Riku Sayuj's Reviews > Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist

Economics runs on images. The language of economics is built upon the iconic imagery of supply and demand curves, circular flow models, GDP growth curves and IS-LM models. Raworth seeks to change the language of economics. How? By changing the fundamental images that define economic models.

So what ails Modern Economics? Raworth is not exactly correct in saying that modern economics still runs on the rational-actor model and hence is limited by it. Not when we have Nobel laureates sitting pretty with bestselling books and superstar ideas about behavioural economics that tears down the old models. The problem in fact is not that the models are flawed or that economists are unaware of their own limiting assumptions built into the models. The real problem is that the aims, the end goals, of modern economics are still perhaps out of sync with reality. The neo-liberal idea that everything can be left to the market is only a pipe-dream - no serious policymaker depends on it today. Much of economic progress, just like much of political and societal progress have been made, as Pinker says, by the gradual pushing of the left-right boundary further and further towards the left. What was once marxist is now neo-liberal. The good fight goes on, but trusting the market is not the real problem of the day. That is not the reform needed in economics.

The next big reform has to focus on the overriding goal of all economics - GROWTH! Economic Growth is the assumed solution to all ills. Raworth takes this to be a case of an almost religious belief in a 'Kuznet's Curve of Everything' (in fact a good marker to test if any argument is in part belief-based is to see if there is an assumed Kuznet's curve present in the argument). Almost every argument and every policy seems to assure us that it will get worse now, but it will get better tomorrow as long as Growth continues. Growth must go on.

This is the core paradigm that Raworth really wants to shift. Raworth asks: “What if we started economics not with its long-established theories, but with humanity’s long-term goals, and then sought out the economic thinking that would enable us to achieve them?” How spectacular is that question? Instead of chasing growth and assuming it will give us the things we value, can economics chase the things we value directly?

To be honest, there is nothing particularly new in Raworth's attempt. This is exactly what has been the attempt since the radical 'Limits to Growth' intellectual movement took root. What Raworth is doing differently though is that here the revolution is waged, not using speeches and big ideas, but using images. And in economics nothing is as powerful as images!

Enter the Doughnut: a sort of miracle diagram that is apparently going to change the world. The inner ring represents the “social foundation”, the situation in which everyone on the planet has sufficient food and social security. The outer ring represents the “ecological ceiling”, beyond which excess consumption degrades the environment beyond repair. The aim is to get humanity into the area between the rings, where everyone has enough but not too much – or, as Raworth calls it, “the doughnut’s safe and just space”.

Thus the Doughnut is the image Raworth uses to represent the limits to growth, and to rub in the fact that we cannot rely on the processes of growth to redress inequality and solve the problem of pollution. Now, the doughnut is a powerful image and Raworth is a great ambassador for it, but it might not be enough, especially because Raworth clearly pitches her camp on the left as far as economic arguments are concerned - and as we know by now, that is often enough for whole ideas to be rejected unilaterally by the rest of the political and economic community... Reading the book, one feels that she seems a bit overoptimistic about the possibility of changing the predominant neoliberal/conservative mindset, essentially through persuasion, as if she is not fully aware of how deep the fault-lines lie in these things. The doughnut may not be powerful enough an image to pull this off...

But, the main point of the book is not just about the Doughnut, it is that there is a fresh new path towards changing the economic orthodoxy that is built into all political debates - most of the simplistic economics debates are possible because the right has access to some basic ideas and concepts that can be visualised easily - 'Economics 101', as they keep repeating.

Raworth's attempt at providing a powerful counter, and hence a possibility of rebuilding the imagery of economics textbooks is commendable, and could eventually be a game changer - not because of the idea of the doughnut, but because of the approach it represents. A truly significant modern economics book, for a change.