PRAISE FOR DOUGHNUT ECONOMICS “I read this book with the excitement that the people of his day must have read John Maynard Keynes’s General Theory It is brilliant, thrilling, and revolutionary Drawing on a deep well of learning, wisdom, and deep thinking, Kate Raworth has comprehensively reframed and redrawn economics It is entirely accessible, even for people with no knowledge of the subject I believe that Doughnut Economics will change the world.” —George Monbiot, author; columnist at The Guardian “Can anyone seriously suppose that today’s economic orthodoxies are going to bring the world back from the brink of chaos? We need to fundamentally rethink the way we create and distribute wealth, and Kate Raworth’s Doughnut Economics provides an inspiring primer as to how we must now set about that challenge I hope it ushers in a period of intense debate about the kind of economy we now so urgently need.” —Jonathon Porritt, author of The World We Made; founding director, Forum for the Future “This is truly the book we’ve all been waiting for Kate Raworth provides the antidote to neoliberal economics with her radical and ambitious vision of an economy in service to life Given the current state of the world, we need Doughnut Economics now more than ever.” —L Hunter Lovins, president and founder, Natural Capitalism Solutions “What if it were possible to live well without trashing the planet? Doughnut Economics succinctly captures this tantalising possibility and takes up its challenge Brimming with creativity, Raworth reclaims economics from the dust of academia and puts it to the service of a better world.” —Tim Jackson, author of Prosperity without Growth “Not long ago, well-known development economist Kate Raworth’s Doughnut graphic became an overnight sensation Now this marvelous book clearly and succinctly explains her re-envisioning of the economy On a bookshelf crowded with attempts to reframe economic thinking and the way forward, this book stands out—brilliantly.” —Juliet Schor, author of Plentitude “Economics rightly is under the microscope Kate Raworth’s insightful Doughnut is what every budding economist should see when they first peer down the lens.” —John Fullerton, founder and president, Capital Institute Copyright © 2017 by Kate Raworth All rights reserved No part of this book may be transmitted or reproduced in any form by any means without permission in writing from the publisher Editor: Joni Praded Project Manager: Patricia Stone Proofreader: Angela Boyle Indexer: Linda Hallinger Designer: Melissa Jacobson Page Composition: Abrah Griggs Printed in the United States of America First printing February, 2017 10 18 19 20 21 Our Commitment to Green Publishing Chelsea Green sees publishing as a tool for cultural change and ecological stewardship We strive to align our book manufacturing practices with our editorial mission and to reduce the impact of our business enterprise in the environment We print our books and catalogs on chlorine-free recycled paper, using vegetable-based inks whenever possible This book may cost slightly more because it was printed on paper that contains recycled fiber, and we hope you’ll agree that it’s worth it Chelsea Green is a member of the Green Press Initiative (www.greenpressinitiative.org), a nonprofit coalition of publishers, manufacturers, and authors working to protect the world’s endangered forests and conserve natural resources Doughnut Economics was printed on paper supplied by Thomson-Shore that contains 100% postconsumer recycled fiber Library of Congress Cataloging-in-Publication Data Names: Raworth, Kate, author Title: Doughnut economics : seven ways to think like a 21st century economist / Kate Raworth Description: White River Junction, Vermont : Chelsea Green Publishing,[2017] | Includes bibliographical references and index Identifiers: LCCN 2016048267| ISBN 9781603586740 (hardcover) | ISBN 9781603587969 (pbk.) | ISBN 9781603586757 (ebook) | ISBN 9781603587815 (audiobook) Subjects: LCSH: Economics History | Economics Classification: LCC HB75 R38 2017 | DDC 330 dc23 LC record available at https://lccn.loc.gov/2016048267 Chelsea Green Publishing 85 North Main Street, Suite 120 White River Junction, VT 05001 (802) 295-6300 www.chelseagreen.com The most powerful tool in economics is not money, nor even algebra It is a pencil Because with a pencil you can redraw the world CONTENTS Who Wants to be an Economist? Change the Goal: from GDP to the Doughnut See the Big Picture: from self-contained market to embedded economy Nurture Human Nature: from rational economic man to social adaptable humans Get Savvy with Systems: from mechanical equilibrium to dynamic complexity Design to Distribute: from ‘growth will even it up again’ to distributive by design Create to Regenerate: from ‘growth will clean it up again’ to regenerative by design Be Agnostic about Growth: from growth addicted to growth agnostic We Are All Economists Now Acknowledgements Appendix: The Doughnut and Its Data Notes Bibliography Image Credits About the Author WHO WANTS TO BE AN ECONOMIST? In October 2008, Yuan Yang arrived at Oxford University to study economics Born in China and raised in Yorkshire, she had the outlook of a global citizen: passionate about current affairs, concerned about the future, and determined to make a difference in the world And she believed that becoming an economist was the best way to equip herself to make that difference She was eager, you could say, to become just the kind of economist that the twenty-first century needs But Yuan soon got frustrated She found the theory—and the maths used to prove it—absurdly narrow in its assumptions And since she began her studies just as the global financial system was heading into free fall, she could not help but notice it, even if her university syllabus didn’t ‘The crash was a wake-up call,’ she recounted ‘On the one hand we were being taught as if the financial system was not an important part of the economy And on the other hand, its markets were clearly wreaking havoc, so we asked, “Why is there this disconnect?”’ It was a disconnect, she realised, that ran far beyond the financial sector, visible in the gulf between the preoccupations of mainstream economic theory and growing real-world crises such as global inequality and climate change When she put her questions to her professors, they assured her that insight would come at the next level of study So she enrolled for the next level—a Master’s degree at the prestigious London School of Economics—and waited for that insight to come Instead, the abstract theories intensified, the equations multiplied, and Yuan grew more dissatisfied But with exams on the horizon, she faced a choice ‘At some point,’ she told me, ‘I realised that I just had to master this material, rather than trying to question everything And I think that’s a sad moment to have as a student.’ Many students coming to this realisation would have either walked away from economics, or swallowed its theories whole and built a lucrative career out of their qualifications Not Yuan She set out to find like-minded student rebels in universities worldwide and quickly discovered that, since the millennium, a growing number had publicly started to question the narrow theoretical framework that they were being taught In 2000, economics students in Paris sent an open letter to their professors, rejecting the dogmatic teaching of mainstream theory ‘We wish to escape from imaginary worlds!’ they wrote, ‘Call to teachers: wake up before it is too late!’1 A decade later, a group of Harvard students staged a mass walk-out of a lecture by Professor Gregory Mankiw—author of the world’s most widely taught economics textbooks—in protest against the narrow and biased ideological perspective that they believed his course espoused They were, they said, ‘deeply concerned that this bias affects students, the University, and our greater society’.2 When the financial crisis hit, it galvanised student dissent worldwide It also spurred Yuan and her fellow rebels to launch a global network connecting over 80 student groups in more than 30 countries—from India and the United States to Germany and Peru—in their demand for economics to catch up with the current generation, the century we are in, and the challenges ahead ‘It is not only the world economy that is in crisis,’ they declared in an open letter in 2014: The teaching of economics is in crisis too, and this crisis has consequences far beyond the university walls What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in We are dissatisfied with the dramatic narrowing of the curriculum that has taken place over the last couple of decades It limits our ability to contend with the multidimensional challenges of the 21st century—from financial stability, to food security and climate change.3 The more radical among these student protestors have been targeting highbrow conferences with their counter-cultural critiques In January 2015, 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right, William Stanley Jevons, The Theory of Political Economy (London and New York: Macmillan and Co., 1687), 58 Page 16 © Yale Joel / The LIFE Picture Collection / Getty Images Page 17 © McGraw Hill Education Page 57 © LSE Library Page 87 © Mark Segal/Panoramic Images, Chicago Page 134 top, © Hulton Archive / Stringer Page 149 Dreamstime © Roman Yatsnya Page 153 © New York Public Library Page 172 © Lucas Oleniuk Page 186 © 2017 by Kate Raworth Page 191 top, © urbancow; bottom, © Matt Champlin Page 230 © Kurt Hutton / Stringer Pages 9, 38, and 44 Diagrams by Christian Guthier Pages 34, 40, 47, 56, 62, 83, Diagrams by Marcia Mihotich 93, 109, 114, 120, 143, 176, 180, 188, 210, 214, and 221 ABOUT THE AUTHOR Kate Raworth is an economist focused on exploring the economic thinking needed to address the twenty-first century’s social and ecological challenges She teaches at Oxford University’s Environmental Change Institute, where she is a senior visiting research associate She is also a senior associate of the Cambridge Institute for Sustainability Leadership, and teaches on the Economics for Transition programme at Schumacher College Her internationally acclaimed idea of Doughnut Economics has been widely influential amongst sustainable development thinkers, progressive businesses and political activists, and she has presented its core ideas to audiences ranging from the UN General Assembly to the Occupy movement Over the past 20 years, Kate’s career has taken her from working with micro-entrepreneurs in the villages of Zanzibar to co-authoring flagship reports for the United Nations Development Programme in New York, followed by a decade as Senior Researcher at Oxfam Named by The Guardian as ‘one of the top ten tweeters on economic transformation’, her media work includes articles and interviews for the Financial Times, The Wall Street Journal, New Statesman, CNN, and Al- Jazeera Her academic research has appeared in journals including Nature Climate Change, Sustainability, Gender and Development, and the Journal of Ethics and International Affairs Kate has a BA in politics, philosophy and economics, and an MSc in economics for development, both from Oxford University She is a member of several advisory boards, including the Stockholm School of Economics’ Global Challenges programme, Surrey University’s Centre for the Understanding of Sustainable Prosperity, and Oxford University’s Environmental Change Institute www.kateraworth.com www.facebook.com/doughnuteconomics @kateraworth the politics and practice of sustainable living CHELSEA GREEN PUBLISHING Chelsea Green Publishing sees books as tools for effecting cultural change and seeks to empower citizens to participate in reclaiming our global commons and become its impassioned stewards If you enjoyed Doughnut Economics, please consider these other great books related to new economics, sustainability, and systems thinking SURVIVING THE FUTURE Culture, Carnival and Capital in the Aftermath of the Market Economy DAVID FLEMING; 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