Posted by: Tony Shannon | August 31, 2017

Life Ring (aka Doughnut) Economics for the 21st Century

So, having made it west to the #WildAtlanticWay armed with a great book, time to recount the key lessons learnt, from a book that is already changing the way I think…

With one book, Kate Raworth is offering her fellow citizens of the world a new world view.. Framed in the context of fixing the “dismal science” of economics that she acknowledges is broken from the start, while this book is all about “7 (new) ways to think like a 21st Century Economist” the breadth and depth of her efforts to learn from across the spectrum help to explain why this is such an important book and certainly not just for budding economists.

Already I can sense that the way she suggests reframing the world we live in is bound to attract scorn and derision from those with any vested interest in the status quo, yet whatever your political persuasion, her new ideas are surely well worth spreading, if only to stimulate the debate and discourse needed by societies to improve our lot.

One could of course suggest as others have done that we have already reached “the End of History” and that the human race has reached the pinnacle of its time on earth, with no further room for improvement, so switch on the TV and sit back…

Somehow I don’t think so, for although many of us are living comfortably (including myself) in a safe part of the world with more creature comforts than our forefathers could have imagined, if we really look around us we see modern society under threat and in danger in many ways. Based in Ireland as I am, I need only look to Brexit and Trumpit to see 2 of the worlds leading nations at the edge of political +/- economic crises of their own making. Why is that so? What is at the heart of the challenge we face as a human race and what way forward?

In her book “Doughnut Economics: 7 ways to think like a 21st Century Economist” Kate Raworth proposes a new visual way of looking at the challenges we face, in a more holistic frame than any I have seen before. She uses the term doughnut to explain an inner ring , a foundation of basic human living standards that everyone aspires to, alongside an outer ring, a ceiling of human activity and impact beyond which there is compelling evidence of long lasting impact to the planet we live on.  She uses the term Doughnut to symbolise this new human compass for the 21st Century . (I would have rather use the term Life Ring or something else, as I fear the Doughnut term will distract/detract from the message) and the key idea is to share a visual that sticks in the mind. Here is key visual #1


From many angles and at many levels, be it at an individual, family, city, nation or planetary perspective, there is plenty work to do to ensure we shift human societies to within these basic/reasonable/essential boundaries.. if you have any interest in your common man today or the generations to come hereafter.
If you aren’t interested yet and sense this is all about green sandal wearing environmental stuff, do read on, this read and the important message is far broader than that suggestion alone…

Kate understands the complexity of our world far better than most authors I’ve read of late, and appreciates the power of patterns, of pictures and of stories/narrative. She introduces 2 versions of a grand play with the key actors, in a way that resonated strongly and are well worth sharing here.
From current economic thinking/which influences our current world view.. the key players in our world and their roles on the stage;

THE MARKET, which is efficient – so give it free rein.
BUSINESS, which is innovative – so let it lead
FINANCE, which is infallible – so trust in its ways.
TRADE, which is win–win – so open your borders.
THE STATE, which is incompetent – so don’t let it meddle.
THE HOUSEHOLD, which is domestic – so leave it to the women.
THE COMMONS, which are tragic – so sell them off.
SOCIETY, which is non-existent – so ignore it.
EARTH, which is inexhaustible – so take all you want.
POWER, which is irrelevant – so don’t mention it.

Then a new 21st Century oriented script, with the key players and their adjusted roles;

EARTH, which is life-giving – so respect its boundaries
SOCIETY, which is foundational – so nurture its connections
THE ECONOMY, which is diverse – so support all of its systems
THE HOUSEHOLD, which is core – so value its contribution
THE MARKET, which is powerful – so embed it wisely
THE COMMONS, which are creative – so unleash their potential
THE STATE, which is essential – so make it accountable
FINANCE, which is in service – so make it serve society
BUSINESS, which is innovative – so give it purpose
TRADE, which is double-edged – so make it fair
POWER, which is pervasive – so check its abuse

To help explain this new world view and how we can frame related discussions she offers another helpful visual;


Some of the many important points that I’ve taken away from this world view.. aren’t radically new, yet they are more cohesive together when framed in the new ways that Kate suggests we can all contribute to a new way of looking at the world around us.

For instance, an affirmation of the important, nay essential role of the State in shepherding change and progress in a fair and equitable direction.  Equally, the essential role of Business with a purpose and the related Market in our world. She draws attention to the importance of both the Household we all take for granted alongside the Commons that has been neglected and pillaged for too long. In exploring the current obsession with measuring a nations success in terms of GDP and growth she sheds light on the broken elements of the politico economic system that has tolerated such a narrow mindset for so long, very easily explained by the small number of powerful actors on the world stage that are quite happy with that current state and the status quo, you guessed it, the 1%..

I mentioned in my last post about the 7 key ways to rethink for the future, frankly brilliant insights worth repeating here and well worth delving into in the book.

  1. Change the goal: away from GDP Gross Domestic Product to sustainability and well-being.
  2. See the big picture: not just a self-contained ‘market’, but rather an ‘embedded economy’ which takes account of households, common property resources, the natural environment.
  3. Nurture human nature: and not just ‘homo economicus’, recognising that people are interdependent social beings, enmeshed in the web of life.
  4. Get savvy with systems: recognising complexity, challenging equilibrium economics, and learning to work with the grain, as gardeners not engineers.
  5. Design to distribute: tackling inequalities in wealth, land, and money.
  6. Create to regenerate: building a circular economy, reshaping the state, and raising the standard of business responsibility.
  7. Be agnostic about growth: not just decoupling growth from environmental resource use, but learning how to live without growth.

Perhaps the beauty of the book is that she is not calling for revolution on the streets to enable a radical reset of the global politico economic system that needs a rejig. A revolution in thinking perhaps, but no bloodshed required! It is all too clear from her writings that a retreat to the shelter of nationhood to sort out these challenges, currently on exhibition in the form of Brexit and Trumpit, isn’t going to really sort any nations ills out for long.  We have arrived at the time for planetary economics for our planetary household and already a global evolution in the right direction is underway.

That evolution she sees happening and ahead of us is something I’m already a witness too.. in fact as she suggests as she closes, “We are all economists now” .. [many of us involved in an] Economic Evolution: one experiment at a time”;

One promising way of redefining the meaning of ‘economist’ is to look to those who have gone beyond new economic thinking to new economic doing: the innovators who are evolving the economy one experiment at a time. Their impact is already reflected in the take-off of new business models, in the proven dynamism of the collaborative commons, in the vast potential of digital currencies, and in the inspiring possibilities of regenerative design. As Donella Meadows made clear, the power of self-organisation – the ability of a system to add, change and evolve its own structure – is a high leverage point for whole system change. And that unleashes a revolutionary thought: it makes economists of us all.

If economies change by evolving then every experiment – be it a new enterprise model, complementary currency, or open-source collaboration – helps to diversify, select and amplify a new economic future. We all have a hand in shaping that evolution because our choices and actions are continually remaking the economy and not merely through the products that we do or don’t buy.

We remake it by: moving our savings to ethical banks; using peer-to-peer complementary currencies; enshrining living purpose in the enterprises that we set up; exercising our rights to parental leave from work; contributing to the knowledge commons; and campaigning with political movements that share our economic vision.

So kudos to Kate Raworth for bringing some new vibrant and deeply insightful thinking to the economic table… call it Doughnut Economics or a new Life Ring for 21st Century thinkers.. I have no doubt there is major merit in this modern cookbook/survival guide.
In fact, if I was a betting man, methinks Kate will be in the running for a Nobel Prize , such is the potential impact of this stuff on the policy makers of the world.
In fact put me down for a tenner.

Please get this book and spread the word.


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