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How to pick an economic approach that really adds up

Assessing doughnut economics, Paul Williams asks what’s the economy for and who does it really serve?

Paul Williams, the CEO of Bible Society, worked for over a decade in business in London and then as an academic theologian in Canada.

a round table with empty chairs is seen from above. An orange is the only item on it.
Meina Yin on Unsplash.

“Anyone can see that our economic system is broken.”

This is the conclusion of Kate Raworth, author of Doughnut Economics, and her assessment has garnered positive endorsements from figures as diverse as George Monbiot, Andrew Marr and Sir David Attenborough. 

Yet to judge by the discussion surrounding the Chancellor’s Autumn Statement, our political class is not included in this broad perspective that Raworth claims. In what is widely understood as the early skirmishes of an election campaign, anticipating the moment when the country’s voters have another opportunity to indicate the direction of travel they hope for, the focus is on who will be better or worse off by this or that tax cut or benefit change. If anything is broken it is not the economic system but something like ‘the government’s economic management’ (Labour) or ‘public sector productivity’ (Conservative).  

If you are worried, as Raworth is, by “relentless financial crises,” “extreme inequalities in wealth” and “remorseless pressure on the environment” then it seems that both the government and the opposition believe that the solution is more economic growth, albeit with some barely discernible differences in fiscal and regulatory policy. 

Our contemporary political discourse is dominated, regardless of party, by the mainstream economic paradigm in which the market generates economic growth and the state functions to keep things on track by taxing and redistributing some of the surplus to those who for whatever reason didn’t do as well as others in the process. It also provides some additional incentives to business and other organisations to act in the public interest, for instance by subsidising green energy or taxing fossil fuels. Both parties, it seems, support this approach. The difference between them concerns how best the state manages the economy to get the most out of it, how the resulting surplus is distributed, and what kind of further incentives are needed. 

Visualising doughnut economics

An economics diagram in the shape of a doughnut.
Source: Doughnut Economics Action Lab.

For Raworth, on the other hand, the first thing to ditch is the assumption that economic growth is the right goal to pursue. The ‘doughnut’ of doughnut economics is an alternative to GDP as a measure of progress. It name is derived from the visual depiction of the idea of an economy that operates in the space within two limits – ensuring the human rights of each person on the one hand, and staying within the means of the planet on the other. This concept refuses to conceptualise the economy as a closed system in distinction from the social and environmental systems on which it depends.  

Raworth also wants to shift the emphasis away from the individual rational chooser of economic theory toward a more social understanding of human flourishing. And in direct contrast to the mainstream paradigm sketched above, in which the market’s job is to deliver economic wealth and the state’s job is to worry about distribution and regulation, Raworth wants an economic system designed from the outset to ensure a more equal distribution and to actively regenerate the environment. 

The economic system itself is like an engine that can be put to whatever purpose you want. It generates wealth and wealth can be put to all kinds of uses, good or bad. 

How might we evaluate this? Nobody disagrees that financial crises, extreme inequality and environmental damage occur and are bad. A good number of mainstream economists find Raworth’s aims laudable and worth pursuing, because we do need a better measure of success and improved models of human behaviour and ways to incorporate and limit externalities like carbon emissions. Yet they also find her analysis of economics a caricature, as many of the developments in economics over the last few decades seem to be ignored. 

For her harshest critics, Raworth fails to give due credit to our current economic system for the incredible reduction in global poverty that it has already enabled, provides very little by way of actionable policy ideas, and is full of erudite but wishful thinking. 

Yet the popularity of Doughnut Economics reflects a deep sense amongst many of us (some mainstream economists included) that something is seriously wrong, alongside an instinctive identification with the kind of values and changes that Raworth seeks. 

 The vital question is: what is our economy for? If we can get a better sense of what purpose we want the economy to serve, it may prove easier to identify whether it is achieving that, or is in some sense ‘broken.’  

But to ask this question is immediately to step away from the mainstream paradigm that dominates our public discourse in framing the economy. For mainstream economics, questions of purpose are ethical questions and those questions are explicitly left to the actors within the economic system and the state acting on their behalf. The economic system itself is like an engine that can be put to whatever purpose you want. It generates wealth and wealth can be put to all kinds of uses, good or bad. 

These ancient texts suggest that our mainstream paradigm is seriously adrift if it imagines that our economic system is morally neutral.

For many people the idea that the economy itself can be separated from ethical questions will automatically raise an alarm. Certainly, for Christians it ought to. The Bible firmly resists the idea that wealth and its generation is morally neutral. Even the most superficial reading of the Scripture alerts to the inherently spiritual and moral quality of economic activity. Fruitful work is part of what it means to be made in the image of God in the garden of Eden. The product of work is offered to God in worship. The Law is full of commands to deal justly, use fair weights and measures, consider health and safety in the building of a house, and give yourself, your family and your animals a rest (to name but a few). Jesus tells us that you cannot serve both God and money. The pictures of the New Creation in both Old and New Testaments include economic imagery – The Old Testament book of Micah envisions an end to war with everyone living “under their own vine and fig tree” (a vision of peace and economic flourishing) and the New Testament book of Revelation depicts the product of human work being offered up in worship before the throne of God.  

Overall the Bible sees the economic, social and environmental dimensions of life as interwoven and interconnected. Take the Sabbath, for instance. It is not only workers who get (or are commanded to take) a Sabbath once a week. The command extends to the whole community - and even to animals. Every seven years, the Sabbath Year provides a rest for the land and for those struggling with debt – the land must be fallow and allowed to regenerate, and all outstanding debts cancelled. Sabbath and Jubilee are deeply intertwined (the Jubilee was effectively a sabbath of sabbaths, taking place after seven sabbath years) and the Jubilee was the theological paradigm chosen by Jesus to explain his own mission and ministry. Quoting the prophet Isaiah, he said:  

“The Spirit of the Lord is on me, because he has anointed me to proclaim good news to the poor. He has sent me to proclaim freedom for the captives, recovery of sight for the blind, to set the oppressed free, to proclaim the year of the Lord’s favour.” 

These ancient texts suggest that our mainstream paradigm is seriously adrift if it imagines that our economic system is morally neutral. And Raworth is closely aligned with the biblical vision insofar as she insists on the importance of an economy that exists not for its own sake, in some independent sphere, but explicitly to enable people, communities and creation to flourish together.  We need to ask what our economy is for. And this is as good an answer as you might find.  

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Budgeting for discontent

The Chancellor can't please everyone, but is contentment possible?

Paul Valler is an executive coach and mentor. He is a former chair of the London Institute for Contemporary Christianity.

A woman stands behind a lectern against a blue and red backdrop.
Chancellor Rachel Reeves speaks at a recent event.
HM Treasury.

As the Chancellor Rachel Reeves seeks to raise billions in this Autumn budget, the news media are all over the downsides.  Poor pensioners freezing during winter and businesses complaining of the tax burden are political headlines. Tough choices must be made, but we are rarely happy when it comes to money.  

Economic discontent is ironically a cultural norm in first world countries.  In the west we have become used to what psychologists call the hedonic treadmill – adjusting our expectations to any new benefits and finding ourselves wanting even more, to try to maintain the same level of happiness.  It’s a mentality that dooms us to discontent.   Socrates said, ‘He who is not contented with what he has, would not be contented with what he would like to have.’    

Contentment seems to be a forgotten virtue today, and increasingly elusive in a society striving for happiness through wealth.  Yet being content in life is a more valuable form of wealth than money.  There is something enormously attractive about a tranquil state of mind and heart.  Contentment does not mean passive acquiescence; there is a noble side to being passionately discontented about something that is unjust – especially when we are fighting for others.  William Wilberforce demonstrated that with his campaign for the repeal of laws allowing slavery. 

Our personal challenge is to be content in ourselves, whatever the circumstances. Oscar Wilde said, ‘True contentment is not having everything, but being satisfied with everything you have.’   Practising paying attention to what we do have and being thankful for it.  That attitude of gratitude is a recognised way to lift our mood and strengthen our resilience.  But thankfulness doesn’t solve every problem.  Warm words may help warm hearts, but they don’t heat cold homes.  Although gratitude is proven to improve our wellbeing, it’s not enough to compensate for all the problems of life.  Because here’s the deal; life is tough and then you die, and there are many worse things than economic woes. 

Pain, grief and loss are all too common, and they can test our resilience beyond what feels like our ability to endure.  Chronic physical or mental illness for example; or being permanently disabled.  Or the life-sapping effort to parent children with special needs; or caring for a parent/partner with dementia - especially when it goes on and on.  Sometimes horrible events happen like violent abuse, or the deep grief of relationship breakdown or bereavement.  This level of suffering pushes us to the end of ourselves, to the place where something more than psychological self-help is needed.  What is the secret of contentment then? 

I don’t envy the Chancellor, and I do not trivialise the very real challenges raised by having to make tough economic choices.

This is where the secular and the Christian worldview are radically different. Secular philosophers call people to show their own self-sufficiency and superior reason when enduring suffering.  This can feel principled and stoic, but it lacks empathy and hope. Christianity accepts the reality of our own weakness and insufficiency, recognising that we can’t fix everything ourselves.  Instead of trusting in humanity, we choose to trust God both for this life and the life to come.  And this trust and hope is linked to a deeper form of contentment, which transcends pure rationality. 

Of course, sceptics say this is just psychological comfort from an imaginary friend, and it doesn’t make sense, because surely any good God would not allow us to suffer in the first place.  But any realist must acknowledge that a lot of human suffering comes from the damaging exercise of our own free will.  Wars and slavery are examples.  If God were to override our free will, we would be robbed of the authentic capacity to love, which makes us fully human.  The coexistence of free will, suffering and God is a complex issue. 

The experience of millions of Christ followers is that trusting God is much more than imaginary comfort.  God is real and prayer changes things; the most ordinary, natural and chance experiences can be affected by it.  And prayer changes us.  In our vulnerability, if we choose to trust God something changes, we begin to relax, things become a bit easier to bear.  In fact, the apostle Paul claimed that Christ’s power was perfected in his own weakness.   

Contentment is a strange peace that comes from trusting God in the middle of difficult circumstances.  One of the great old hymns was written by a man who lost his four daughters in an accident at sea, and also lost all his money in a fire.  The refrain says, ‘It is well, it is well with my soul.’   This isn’t denial or delusion, it is the inner sense of quietness that God can give.   Only an eternal perspective allows for that kind of contentment. 

I don’t envy the Chancellor, and I do not trivialise the very real challenges raised by having to make tough economic choices.  Britain is clearly in a place where some stringent fiscal discipline is needed, and that will inevitably cause some hardship and difficulties.  But in the face of all the discontent that is so freely shared in the news, there is another way to respond.  Instead of complaining about our flawed Government or moaning about our circumstances, we can change our perspective to put our trust in the ultimate Authority.  And in doing so can find a peace that the world cannot give.   Contentment is a treasure beyond the wealth of nations.