Kate Raworth’s Doughnut Economics – what’s missing

 

I agree with George Monbiot’s comment on the cover of Kate Raworth’s book: “I believe  Doughnut Economics’  will change the world.” But as the proverbial midget on a giant’s shoulders may I suggest a couple of crucial additions?

It can only be a matter of time before the massive paradigm shift Kate Raworth envisions takes place in economics, from the illusion of a quasi-scientific discipline which is actually taking us towards ecological self-destruction to a  ‘systems’ based approach, mimicking methods tried and tested by Nature in millions of years of evolution.

Two previous books,Prosperity without Growth (Earthscan, 2009) by Tim Jackson, and Enough is Enough’  (Routledge 2013) by Rob Dietz and Dan O’Neill, paved the way for this breakthrough. Both give a coherent view of how a steady state economy could be function, and how the transition could be managed. I was guided through this scary paradigm shift in the 1970s by an early edition of Herman Daly’s  Steady State Economics.

But this book is of a different order of magnitude. I believe that ‘Doughnut’, and hence the name Raworth will rank alongside Keynes, Adam Smith and even Newton and Kepler in terms of shaping the mainstream world view.

But I asked the same question which neither Jackson nor Dietz and O’Neil, nor Daly for that matter answered satisfactorily: why should those currently in control, the neoliberal clique, take any notice? They are profiting quite nicely as things are. Why should they alter their mind set just because that would suit everybody who does not share their ability to shape the course of events?

There is a rational answer, namely that if the neoliberals go too far and trip abrupt climate change, even though they may survive where many of the rest of us may not, at best they will certainly wish they hadn’t . ‘Stranded assets’ (keeping fossil fuels in the ground) will be the least of their problems.

Kate Raworth does cite many examples of how what she proposes is already happening, but it is still very much on the margins. The fact remains that in the short term, the tiny clique in power will continue their effective suppression of anything they perceive as not in their immediate interests.

But the neoliberal clique  are not mad, though some of them may be short sighted. But there is a worrying reason why they find it difficult to change tack: the ‘Tragedy of the Commons’. Exxonmobil was aware of the threat of climate change in the 1980s. In fact, the USA government knew of the problem in 1967, long before the 1972 MIT  study first warned the world about the obvious eventual probability of indiscriminate economic growth threatening the ecosphere. The ‘Stockholm’ conference actually discussed it the same year.  Yet as recently as July 2016 – 7 months after the ‘Paris’ agreement on climate change,  Exxonmobil was still exposed as funding climate denial campaigns. Why?

Kate Raworth misses the real relevance of the ‘Tragedy‘, as do both the opposing views of Garrett Hardin and Elinor Ostrom. Raworth rightly notes that the commons cited by Ostrom were not open access commons at all, but carefully managed co-operative schemes. Easter Island demonstrates that Hardin was correct, but only in the specific circumstances of an expanding society meeting limits to that expansion for the first time in their history.

Fracking is not mentioned in ‘Doughnut’. That is a true example of open access exploitation and how the dynamics of the Tragedy  operate as limits to expansion are reached. As long as a short term profit seems likely, the first company to back off in order to preserve the environment does nothing of the kind. They merely miss out on an opportunity and put themselves at a disadvantage.

Doughnut’s bibliography includes over 160 books. One more I strongly recommend is Ellen Meiksins Wood’s ‘The Origin of Capitalism: a longer View’ (Verso, 2002). Wood explains that the monetization of transactions during the late mediaeval period gave rise to new opportunities which very quickly became imperatives. Those imperatives are still driving economic activity, indeed economic growth.

At least the Universal Basic, or Citizens’ Income (UBI) appears several times in ‘Doughnut’. But given her head on attack on growth, it is disappointing that Kate Raworth does not spell out what is for me the most important reason for a UBI: to give every individual, everywhere an incentive to heed ecological constraints not only in their own behaviour, but in accepting, even voting  for policies which would otherwise threaten them with personal insecurity. This may be implicit in what is said about the UBI, but implicit is not good enough The UBI will make thinkable a ‘soft landing’ of Kate Raworth’s economic aeroplane. The UBI is not mentioned where it is most needed – in Chapter 9 – ‘Be agnostic about Growth’.

Having said all that, I remain impressed by the advance which ‘Doughnut’ embodies. I was forced to think very carefully where Kate warns against the monetization of incentives. The UBI is not a panacea, but I have been advocating it as a monetary sine qua non for 44 years. However, the UBI is merely a rearrangement of something which is already monetized. I can only see three alternatives, or hybrids: no benefits, means tested benefits, or a UBI. During those 44 years no one has yet offered anything more.

I have recently received a critique of my case for the UBI, suggesting that its Achilles’ Heel was funding it as the sources of public revenue fell, or even collapsed as manufacturing gave way to repair and re-use etcetera. But which of the three alternative welfare provisions just mentioned will best cope with this? If Kate Raworth has something up her sleeve I have not thought of she does not spell it out.

Land Value Tax, and an element of Wealth Tax will shift revenue raising away from ecologically damaging to neutral sources, but it is likely at all events to entail rather more drastic redistribution than has happened within living memory, if ever.

There are answers, and there are clues that the neoliberal clique is aware of them, as indicated by Exxonmobil’s strange response. A BIEN  conference in Anchorage, Alaska, in 2011 explored novel forms of revenue, such as Broadband spectrum. This idea is taken further by a recent ‘thinking out of the box’ article in the Financial Times: Facebook should finance a UBI, though I would be extremely wary of the actual privatized suggestion. Facebook should simply pay tax on their profits. Kate Raworth could not comment on a FT article written since her book was published, but it could and should have included the Anchorage conference discussion.

Kate Raworth mentions Anita Roddick’s travails trying to further an ethical business in a capitalist milieu. In view of the neoliberal hegemony, I wonder can open source make enough progress before the world temperature rises by 20 centigrade? But one of the claims I make for the UBI is that it allows the necessary mind set change – paradigm shift – to be thinkable by the mainstream.

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