Doughnunt Economics: For Well-born Activists

In the rarified heights that I live I had never heard of Doughnut Economics: 7 Ways to Think Like a 21st Century Economist by Brit academic Kate Raworth until last week when I encountered the book in a used book store. It's a manual for well-born women activists like this one.

Yuan Wang arrived at Oxford University to study economics. Born in China and raised in Yorkshire... [she] was determined to make a difference in the world.

She thought that economics was the way to do it, but soon got "frustrated."

She found the theory -- and the maths used to prove it -- absurdly narrow in its assumptions.

She found that there was a huge disconnect between the economic theory she was being taught and the real world "visible in the gulf between the preoccupations of mainstream economic theory and growing real-world crises such as global inequality and climate change."

Ms. Wang is a stand-in for author Kate Raworth who "is an economist focused on exploring the economic thinking needed to address the twenty-first century's social and ecological challenges." There isn't an "Early Life" section in La Wik's piece on her, but she describes herself as a former "London schoolgirl." Another website says she was raised in Surrey, a wealthy suburb of London, the daughter of a businessman and a florist.

My take is that well-born young women in the world today all want to get into "activism" working for some NGO. So I experience Doughnut Economics as a manifesto for their world-saving faith.

But what is this "doughnut" Raworth is talking about? It is a world model, rather like the Solar System model we are all brought up to believe in (Image By DoughnutEconomics - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=75695171).

The idea is that the outer ring of the doughnut is an "ecological ceiling of planetary pressure that we should not go beyond" and the inner ring of the doughnut is a "social foundation of well-being that no one should fall below."

You can see that this is almost a perfect view of the universe from the perspective of an educated elitist that wants to make a difference in the world. If there is a global ecological problem then global-minded ecological activists should be tasked with policing the ecological ceiling and solving the problem. If there is a social problem, social activists should be tasked with policing the social foundation and solving the problem. All with manipulations of the economic system through taxation, subsidies and government force. It's another top-down secular-religious fantasy in the tradition of rich-kid Marx and rich-kid Engels and their determination to make a difference.

Yes, what is the meaning of "life, the universe, and everything" from the perspective of a Yuan Wang or a Kate Raworth? Look no further than the Doughnut.

To make it "real simple" know that if we are predicted to penetrate the "Ecological Ceiling" then the ruling class activists must intervene. If we are reported to have fallen through the "Social Foundation" then ruling class activists must intervene. All roads lead to Rome.

The interesting thing is that Yuan Wang and her generation of well-born activists seem to think they are rebelling against the ruling class. In the wake of the 2008 economic crisis, Wang and "her fellow rebels" all over the world got together to demand that economics "catch up with the current generation." Economics needed to deal with the challenges of the 21st century, "from financial stability, to food security and climate change."

I'll believe that when I see it.

But what is it that Raworth and her well-born activists want to do?

1. Change the goal from GDP to "meeting the human needs of every person within the means of our life-giving planet.
2. See the big picture and move from the hydraulic "Circular Flow" model of Paul Samuelson and the "neoliberal" faith in "the efficiency of the market, the incompetence of the state, the domesticity of the household and the tragedy of the commons" to "the power of the market, the partnership of the state, the core role of the household and the creativity of the commons.
3. Nurture human nature and move from a vision of "rational economic man" to a vision that is "social, interdependent, approximating, fluid in values and dependent upon the living world."
4. Get savvy with systems, moving from supply and demand curves to systems thinking and feedback curves. Go from "control levers" to an "ever-evolving complex system."
5. Design to distribute, going beyond redistributing income to "exploring ways of redistributing wealth."
6. Create to regenerate. Don't think of a "clean" environment as a luxury good, but build build clean into the entire economy.
7. Be agnostic about growth. Nobody has created the dangerous diagram of the long-term path of GDP growth. It may be hard to give up growth as an economic goal.

Actually, many of these ideas make sense. The devil, of course, is in the details. Will the noble activists insist that they and only they are allowed to direct traffic. And in regard to the "dangerous diagram" of GDP growth, how about this, from my usgovernmentspending.com?

Isn't it interesting. It shows that growth is slowing in the US and Europe and Japan, while China and India are in the exponential phase of growth, with China showing a slight indication of slowing down after its meteoric growth since 1978. But Kate Raworth says that we are merely focused on growth. I wonder why.

We'll see, in the next exciting installment of this series on Doughnut Economics. Of course, there is bound to be a disconnect between me and Raworth. Her story of economics goes through Quesnay, Marshall, Samuelson, and introduces Kuhn's paradigms, Goffman's "framing," Korbyski's a-model-is-only-a-model, Lakoff's demand for "an alternative frame," e.g., "tax justice" to counter "tax relief."

My story of economics goes through Adam Smith to Marx. Then to Menger, Jevons and Walras in the marginal revolution and Bagehot on central banking. Then to von Mises and Hayek and supply-sider Arthur Laffer. And to me your Keyneses and Samuelsons and MMT advocates are fools and knaves, tools of the globalist ruling class. Like I assume Kate Raworth to be.

And what I want to know is how come little Yuan Wang didn't know about Walter Bagehot and his understanding of central banking and thus did not know that the 2008 crash was all about the ruling class ignoring the advice of Bagehot after the Crash of 1873? Hey Kate Raworth: Didn't you teach her the central banking facts of life?