Reimagining economics

‘Doughnut economics’ as envisaged by Kate Raworth calls for profound transformation in our conception and organisation of the economy. She talks to Caspar Henderson about the demands that it makes of us, and the limits of the Doughnut as metaphor

What are some of the demands that your model make of us as individuals?

One of the seven ways to think I set out in Doughnut Economics is to rethink who we are.  Mainstream economics depict us very specifically as ‘rational economic man’. If he were drawn in a picture, he’d be a man, without dependents, standing alone with money in his hand, ego in his heart, a calculator in his head and nature at his feet. He hates work, he loves luxury and he knows the price of everything. These are implicit assumptions that are written into the heart of the model of ‘man’ at the heart of economics. It was modelled first by John Stuart Mill, then by William Stanley Jevons. Jevons followed Newtonian thinking: if I can understand the movement of an atom then I can understand the movement of apples and planets too. If I can model one human then I can aggregate its behaviour to understand society. So it’s rooted in a reductionist, atomised understanding.

economic models are performative. The more that students learn about them, the more they come to say they value self-interest and competitiveness above altruism and collaboration.

The fascinating thing I learned is that these models are performative. The more that students learn about these models in their studies, the more they come to say they value self-interest and competitiveness above altruism and collaboration. So who we tell ourselves we are shapes who we become. This means there’s a huge moral responsibility for any academic discipline that claims to tell us who we are, because it actually changes who we become.

Taking that as a starting point, mainstream economics says, ‘welcome to economics: here is the market!’ It foregrounds the market as the centre of action and every impact that falls outside of its contracts is classed as an externality (and the language used here is a whole other problem…). When we foreground the market, it means that people show up in the economy either as ‘labour’ when they’re in production mode, or ‘consumer’ when they’re in purchasing model. If you add a banking system people show up either as ‘creditor’ or ‘debtor’. And the characteristics or attributes that have been celebrated in those who perform well in the market sphere go back to Adam Smith, who noted that the butcher, brewer and baker provide our dinner out of self interest, not out of benevolence (he quietly forgot his mum’s benevolence in making his dinner — but that’s another feminist story).  The characteristics, values and attributes seen as effective in the market are those placed at the centre of humanity’s model in economics.

What I tried to do in Doughnut Economics is say, hang on, the economy is embedded in society, which is in turn embedded in the living world! The economy is the social sphere in which we produce and distribute goods and services to meet our wants and needs. And there are four fundamental forms of provisioning: yes, there’s the market, but there’s also the state, the household, and the commons. Who we show up as in each of those four realms of provisioning is very different.

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In the market we are labourer and consumer, creditor and debtor. In relation to the state we may show up as citizen or resident, service user and taxpayer, as public servant, and as voter or protestor. Very different attributes, and social skills are called upon to engage well in this relationship.  In the household we show up as parent, as partner, as neighbour, as child. In the commons we may show up as co-creator, collaborator, steward. And these latter ways of naming ourselves are ones that, if you did a Google search, have taken off in the last decade: ‘lets co-create!’  So we’re rediscovering and inventing a language to describe a form of economic engagement that has been massively neglected. Its return and enrichment now is in large part thanks to Elinor Ostrom’s work and the rise of the digital commons.

What is ‘economic intersectionality’?

People increasingly talk about the concept of ‘intersectionality’ – the specific experience that arises at the intersection of identities. A black woman’s experience of life, for example, is distinctly different from the experience of a white woman and a black man combined. Building on this concept, I like to talk about ‘economic intersectionality’ because everyday we weave together our multiple economic roles. This morning I’ve already been parent and partner. I’m about to go work and be ‘labour.’  I’ll be buying something at lunchtime so I’ll be a customer. I may also be a citizen if I join a protest this afternoon, or simply use a public service. And I might play the role of sharer and steward if I help out in the neighbourhood garden this evening.

We weave these identities together all the time but we rarely name them. I think it’s really valuable to name them, and ask ourselves what are the skills and attributes that would enable us to do each one well. What it means to be a good collaborator and co-creator demands a completely different set of skills and values than those valued in the market place. It’s the difference between playing the board game ‘Monopoly’, which celebrates the individual’s triumph over all, versus the far better board-game ‘Pandemic’, in which all players collaborate as a team for a common purpose.

So this is partly about helping us understand the different roles we bring to economic interactions?

Yes, the multiple identities we bring to our economic relationships, because all of these roles – in relation to the market, the state, the household and the commons – all of them are economic roles. But mainstream economics tends to overemphasise market relations and their attributes: competition, self-interest, one-upmanship. Whereas in life we are far more social, collaborative, and reciprocal – and so we desperately need to name, nurture and improve those skills.

Mainstream economics tends to overemphasise market relations and their attributes: competition, self-interest, one-upmanship. Whereas in life we are far more social, collaborative, and reciprocal

So here’s the question: what are the values, the assumptions and the skills that would enable us to be more effective in relation to the state, the household, and the commons?  Thinking about our family relationships, we all know we can do that better. We can think about our relationship to the state – and I am loving seeing the young climate strikers realise their voice and power by going on strike.  As for the commons: what kind of structures do we need? What forms of creative commons licensing are needed such that people can collaborate? And what are the skills and values that enable people to co-create and collaborate while feeling recognised, valued and fulfilled, even though they may be earning considerably less money than they would in a profit-centred enterprise.

What are some of the things that lead people in that direction?

The first thing to do is provide shared purpose in an enterprise. There’s a really nice RSA animate by Dan Pink about Drive. He says that sometimes when you pay people more they screw up the task. Money doesn’t motivate us in the very narrow way that economic theory tells us it’s going to. Pink says you need to pay people enough to take the issue of money off the table, so they can actually focus on the purpose. Money is not necessarily what drives and motivates us. That’s why many nurses and teachers are offended when the government offers performance-related pay. They respond by saying, if you think I’m going to try to do a better job of teaching kids in order to earn 10% more money, you totally misunderstand my motivations – you offend me. That’s the mistake of applying rational economic man’s motivations to people who have chosen to work in the space of public service.

What are the strengths and the limits of ‘Doughnut Economics’ as a metaphor?

Let me articulate it first what it is in order to critique it. I tend to offer the Doughnut as a compass for human prosperity in the 21st century: how do we meet the needs of all people within the means of the planet? And then the shape of it: it’s a pair of concentric circles which invoke balance, wholeness, holism and natural resilience.  The 20th century was dominated by the metaphor of progress as growth — the endless growth curve.  It seems to make sense because we are happy to think, ‘Hey, my kids are growing, the garden’s growing!’  So growth seems good.  But if I told you my friend went to the doctor and was told she had ‘a growth’, why would you already feel differently about that? It’s because we know there’s another end to this metaphor.  Growth is a wonderful healthy phase of life, but in nature things eventually grow up so they can mature and thrive. We deeply understand within our bodies that if something in the body doesn’t stop growing it becomes a threat to the health of the whole.

We can move from this analogy of bodily health to planetary health.  The Doughnut as an image says well-being lies as a balance between the social and ecological boundaries. There’s dynamism to it, but also a healthy balance.

As to the limits of the metaphor, first of all let me talk about how I defined the inside of the Doughnut, the social foundation. I simply crowd-sourced the social priorities agreed by the world’s governments in the Sustainable Development Goals, or SDGs. That doesn’t mean they’re exactly right: they include gender equality, for example, but they don’t include racial equality. And they’re individualistic because they are derived from the 1948 Universal Declaration of Human Rights, in which human rights were articulated in a very individualised way: do you have enough food, water, housing, healthcare? But there’s no focus on whether people have enough community or social support. So the SDGs lacks community, culture, racial equality and more. That doesn’t undermine the Doughnut itself because I used the SDG priorities as the most up-to-date statement of what humanity agrees are the claims of all people, but the content of the social foundation can keep evolving.

Now go to the outside of the doughnut, which is made up of nine planetary boundaries. And there’s evolving science here, some of it contested. My view is that we’re like archaeologists just beginning to brush away the dust. We certainly don’t have the full picture but its’s fast getting clearer, so let’s keep on going and refine this. It’s giving us a faint but truer depiction of human wellbeing, rather than a more precise but false one such as we had in the last century. So planetary boundary science is continually evolving. The real problem is that we needed this science fifty years ago because we’re at serious risk of going over the Earth-system’s tipping points just as we begin to see them.

we’re like archaeologists just beginning to brush away the dust. We certainly don’t have the full picture but its’s fast getting clearer, so let’s keep on going and refine this.

Another limitation is that the planetary boundaries are, by definition, set at a global scale. I’m working with a great team at the moment to create an equivalent city-level model, for use by the most ambitious cities in the C40 programme – those that want to go beyond being ‘low carbon’ to being ‘thriving’ cities. In redesigning the Doughnut for the city level, you can’t just take the planetary model and scale it down.  As Elinor Ostrom said, we need polycentric governance [pdf]. The critical support systems at the planetary scale are different from those relevant at nation, city or district scale. Nevertheless, despite these limitations I think they Doughnut metaphor has proven itself as useful for now.

Some people say the concept can be critiqued because it’s anthropocentric. True, it is. It puts human needs at the centre and the rest of the living world is in the biodiversity boundary. Some conservationists have suggested bringing the needs of all other species into the middle alongside humans. I like that challenge: if humanity sat around the table with all living species and said let’s draw up something like the Doughnut but for all of us – what would it look like?

One of my favourite lines is “All the models are wrong but some are useful.”

Some people say, how do you know the Doughnut can exist? By the time you meet all human needs is there any planet left?  Doesn’t the inner ring overlap with the outer ring?  It’s a question no one can yet prove either way. I think it very much depends not just on population but also on inequality, governance, technology, a sense of sufficiency and what people think they need.

But yes, maybe the Doughnut model will be a relic in 20 years time, seeming just as flawed as the old economics I am criticising today. To me it’s a staging post on the way to greater paradigm shift. One of my favourite quotes is from the statistician George Box: “all the models are wrong but some are useful.”

We have to ask, useful to whom? But also what does ‘useful’ mean? Well, it depends on the values you hold, the goals you have, and the context you believe we face.  And my experience is that something very powerful happens when people feel that there is a set of values and a goal that they had, but which they hadn’t seen articulated or drawn or described or named, and they find a framework that makes it visible. And with Doughnut Economics they often say, ‘yes, this is what I have been trying to do! I’ve just never seen it drawn or spoken before.’ And it galvanises their purpose.

Can we talk about other capacities and limits of other metaphors you’ve used in association with the Doughnut?

First there is the move from linear industrial processes to circular – though I tend to call them ‘cyclical.’  I think this is a very powerful metaphor. ‘There’s no such thing as waste, just a resource in the wrong place’ is a really important way of reframing our relation to, for example, carbon dioxide or plastics. Such biomimetic thinking is, I think, really valuable. Of course there are limits to this too because there are some things in nature we will not want to mimic, depending on our values and purpose.

As well as the linear to cyclical shift, there is the move from centralised to distributed technologies – and here there is an unprecedented opportunity. Think about the core technologies of how we generate energy, make things, communicate, and share knowledge . In the 20th century these were centralised. Energy was produced by an oil rig or a coal mine. Goods were produced in big factories. Communication passed through a switchboard, knowledge held in patents.  In the 21st century we have the chance to move to a system that is distributed by design. Energy can come from renewable energy networks. We can make things on desktop 3-D printers, communicate through the Internet’s distributed networks, and share knowledge open source in the creative commons.

The World Wide Web was supposed to be for everyone, as Tim Berners-Lee put it, but instead we have ‘surveillance capitalism

Yes, with any distributed network the question remains: who owns it, how’s it controlled, how’s it used?  There’s nothing inherent in networks that means you have to end up with surveillance capitalism.  Other iterations are possible. We should not give up on the possibilities inherent in network technologies: there are many other ways of using them and we’ve only just begun.

What does the metaphor of the network replace?

We have inherited an economy that’s highly divisive — characterised by the 1% — so we need to go from divisive and degenerative to distributive and regenerative economies. The way I think about it is we have an opportunity to not merely redistribute incomes through taxes, but to look deeper and ask, what are the sources of wealth creation, to ask who owns the technology, the land, the housing, the capacity to create and share ideas, the capacity to make things? And because of these networked near-zero-marginal cost technologies, it is possible for the first time in human history to reconnect labour with the means of production. This is partly why I don’t use the word ‘capitalism’, because that’s part of the definition of capitalism, and this completely turns the possibilities on their head. Hence I think in terms of going beyond redistributing incomes to pre-distributing the sources of wealth creation.

Now, is that a metaphor?  Going back to ecological thinking, let’s consider a leaf.  In a leaf there’s a fractal network of veins, some much bigger than others.  There’s a nice diagram you might be familiar with between efficiency and resilience of a network. It’s basically an upside-down U curve , but it shows that if something is extremely distributed it risks becoming deeply inefficient — in a flat hierarchy you can’t get things done quickly if you have to build consensus. But at the opposite extreme, if a system becomes too streamlined it also becomes brittle and fragile. There’s a healthy balance somewhere in the middle, and maybe leaves have found it.  By analogy, maybe we can we find that right balance of relationships in the 21st century economy.

 

Sustainability-as-a-trade-off-between-efficiency-and-resilience-CATs-critique-of

 

This is an edited transcript of a conversation that took place on 1 March 2019

Image credits: Leaf – Jon Sullivan (public domain); economic identities – Kate Raworth; efficiency/resilience – Peter Harper

2 comments

  1. What a joy to read – a refreshing re-casting of economics. Over the last 16 years I have helped to develop a small charity in west London focussed on enhancing the environmental and community “value” of local open spaces. We have known what we mean by value – you recognise it when you see it – and have developed some metrics to try and get a grip of it. This short summary of Kate Raworth’s work has for the first time indicated to me that there may be an economics that is trying to capture and appreciate the same value related issues we are grappling with. I will get the book and look forward to reading more.

    Like

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