Doughnut Economics - Kate Raworth - Part 8 of 8

2020 Reading Challenge - Day 216

August 5, 2020

Book 58 - Doughnut Economics
Kate Raworth
Chapter 7 - pages 207-249

In this chapter, Be Agnostic about Growth, Raworth questions the idea never-ending economic growth is the ultimate goal... or that it's even achievable.

We get into a bit of a conundrum right up front.. what happens if we have no economic growth? Is it even possible? What about Green Growth?

No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one."

Sooo... is that the trade-off... end human deprivation (with economic growth) or end ecological degradation (with no economic growth). Or are they mutually exclusive? Is there a solution? Raworth suggests that it is possible... that we can create an economy that makes us thrive whether or not it grows instead of staying in an economy that grows whether or not we thrive. It wouldn't be easy though... and would require us to transform political, financial and social structures that demand growth.

The problem with exponential GDP growth, as shown in the diagram is... where does it go? The curve just ends in mid-air and some have used the metaphor of a plane to describe it. But do planes just keep going up and up?

Many of the founding fathers of economics (including John Stuart Mill and John Maynard Keynes) thgouth that economic growth must slow to a stop eventually, so that it would look more like an S curve or a logistic growth curve. The same curve works for many other growth processes and would tie us in with the carrying capacity of the earth.

The question becomes, where are we on the growth curve? High income nations might be cresting the top of the curve while lower income nations might be down towards the bottom of the exponential growth. But... for every country to live as we do in Canada, the USA or Sweden... we would need 4 earths. And for everyone to live as they do in Australia or Kuwait... we would need 5 earths. Something has to give.

Already, in high income countries, we can see talk of the economy stagnating... interest rates have been near zero for several years and economic growth is tiny (and even less than tiny with Covid-19). Raworth suggests that (using the metaphor of the plane) we need to prepare for a landing and a post-growth economy. And Green Growth isn't necessarily a solution. The past 200 years of economic growth have been fuel by cheap fossil fuels which have had a deliterious effect on the environment. Right now, we need to ditch fossil fuels rapidly if we are to undo the impacts on the environment but renewable energy can't be built fast enough...

Moving into the safe and just ring of the Doughnut will require a strong contraction of all sorts of industries (mining, oil & gas, industrial livestock, etc) and we don't know what the GDP will do. But in order to stimulate economic growth, governments do all sorts of desperate things: deregulate, dismantle environmental protection legislation and privatize public utilities. We can see that happening in the US and it is not a solution.

Raworth argues that we need to create an economy that is not reliant on GDP growth but one that is steady-state.

What if, instead of being focused on monetary growth, finances was focused on other forms of investment, ones that had social and environmental benefits. What if there was a fee incurred for holding money, which would help make money less of a commodity.

What if, instead of tax relief and public spending... it was tax justice and public investment. What if, instead of taxing labour, governments taxed wealth (real estate and financial assets).

What if we reduced the workweek to 20 hours and offered all a basic income? What if we taxed no-renewable resources instead of labour.

Right now, countries are addicted to econmomic growth in order to maintain, or improve, their spot in the geopolitical world. But what if, instead of using money as a metric, we used human prosperity in a flourishing world. What if, instead of using GDP as a metric... we used the UN Human Development Index.

What if, instead of having consumerism and material possessions as something to aspire to, we focused on emotional abundance and relationships.

Raworth suggests that a better analogy than a plane, which isn't really suited to a lot of ups and downs in rapid succession would be a kite surfer, who is always adjusting to the wind and the waves in a dynamic flow of give and take.

Finally, she notes that so many transformative ideas are coming out of other fields: psychology, sociology, earth system sciences, geography, ecology, physics, history, complexity science... it's time for economics to stop playing a solo jig and join the chorus. Economics does not operate independent of everything else.. there is a context in which it works... and it's time for economists to recognize that and partner with other disciplines.

This was an excellent book and there is way more information in it than I can hope to share here. It's inspired me to do a lot more reading and dig more deeply into some of the topics and ideas