Doughnut Economics

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Kate Raworth’s “doughnut” refers to the dilemma currently facing capitalism and has, she claims, become an “iconic image” in the world of global development economics. The dough provides a “safe and just space for humanity”. The hole in its centre represents “critical human deprivation” while “critical planetary degradation” lies in the space beyond the outer crust. The dilemma is how to eradicate the former without exacerbating the latter.

But gimmickry and puffery are not the book’s major features. It is actually a highly informed and intelligent example of the current deluge of radical economics books. With the aid of apt quotes, memorable visuals and pithy lists Raworth convincingly demolishes the idea that neoliberal capitalism can ever solve its escalating problems.

She dissects a number of misleading visual images commonly found in economics textbooks, primarily the three-way graph of demand, supply and price, and completely rejects the ideal of the free market extolled by an influential network of think tanks, such as the American Enterprise Institute, UK’s Institute of Economic Affairs or the Mont Pelerin Society.

The “financial, political and social addiction to GDP growth” is exposed as an oversimplification that allows politicians to avoid serious public discussion of goals and outcomes of economic policy and, more importantly, to ignore the ultimate impossibility of endless growth.

Marx and scores of radical authors, such as Hyman Minsky, John Maynard Keynes, Howard Zinn, Joan Robinson and Ha-Joon Chang, are quoted to destroy such absurdities. For example, the “Kuznets curve” presents GDP growth in less developed countries as increasing inequality initially, in order for it to fall later. The evidence, of course, contradicts this.

Similarly, in relation to the Environmental Kuznets curve (growth-fuelled pollution must get worse before it gets better), Raworth concludes that the “data point to a disturbing rise and rise… it is a mountain that humanity simply cannot afford to climb because we cannot survive its peak”.

Sadly, Doughnut Economics’s considerable strengths are fully matched by its weaknesses. Despite Raworth’s precision in analysing the problems, her solutions include practically every “transitional initiative” going: worker cooperatives, the commons (such as Linux and Wikipedia), state regulation, circular economy, alt currencies, alt economics, alt business models, Financial Transactions Tax and Universal Basic Income.

Implemented seriously, socialists would be in favour of most of these and, to be fair, Raworth herself critiques some quite sharply. But pieces selected from different jigsaw puzzles don’t add up to a coherent picture, especially if many are tissue-paper thin.

All fundamental questions of political power and social change are skimped. For example: “Ensuring workers’ rights to organise and bargain collectively is one way of offsetting such deep power imbalances.”

She paraphrases political scientist Gar Alperovitz, “Tackling inequality at root calls for democratising the ownership of wealth”. “How?” readers might ask.

“Democratic governance” is referred to often, but left undefined. Omitted altogether is a clear declaration that profit and capital accumulation derive solely from the expropriation of value created by work.

Doughnut Economics is well worth reading, but only with a Marxist text nearby as a reminder of what it leaves out.