## Metadata - Author: [[Kate Raworth]] - Full Title: Doughnut Economics - Category: #books ## Highlights - As the ingenious twentieth-century inventor Buckminster Fuller once said, ‘You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.’ ([Location 181](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=181)) - 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? I tried to draw a picture of those goals and, ridiculous though it sounds, it came out looking like a doughnut—yes, the American kind with a hole in the middle. ([Location 282](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=282)) - Below the inner ring—the social foundation—lie critical human deprivations such as hunger and illiteracy. Beyond the outer ring—the ecological ceiling—lies critical planetary degradation such as climate change and biodiversity loss. Between those two rings is the Doughnut itself, the space in which we can meet the needs of all within the means of the planet. ([Location 285](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=285)) - If humanity’s twenty-first-century goal is to get into the Doughnut, what economic mindset will give us the best chance of getting there? ([Location 292](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=292)) - Humanity faces some formidable challenges, and it is in no small part thanks to the blind spots and mistaken metaphors of outdated economic thinking that we have ended up here. ([Location 301](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=301)) - Half of the nerve fibres in our brains are linked to our vision and, when our eyes are open, vision accounts for two-thirds of the electrical activity in the brain. It takes just 150 milliseconds for the brain to recognise an image and a mere 100 milliseconds more to attach a meaning to it. ([Location 315](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=315)) - Words are processed by our short-term memory where we can only retain about seven bits of information . . . Images, on the other hand, go directly into long-term memory where they are indelibly etched.’ ([Location 322](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=322)) - inequality, it turns out, is not an economic necessity: it is a design failure. ([Location 515](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=515)) - Talking about values and goals is a lost art waiting to be revived. With all the awkwardness of teenagers learning to talk about their feelings for the first time, economists and politicians—along with the rest of us—are searching for words (and of course the pictures) to articulate a greater economic purpose than growth. ([Location 638](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=638)) - How can we learn to talk again of values and goals, and put them at the heart of an economic mindset that is fit for the twenty-first century? One promising place to start is by looking to the long lineage of unsung economic thinkers whose aim was to put humanity back at the heart of economic thought. Back in 1819, the Swiss economist Jean Sismondi sought to define a new approach to political economy with human welfare, not wealth accumulation, as its goal. The English social thinker John Ruskin followed him in the 1860s, railing against the economic thinking of his day, declaring that, ‘There is no wealth but life . . . That country is the richest which nourishes the greatest numbers of noble and happy human beings.’18 When Mohandas Gandhi discovered Ruskin’s book in the early 1900s, he set out to bring its ideas to life on a collective farm in India, in the name of creating an economy that elevated the moral being. In the late twentieth century, E.F. Schumacher—best known for arguing that ‘small is beautiful’—sought to place ethics and the human scale at the heart of economic thought. And the Chilean economist Manfred Max-Neef proposed that development be focused on realising a set of fundamental human needs—such as sustenance, participation, creativity and a sense of belonging—in ways that are adapted to the context and culture of each society.19 Big-picture thinkers such as these have for centuries offered alternative visions of what the economy is for, but their ideas have been kept far from the eyes and ears of economics students, dismissed as the touchy-feely school of ‘humanistic economics’ (begging the question of what the rest of it has been). ([Location 641](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=641)) - One person who was willing to risk political suicide was the visionary systems thinker Donella Meadows—one of the lead authors of the 1972 Limits to Growth report—and she didn’t mince her words. ‘Growth is one of the stupidest purposes ever invented by any culture,’ she declared in the late 1990s; ‘we’ve got to have an enough.’ In response to the constant call for more growth, she argued, we should always ask: ‘growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s the cost to the planet, and how much is enough?’ ([Location 684](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=684)) - As we have seen, the founding fathers of political economy were unabashed to talk of what they thought mattered and to articulate their views on the economy’s purpose. But when political economy was split up into political philosophy and economic science in the late nineteenth century, it opened up what the philosopher Michael Sandel has called a ‘moral vacancy’ at the heart of public policymaking. ([Location 706](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=706)) - Western cultures seeking to oust the cuckoo goal of GDP growth cannot simply put an Andean or Maori worldview in its place but must find new words and pictures to articulate an equivalent vision. What might the words for that new vision be? A first suggestion: human prosperity in a flourishing web of life. Yes, that is a mouthful to say—and it’s telling that we lack more concise ways of expressing something so fundamental to our well-being. ([Location 817](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=817)) - the economy’s fundamental resource flow is not a roundabout of money but, rather, a one-way street of energy—and nothing can move, grow or work without using that energy. ([Location 1183](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1183)) - mainstream economic theory is obsessed with the productivity of waged labour while skipping right over the unpaid work that makes it all possible, as feminist economists have made clear for decades.29 That work is known by many names: unpaid caring work, the reproductive economy, the love economy, the second economy. However, as economist Neva Goodwin has pointed out, far from being secondary, it is actually the ‘core economy’, and it comes first every day, sustaining the essentials of family and social life with the universal human resources of time, knowledge, skill, care, empathy, teaching and reciprocity. ([Location 1244](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1244)) - As Ha-Joon Chang writes, ‘A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them.’36 From passports to medicines and AK-47s, many things cannot be legally bought or sold without official licence. ([Location 1294](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1294)) - Forget the free market: think embedded market. And, strange though it sounds, that means there is no such thing as deregulation, only reregulation that embeds the market in a different set of political, legal and cultural rules, simply shifting who bears the risks and costs and who reaps the gains of change. ([Location 1298](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1298)) - Over the course of two centuries—from the 1770s to the 1970s, as economic man’s depiction morphed from a nuanced portrait to a crude cartoon—what had started as a model of man had turned into a model for man. This matters, argues economist Robert Frank, because ‘our beliefs about human nature help shape human nature itself’. Research by Frank and others has revealed, first, that the discipline of economics tends to attract self-interested people. Experimental research in Germany, for example, found that economics students were more likely than other students to be corruptible—willing to give a biased answer—if it led to a personal payout.12 Research in the United States likewise found that economics majors were more approving of their own and others’ self-serving behaviour, while economics professors gave significantly less money to charity than their worse-paid colleagues in many other disciplines. ([Location 1561](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1561)) - Change one word and you can subtly but deeply change attitudes and behaviour. Throughout the twentieth century, widespread use of the word ‘consumer’ grew steadily in public life, policymaking and the media until it far outstripped the word ‘citizen’: in English-language books and newspapers, that happened in the mid 1970s.19 Why does it matter? Because, explains the media and cultural analyst Justin Lewis, ‘Unlike the citizen, the consumer’s means of expression is limited: while citizens can address every aspect of cultural, social and economic life . . . consumers find expression only in the market place.’ ([Location 1598](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1598)) - The preliminary sketches for this updated self-portrait are under way, revealing five broad shifts in how we can best depict our economic selves. First, rather than narrowly self-interested, we are social and reciprocating. Second, in place of fixed preferences, we have fluid values. Third, instead of isolated, we are interdependent. Fourth, rather than calculate, we usually approximate. And fifth, far from having dominion over nature, we are deeply embedded in the web of life. ([Location 1607](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1607)) - Changing our sense of how we belong in the world also depends upon finding better words to describe it. The political theorist Hannah Arendt once noted that a stray dog has a greater chance of surviving if it is given a name.44 Perhaps in that spirit, mainstream environmental economists now describe the living world in terms of the ‘ecosystem services’ that it provides and the wealth of ‘natural capital’ it contains. But the names we choose matter: calling a stray dog Champ rather than Scamp switches just a couple of letters but utterly transforms how he is seen in the world. And that is precisely why talking of ‘natural capital’ and ‘ecosystem services’ is so double-edged: it may give the stray dog a name, but the chosen name simply shifts the living world from being man’s material means to being an asset on his balance sheet. When Chief Oren Lyons of the Iroquois Onondaga Nation was invited to address students at the University of Berkeley’s College of Natural Resources, he highlighted this risk. ‘What you call resources we call our relatives,’ he explained. ‘If you can think in terms of relationships, you are going to treat them better, aren’t you? . . . Get back to the relationship because that is your foundation for survival.’ ([Location 1810](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1810)) - For the ecological writer Charles Eisenstein, it is time to recognise ourselves as ‘the connected living self in co-creative partnership with the Earth’.46 This kind of language makes some people squirm, but perhaps that is because it confronts us with the awkwardness of acknowledging our most profound yet most neglected relationships. It also indicates just how unused we are to talking about ourselves this way, a little like fish searching for a word for water. How do we belong in this world, and what is our role? Finding the words to say it may turn out to be more important than we can imagine in determining whether or not we as a species can learn to thrive with others. ([Location 1823](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1823)) - twentieth-century theory has led economists to overestimate the effectiveness of price as a lever and to underestimate the role of values, sense of reciprocity, networks and heuristics. ([Location 1851](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=1851)) - In 2008, the fallout from this inherent market instability was compounded by the financial regulators’ failure to understand the inherent dynamics of banking networks. Before the crash, those regulators worked on the assumption that networks always serve to disperse risk, and so the regulations that they devised only monitored the nodes in the network—individual banks—rather than overseeing the nature of their interconnections. But the crash made clear that a network’s structure can be robust-yet-fragile: usually behaving as a robust shock-absorber, but then—as the character of the network evolves—switching to becoming a fragile shock-amplifier. That switch is more likely to be triggered, discovered the Bank of England’s Andy Haldane, when networks have a few super-nodes acting as key hubs, too many connections between the nodes, and the small-world trait of creating shortcut connections between otherwise distant nodes. Between 1985 and 2005, the global financial network evolved to feature all three of these trigger traits but, lacking a systems perspective, regulators did not pick up on them. ([Location 2291](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2291)) - Anyone who has played the board game Monopoly is well versed in the dynamics of Success to the Successful: players who are lucky enough to land on expensive properties early in the game can buy them up, build hotels, and reap vast rents from their fellow players, thus accumulating a winning fortune as they bankrupt the rest. Fascinatingly, however, the game was originally called ‘The Landlord’s Game’ and was designed precisely to reveal the injustice arising out of such concentrated property ownership, not to celebrate it. ([Location 2327](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2327)) - It’s a vocational shift that has been a long time coming: back in the 1970s, Friedrich Hayek himself suggested that economists should aim less to be like craftsmen shaping their handiwork and more like gardeners tending their plants. Yes, the metaphor may have come from a thinker with extreme laissez-faire leanings, but if anything, it suggests that Hayek never did a hard day’s work in the garden: as any true plantsman knows, gardening is far from laissez-faire. In their book The Gardens of Democracy, Eric Lui and Nick Hanauer argue that moving from ‘machinebrain’ to ‘gardenbrain’ thinking calls for a simultaneous shift away from believing that things will self-regulate to realising that things need stewarding. ‘To be a gardener is not to let nature take its course; it is to tend,’ they write. ‘Gardeners don’t make plants grow but they do create conditions where plants can thrive and they do make judgments about what should and shouldn’t be in the garden.’ ([Location 2450](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2450)) - One approach to economic gardening is to embrace evolution. Rather than aiming to predict and control the economy’s behaviour, says Eric Beinhocker (a leading thinker in this field) economists should ‘think of policy as an adapting portfolio of experiments that helps to shape the evolution of the economy and society over time.’ It’s an approach that aims to mimic the process of natural selection, often summed up as ‘diversify–select–amplify’. Set up small-scale policy experiments to test out a variety of interventions, put a stop to the ones that don’t work well, and scale up those that do.47 This kind of adaptive policymaking is crucial in the face of today’s ecological and social challenges because, as Elinor Ostrom put it, ‘we have never had to deal with problems of the scale facing today’s globally interconnected society. No one knows for sure what will work, so it is important to build a system that can evolve and adapt rapidly.’ ([Location 2459](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2459)) - Meadows was a skilled economic gardener in this sense, having spent much of her life watching the dance of social-ecological systems in action and observing the value of what was already there. In fact, she noted, effective systems tend to have three properties—healthy hierarchy, self-organisation and resilience—and so should be stewarded to enable these characteristics to emerge. First, healthy hierarchy is achieved when nested systems serve the greater whole of which they are a part. Liver cells serve the liver, which in turn serves the human body; if those cells start to multiply rapidly, they become a cancer, no longer serving but destroying the body on which they depend. In economic terms, healthy hierarchy means, for example, ensuring that the financial sector is in service to the productive economy, which in turn is in service to life.50 Second, self-organisation is born out of a system’s capacity to make its own structures more complex, such as a dividing cell, a growing social movement or an expanding city. In the economy, much self-organising goes on in the marketplace through the price mechanism (that was Adam Smith’s insight), but it also takes place in the commons and in the household too (the insight of Elinor Ostrom and generations of feminist economists). All three of these realms of provisioning can self-organise effectively to meet people’s wants and needs, and the state should support all three in doing so. Lastly, resilience emerges out of a system’s ability to endure and bounce back from stress, like a jelly that wobbles on a plate without losing its form or a spider’s web that survives a storm. Equilibrium economics became fixated on maximising efficiency and so overlooked the vulnerability that it can bring, as we will see in the next chapter. Building diversity and redundancy into economic structures enhances the economy’s resilience, making it far more effective in adapting to future shocks and pressures. ([Location 2479](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2479)) - DeMartino believes that economic policy advisers too often follow what he calls the ‘maxi-max’ rule: when considering all possible policy options, recommend the one that would work best if it worked—without fully assessing whether it is likely to work. ‘Maxi-max has been the primary decision rule in the most important economic interventions over the past 30 years,’ he argues, pointing to the damage wrought by the shock policies of privatisation and market liberalisation implemented in Latin America, sub-Saharan Africa and the former Soviet Union during the 1980s and 1990s. ([Location 2505](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2505)) - Economics is more than two thousand years behind medicine in honing the ethics of its own profession. That’s quite some catching up to do, so to get the ball rolling—and with inspiration from DeMartino—here are four ethical principles for the twenty-first-century economist to consider. First, act in service to human prosperity in a flourishing web of life, recognising all that it depends upon. Second, respect autonomy in the communities that you serve by ensuring their engagement and consent, while ever aware of the inequalities and differences that may lie within them. Third, be prudential in policymaking, seeking to minimise the risk of harm—especially to the most vulnerable—in the face of uncertainty. Lastly, work with humility, by making transparent the assumptions and shortcomings of your models, and by recognising alternative economic perspectives and tools. Principles such as these may one day be included in an Economist’s Oath, to be recited by aspiring professionals upon graduation. ([Location 2511](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2511)) - Higher levels of national inequality, it turns out, also tend to go hand in hand with increased ecological degradation. Why so? In part because social inequality fuels status competition and conspicuous consumption, summed up in the only-half-joking US bumper sticker, ‘He who dies with the most toys wins’. But also because inequality erodes social capital—built on community connections, trust and norms—that underpins the collective action needed to demand, enact and enforce environmental legislation.21 Research into households’ use of water in Costa Rica and use of energy in the United States found that social pressure to reduce consumption to the community norm was far stronger within communities that considered themselves to be a group of peers. ([Location 2669](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2669)) - For people whose livelihoods and culture depend upon the land, secure land rights are essential. They enable farmers to take out loans, increase their crop yields and build a secure future for their families and communities. That’s especially true for women farmers: with strong land inheritance rights, they can earn almost four times more income than those left land-insecure. ([Location 2761](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2761)) - George’s proposal for a land-value tax—an annual levy on underlying land values as a fair means of generating public revenue—echoed John Stuart Mill’s earlier call to tax ‘rentier landlords’ who ‘grow richer, as it were in their sleep, without working, risking, or economising’. ([Location 2779](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2779)) - Since 2000, foreign investors have made over 1,200 large-scale land deals in low- and middle-income countries, acquiring more than 43 million hectares of land—an area bigger than Japan.40 In the majority of cases, those deals were land grabs: signed without the free, prior and informed consent of the indigenous and local communities that had inhabited and collectively stewarded that land for generations. ([Location 2795](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=2795)) - So how could distributive design help to prevent the economic segregation that technology appears to be driving? An obvious starting point is to switch from taxing labour to taxing the use of non-renewable resources: it would help to erode the unfair tax advantage currently given to firms investing in machines (a tax-deductible expense) rather than in human beings (a payroll tax expense). ([Location 3009](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3009)) - The international regime of intellectual property rights has significantly shaped the control and distribution of knowledge for hundreds of years. It’s a story that began innocently enough in the fifteenth century, when Venice started awarding its famed glass-blowers 10-year patents to protect their novel creations from imitators. ([Location 3035](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3035)) - Rather than wait (in vain) for growth to deliver greater equality, twenty-first-century economists will design distributive flow into the very structure of economic interactions from the get-go. Instead of focusing on redistributing income alone, they will also seek to redistribute wealth—be it the power to control land, money creation, enterprise, technology or knowledge—and will harness the market, the commons and the state alike to make it happen. Rather than wait for top-down reform, they will work with bottom-up networks that are already driving a revolution in redistribution. ([Location 3186](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3186)) - While regenerative designers now ask themselves, ‘how many diverse benefits can we layer into this?’, mainstream business still asks itself, ‘how much financial value can we extract from this?’ ([Location 3506](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3506)) - In 2012, over 50 percent of tax revenue raised in the EU came from taxing labour; in the United States, the percentage was even higher.55 It’s no surprise that industry’s response has been to focus on increasing labour productivity—output per worker—by replacing as many workers as possible with automatons. ([Location 3671](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3671)) - poet Taylor Mali—that ‘changing your mind is one of the best ways of finding out whether or not you still have one’. ([Location 3761](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3761)) - nuclear physicist Al Bartlett warned, ‘The greatest shortcoming of the human race is our inability to understand the exponential function.’ ([Location 3812](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3812)) - John Stuart Mill, for one, could hardly wait for the stationary state to usher in what many would now call a post-growth society. ‘The increase of wealth is not boundless,’ he wrote in 1848. ‘A stationary condition of capital and population implies no stationary state of human improvement. There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the art of living, and much more likelihood of it being improved, when minds ceased to be engrossed by the art of getting on.’ ([Location 3859](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3859)) - Tags: [[favorite]] - Upton Sinclair famously noted, ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’ ([Location 3932](https://readwise.io/to_kindle?action=open&asin=B06X9C63SX&location=3932))