Doughnut Economics

Throughout my life I have become more and more curious about economics. Starting out with a concern about wealth disparity and its social and political consequences, I eventually learned that perpetual growth on a finite planet is what’s fueling the ecological crisis. And as a student of theology I was struck by the paradox of reading a Bible that is full of economic commentary, while in the real existing church, concerns about money will usually drown out all other concerns.

Yet, despite having taken several classes related to economics, I still felt painfully illiterate in economic matters. This is especially true when it comes to not only naming what is bad about our current economic system, but what a better alternative could look like. Enter Kate Raworth and her 2017 book Doughnut Economics: Seven Ways to Think Like a 21st-century Economist which does just that in an engaging, almost playful way that for once leaves me hopeful for the future and full of new ideas and questions.

Raworth’s doughnut visualizing the „safe and just space for humanity“ in which the existential needs are met without undermining the ecological systems supporting all of life.

Raworth basic idea is that the challenge of 21st-century economics is to meet the basic needs of all humans while at the same time staying within the limits of the Earth. She calls these two limiting factors the „social foundation“ and the „ecological ceiling“ and draws them as a donut, or-in her British spelling-„doughnut.“ The problem is that the dominant economic theories of the 19th and 20th-century have at least contributed to if not created these crises and are incapable of solving them, which means we need new economic models and ways of thinking to get us out of the wreckage and into the doughnut.

In the book’s seven chapters, Raworth sketches core concepts in „neoclassical“ dominant economics like „Gross Domestic Product“, „homo oeconomicus“, „price equilibrium,“ or „Kuznet Curve“ and contrasts them with new ideas drawn from various fields, especially psychology, systems thinking, and complexity science. Without ever becoming boring or arcane, she introduces the economically illiterate reader to the big debates in economics from the role of households and commons in relation to market and the state, the challenges of climate change and automation, or what growth is and whether it is necessary.

Or rather, she uncovers that there is a debate, despite the neoliberal consensus which is taught in most economic faculties around the world. She does this by telling the stories of how the dominant models came to be accepted, often a process of stripping a cautious attempt of all caveats and transforming it into an unquestionable dogma. Within this process of dogmatization, Raworth highlights the power of images to capture our imagination, based in our metaphorical mind. Rather than bemoaning this fact too much, she sets out to provide new images that line up closer to the best of our knowledge and can displace the old images.

Drawing on her years of experience with Oxfam and as a consultant in international negotiations, Raworth tries hard to present a global perspective to counter the Eurocentrism inherent in economic theory. Her real-world examples of people experimenting with new economic approaches are drawn from around the world. While some of her cultural references might be difficult to get from a non-Western perspective, she tries hard to communicate across cultural contexts. I especially appreciated her reoccuring use of the acronym WEIRD to designate the biased basis of many psychological studies that draw primarily on college students and thus on people who are primarily from societies that are Western, Educated, Industrialized, Rich, and Democratic.

While the book is not explicitly theological, it provides rich ground for theological reflection; not least because of its engagement with anthropology. Raworth sees the perfectly calculating completely selfish homo oeconomicus as a dangerous self-fulfilling prophecy. She points to research which documents that humans are uniquely capable of caring and prosocial behavior in comparison to other species, and argues that the role of economics is to nurture this aspect of human nature through appropriate economic arrangements, going beyond pricing to include things like nudging and establishing shared expectations.

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The final chapter on growth is perhaps most engaging for theological reflection. It explicitly uses theological language by calling us to be „agnostic about growth.“ Rather than putting our faith in growth, or in its repudiation (!) the task is to designing economies in which humans can flourish with or without growth, much like a windsurfer rides out the waves, but does not rely on them to move. The current system by contrast, is like a plane with no landing gear. It not only believes in perpetual growth, but is dependent one it to keep functioning. Raworth describes how we are financially, politically, and socially addicted to growth, but oddly moves on from there without describing ways we might wean ourselves off these addictions. This vacuum might be filled by Ched Myers‘ practical theology of Sabbath Economics reflecting on how can get „beyond the addict’s excuse“ toward Recovery from public addictions.

Raworth’s book is a gift to everyone who cares about this planet and whether humans will survive on it. By demythologizing economics she gives ordinary readers the knowledge to contribute to the urgent and long overdue societal conversation about what kind of an economy we want to live in. Her emphasis on images (iconic turn!) is not only important in going beyond rationalism, but also highlights the importance of visual and other artists in the work for a just transition. While much of the book focuses on macroeconomic structural changes that need political change to be implemented, some like worker-owned cooperatives, or defending and expanding the cultural and ecological commons can also be implemented here and now by small groups of people. Pastors and church people can only benefit from reading this book as a way to learn how to „make friends by means of the unjust mammon, so that when it fails, they will receive you into the eternal tents.“ (Luke 16:9)

Also check out all the free material on her blog!