments by billionaires and their lobbyists, extreme inequality, the rise of demagogues, above all the collapse of the living world – those to whom we look for leadership appear stunned, voiceless, clueless. Even if they had the courage to act, they have no idea what to do.

The most they tend to offer is more economic growth: the fairy dust supposed to make all the bad stuff disappear. Never mind that it 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%. As values, principles and moral purpose are lost, the promise of growth is all that’s left.

Richer countries tend to have better environments, unemployment is falling, so is global inequality. The really remakable thing about the last 40 years of economic growth is how pro-poor it has been…..yep, reality ain’t getting a look in there, is it?

We cannot hope to address our predicament without a new worldview. We cannot use the models that caused our crises to solve them. We need to reframe the problem. This is what the most inspiring book published so far this year has done.

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 standardised 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.

And absolutely everything in the book is standard economics. It’s a slightly different emphasis, yes, but that’s all it is. Sure we should be using NNI not GDP and so on but it’s a tough thing to calculate and it takes some years. Thus as a management tool it’s not all that good. Why not value household labour as well? We know how to do that, it’s at minimum wage. Yes, externalities exist and we’ve known for a century how to deal with them, Pigou Tax.

It just ain’t different.

But the opening chapter is absolutely glorious. She notes that since 1990 extreme poverty has halved around the world – you know, this neoliberal globalisation thing, the greatest reduction in human misery in the history of our species.

Therefore, and it is therefore, we must entirely change economic policy.

Facepalm.

25 comments on “The Doughnut Economy

  1. “She notes that since 1990 extreme poverty has halved around the world – you know, this neoliberal globalisation thing, the greatest reduction in human misery in the history of our species. Therefore, and it is therefore, we must entirely change economic policy.”

    Yes, Tim. The neo-racists are hardly subtle. The point is that the people getting richer are _’darkies’_, and therefore this process must be stopped.

  2. The Doughnut Economy? Does that go with Ritchie’s Cappuccino Economy (the private sector is just the froth on the top)? Can you get both at Starbucks?

  3. @Dave

    In the case of economics, it really is getting difficult to think of another explanation, I must admit.

    Like how the upper middle-class’s hatred of Maggie Thatcher is probably just because of them not liking the competition from – and company of – upwardly-mobile oiks.

    They just dress it up in language that says otherwise.

  4. @Dave – there’s no argument that will stop a droning white middle-class anti-capitalist as that one – I have reduced a very articulate and dead right-on lawyer to stuttering near-apoplexy by pointing out that his desire to have maintained Glaswegian shipyards would have meant brown people staying poor. “You think Scottish jobs should be protected by stopping brown people developing their economies. How is that not racist?”

  5. The answer is usually some blathering about working conditions and how because people in third world countries get paid less it’s immoral to give them even that pittance or something equally stupid.

  6. “We must change our economic policy”

    Out of interest- what’s she proposing changing it to?

    The stuff mentioned in the post is all around economic theory and measurement of things.
    What shall we do differently as a result of looking at the problem differently?

    Or is the ’21st Century economist’ we are encouraged to think like mainly worried about definitions?

  7. Yes, NS. Interesting title for a book. Presumably to suggest that there’s some sort of vacuum at the centre of the economy under discussion.
    Except, the doughnut with the hole at the centre is very much an anomaly amongst donutae. A mere affectation. In the true doughnut, the exterior presents a general oblate spheroid geometry surrounding a central cavity in the dough, where resides the jam.
    If one wished for a bakery product to illustrate the principal under discussion, you really need the beigel*. Which invariably have a hole at the centre. In fact; it could be said the hole defines the beigel.

    *You don’t like the spelling? Tough. It’s the London spelling not the NuYawk spelling. And WTF do Yanks know about food? Not only that. It”s the Brick Lane spelling. And if you’ve never eaten a beigel from Brick lane you know fuck all about beigels. Less than Moonbat knows about economics.

    And why am I expecting Dave to be along frothing & ranting any second?

  8. Oh my- Monbiot’s scrawlings really are poor, aren’t they? Does he not get that Growth is people getting richer? And that dispensing with that is when people stop getting richer?

    He quotes Raworth as saying that ‘economics in the 20th century “lost the desire to articulate its goals”’. Yeah- it became a science, not a platform for opinions.

    He goes on: ‘It aspired to be a science of human behaviour’, Well, it observes the outputs of humans making decisions…

    ‘The dominant model – “rational economic man”, self-interested, isolated, calculating’ – er, right. I’d love to see a science that tries to model irrational, unpredictable decision making.

    ‘The loss of an explicit objective allowed the discipline to be captured by a proxy goal: endless growth.’
    Or everyone getting richer, as normal people call it. Which seems like a pretty good goal. Proxy, explicit or whatever. (Any idea why endless growth isn’t an explicit objective?)

    ‘The aim of economic activity, she argues, should be “meeting the needs of all within the means of the planet”.’
    Ah, so she’s not actually an economist, then. Or a scientist.
    She’s a politician manqué.

    ‘ 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”. ‘

    Riiiiight…

    ‘This means changing our picture of what the economy is and how it works.’
    Changing it from one that makes people richer and works into one that doesn’t and won’t.

    ‘Like all the best ideas, her doughnut model seems so simple and obvious that you wonder why you didn’t think of it yourself.’
    … too many punchlines…

    ‘The embedded economy ‘reminds us that we are more than just workers and consumers’. ‘
    I don’t need any help to remember this. Why does George? because he spends all day in a froth of indignation that people aren’t doing what he wants, and he lacks the self-awareness to realise what he wants ain’ that important?

    ‘An economics that helps us to live within the doughnut would seek to reduce inequalities in wealth and income.’
    Any work that contains that sentence just has to be a work of genius, amirite?

    ‘Money, markets, taxation and public investment would be designed to conserve and regenerate resources rather than squander them.’
    Eh- is that more important than making sure people don’t starve? ‘Sorry, Ethipoia, no food for you- Guardian readers are worried about deciduous tree stocks in Suffolk.’

    ‘Now we need to turn her ideas into policy. Read her book, then demand that those who wield power start working towards its objectives’

    Yeah! C’mon government- Gimme a doughnut!

    (Seriously- does George just wanna fuck this woman?)

  9. It is interesting to see the highest ranked comment as of this moment:

    Let’s start with the most fundamental element: compound interest.
    Completely unsustainable, unjust, the main driver pushing income concentration.
    Its very principle necessitates infinite exponential growth.
    Why do we still use it?

    The economy would work just as well if we converted all fixed income debt instruments into equity stakes. We can also incentivize shareholders to be responsible by doing away with the limited liability of corporations, and making the owners personally and unlimitedly liable for all externalities.

    Not exactly rocket science. But still far more complex than say breaking up the cartel of the money center banks, something for which even the financial crisis didn’t incentivize us enough to do.

    See if anyone can spot the ideology behind these claims?

    The Left, and the Guardian, are going to strange places.

  10. “..those to whom we look for leadership appear stunned, voiceless, clueless. Even if they had the courage to act, they have no idea what to do.”

    Step forward then, George Monbiot. Show us your courage. Show us the way. Get up off your arse and from behind your laptop and lead us all to the promised land….

  11. An alternative description could be the cowpat economy, which Moonbat seems determined to foist on all of us.

    Cowpats for fuel, cowpats for food, perhaps even as a type of quoits cowpats also for entertainment.

  12. @SMFS – Usury! Perhaps Dave is right that leftism is simply Jew-baiting in a different hat.

    @John Square – ‘The aim of economic activity, she argues, should be “meeting the needs of all within the means of the planet”.’

    Unless we’ve started mining Mars when I wasn’t looking then I think the ‘means of the planet’ bit is pretty much covered.

    @Bravefart – that is the Moonbat Utopia; everyone living in caves and eating dung.

  13. “everyone living in caves and eating dung.”
    Aw cummon! Every speleologist knows caves are extremely sensitive environments containing as yet undiscovered vulnerable species of grey slime & tiny slithery things.
    Sacrilege of Mother Gaia’s temples!

  14. “Perhaps Dave is right that leftism is simply Jew-baiting in a different hat.”

    To be fair, despite the fact the our fair Dave has a veritable bee in his bonnet about this, one has to conclude that similarities between much Leftist rhetoric and that emanating from a certain 1930s politician are becoming harder and harder to ignore……………….I’m still not convinced its conscious antisemitism, but the root of the animus has to be the same.

  15. MC – “Usury! Perhaps Dave is right that leftism is simply Jew-baiting in a different hat.”

    Islamism is not necessarily Jew-baiting. Besides, Dave thinks everyone is Jew-baiting. Greggs thinks it is baking pies and sticky buns. But actually they are all part of Dave’s vast anti-Jewish conspiracy.

  16. Islamism is not necessarily Jew-baiting.

    Well, theoretically I suppose. Although in practice Islamism does seem to involve a certain amount of Jew-baiting. I suspect it would involve more were it not for the distractions of slaughtering Christians, raping children and chucking gays off tall buildings.

  17. BiS: All this talk of toroidal doughnuts, oblate spheroidal doughnuts & ‘beigels’ is getting us perilously close to the excessively hard maths subject of Topology. So I’ll see your beigel & raise you a pretzel.

    Pretzel Economics has much more class (and knots).

  18. The economy would work just as well if we converted all fixed income debt instruments into equity stakes

    It does seem a little like those Islamic schemes where you borrow money, repay more than you borrowed but omit to call the difference “interest”.

  19. “Let’s start with the most fundamental element: compound interest.
    Completely unsustainable, unjust, the main driver pushing income concentration.
    Its very principle necessitates infinite exponential growth.
    Why do we still use it?”

    err, because maths?

    Can you imagine the fun to be had calculating simple interest on a savings account when money has moved in and out, and interest has been earned? What do you do, exclude interest earned in previous years for serving as the basis for future years? And when money goes out, being fungible as it is, how do you decide whether that was input money or interest earned? Or do you have to decide it on proportion? Daily? Weekly? By the hour? Who decides, and why will that not be politically decided?

    AARGH!

  20. And if interest is not to be earned on interest, what’s to stop you taking interest earned out and shifting it between accounts at different banks? Thereby exposing it to interest again?

    AARGH, the stupid, it hurts.

  21. ” Greggs thinks it is baking pies and sticky buns. But actually they are all part of Dave’s vast anti-Jewish conspiracy.”

    A tasty part lets be honest SMFS.

    And if they make doughnuts as well then that PROVES conspiracy .

  22. The Protocols of the Elders of Zion, Mein Kampf and the Koran were all best sellers in their day. There’s still a matket for this shit.

  23. The economy would work just as well if we converted all fixed income debt instruments into equity stakes

    So in an economic downturn, all our savings would start to evaporate? Leading to an ever quickening spiral, I would guess, as people couldn’t meet obligations due to the loss in value of their savings. Hastening business collapse.

    Some people need to consider the saw, don’t put all your eggs in one basket.

  24. The concept of continuous economic growth is one of central planning. It is meaaured under the assumption that it can, and should, be managed. The left thinks that endless growth is a theory of capitalism, rather than central planning.

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