22: Kate Raworth: Doughnut economics and thriving in balance

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1:49Welcome to The Rest is Politics Leading with me, Alistair Campbell. And with me, Rory Stewart. And we're interviewing today a woman who is here, I have to say, something by popular demand. We've had quite a lot of people saying, why don't you get Kate Raworth on the podcast? And we'll describe you as a renegade economist. I think that's how you describe yourself. I'll take that. As a renegade economist who feels that we have to cure ourselves of the obsession with growth in our economies, who wants us to think of the economy in a completely different way. She defines it as donut economics, on which she wrote a book in 2017.

2:31And it's a theory, but it's also a theory that's being practiced in some parts of the world, particularly at a local level, but I think she would like to see it happening at an international level. She's an academic at Oxford and at Amsterdam University, and she's previously worked in overseas development at the Overseas Development Institute for the United Nations Development Programme for 12 years as a senior researcher at Oxfam. So I know she and Rory will have lots to talk about on the charitable front as well. So thank you for being here. Pleasure. Welcome. And I guess we'll get on to doughnut economics and what it is and what you mean by it.

3:08But first of all, as an economist, I'd love to know your sense of how you see the debate about and around and in economics that happens in the political arena, starting maybe with the UK, but possibly more generally? Okay, so I feel that we are really stuck. Let's start with the UK, actually. I think we've come to a very narrow political framing that I thought we were getting away from, where in the recent months, we've had politicians on both sides of the house saying, the goal is growth growth growth i find that alarming because we are destroying the only known living planet in the universe and billions of people worldwide and in this country cannot meet their most essential needs so we should be rooting our economies in meeting the needs of all people within the means of this delicately balanced living planet so how do you as a politician though if you're not going to say we want to grow the economy the only alternative you have is to say we want to shrink the economy no you say we want to thrive we want to thrive right i mean growth is a wonderful healthy phase of life that's why we love to see our kids go that's why we love to see our gardens grow but nothing in nature succeeds by growing forever everything in nature grows and then grows up and matures and that's what enables it to thrive that's why oak trees grow for 300 years then they thrive so hold on so imagine you i know you're not but imagine you're a politician okay and imagine you're standing for office in the next election in the uk how do you frame what you're saying as a political message because ultimately in a democracy you've got to persuade people and you're arguing for something fundamental as a change in the way we think about the economy and therefore the way we live.

4:59So I'm going to proactively argue for what we're for. We are for a UK that thrives. That means people have good jobs in communities, their kids go to good schools, they breathe clean air as they bike to school. People feel respected and belong and they need it. We are regenerating UK nature, which is amongst the most depleted in the world. We are bringing back the life-supporting systems of this country so we have fertile source so we can provide for ourselves. Isn't that what people actually want? It's a vision that makes far more sense on the doorstep than saying, oh, we want GDP to grow by 2 % a year.

5:34Whose growth is that? Whose pockets does that get into? So I think it actually speaks much more to what people want, which is why these ideas are taking off in towns and cities and communities, because it makes sense to people in their lives. Kate, thank you very, very much for coming on the show. We're going to apply Alistair's golden test of strategy to you. So, Alistair's golden tested strategy, which I'm sure you know, along with all our listeners, is that you have to define donut economics in a word, a phrase, a sentence, and a paragraph. So, very unfairly, would you mind beginning with your great idea of donut economics in that form?

6:09In a word? Donut. Definitely. Definitely on brand, yeah. Vagod, yeah. In a phrase? Yeah. You've got to meet the needs of all people within the means of the living planet. Okay. In a paragraph? A sentence. In a sentence? That was kind of a sentence. That was my sentence. All right, you want a phrase? Stop trying to grow endlessly, it's time to thrive in balance. Yeah. And a paragraph? In a paragraph. The 20th century economic obsession with endless growth is destroying the living planet and creating massive inequality. It is time, instead of trying to grow endlessly, to grow up and learn to thrive in balance.

6:48so that we meet the needs of all people and we come back within the means of the only known living planet in the universe. What's not to like? Okay, now I'm now looking at a picture of your donut. It looks quite complicated to me. I'd like you to explain it to our listeners in a way that they're quite bright, but let's just assume that some of them aren't as bright as you and I are. Oh, get off. Hey, hey. Very, very simple terms. Explain your donut. Okay, think of a donut, the kind with a hole in the middle, right? And think of humanity's use of Earth's resources radiating out from the middle of that picture.

7:24The hole in the middle is a place where people are falling short in the senses of life. It's where people do not have the resources they need for health and education and housing, political voice, income, right? These are the human rights of all people. So leave no one in the hole. Get everybody out of that middle circle. but as humanity collectively use earth's resources we start putting pressure on the life support systems of our planetary home we start to cause climate breakdown and we acidify the oceans and we create a hole in the ozone layer and we withdraw too much water is this the outside of the outside ring right so leave no one in the hole but don't go over the outer ring either because there we break down the very planet that sustains us so the sweet spot of the donut.

8:05In fact, the donut itself, the sweet bit that you eat, is that habitable zone between extreme poverty on the one hand and destroying the planet on the other. It's the zone where humans ought to live. You got it. And so the shape of progress changes, right? In the 20th century, and in fact, you still hear it in parliaments and in economics departments today, I think it's the 20th century shape of progress. It's an exponential curve, an ever rising line of growth that goes to the ceiling the 21st century shape of progress is thriving in balance between that inner and outer circle it's more like a heartbeat and actually i believe that if we're going to give ourselves half a chance politically and socially to learn this we need to reconnect what we already know in our own bodies right every one of us understands that health in the human body is about balance enough food but not too much enough heat but not too much enough water oxygen you name it enough but not too much we get that and if something tries to grow endlessly in our bodies we call it cancer and we move in as fast as we can to end it we deeply understand that health lies in balance if we can take what we deeply understand in the human body to the planetary body and then move our political language and it's an appealing political language you can talk about thriving right it makes so much more sense in our life i've never heard a politician have thrive in a slogan?

9:30I have. I'm hearing towns and cities and regions around the world, they're starting to talk about a thriving economy, living well within the means of the planet. This is to me the 21st century politics we need. I'd love to sort of take you back to your earlier career and maybe begin with poverty in Africa. I guess you worked with the ODI in Africa, is that right? And then you worked later with Oxfam and with UNDP? Yes, after university, I was what's called an ODI fellow. So I worked in the Ministry of Trade and Industries of Zanzibar for three years. So I was based, I was going around working with barefoot communities in the villages, trying to see how I could support them in improving their livelihoods on which they were utterly dependent for their very most basic needs.

10:12Yes. And it's something I struggle with a lot, and I'd love to hear your reflections on it. How do you find a way of reconciling what needs to be done for the extreme poor in the developing world, people who are living on less than$2 a day, who are on the edge of starvation, and the very different types of structural problems that we face in the UK, and how you reconcile justice inside the UK with the much bigger problem of global injustice? Well, I would start by saying in those countries, whether it's Tanzania or Malawi or indeed Bangladesh or India, people who cannot meet their most basic needs.

10:48That is where you want to see the growth of their incomes and the growth of public services that serve them. Right. So we absolutely want to see them rise so that they have the health and education and transport and decent housing to meet their fundamental human rights. So to me, that's where if anywhere in the world we want to see economic growth, that's where it's going to happen. And it's got to be distributive. So it's actually shared and it's got to be regenerative so it doesn't destroy the planet as it happens. That's a completely different situation from, say, the UK or any European or high income nation.

11:21As we know, we are living in the richest countries ever in the history of humanity. These nations are richer than nations have ever been before. and we are massively overshooting our pressure on the planet and excessively using resources and energy so we just face a completely different trajectory if we want to thrive and it's about reducing our overshoot of energy and resource use let me just sort of stick on that for a second because i think this is really interesting you feel presumably that we are quite close to the carrying capacity of the planet that are we're way over the carrying sorry i didn't mean to interrupt you, but we are so massively over the carrying capacity of the planet.

12:01Earth system scientists are just telling us again and again, we are about to hit tipping points from which there's no return. So we're way over the carrying capacity of the planet in terms of our ecological impact. So that really means that we're not going to be able to continue globally GDP growth for much longer. We're going to have to stabilise the global economy and cease growing it. Otherwise, the ecological impact is going to be very extreme. And I want to speak first in the metrics of the earth. So we need to massively reduce our global carbon use for sure, our global material footprint and our excessive use of fertilizers, right?

12:37Let's start with the real metrics. GDP, money is an invented human measure. So I wouldn't want to speak of it in fundamental terms. We've got to come back within our pressure on the planet. Massive reduce of resource use. What does that mean for GDP? Globally, I don't anticipate that that means globally we can keep on growing, but it's the high income countries where it's clearest that they need to move fastest. And that's why we come into this challenge of can we have green growth? I can't see. I'm really happy to talk more about that, but I can't see the feasibility of having the GDP that we've always wanted, two and a half percent a year, please, coupled with the unprecedented reduction at speed and scale in energy and material use that's required in high income countries.

13:18Final one, and then to Alistair, because I think this is where the politics again comes in. Broadly speaking, per capita GDP in the world, if you divide, I don't know, the$100 trillion that we say the world economy is worth, divided by 8 billion people, we end up with a number which is about a quarter of the GDP per capita that we have in the UK. And that would seem to imply to me that if we were going to improve the living conditions of the extreme poor, there would have to be a reduction in the per capita GDP in the wealthy world. And that would mean that it would be quite difficult if we reduced by 75 % per capita GDP in the UK to pay for our government, which consumes about 44 % of our GDP at the moment.

14:01So again, I wouldn't put it in GDP terms because I think it gets too reductionist too quickly that we're going to move money like that. We need to, in the UK, live within our share of Earth's resources, which means we massively need to decarbonise our economy. But actually, also, we need to reduce our material footprint. How we do that in terms of its relation to economic activity is a separate transformation, is a separate innovation that we need to make. It's not about taking literally just taking GDP money from one pocket and putting it to another. What ultimately matters is energy and materials.

14:35Money is merely a means to having command over that. So we need to decarbonize and create a circular cyclical economy with massively reduced energy demand and can have very good quality lives within that. But I'm with you in terms of it certainly doesn't I don't believe we can continue to have the growth that the 20th century brought because that was deeply dependent on fossil fuel energy. And those days have gone. And I would love to know from your perspectives how this comes into politics or unless do you disagree with what I'm saying that we need to massively reduce our energy use and our material footprint in this nation, in all high income nations to respect the rights of people worldwide.

15:18If you don't disagree with me, I'd love you to join me in thinking, how do you bring this into politics? You're both immersed in the world of politics. How can this become part of the political conversation? I've only ever heard two MPs, Caroline Lucas and more recently Clive Lewis, ever speak to challenging the growth mantra in politics. And all other MPs are caught in it because it's so dominant that to dare to speak against it, the onus is on you as it is on me right now. You're asking me, Rory, to prove how we can utterly transform the world. Whereas if you stick with it, nobody asks you how the heck are you not going to go to the wall because we're going to the wall.

15:54And I want to flip that onus. the onus I think is on those who call for growth to explain how on earth this makes sense on this deeply destabilized planet just to pick that up directly listening I mean I've watched your TED talks I've read your book I've read these leaflets that have been put out by different cities that are practicing some of the stuff that you've been preaching for for years and I find it incredibly appealing but every time I see any of it I think oh my god as a political strategy I don't see how that is ever going to be successful in the current climate so something like caroline lucas who's been brilliant at prosecuting her pro planet pro environment call it where green party view and she's won her seat but she does it from a perspective of knowing she's not actually having to fight for the political support of the country and i guess my big worry about this is how you can do it in a democracy because the scale of the change you're asking for is so big and if you take something like China, when you talk there about Malawi and the countries that need growth, China has presided over the biggest elevation from poverty of millions of people by, I would argue, adopting a pretty capitalist approach to the world and in a dictatorial way.

17:13So I guess my worry is how you do what you're trying to achieve, the principles which I support, in democracies with very, very short timeframes. Totally agree. Many politicians would say, I know what I need to do. I just don't know how to get re-elected when I've done it. And that's why I think you're seeing some of the most progressive places say, let's hold a citizens' assembly. Let's use sortition. Let's bring together a randomly selected group of around 100 citizens, residents of our place. Let's introduce them to experts who can introduce them to the scale of this topic and see what they come up with.

17:44And time and again, what's coming out of these citizens' assemblies is that the people who are not trying to get re-elected because they are citizens thinking of the long view, they come up with far more long-termist, progressive and ambitious policies than, as you say, politicians feel they're able to. But would those policies get political support, which you have to have to be able to put them into practice? Well, I think then it comes down to how do you structure citizens' assemblies? Do you say, have a citizens' assembly, it'll be nice to hear your recommendations? Or does a politician government say, let's hold a citizens' assembly And let's actually commit to taking account of what the people of this nation are saying they want to happen.

18:23And let's put it into practice. I just want to dig in a little bit more into this. Without being too cheeky, sometimes you say that you're agnostic about growth. But it sounds to me that actually you're profoundly worried about growth. You're more than agnostic. I would have thought that if you really think, and you have every reason to, that we're exceeding the carrying capacity of the planet, you would want production and consumption globally to decrease. Is that right? And I sometimes think maybe you're being a bit political. You don't really want to say that because you don't really want to follow through the implications of that.

18:57Oh, okay. No, thanks for bringing that up. That's not why. When I wrote Donut Economics and I was arguing, let's move away from being addicted to growth to becoming agnostic about growth. One of the reasons was because I was thinking about countries around the world. I was trying to write principles that could be applied in many places. So whether it's in the UK or in Turkey or Malawi, and I think we need to move away from thinking growth is the trajectory that matters to actually what matters is the dynamics of being regenerative, working with and within the cycles of the living world, and being distributive so that value that's created in the economy is shared far more equitably with everyone who co-creates it.

19:36So to me, the fundamental dynamics become regenerative design and distributive design. And what happens to GDP is more like a consequence of pursuing those. But the consequence to GDP in the UK would be negative. And would that matter, in your view, if we went into a recession, what's technically defined as a recession, would that matter? It would absolutely matter to go into what's technically defined as a recession, because here's, and let me come to the point of what I actually deeply mean about being agnostic about growth it would mean an economy that can thrive without being utterly dependent upon endless growth so i'll put it this way we have an economy that needs to grow whether or not that makes us thrive and what we need is an economy that makes us thrive whether or not it grows and so actually it's quite radical to be agnostic about growth in a high-income country because it means we need to create our own economy so it's no longer dependent on endless growth as you just said alistair it currently is dependent on endless growth.

20:34And if it doesn't grow, it goes into recession. And it's tragic. It's massive implications. People lose their jobs. We lose the funding as immediate knock on effects. That's because our economies are structurally, financially, politically and socially dependent on endless growth. In order to separate ourselves from that dependency, we need to take the growth dependency out of our economies. This is what I wish was being taught in every macroeconomics course in every university. That growth doesn't matter? Not that it doesn't matter. Let's start by recognising that we are currently, we have economies in high income countries, particularly let's focus, that are structurally dependent on endless growth.

21:11And if growth isn't going to be possible, because we, as Rory's saying, we need to massively reduce our energy and material use, and that may not be compatible with growth. And if that's not possible, we need urgently smart policies and politics that starts to remove the structural dependency on endless growth. I'm pushing a little bit here, but again, you said may not be compatible. I think you actually believe it's not compatible. You don't believe that you can somehow decouple growth from consumption of precious resources. You're not somebody who believes there's some magic green growth solution which is going to allow us to grow happily without having a catastrophic planetary impact.

21:53You really don't think it's compatible with GDP growth, right? So I don't think it's compatible with GDP growth. But you know what? The future is unseen. And there are many different ways we can organize our economy. So I'm not going to definitively say it is not possible because all we have, all the empirical evidence comes obviously from the past. but the evidence that I see makes me deeply skeptical of that possibility whereas what I find in politics and in economics and economic advice to politics it leans the other way it leans in the direction of hope it's too early to give up the possibility of decoupling now when we lean into the hope and the possibility the optimism and the kind of technological optimism I find that ethically really problematic because if that optimism turns out to be false when push comes to shove between green and growth you can bet you know what's going to get the shove it's going to be the green because we're structurally dependent on growth and so i think it's actually an ethical obligation to remove the growth dependency from our economies rather than hope and promise that it's going to be possible to carry on with gdp growth so yes i in my agnosticism i lean very much towards this ain't going to deliver we've got some decoupling and We need all the decoupling we can get, but we are not moving anything fast enough at the speed and scale required.

23:13So fundamentally, I think what you're saying and many other people are saying is that the scale of the problem is so vast and the actions we're taking are tiny compared to the scale of the problem. And actually, I sometimes think that, unfortunately, even with some very good initiatives in the UK, that they're very admirable, but they're not matching the scale of the planetary challenge. Agree. And given the size of that planetary challenge, and given, as I say, on the maths of it, if we were going to create an equitable world, we would be shrinking incomes in the UK by 75 % to put it down to a global average.

23:46And it's difficult for me not to feel that that's not really consistent with the types of democratic politics that we have at the moment. That's sort of going to Alice's point that how does your economics tie into political economy? What sort of state do you imagine can actually respond to a crisis of that magnitude? I think we could have a, well, first of all, citizens' assemblies, I believe, are starting to actually advocate the kinds of policies that are required. I really want to flip it around to both of you though because I haven't heard you disagree with me and if you agree with me then the question is how do we transform the political dialogue the reality the facing up to the scale that's required and instead of carrying on with the narrative that is putting growth first and then promising that we can tuck some green inside it actually putting the scale of planetary challenge being open about it and making it central to our politics and talking far more openly about how deeply we need to transform our economies and all high income economies need to transform together.

24:52So moving towards, for example, far more democratic ownership of enterprise, by which I mean, rather than companies that are owned by shareholders that hold them to account every quarter to show that they've got growing profits, growing margins, growing market share, which drives growth in that business. What if we move towards companies that are owned by their employees, by the community, with nature on the board? And these kinds of companies are emerging, whether it's Patagonia, whether it's Faith in Nature. This is a different kind of enterprise that's possible to evolve that can put not profit primacy, but its mission primacy.

25:30Indeed, there's companies coming to us at Donut Economics Action Lab saying this could be our logo. This is what we're for. We're not in business to max out profits. We're in business to sequester carbon. I read the paper you did on that and I knew some of the names, but I knew very few of them. And this has to be done by leadership. I get that. I think that you're probably looking for a government that is going to flip it in the way that you say, that is going to be led by somebody like Caroline Lucas. but I guess what Rory and I are trying to put across to you is what feels like a gulf between the scale of change that you're calling for in the way that people live their lives in the way that businesses run themselves in the way that the world works and the political realities in democracies and I just wonder whether you know I'd love to sit down with you and try and work out a political strategy to how you might get this getting more traction but along the way i see an awful lot of people in the advanced democracies losing their seats and losing their power and that that in the end becomes like the climate change debate has moved in phenomenally far yeah okay and that's been done by campaigners and politicians and people facing up to realities but it strikes me that you're saying something even bigger than that yeah i am because climate change is just one of what we can call nine planetary boundaries one of the life-supporting systems of our planet.

26:56And if we just go climate, climate, net zero, we're being reductionist all over again. But let me put this back. So we set up Donut Economics Action Lab after my book Donut Economics came out, because when the book came out, I was just immediately approached by councillors, by mayors, by MPs, actually, who said, well, how could we put this into practice? I want to do this. What would it mean to do this in my town, in my city, in my district? By teachers saying, this isn't on the syllabus bell, this is what the students should be learning. I'm going to teach it anyway. By companies saying, we want to put this in practice in our company.

27:29So we set up an organisation for people who already wanted to start doing it. The city of Amsterdam adopted it at the heart of their policy to become a circular city in the height of COVID in 2020. Six weeks later, the city of Copenhagen voted to say, actually, we're going to explore what it would mean for our city to be a company. These are democracies. Brussels, capital region, the Secretary of State for ecological transition she said i'm going to put this at the heart of our strategy i want all of our civil servants to be you know be learning this it's happening at glasgow is currently that's the answer to your question that's how you develop it you have to have real cases well it's happening so what's what's interesting to me is it's not happening at the national level i'm not surprised it's not happening at the national level it's happening locally okay part of the issue maybe if you're really asking us sincerely about this i think is that some of this is not biting hard.

28:18The impacts of these programs that you're talking about are not yet having a fundamental impact. Just to understand the impact of which programs are talking about. Either the initiatives from individual companies are not fundamentally transforming our market economies. So there are companies doing that, but they're doing it on a voluntary basis. There isn't government regulation pushing it through the whole economy. The initiatives that you're talking about in Cornwall or Glasgow are quite small scale. And the problem is that, well, I mean, one example, I think, which was quite dramatic in the UK was, we'd all been very comfortably talking about a proper price for energy.

28:55And that unless we priced energy fairly, people weren't going to change their behavior. But as soon as gas prices shot up last year, and household bills went up, almost everybody abandoned it overnight. And they introduced a price cap on energy, which ran against even very conventional economic logic, because it turned out that the public was not willing to pay a fair price for energy. So what frightens me here is that when it really begins to have intense felt impacts on individual lives, it's going to be much more difficult to sustain. I think that's true. And I think in the Netherlands, actually, they've realized their use of nitrogen.

29:31They're calling it a nitrogen ceiling. They're far too nitrogen intensive in their agriculture and they've literally got to reduce their national nitrogen use and this then creates it can create a very polarized national politics about between agriculture and between the urban areas i think that's just the beginnings of a future so this is all to come we are going to face huge pressures on resource use on on if we want to decarbonize and switch to batteries the cobalt, the lithium, the prices of these materials is definitely going to rise. And it's going to become very real. I think we're going to face far more material constraints that we are not yet setting ourselves up to prepare for.