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 BLOG >> Recent

Review of Doughnut Economics [Books
Posted on September 19, 2017 @ 08:15:00 AM by Paul Meagher

I just finished reading the book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist (2017) by Kate Raworth. I've read a number of positive reviews of the book so I felt it was worth checking it out. Today I'll provide my own brief review of it.

The book is named after a diagram that Kate originally developed in a policy document she wrote for Oxfam. She argues that the proper task for a new economics is to develop policies and ideas that ensure that we stay within the light green middle layer of the doughnut by avoiding overshoot and shortfalls.

The diagram is meant to replace the limited goal of increasing Gross Domestic Product (GDP) that most economists are obsessed with. Kate wants to replace the goal of increasing GDP with a broader picture of the many other aspects of our existence that we need to manage better. Kate argues that economics needs new foundational diagrams and pictures and the doughnut diagram is the foundational one for a new economics.

The subtitle of the book is "Seven Ways to Think Like a 21st-Century Economist" and there are seven chapters devoted to the different ways of thinking. The table of contents is reproduced below because it offers a nice brief summary of the 7 ways of thinking that a 21st century economist must master:

  1. Change the Goal
    from GDP to the Doughnut
  2. See the Big Picture
    from self-contained market to embedded economy
  3. Nurture Human Nature
    from rational economic man to social adaptable humans
  4. Get Savvy with Systems
    from mechanical equilibrium to dynamic complexity
  5. Design to Distribute
    from 'growth will even it up again' to distributive by design
  6. Create to Regenerate
    from 'growth will clean it up again' to regenerative by design
  7. Be Agnostic about Growth
    from growth addicted to growth agnostic

The book does not offer a simple set of solutions to the problems depicted in the doughnut diagram. Rather it encourages us to adopt a different mindset about these problems so that we might find new and better solutions to these problems. Kate discusses interesting recent research, ideas and examples in support of each way of thinking along with ample links to more research you can do on your own if you are so inclined. The seven ways of thinking are not independent of each other and are most powerful when combined to formulate a solution.

This is probably not a book to read if you are looking for a business book that encourages you to make more money or grow your business. There are enough of those books anyway. While that is not Kate's goal in writing the book, the problems she cites are not going away and the power of current economic thinking to solve them are counterproductive in so far is they mostly focus on ever increasing growth as the solution (which is causing many of the problems). I believe there are significant opportunities to create new businesses that arise from thinking like a 21st century economist. The book offers lots of useful ideas and examples to get you started.

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