Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

Book review by Branko Milanovic

My first Summer book to read and review is Kate Raworth’s very successful “Doughnut economics: Seven ways to think like the 21st-century economist”. It is an ambitious book whose objective is to change the ways economists think and the economics is framed in order to respond to the “limits to growth”. It thus reconsiders the organization of the economy, from the financial sector, money creation, ownership structure of companies to the distribution of assets. It also wrestles with the “addiction” to economic growth, not only among the policy-makers but among most of the population (that understandably want more things) and it finally envisages a rich society with “zero growth”. The last term is avoided by Raworth by saying she is agnostic about growth and by presenting future growth as undulating around a stable level, with the economy at times going down and at times up “(“[we] embrace growth without exacting it”, p. 270).

The book is probably better than its competitors in the area. For example, Raworth’s discussion of inequality where she argues for the equalization of endowments rather than expansion of policies that redistribute current income, makes lots of sense. Suggestions for the use of various incentives to make companies more environment-friendly are also plausible. Perhaps even the imaginative use of electronic currencies may help.

Yet the book fails to convince for three reasons.

First, it never faces squarely (or even indirectly) the fact that if everybody in the world is to be “allowed” to have income level equal to the current median in the rich countries, world GDP would have to increase three times—not accounting for the rise in the world population. This is a fact for which Raworth has no answer and thus prefers not to mention it. (For obviously, if one is against trebling world GDP, one needs either to accept that half of the world population will continue living in poverty, or to produce some evidence that carbon intensity of production will suddenly plummet.)

Second, numerous examples of companies and people who do innovative “green” things are listed (which is quite useful) but their importance is never assessed. The reader is right, I think, to feel that their importance is marginal and while progress is made, it is minimal compared to what needs to happen.

Third, the interpretation of the current phase of globalized capitalism is, in my opinion, wrong. Rather than seeing it, as Raworth does, as becoming more cooperative and “gentler”, it is more correct to see the inroads of commodification into our personal lives (which we not only willingly accept but promote) as moving us further toward a self-centered, money- and success-oriented society—that is, going exactly in the opposite direction from that which Raworth favors.

I will illustrate this last point with Raworth’s discussion of intrinsic vs. extrinsic motivation. This last point (Chapter 3), where Raworth shows, based on empirical studies, that extrinsic (money-driven) motivations may at times produce worse outcomes than the use of non-cash motivation (emulation, social pressure etc.) is, in my opinion, the best part of the book—but it is also the one where I disagree, not with the arguments, but with Raworth’s interpretation of the current state of the world and tacit forecasts for the future.

Raworth very persuasively shows that working on intrinsic motivations may often be preferable (measured in terms of hard-nosed efficiency) than using cash grants. I agree with that (actually, I just follow the studies that show that) but I think that the contemporary hyper-commercialized capitalism leads us more and more to value only monetary incentives and to disregard others—even if the latter can produce better outcomes. But to do so they have to be grounded into traditional social norms, traditional hierarchy, social capital and the like, the very things which globalized capitalism erodes daily. Thus I conclude that non-cash incentives, despite their advantages in many situations, are doomed to extinction. Kate implicitly argues the opposite: if they are better they should be used more. But by whom? What are the social forces to promote them? Who has the incentive to do so? Is today’s societies’ ethos compatible with them?

And here appears the major weakness of the book. The world Kate has in mind is a world essentially devoid of major social contradictions. It often comes close to the world of Bastiat’s “universal harmonies”. In many instances, Kate writes in the first-person plural, as if the entire world had the same “objective”: so “we” have to make sure the economy does not exceed the natural bounds of the Earth’s “carrying capacity”, “we” have to keep inequality within the acceptable limits, “we” have an interest in a stable climate, “we” need the commons sector. But in most of the real world economics and politics, there is no “we” that includes 7.3 billion people. Different class and national interests are fighting each other.

The same “we-ism” is apparent when Raworth calls for deemphasis (“agnosticism”) of economic growth. I have already mentioned that the world’s poor get a short shift, but the argument why growth in the rich countries should cease, and how to go about it, is also presented in a most confused fashion (and perhaps there is no way to present it better). Raworth acknowledges that economic growth is needed to soften distributional conflicts, to maintain democracy, as well as for people’s subjective happiness but she fails to provide any persuasive arguments how a new “no-growth” regime will come about (who is going to vote for it?) nor how it would solve these real issues. “We” should somehow be magically transformed from acquisitive and money-grubbing beings, traits which the system itself encourages in us, to people, who under the same system, are rather indifferent to how well we do compared to others, and do not really care about wealth and income.

Short of magic, this is not going to happen. It then becomes apparent that Raworth’s book is a book of miracles, as well as why in such a world of miracles, the real “miracle” which is Chinese growth that has pulled out of abject poverty some 700 million people goes all but unmentioned. The reason is that poverty was eliminated by “dirty” growth that has polluted Chinese cities and the countryside, disrupted Arcadian idyll between man/woman and nature—and yet made the lives of millions incomparably better.

Raworth’s ideal world seems to be the one that we find in Giotto’s paintings of St Francis, but it is not the world we inhabit. In an attempt to convince us that “other worlds are possible” Raworth uses the example of an Indian tribe in northern Manitoba which a couple of centuries ago responded to an increase in price by providing fewer goods.

Rather than proposing the economics for the 21st century, Raworth’s book brings us back to the imaginary world of the early Christendom. Perhaps that such imaginary people were then “thriving” (a term Raworth uses at least 50 times in the book), but the real world even in those times was different: it was the world of Augustus and Spartacus, burned temples and fortunes made through violence. Exactly like ours. Except that we are richer. Which is a good thing.

Cross-posted from Global Inequality

 

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

Published by Penguin Books

ISBN: 978-1847941374

 

Reply by Kate Raworth from 26 June:

Hi Branko,

I enjoyed reading your review of my book and am glad that some parts of it chimed with you. Unsurprisingly I dispute or disagree with much of your critique, but since I think it is one of life’s great privileges to respectfully disagree, I look forward to doing so here. As I’ve tweeted to you before, I’d far rather be having this conversation in person (ideally over a drink ¬– so much more civilized a way to disagree!) but here we are on a blog, so although I’m writing, please take my replies in the spirit of a good pub debate.

You argue that Doughnut Economics fails to convince for four reasons:

1. It does not acknowledge that global GDP must rise significantly to end poverty.

2. Current ‘green’ innovations are marginal and their progress is minimal compared to ‘what needs to happen’.

3. The book portrays globalized capitalism as entering a ‘more cooperative and gentler’ phase – but in fact people are embracing ever greater commodification, leading to a self-centred, money- and success-oriented society.

4. The book conveys a world that is ‘devoid of major social contradictions’, and refers to a ‘we’ of 7.3 billion people that doesn’t exist: in reality, different class and national interests are fighting each other.

I will respond to each in turn, using our initials (BM and KR) to make things clear.

BM: 1st critique: “The book doesn’t acknowledge that global GDP must rise significantly to end poverty.”

KR: I disagree. The central premise of Doughnut Economics is that humanity’s 21st century goal should be to end poverty for all, and do so within the means of the living planet. Ensuring everyone in the world lives well above the Doughnut’s social foundation (in terms of healthcare, education, housing, food, water, energy use, mobility, and so on) will obviously lead to an increase in economic activity and hence global GDP. As I write in the book,

Across low- and middle-income countries (where national income is less than $12,500 per person per year) a higher GDP tends to go hand-in-hand with greatly increased life expectancy at birth, far fewer children dying before the age of five, and many more children going to school. Given that 80% of the world’s population live in such countries, and the vast majority of their inhabitants are under 25 years old, significant GDP growth is very much needed and it is very likely coming.

BM 2nd critique: “Current ‘green’ innovations are marginal and their progress is minimal compared to ‘what needs to happen”.

KR: I couldn’t agree more. If I thought ‘green’ innovation was already taking place on anything like the scale needed, I probably wouldn’t have felt compelled to write the book. But five facts (or views) of the world drove me to do so:

a. Ending poverty and deprivation worldwide will likely lead to a significant increase in resource use.

b. Humanity’s collective pressure on many of Earth’s life-supporting systems is already critical or excessive.

c. High-income countries and individuals have a moral obligation to create ecological space so that others have the chance to lead lives free of deprivation, while protecting Earth’s life-supporting systems, which are fundamental for conditions conducive to human thriving.

d. There is no evidence that any high-income country is decoupling its pursuit of endless GDP growth from resource use and ecological impacts on anything like the scale required.

e. The mainstream economic mindset – taught in universities and practiced in institutions worldwide – still fails to face up to this conundrum.

Together these five claims create the central challenge of the book. If you disagree with any of them, I’d be curious to know which one(s). And if you agree with them all, I’d sincerely like to understand how you proposing resolving the challenge they create.

My attempt at resolving it, as you know, is to advocate an economic mindset focused on creating economies that are regenerative and distributive by design and, simultaneously, to overcome the structural dependence of high-income countries on endless GDP growth. Yes, I think this growth addiction is the mother of all long-term economic challenges, and I certainly don’t have all the answers, but I tried to address it in the book because it doesn’t go away if we simply don’t confront it.

BM 3rd critique: “The book portrays globalized capitalism as entering a ‘more cooperative and gentler’ phase – but in fact people are embracing ever greater commodification, leading to a self-centred, money- and success-oriented society.”

KR: I certainly don’t think capitalism is entering, as you put it, ‘a gentler and more cooperative phase’ (you must be joking!). Instead, I see alternative forms of economic organizing emerging – running counter to the extractive drive of capitalism – such as in open-source design, platform cooperativism, and the creative commons.

You describe people as ‘acquisitive and money-grubbing beings’ and that ‘we accept and promote commodification in our personal lives’, moving us further towards a ‘self-centred, money and success-oriented society’ of ‘hyper-commercialized capitalism that leads us more and more to value only monetary incentives and disregard others’.

Ouch. Branko, I’m starting to worry that you lived for too long in Washington DC…but seriously, look to the literature. If empirical research into human behavior has told us anything over the last 30 or so years, it tell us that we, Homo sapiens, are far more nuanced than this. We are conditional cooperators and altruistic punishers (Bowles and Gintis), with a common set of universal values (Schwartz), influenced by both intrinsic and extrinsic motivations (Crompton and Kasser), and able to self-organize effectively not only through markets but also through the commons (Ostrom). Indeed I see you’ve been engaged in this discussion about human nature, behaviour and morality in this recent really engaging blog debate at Evonomics (http://evonomics.com/role-of-morality-in-a-capitalist-economy/).

Perhaps the nub of our difference in view is this: you think humanity is so far gone into capitalism that people have become irredeemably motivated by self-interest alone. I simply disagree, and see evidence to the contrary every day, in the street and in the worldwide news. Since you amusingly likened my worldview to Giotto’s paintings of St Francis (I very much hope not – it looks far too male-dominated for me), then I’ll stick with the high-art analogies and say your dismal view of humanity reminds me of Rodin’s Gates of Hell. “Abandon every hope, who enter here”. I chose a different gateway to the future and I think many millions of others do too.

BM: 4th critique: The book describes a world that is ‘devoid of major social contradictions’, and refers to a ‘we’ of 7.3 billion people that doesn’t exist: in reality, different class and national interests are fighting each other.

KR: I have to disagree: the book absolutely acknowledges the pervasive role of power relations between social groups. As I write in the book,

‘Power is at play in myriad places throughout the economy and society: in daily household decisions about who cares for the kids; in boss-versus-worker wage negotiations; in international trade and climate-change talks; and in humanity’s domination over other species on the planet. Wherever people are present, so too are power relations . . . When it comes to the workings of the economy, one power relationship in particular demands attention: the power of the wealthy to reshape the economy’s rules in their favour.’
And yes, at the same time, I very much believe there is a ‘we’ of 7.3 billion people: it is the ‘we’ of Homo sapiens, the most dominant species on the planet, whose collective activities have given rise to a new epoch on Earth, the Anthropocene.

Rather than avoiding social contradiction, I think the book actually goes beyond and takes on the major social-ecological contradiction of our times. As I write in Chapter 7:

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

Over a second drink, I would love to hear how you see this challenge being resolved. I’m well aware that I certainly haven’t fully resolved it, but I believe that the seven ways of thinking that I set out in the book are, each one, an important part of a bigger answer.

Related to this, you were irritated that I used the word thrive / thriving over 50 times in the book (53 times to be exact). But you didn’t seem to notice, or weren’t bothered, that I used the word growth / growing over 180 times. Growth-centric thinking is so deeply ingrained in economics that it has become the water we swim in – but, as I argue in the book, I think it profoundly influences economic worldviews and creates an expectation of and belief in the possibilities of endless GDP growth, even in the richest of countries, and even though there is no evidence that it can be made compatible with preserving the integrity of Earth’s life-supporting systems on which we (yes, we) all depend.

Let me end where I began. I think there are few privileges greater than respectfully disagreeing with others. So I look forward to your reply (and the next round of drinks is on me).

All best, Kate

 

Answer to Kate Raworth by Branko Milanovic from 1 July (Cross-posted from Global Inequality) :

On growth and people: my reply to Kate Raworth’s reply

Let me focus on two most important issues on which Kate Raworth and I differ.

(My original review of Kate Raworth’s very good and challenging Doughnut Economics can be found here; Kate’s response is given here.)

Growth

When Kate allows that growth is necessary for poverty reduction and that countries with income levels less than $12,500 per capita should be “allowed” to grow, she fails to either tell us up to what level they should be “allowed” to grow or to provide an estimate of how much the world GDP would have to increase in order to accommodate such growth. As I mentioned in my review, any back-of-the-envelope calculation shows that “allowing” everybody in the world to live at an income level that is today considered barely acceptable in the rich countries involves a tripling of global GDP. Kate should show us what are, according to her, correct numbers. But the reason why I think she prefers not to do so is because it allows her to leave the whole issue in an area of deliberate vagueness where poor countries are “allowed” to grow but the issue of “unsustainability” of that growth is elided.

Now, in the next stage of vagueness, it is acknowledged that perhaps the space for future growth of poor countries can be provided by voluntary restraint of growth in the rich world (“high-income countries and individuals have a moral obligation to create ecological space so that others have the chance to lead lives free of deprivation”). Technically, it should imply a voluntary reduction of rich countries’ real GDP (that is, negative growth) in order to create the “space” into which poor countries can grow. Is this realistic? I already wrote about that in my discussion with Jason Hickel and I do not think that it is necessary to repeat the arguments here or to highlight the obvious fact that no rich country (or rich countries’ populations) display any observable inclination either to degrow (for if they did, they should have been cheerfully accepting the Global Recession) or to share their income with poor people (for if they were, they would not be creating right now such a fuss with migration both in Europe and the US).

So, we can take it as given: (1) if poor countries are “allowed” to grow, today’s GDP envelop will have to be expanded severalfold, and (2) rich countries’ populations will not voluntarily immiserate themselves nor will they share, out of the goodness of their heart, their income with poor countries.

People

The second issue is less amenable to such (in my opinion) clear cut conclusion. It is the issue of human behavior under conditions of hyper-commercialized global capitalism.

I have already explained my views (and will do so further in my forthcoming Capitalism, alone), so those interested can find them here.

Let me make just two paints.

The fact that people cooperate does not invalidate at all that people are motivated by self-interest alone. Self-interest can often be more effectively realized in cooperation than by trying to do everything alone. This is why companies, clubs and mafia (indeed, mafia) do exist. If accomplishment of self-interest required that one do everything alone, there will be no society, no family, and everybody would be self-employed. None of that is true. But none of that invalidates the notion that cooperation will be a form in which, at times, self-interest will be best realized.

The next point has to do with human nature under hyper-commercialized global capitalism. Here I respectfully decline to be moved by the results of any of  the “games” that Kate cites and that are supposed to reveal human nature. These games are indeed games; they are not the way people behave in real life. Games are good in generating publishable papers but they tell us nothing about how the same people would (or do) behave in real life. There, if Kate wants to convince me and others of our “improving” nature and greater willingness to share, I would like to find the evidence that we are becoming less engaged in market transactions, that we contribute more to charity, that we care less about income, wealth and prices…

But all the real world evidence I see goes exactly in the opposite direction. And for a reason. Globalized capitalism has to create new goods and services and it moves into what was hitherto a personal sphere (homes, cars, leisure hours). It pushes us to exploit these in order to make more money (because money is the sole indicator of success). Thus marketization (and numeracy which goes together with marketization) is greater than ever in history, and the more developed a society, the more marketized and money-conscious it is.

What we observe is that people have become ever more aware of small differences in incomes and prices. This is why Internet has brought such fierce competition between airline companies, hotels, restaurants, retailers. People consider the tiniest differences in prices. They go to stores, take a picture of an item, and then purchase it on the Internet from Walmart or Amazon. If people were less commercially motivated, Walmart and Amazon would not be the behemoths they have become: people would have been happy to purchase the same item for a higher price in their local store. But they are not.

Professors, claiming altruism in their writings, bargain (as Kate must know) to the last possible cent when it comes to their salaries and fees. I have not noticed many of them foregoing higher income or altruistically declining higher fees. The same behavior is prevalent in all professions. I would like to be given examples of academics (among others) who have seriously discarded the pecuniary motivation. The majority of them are like the real-world people depicted in “Inside Job”. I wrote before that out of almost 80 top economists who are recipients of the Nobel Prize, I understand that only Jan Tinbergen donated about a half of his prize. Everybody else kept it in full. And here we are talking about a group of old, very rich, extremely successful people. Yet they hoard the money. What can be expected from those who are less rich?

Again, this does not mean that we care only about money (income). Other considerations certainly do play a role. But the key consideration is that of money.

Thus, on this point I see close to zero evidence that Kate’s picture of today’s Homo Sapiens is accurate. Actually, for the reasons that are intrinsic to hyper-commercialized capitalism, I see us moving further away from the idealized picture that Kate depicts.

Finally, let me mention that at times I think a peculiar hypocrisy creeps into people’s discussion of human behavior because the authors seem to think that by claiming that humankind is altruistic they are thereby showing their own munificence. I think that this feeling was not entirely absent even in Adam Smith’s explicit critique of Mandeville—even if Smith himself gives us in The Wealth of Nations innumerable examples of the behavior fully consistent with the view of human nature advocated by Mandeville.

We regret to have to inform you that we had to remove all the links from the comments. One of them resulted in our website repeatedly crashing. This is not our usual policy and we find it very unfortunate, but we are a website. If we cannot be viewed due to something like this, we can pack it in. Once again, sorry.

15 Comments

  1. Hello, to both Branko and Kate, if I may,

    The challenge, I think, is that the problem is fundamentally political. Part c of Kate’s response to Branko’s critique #2 really sums up where the big problem (of society, not of the debate) is:

    “High-income countries and individuals have a moral obligation to create ecological space so that others have the chance to lead lives free of deprivation, while protecting Earth’s life-supporting systems, which are fundamental for conditions conducive to human thriving.”

    It sounds like a subtle way of arguing that high-income countries and their citizens should voluntarily reduce their consumption to help those in low-income countries escape deprivation while preserving Earth’s ecosystem. While it is admirable, it is hardly obvious that who would enforce this if they collectively choose not to. The individual level goodness and morality of the first world citizens is not the question, but that of the institutions that they collectively delegate authority to is. While one can point to a lot of behavioral economics research that points to how individuals do not play the dictator in dictator games, other research also show that introducing delegation of authority does induce more “dictatorial” behavior in such settings (e.g. Hamman et al, 2010, and Bartling et al 2011). Not so much saying that people will act selfish with certainty as much there being limits to their sociotropicity. Most sociotropic behavior takes place in small groups and counting on billions of people to behave as if they were in a small village where cooperative norms prevail (in presence of large scale delegations to institutions) seems a bit dangerous to rely on.

    Put differently, we can’t expect growth alone to resolve the problem. At least some form of transfer away from the high-income world to the lower-income world will be necessary. But to do so systematically will require creation of (political) institutions which need to be delegated power to execute it with at least implicit use of force behind it. Once institutions are delegated power, I don’t see how it will not be subject to abuse. It will be far easier, for example, for modern titans (e.g. people like Bezos and Zuckerberg) to give a million out of their billions and force the less endowed to give half their income out of mere thousands–and scold the latter for not being rich enough to be as generous as they are.

  2. We need to re-frame, re-set and re-base our economic system in terms of life capital protection and growth, that puts foremost the universal human life necessities (needs) of all people within the means (life supporting systems of planet and society) without compromising the dignity and integrity of both people and planet. Economic growth and policy that is decoupled from these life-enabling constraints (the former the foundation and the latter the ceiling) is not true life-enabling economics, but a false one that is life-disabling at all levels. The sooner we see this and conform to this reality, the better it would be for all concerned.

    Kate’s model is the best so far that would be able to lead us through. What is missing is the life-ground, which provides the principles, criteria and measures to decide which goods and services are life enabling and which ones are not. Once life-grounded, we can have infinite life economic growth, based on a new economic paradigm based on life-enabling regenerations and distribution within a safe and just economic space for one and all to survive and thrive.

    Once we shift focus to this phase which would require a collaborative and sharing mindset, where we would have less scarcity and more sufficiency, the better side of our human nature would be able to be actualized, and the insecure competitive and hoarding activities and destruction of society and planet would become relegated to the museums of history.

  3. Hello to Branko and Katie,

    I wonder if you´ve taken into consideration According to the Scumpeterian economic-historian Carlota Perez we could very well be on the verge of a new Golden Age. This time with customization instead of identical mass production for mass consumption, and where the “Third World” would be interesting in itself as consumer markets (as opposed to the 20th century when the advanced world was more interested in the natural resources of the newly de-colonized countries). Industrial policies and environmentalism will then eventualy merge when resource conservation and new market arrangements (renting equipment that in turn gets its software upgraded instead of using consumer credits to buy planned obsolesence capital goods – a “new” financial invention when it came along from the 1950’s and onward). New arrangements including lifestyle (not to underestimate – these changes won’t be brought unless there’s a desire to it as well. The American Dream of the Great Gatsby was one such, and a few decades later millions could live out their respective variations in suburbia according to income level and so on ) will replace old ones.

    Here’s one interview with her that I think sums up this line of thinking – A new “Schumpeterian wave” which this time would be based on resource conservation:

  4. Our hope for a sustainable NEW economy lies outside of the perpetual growth economy … and I believe it lies in those which the growth economy makes redundant in the first World and in the poor of the third world.

    Regards
    Chris … @landrights4all

  5. First, I’d like to thank Kate Raworth for providing an alternative to traditional economics that I am able to read. I admire but was not able to finish books by Keynes and Picketty. I agree that “economicus man” is silly. I donate a significant amount to GiveDirectly. Donut Economics introduced me to system dynamics, and wow, what a revelation! How silly is supply/demand compared to a simple system dynamics model? However, I believe there is an elephant in the room missed by both Branko and Kate. I believe large corporations are essentially leaderless. CEOs are well paid not because they are good leaders, but because they are good at representing the corporation. Not only that, but corporate interests have become the primary concern of Capitalist governments, which now includes Russia and China. Also, large corporations have more influence on their markets than usually admitted. In particular, I blame big oil for the slow progress of renuables. In my opinion, the solution is also contained in Donut Economics. We must adopt a new paradigm that allows government to disband corporations at will.

  6. Absolutely speaking Branko and Kate are both wrong. Relatively speaking Kate has many things right but being part right is not good enough. Both are wrong to think the problems we have, have an economic solution just as all religious leaders think the problems we have have a religious solution. So, both Kate and Pope Francis are correct to use the pronoun we but they are wrong to speak from inside their respective exclusionary boxes. Specifically, Kate’s “we” and the variable income she proposes can’t fit in her economic box nor can the Pope’s “we’ fit inside his religious box. The solution to the impasse should be clear. To solve our problems we have to work together and to work together we all have to discard our boxes. More specifically relating to this economic post, to help solve the problems we have that are an imminent threat to our survival, we have to raze our vertical economy. Understanding how is in a 2 min poem, not in a billion books.

  7. Hello everyone.

    I would like to add some comments about my understanding of the subject.

    1/ “First, it never faces squarely (or even indirectly) the fact that if everybody in the world is to be “allowed” to have income level equal to the current median in the rich countries, world GDP would have to increase three times”

    I don’t think that the global GPD can even remain at the current levels, which have put us into this unsustainable overshooting situation, much least to grow.
    Yes, it should be properly distributed among the countries to allow those who need some development to access to the economic improvements needed.
    But, the need of rich countries to de-growth must be addressed as well. The planet is not enough for everybody to have their income level, and that’s why no one should have. While many of those claim to be sustainable, its sustainability is based on poorest countries social and environmental chaos. They are importing sustainability and exporting unsustainability.

    We’re way beyond our ecological limits. Not only they can’t have that high income, but the planet can’t sustain those who have who have. A middle ground must be reached. I believe that the impossibility of that high global income level was a settled issue, no need to discuss that.
    Also, there is the why. Why would we need that income level? To mimic their development model? Consumerism levels? Which model is to be followed? Shouldn’t every country follow its own path, accordingly to its culture, environmental constraints, etc…?

    2/”Second, numerous examples of companies and people who do innovative “green” things are listed (which is quite useful) but their importance is never assessed. The reader is right, I think, to feel that their importance is marginal and while progress is made, it is minimal compared to what needs to happen. ”

    “The reader is right, I think, to feel that their importance is marginal and while progress is made, it is minimal compared to what needs to happen”

    I agree with that, but when we add up all those individual, tiny, actions, I do think that they do are important locally, but irrelevant when faced to the absurdity of the scale of the problem.
    We need strong and significant institutional, economic, corporate change to actually start to have some hope to fix it.
    Their importance matter, but it alone is marginal and not enough to do a difference unless they can add an adequate amount of pressure n governments, economy, etc.. enough to start the change.
    Also, living in Brazil, an undeveloped country nevertheless, I can see how almost impossible it is to do it here, due to population ignorance on the subject, corruption (both political and from those who should be taking care of social and environmental issues) and many other issues that were already dealt with in rich countries. How about an African country? Or even some other Latin America ones? It’s not realistic to believe that their population can make any difference when they are worried about larger fishes to catch.
    We need more, a lot more, at a global level.

    3/”Short of magic, this is not going to happen. It then becomes apparent that Raworth’s book is a book of miracles, as well as why in such a world of miracles, the real “miracle” which is Chinese growth that has pulled out of abject poverty some 700 million people goes all but unmentioned. The reason is that poverty was eliminated by “dirty” growth that has polluted Chinese cities and the countryside, disrupted Arcadian idyll between man/woman and nature—and yet made the lives of millions incomparably better.”

    I can’t see magic or miracles here. I see a needed mindset change, difficult one, to drive us away from the concept that it is acceptable a miracle that is a trade-off between population health and population consumerism level. Are really millions of Chinese incomparably better? They can consume better indeed, but at the expense of their health, I hardly think that it’s a better life.

    So, it seems to me that the idea is that any growth is better than no growth, no matter what.
    No. Economic growth, if and where needed, must happen carefully, focused, and within our limits, even if it implies in de-growing the rich, overshooting, economies.

    Julio

    1/

  8. Very insightful debate.

    Quoting BM:
    “2.Current ‘green’ innovations are marginal and their progress is minimal compared to ‘what needs to happen’.”
    KR’s response:
    “d. There is no evidence that any high-income country is decoupling its pursuit of endless GDP growth from resource use and ecological impacts on anything like the scale required.
    e. The mainstream economic mindset – taught in universities and practiced in institutions worldwide – still fails to face up to this conundrum.”
    —-
    My own additions:
    I agree with Kate that there is very little evidence that decoupling of economic activities from environmental pressures is a huge conundrum and to my knowledge mainstream economics theory does not square up to this paradox. If it does not address it fast enough, we are headed for systematic crossing of planetary boundaries. That’s where I believe that people like BM and KR should *join forces* and contribute ideas. It is an enormously complex challenge that we have not faced before -never at this magnitude. Suffice to say the carbon intensity of most of our economic activities, especially in countries with relatively higher income per capita.
    That progress of “green” initiatives is minimal is both true (sadly) and false. It is minimal when compared to what needs to happen and the necessary scale. Lest we forget the law of exponentials. A prime example is in the growth of renewable energy supply. OF course its scale today is still marginal, but it has been doubling its energy output every <6 years. IT would be like saying that on the proverbial chess board where the grains of rice are multiplied at every successive square, we are "only" at 64 grains, forgetting that the doubling rate is the most important factor to take into account. IF the current pace keeps up and doubles every <6 years, renewable energy production would dominate by 2040

  9. I would very much be interested in seeing this debate couched in the language of evolutionary game theory.

  10. People who believe that things will never change usually (always?) end up being wrong.

    Bring on the doughnut.

  11. Kate repeatedly quotes George Box in her teachings with “all models are wrong; but some are useful”. She doesn’t claim to have all the answers. What she’s doing is looking to see where the big influential levers are in the systems (and our white male neoclassical economic model has become one of our defining systems, gone bad) and trying to figure out what we might do. She sees economic theory as one of the biggest levers of change – in her words, “the mother tongue of public policy”. I think she’s trying to do what possibly Branko hasn’t quite managed yet: understand the boxes we jump in and actually kick them around to see if we can do better …

  12. First let me say I am a former World Bank lead economist and manager who remembers Branco Milanovic from the time we were colleagues, and also am an admirer of Kate Raworth’s work. I have read both of their recent books on inequality (Milanovic) and doughtnut economics (Raworth).
    I currently coordinate a network of thought leaders called the Sufficiency4Sustainability (S4S) Network (www.sufficiency4sustainability.org) exploring the role innovation, especially exponential technologies, can play to eliminate shortfalls in access to basic needs (sufficiency) while staying within the safe and just space for humanity (the doughnut) – that is within ecological planetary boundaries on a planet moving toward a population of 11 billion people this century. We consider sustainability to have three other dimensions in addition to the ecological one: economic, social, and political.
    My first point is that neither Kate, nor Branco — or for that matter any of the other commentators as far as I can see — address how innovation, especially exponential technologies, can address Kate’s (and my) issues: how to provide enough for all while living within planetary ecological boundaries. And, I would add, avoiding populist and authoritarian threats to democracy that are already evident as the middle class is hollowed out by technological change and (IMHO) less importantly in the future, globalization. By exponential technologies, we mean those driven by Moore’s Law (doubling of computing power at same cost every 1.5 to 2 years) – mainly information and communication technologies, robotics, artificial intelligence, bio technology, nanotechnology, and increasingly green energy production (especially solar and wind). Projecting past trends does not give any idea of the exponential rates at which costs fall when these technologies are applied.
    The best institution advocating steering innovation to achieve S4S I’ve found is Singularity University (SU) (www.su.org). It is acting to inspire entrepreneurs to attack 12 grand global challenges that include resource needs (energy, environment, food, space, shelter, water) and societal needs (disaster resilience, governance, health, learning, prosperity, security). For example, SU’s environment challenge is summarized as “sustainable and equitable stewardship of Earth’s ecosystems for optimal functioning both globally and locally” and the prosperity challenge as “equitable access to economic and other opportunities for self-fulfillment where all people are free from poverty and able to thrive.” SU encourages a “moonshot” approach to attacking global challenges. The essence of this approach is to seek a ten-fold (10 x) improvement over current state-of-the art technology to deliver goods and/or services to at least a billion people. The S4S website has extensive up-to-date reading and viewing (videos) suggestions for innovation, sustainability, and sufficiency.
    Second, not much is much said in this entire discussion (or in either Kate’s or Branco’s books) about the best public policy to address the sufficiency issue and help deal with economic, social, and political sustainability; a Universal/Unconditional Basic Income (UBI) — eventually at a global level — as a means to get the poor, un and under employed, disabled et al. — out of the doughnut’s hole. It is, as I think all will agree, morally and politically impossible to ask those who cannot meet their basic needs to remain in this condition so that the “rich” can continue their lifestyles, that include what Branco so aptly describes as the imperative to have more. We need value change from “more” to “enough” if to avoid an ecological apocalypse. if we don’t get a political or nuclear one first.
    UBI is a hot topic now, and one that finds support from across a broad spectrum of political/ideological currents — something quite rare in countries faced with polarization and political gridlock the progressive destruction of middle class, let’s say the 90% who in the US have lost to the 0.1%, while 9.9% have more or less maintained their share of income, that is in the United States, but probably true in other “developed” countries. This is leading to dangerous populism threatening democracy — e.g. Trump, Brexit, Orban and others in Europe. It can also mitigate the migration issue to some extent. That’s a long story — better promote development so people can find a hopeful future in their own countries and cultures. I did see one commentator who said he supports Give Directly, a positive move in the UBI/development field.
    The trends today among younger people are away from more goods and in favor of services – e.g. transportation services vs car ownership – enabled further by autonomous vehicles. The sharing economy is growing, and not just Uber and Airbnb. Jeremy Rifkin has good points to make in his latest book, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. Exponential falls in the cost of solar and wind energy production are enabling consumers to be producers, food can be produced closer to consumers using new technologies – there are many trends toward decentralized, low-cost, and green forms of production.
    I think Branco is too pessimistic about value change in the population, while both Kate and Branco fail to take revolutionary technological trends into account in their analysis. Both make good points in their books, articles and, at least in Kate’s case, videos. But if Branko’s pessimism about today’s capitalism is correct, we are headed for global disasters that technology and value change could help us avoid. Slightly paraphrasing Marx, the thing is not just to describe the world and its problems, but to find ways to address them. We have the means, we have to generate the political will to use them.

    • Peter,

      Thank you for clearly expressing so much of what I, too, have to say on this discussion, regarding UBI, technology, Singularity University and emerging trends towards alternative forms of production.

      It leaves me with one main observation, question, and proposal to make. 🙂

      Observation: Current progress towards achieving sustainable human systems on our planet is too slow. Many people and groups are taking action, however such actions are frequently uncoordinated and inconsistent, and therefore not as effective and efficient as they might be. Ignorance, inertia and institutions invested in maintaining the status quo frequently pose significant obstacles to progress. Even those doing their best to work towards common goals frequently expend significant time and energy fighting with each other about how to achieve them.

      Question: Bearing in mind the real difficulties we face, including human nature, how can we speed up progress sufficiently to actually achieve our goals during the time we have available?

      Proposal: Form a new opt-in global union of individuals to create a “virtual” global governance body and secondary parallel global economy. A global governance union could increase coordination and efficiency of climate actions such as carbon fee collection and dividend distribution (as a first move towards UBI), decrease infighting amongst those who are working to achieve the same ends, and be better positioned – and have more power – to deal with the various obstructions posed by current governance structures.

      I’m currently working on a paper to briefly introduce this concept and outline a (possible) high level strategy for implementing it. While I make absolutely no claim to expertise in economics or the issues we’re facing as a species, I’ve yet to see any discussion on an approach which — possibly due to insanity? 😉 — seems most obvious to me, and feel compelled to at least raise the idea for consideration by others who do have the requisite knowledge and experience.

      In the meantime, I would love the opportunity to discuss and possibly round out ideas for the paper with you, Kate, Branco, or indeed anyone who is interested in doing so. I’m based in Brisbane, Australia and can be contacted on Twitter (@indiqicom).

  13. “I [BM] disagree with Raworth’s forecasts for the future.”

    Isn’t economics more about (performatively) creating rather than forecasting the future (performativity implying self-fulfilling prophesy)?

    Picturing people as self-interested beings encourages them to behave accordingly.

    Addressing people as ‘we’ encourages ‘us’ to behave as such.

    Economics is the way in which we organise that people (preferably all) get what they need (preferably and in the end necessarily within the limits of what earth can provide).

    As economists we are failing to guide humanity (and its many factions) to do better.

    What I miss in this book review is an acknowledgement of Kate’s point about the power of pictures.

    It IS almost magical how Samualson’s diagrams (and those of others) shaped our economy in historical hindsight.

    If ‘the system’ (as pictured and thereby performatively created) can encourage selfishness in people, so can intrinsic pro-social motivation be strengthened with the magic of the pencil, if Kate is right.
    From Wim Nusselder

    Whether the (almost) magic of picturing another economy will be enough, can only be ascertained by trial and error.

    What about refocusing the debate on what the best pictures are to do so, rather than on your relative optimism/realism/pessimism?

  14. Milanovic has said (http://evonomics.com/role-of-morality-in-a-capitalist-economy/) that he tends to see nice-guys as hypocritical, and doubts that they are truly nice and ethical.

    But this is lack of imagination – perhaps since his own predominant values are not pro-social, he feels in his gut that people with sincere pro-social values cannot exist. All of us start our lives assuming that others see the world in roughly the same way we do. But in truth, there are as many world-views as there are different faces, and of course some are sincerely, non-hypocritically pro-social.

    Pro-social values are so common that they are taken for granted, we don’t ‘see’ them. For every bit of litter thrown out of a car window, there are more people holding on to their rubbish. Yet it is the litter that we see, and this clouds our judgement of human nature.

Leave a Reply

Your email address will not be published.


*