sábado, 9 de dezembro de 2017

Forget growth, think survival.


Doughnut Economics by Kate Raworth review – forget growth, think survival
Raworth seeks to change the language of economics, which is biased towards neoliberalism. Is her eco-model the answer?

Richard Toye
Thursday 8 June 2017 09.30 BST Last modified on Wednesday 29 November 2017 09.33 GMT

Survivors of a shipwreck find themselves on a desert island with a large quantity of tinned food – but no means to access the contents. Among them is an economist, who declares he has a solution: “First, let us assume that we have a can opener ... ”

The joke is an old one, long used to mock the unrealistic nature of many economic models. But we will introduce a new character into the story, who jumps up to explain the economist’s error. “Economics has failed,” this person declares. “What we need is a new paradigm!”

The hungry mariners might be forgiven for feeling a little dissatisfied. Although conventional economics has many well-known limitations, the unorthodox or radical alternatives are not without their drawbacks either. So Kate Raworth’s guide to rethinking the discipline is at one level entirely sensible. She is right that not everything can or should be left to the market, that the “rational actor” model of economic conduct is problematic and that we cannot rely on the processes of growth to redress inequality and solve the problem of pollution. On the other hand, she seems overoptimistic about the possibility of changing the predominant neoliberal mindset, essentially through persuasion.

We may be far from rational in our individual economic behaviours, yet – she appears to say – if only the problem is framed in the right way, the population can potentially be induced to support the sustainable and fulfilling human goals from which mainstream economics has led us so cruelly astray.

How is this to be done? Enter the doughnut – a sort of miracle diagram that is apparently going to change the world. The inner ring represents the “social foundation”, the situation in which everyone on the planet has sufficient food and social security. The outer ring represents the “ecological ceiling”, beyond which excess consumption degrades the environment beyond repair. The aim is to get humanity into the area between the rings, where everyone has enough but not too much – or, as Raworth calls it, “the doughnut’s safe and just space”.

If you are familiar with the ideas of Hyman Minsky, Daniel Kahneman, Joseph Stiglitz and Ha-Joon Chang, you will not be in for too many surprises, but if not, this book serves as a compact synthesis of modern heterodoxy. Raworth’s distinct contribution is in her emphasis on environmental themes. Too many writers, even radical ones, tend to treat “the economy” and “the environment” as separate issues, even though they admit that the one has an impact on the other. Yet, as she rightly stresses, the conventional notion of “externalities”, or economic side effects, serves to imply that problems such as pollution are not ones that economists need to make central to their concerns.

As long ago as 1972, the Limits to Growth report showed that GDP may not be able to increase forever in a world of finite resources. Raworth calls on us to “become agnostic about growth”, noting that the option of halting it and the option of trying to make it continue indefinitely both seem, in their different ways, intolerable. She highlights the dilemma without proposing a clear solution, but this is no criticism.

What if we started economics not with established theories, but with humanity’s long-term goals and how to achieve them?

Raworth asks: “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?” But surely, we first need to work out if they are achievable. What if humankind can only survive in the long-term at subsistence levels of consumption that would seem unendurable to most of us? What if, as recent work suggests, greater equality is most likely to come about through massive destruction of capital induced by war and social breakdown, rather than through the peaceable processes of social democratic redistribution?

Ignoring the large parts of the Earth that continue under authoritarian rule, and the rise of kleptocracy elsewhere, Raworth dismisses the political problem of bringing about change with a wave of the doughnut. Yes, she admits, proposals for a fairer global tax regime look impossible now, “but so many once-unfeasible ideas – abolishing slavery, gaining the vote for women, ending apartheid, securing gay rights – turn out to be inevitable”. This seems close to assuming that a can opener will inevitably wash up on the beach.

To the extent that Raworth has a political programme it is about changing the language in which we discuss economics. Of course she is right to protest about the narrow ways in which the discipline is framed; of course it is true that the media predominantly casts the issues in ways that play to a neoliberal agenda; and of course rightwing politicians often skew arguments by labelling tax cuts as “tax reform”. But although language is important, there is a risk that overstating its power might lead us to neglect certain fundamental economic interests and desires. “Change one word and you can subtly but deeply change attitudes and behaviour,” Raworth tells us. Perhaps, but is that new word “doughnut”? There just might be a hole in the argument.

growth economics – the doughnut
George Monbiot
Instead of growth at all costs, a new economic model allows us to thrive while saving the planet
 street boy collects stones in Dhaka, Bangladesh.

@GeorgeMonbiot
Wednesday 12 April 2017 06.00 BST Last modified on Tuesday 28 November 2017 02.10 GMT

So what are we going to do about it? This is the only question worth asking. But the answers appear elusive. Faced with a multifaceted crisis – the capture of governments by billionaires and their lobbyists, extreme inequality, the rise of demagogues, above all the collapse of the living world – those to whom we look for leadership appear stunned, voiceless, clueless. Even if they had the courage to act, they have no idea what to do.

The most they tend to offer is more economic growth: the fairy dust supposed to make all the bad stuff disappear. Never mind that it drives ecological destruction; that it has failed to relieve structural unemployment or soaring inequality; that, in some recent years, almost all the increment in incomes has been harvested by the top 1%. As values, principles and moral purpose are lost, the promise of growth is all that’s left.

You can see the effects in a leaked memo from the UK’s Foreign Office: “Trade and growth are now priorities for all posts … work like climate change and illegal wildlife trade will be scaled down.” All that counts is the rate at which we turn natural wealth into cash. If this destroys our prosperity and the wonders that surround us, who cares?

We cannot hope to address our predicament without a new worldview. We cannot use the models that caused our crises to solve them. We need to reframe the problem. This is what the most inspiring book published so far this year has done.

In Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, Kate Raworth of Oxford University’s Environmental Change Institute reminds us that economic growth was not, at first, intended to signify wellbeing. Simon Kuznets, who standardised the measurement of growth, warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” Economic growth, he pointed out, measured only annual flow, rather than stocks of wealth and their distribution.

Raworth points out that economics in the 20th century “lost the desire to articulate its goals”. It aspired to be a science of human behaviour: a science based on a deeply flawed portrait of humanity. The dominant model – “rational economic man”, self-interested, isolated, calculating – says more about the nature of economists than it does about other humans. The loss of an explicit objective allowed the discipline to be captured by a proxy goal: endless growth.

The aim of economic activity, she argues, should be “meeting the needs of all within the means of the planet”. Instead of economies that need to grow, whether or not they make us thrive, we need economies that “make us thrive, whether or not they grow”. This means changing our picture of what the economy is and how it works.

The central image in mainstream economics is the circular flow diagram. It depicts a closed flow of income cycling between households, businesses, banks, government and trade, operating in a social and ecological vacuum. Energy, materials, the natural world, human society, power, the wealth we hold in common … all are missing from the model. The unpaid work of carers – principally women – is ignored, though no economy could function without them. Like rational economic man, this representation of economic activity bears little relationship to reality.

So Raworth begins by redrawing the economy. She embeds it in the Earth’s systems and in society, showing how it depends on the flow of materials and energy, and reminding us that we are more than just workers, consumers and owners of capital.

The embedded economy ‘reminds us that we are more than just workers and consumers’. Source: Kate Raworth and Marcia Mihotich
This recognition of inconvenient realities then leads to her breakthrough: a graphic representation of the world we want to create. Like all the best ideas, her doughnut model seems so simple and obvious that you wonder why you didn’t think of it yourself. But achieving this clarity and concision requires years of thought: a great decluttering of the myths and misrepresentations in which we have been schooled.

The diagram consists of two rings. The inner ring of the doughnut represents a sufficiency of the resources we need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare, democracy. Anyone living within that ring, in the hole in the middle of the doughnut, is in a state of deprivation. The outer ring of the doughnut consists of the Earth’s environmental limits, beyond which we inflict dangerous levels of climate change, ozone depletion, water pollution, loss of species and other assaults on the living world.

The area between the two rings – the doughnut itself – is the “ecologically safe and socially just space” in which humanity should strive to live. The purpose of economics should be to help us enter that space and stay there.

As well as describing a better world, this model allows us to see, in immediate and comprehensible terms, the state in which we now find ourselves. At the moment we transgress both lines. Billions of people still live in the hole in the middle. We have breached the outer boundary in several places.

 This model ‘allows us to see the state in which we now find ourselves’. Source: Kate Raworth and Christian Guthier/The Lancet Planetary Health
An economics that helps us to live within the doughnut would seek to reduce inequalities in wealth and income. Wealth arising from the gifts of nature would be widely shared. Money, markets, taxation and public investment would be designed to conserve and regenerate resources rather than squander them. State-owned banks would invest in projects that transform our relationship with the living world, such as zero-carbon public transport and community energy schemes. New metrics would measure genuine prosperity, rather than the speed with which we degrade our long-term prospects.

Such proposals are familiar; but without a new framework of thought, piecemeal solutions are unlikely to succeed. By rethinking economics from first principles, Raworth allows us to integrate our specific propositions into a coherent programme, and then to measure the extent to which it is realised.

I see her as the John Maynard Keynes of the 21st century: by reframing the economy, she allows us to change our view of who we are, where we stand, and what we want to be.

Now we need to turn her ideas into policy. Read her book, then demand that those who wield power start working towards its objectives: human prosperity within a thriving living worl

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