In Russian

MAIN DIRECTIONS OF ECONOMIC DEVELOPMENT IN THE 21ST CENTURY




Doughnut Economics by Kate Raworth

"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 (fig. 1).

Figure 1. Current economic model.

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.


Figure 2. Economic model by Каte Raworth.

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.

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."

[ All above text is cited by paper "Finally, a breakthrough alternative to growth economics - the doughnut", author George Monbiot, published in "The Guardian". ]


Logical-probabilistic model of the "Doughnut Economics" invalidity. The concept of economics in the 21st century, proposed by Kate Raworth, attracted our attention. We have immediately constructed the logical-probabilistic model of the invalidity for the safe space of humanity, using the results [3,4]. The LP-model of invalidity is based on the invalidity of parameters that can go beyond the outer and inner boundaries of the safe space for humanity (Fig. 2).

The invisibility (quality) of a safe space, as an event and a logical variable, can be quantified for humanity, countries and regions.

The "Doughnut Economics" model is presented as a graph (Fig. 3), which are usual for the Top-Economics and logical-probabilistic calculus [3, 4].

Figure 3. Structural model of invalidity for safe space for humanity.

Following parameters (Y1) are invalid parameters, which are beyond outer ring (events and logical variables, accordingly):

Y11 - Land Use Change, Y12 - Freshwater Use,
Y13 - Nitrogen and Phosphorus Cycles, Y14 - Ocaen Acidification,
Y15 - Chemical Pollution, Y16 - Atmospheric Aerosol Loading,
Y17 - Ozone Depletion, Y18 - Biodiversity Loss,

Following parameters (Y2) are invalid parameters, which are beyond inner ring (events and logical variables, accordingly):

Y21 - Food, Y22 - Water, Y23 - Income, Y24 - Education, Y25 - Resilience,
Y26 - Voice, Y27 - Jobs, Y28 - Energy, Y29 - Social Equity,
Y2 10 - Gender Equality, Y2 11 - Health.

Let write LP models for the invalidity (quality) of safe space for humanity.

Logical model of the invalidity of safe space for humanity:

Y = Y1 v Y2, (1)

where:

Y1 = Y1 1 v Y1 2 v Y1 3 v ... v Y1 8, (2)
Y2 = Y2 1 v Y2 2 v Y2 3 v ... v Y2 11, (3)

Logical model of the invalidity of safe space for humanity in orthogonal form:

Y = Y1 v Y21, (4)
where:
Y1 = Y1 1 v Y1 21 1 v Y1 31 11 2 v ... ; (5)
Y2 = Y2 1 v Y2 22 1 v Y2 32 12 2 v ... . (6)

Probabilistic model of the invalidity of safe space for humanity:

P(Y) = P1 + P2(1-P1) (7)

where:

P1 = P1 1 + P1 2(1 - P1 1) + P1 3(1 - P1 1)(1 - P1 2) (8)
P2 = P2 1 + P2 2(1 - P2 1) + P2 3(1-P2 1)(1-P2 2) + ... (9)

Here P1 1, P1 2, P1 3, ... , P1 8; P2 1, P2 2, P2 3, ..., P2 11 are probabilities of invalidity of parameters.

In model of invalidity of safe space (fig. 3) we can research following possible variants of invalidity function calculation Y:

  1. Logical function for realization al least one criterion (Y1 v Y2);
  2. Logical function for non-realization all criteria (Ῡ1 ∧ Ῡ2);
  3. Logical function for realization both criteria (Y1 ∧ Y2);
  4. Logical function for realization first criterion only (Y1 ∧ Ῡ2);
  5. Logical function for realization second criterion only (Ῡ1 ∧ Y2).

References

  1. Kate Raworth. DOUGHNUT ECONOMICS: Seven Ways to Think Like a 21st - Century Economist / Pages: 284. Publisher: Cornerstone. Publication Date: 06.04.2017. Category: Economic theory & philosophy. ISBN: 9781847941374.
  2. George Monbiot. Finally, a breakthrough alternative to growth economics - the doughnut. Random House Business Books, 6 апреля 2017. 284 p.
  3. Соложенцев Е. Д. Топ-экономика. Управление экономической безопасностью. 2-е изд. СПб. Троицкий мост. 2016. 272 с.
  4. Solozhentsev E. D. The Management of Socioeconomic Safety. - Cambridge Scholars Publishing, 2017, 255 p.





Main page

Intelligent Integrated Systems of Automated Designing Laboratory", IPME RAS
E-mail: esokar@gmail.com