Book review: Doughnut Economics by Kate Raworth: Rethinking the economy

 While I say that as well as fiction I read non-fiction, really I typically only read popular science, ancient history and some travel. One area that I never expected to be reading is the wannabe science of economics - but, as with politics, you might not take an interest in economics but it will take an interest in you.

There have been a slew of popular progressive economics books in recent years - from examinations of our broken system like John Lanchester’s Whoops! and Grace Blakely’s Stolen, to those that are more focused on looking at how we build better systems (The Spirit Level and Utopia for Realists), to the more hardcore economic theory (I swear I’ll get round to reading Thomas Piketty and Yanis Varoufakis!), and Kate Raworth’s book may be the best I’ve read at both outlining the problems and offering potential solutions in clear, straight-forward language.

It is an idea she has been presenting and working on for almost a decade. While her degree is in economics she was disenchanted by the blinkered, systematised thinking that shackles the discipline (as she points out early on, and again at the end of the book, while other social sciences seek out an encourage different ways of thinking, economists are taught that certain core principles are not to be questioned - no, more than that; they are indoctrinated into the mindset that there are no other ways of thinking.)

The idea of the doughnut is simply this: the hole in the middle is the lack of human dignity - insufficient food, water, shelter, healthcare, education. Those basics that we should allow to all people as a right.

The outer circle is the limit to which we can live with the finite resources of minerals, energy, food production, clean air, clean water.

The doughnut, therefore, is the space between those, where we as a species, as a culture, can provide a decent standard of living for every individual for the long term, without threatening the environment that we rely on for our survival.

It seems like almost too simple an idea - and an even simpler diagram, however she begins by pointing out how important visual signifiers are to us - the iconic map of the London Underground, Copernicus’ illustration of the heliocentric universe - the rising curve of progress and Paul Samualson’s simplistic Circular Flow diagram, picturing the economy as a closed loop that is taught in Econ 101 to this day. Raworth references sharing the ‘doughnut’ diagram with activists who respond effusively stating “YES! That is EXACTLY what I’ve been trying to say!”

And if that was all this book was, it would be no more than an interesting idea. I am sure there are many who are happy to scoff exactly so without engaging, but Raworth both delves into the history of and problems with economic theory, and outlines ideas - both conceptual and real-world ideas actually being implemented - for how we can, and must, do things differently.

She points out how so many of the great economic theorists of the past are selectively understood - Samuelson knew his diagram was a simplification ad absurdum, of use as only the most broad idea for non-specialists; when Simon Kuznets came up with GDP as a measure of productivity, he specifically warned that it was necessarily a narrow measure that should not be used as a benchmark to gauge progress; back to John Stuart Mill and Adam Smith (I always find it remarkable that most people who quote Smith appear completely ignorant of the half of his work in which he talks about social responsibility and warns against the dangers of subverting everything to the acquisition of wealth).

She thoroughly dismantles the consensus idea of economics that growth is the Ultimate Good (quoting a respected economist whom she doesn’t name, when asked why perpetual growth is possible simply responds “Because it has to be!”) to a more thorough debunking of some of the assumptions and models that underpin a pseudoscience that has come to dominate both public policy and public consciousness to a degree that neither the public nor policy makers feel they can question it.

On top of this, the author outlines the generalities of what we need from a new economics and gives examples that work in the real world, along with concepts that should be used in general. 

But this is not a utopian exercise; Raworth makes sure to state that change will be far from easy, and requires some extremely difficult choices. Nonetheless, the tenor of the book is ultimately hopeful, pointing out possible routes out of consumption-driven catastrophe to a future that is not only survivable and sustainable but equitable and regenerative, where we are not merely ameliorating the damage we do to our life support system but actively improving it.

I mostly consumed this via the audiobook, while dipping into the ebook - hence the sparsity of notes. I feel I need to go back for a closer read, to fully embed the ideas. I should do the same for some other books - the ones mentioned at the start of the review. For all the economics is a pseudoscience, it may be the most important factor in how we cope with the coming decades, impacting on everything from our jobs to the welfare state to climate change and alleviating mass extinctions, to production of food and energy and technology.

A must read, and must act on.

Does how you spend your money matter?

Every pound or euro or dollar we spend is a vote on how we want the world around us to be.


This is not, of course, my original thought but it is one that requires regular restatement  against the constant counter narrative that is simply seen as normal.


It is easy to buy from Amazon. We all do it; it is easy and fast and cheap, so why not? Well, just think about what money is, and where it goes. Amazon are cheap partly due to the economies of scale and low overheads, but more so because of the power that they wield in the marketplace.. For instance, with books the standard agreement is that they sell at a 60% discount, and the publisher does not allow other retailers to undercut that price. Of course, that cut doesn't come from Amazon's profits, but from those of the publishers and authors, which is largely the reason that the average UK-based writer makes around £11, 000 per year from their work.


So the vast amount of your spend with Amazon goes to the company, not to those who produce the products it sells - and, of course, we all know how little Amazon pays in tax or staff wages.


Big chain stores are a little better. While they generally have a similar profile in terms of passing costs on to producers (see the various reports on how the major supermarket chains screw over farmers) , and often in paying taxes, but at least they provide jobs in the community in which they are based.


Best of all is the old mantra: buy local, as much as is possible. Spending £100 in a chain store mostly goes to the overpaid CEO (by definition, executives are grossly overpaid in the modern economy, with few exceptions) and shareholders, but £100 at a local hardware shop goes to the family that own it buying food and supplies, ideally in other local shops, strengthening the local economy in a virtuous circle. Maybe paying local craftspeople, or for repairs from local tradespeople.


Sometimes these decisions are fairly easy. I'm lucky enough to live in a city with many, many fantastic small - often family-run - restaurants, cafes, takeaways and sandwich shops, so I've not been to a chain eatery in years. I made the choice not to - but, let's face it, the places I frequent serve far better food than KFC or Nando's or Zizzi, and are often cheaper. If you're going to a local butcher or greengrocer, you're probably paying more than you would at Tesco or Aldi, but the quality is probably higher. But many of the groceries - the dry goods, the cleaning products, the toilet paper - are almost certainly going to be a damned sight more expensive at your local corner shop, and they'll have a poorer selection. And you might not even have the choice.


These and many other factors make it easier to shop online or at big supermarkets. While the greengrocer and butcher are closed by 6 pm (if you're lucky) the supermarket is likely open until at least 10, and the internet never shuts. But it is worth making the effort, rather than slipping into the most convenient way of doing things, because it's better for everyone in the long term. And it isn't all or nothing. I've fallen back to doing most of my shopping at one supermarket or other (Aldi is just so cheap and convenient...), mostly through working hours and a lack of planning. But I haven't given up.


So, if you're going for coffee look around from the Costa and find that little independent place around the corner, which is probably cosier and friendlier - and definitely has better coffee. Seek out that local Italian restaurant and get that warm welcome feeling when they recognise you on your second visit. And maybe, on the Saturday drive to the supermarket see if you can drop by some local shops or the town market and enrich your shopping experience.