This book provides food for thought regarding the criteria we assess today’s economy and not only. Our linear way of thinking, limited metrics of social and environmental phenomenon, or the so-called ‘externalities’ in neoclassical economics are definitely not driving us towards sustainable development.
Even though Raworth in her book does not provide precise answers or recipes for developing economic systems, her proposed model of the ‘doughnut economics’, recommends striving for a safe area without breaking the borders that lead to social deprivation and environmental degradation. This is a good starting point.
She highlights shifting towards a circular economy, while adopting a new attitude in the way we treat common property, use complementary currencies, and treat economic growth. I agree with her especially in considering GDP growth as a balancing feedback loop in long term GDP forecasts of economic models, instead of a reinforcing one. Growth cannot last forever sustainably!
After explaining the concept of the doughnut, Raworth divides the rest of the book into 7 major pillars of how a 21st century economist should think like. These pillars are a challenge to the current neoclassical paradigm and the theoretical advice if implemented, will change the landscape of the global economic system.
In fact, one of the thinking ways she suggests, consists of having an economy which is distributive by design. Throughout the years, there have been different hypothesis on what will happen to the incomes across society as the respective national GDPs grow. Would there be a trickle-down effect that would converge the incomes?
Marx, Kuznets, Piketty and other economists are mentioned by the author as she strives to make her point that inequality has ultimately increased and a mere fiscal distributive system won’t work. The revitalization of the SMEs, development of human capital, accounting for environmental costs and customized approaches in distributive land design can actually be the solution to creating a more equal, stable and resilient society.
Economic growth can be a necessity, but it should not be the end of all means. The growth numbers should just play a small part while designing and analyzing it all. The quality of growth matters and should be reflected in all economic models. One key takeaway from this book is that an economist should not shy away from quantifying inside economic models the so-called externalities: such as environmental or social impact.
Towards the end of the book she rightfully quotes the nuclear physicist Al Barlett: “The greatest shortcoming of the human race is our inability to understand the exponential function”.
Unfortunately, he is right and we all need to find alternative ways to assess economic performance, with a focus on what truly matters: human and environmental development. They are so interrelated in a complex way, which i think we are still so far away from understanding. Complexity by its name is difficult and requires the help of technology in order to be applied in economics and other fields. While the technology part is on the right track, I think that more should be worked on the mindset of those who are its end users. This book does an overall good job in bringing this to our attention. Indeed, these are great times to be an economist, aren’t they?