Explainer

Economics

Culture

16 January 2024

6 min read

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

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.

Article

Character

Culture

Leading

Virtues

19 September 2024

6 min read

What is Putin thinking? And how would you know?

The self-centeredness of modern culture is antithetical to strategic thinking.

Emerson Csorba

Emerson writes on geopolitics. He is also a business executive and holds a doctorate in theology.

Preisdent Putin stands behind a lectern with a gold door and Russian flag behind him.

What is Putin thinking?

In a world of Google Maps when walking on city streets, or of Waze when driving, it is difficult to ever become lost.

The AI algorithm provides us with the shortest route to our destination, adjusting whenever we make the wrong turn. We do not need to think for ourselves, technology instead showing the way forward.

But there are times where it is possible to get lost. This happens less in a city with its clearly set-out streets, and more so when taking the wrong turn in open expanses: hiking in the mountains, traversing farmers’ fields or while navigating at sea. In each of these situations, a miscalculation may lead to peril.

It is in these situations that we must carefully think through our steps, determining how to proceed, or whether to turn back. Often, these situations are ambiguous, the right way forward unclear.

Much of life – perhaps more than we wish to acknowledge – is like this, more akin to a walk across an open field with multiple possible routes forward, than a technology-enabled walk through a city.

When making important decisions, our grasp of a given situation, of others’ intentions and motives, and the networks facilitating and constraining action, are less evident than we may initially think.

This acknowledgement of uncertainty is no reason for delay, but rather a basis for careful deliberation in determining what to do, and how to proceed. It is necessary if we are to pursue what we believe is right, in a manner that may produce positive results.

In a recent interview with the BBC Newscast podcast, University of Durham Chancellor Dr Fiona Hill – who previously served as White House National Security Council Senior Director for European and Russian Affairs, and currently as Co-Lead of the UK’s Strategic Defence Review – provides listeners with a powerful reminder on how to proceed within ambiguous situations, especially in navigating the choppy seas, or rocky terrains, of human relationships.

Strategic empathy requires self-restraint when natural impulses urge a person to make rapid conclusions about the reality of a given situation – the default human tendency.

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Dr Hill uses the term “strategic empathy” to consider how the political West might proceed in its relationship with Russia, and specifically with Vladimir Putin.

Strategic empathy is a serious commitment to understanding how another person thinks, considering their worldview, their key sources of information (in other words, their main three or four advisors, who have a person’s ear), and other emotional considerations that underpin decision-making.

It is much more than just putting oneself in other’s shoes, as is often said about empathy. The approach is one of realism, suspending judgment based on self-protective or self-aggrandising illusions, in favour of what is actually the case.

In the case of Putin, Dr Hill helpfully reminds listeners that his worldview is drastically different than that of Westerners, and that significant intellectual effort (and specifically, intellectual humility in setting aside one’s own default frames of reference) is necessary to consider decisions from Putin’s perspective, and so make the right decisions from ours.

Technology is here an assistant but not a cure-all. Whereas AI might – based on a gathering of all possible publicly available information written by and about a particular person – help to predict a person’s next move, this prediction is imperfect at best.

There are underlying factors – perhaps a deeply engrained sense of historical grievance and resentment in the case of Putin – that shapes another’s action and that can scarcely be picked up through initial conversation. These factors may not make sense from our perspectives, or be logical, but they exist and must be treated seriously.

This empathy is strategic, because effective strategy is the “How?” of any mission. Whereas a person’s or organisation’s mission, vocation or purpose (all words that can be used relatively interchangeably) is the “Why?” of a pursuit, strategy is the “How?” which itself consists of the questions “Who?” “What?” “When?” and “Where?”

To understand how to act strategically requires a prior effective assessment of reality. This requires going beyond what others say, our initial perception of a situation, any haughty beliefs that we simply know what is happening, or even the assessments of supposedly well-connected and expert contacts.

Dr Hill’s strategic empathy is an appeal to listeners to ask questions – digging as much as possible – to arrive at an assessment that approximates reality to the greatest degree possible. This exercise might be aided by AI, but it is at its heart a human endeavour.

Strategic empathy requires self-restraint when natural impulses urge a person to make rapid conclusions about the reality of a given situation – the default human tendency. The persistent asking of questions is difficult – requiring mental, emotional and intellectual endurance.

There is considerable wisdom in Dr Hill’s reflections on strategic empathy, which extend well beyond the fields of intelligence, geopolitics or defence. The idea of strategic empathy helps show us that in much of modern culture – which glorifies the self, individuals putting their wants, needs and desires before those of others – developing strategy is very difficult.

The key then, when deliberating on potential right courses of action in ambiguous situations, is to not begin believing that the right way is clear. It rarely is.

Why is this the case? When popular culture favours phrases such as “You do you,” the you becomes a barrier to asking questions, with some aloofness to the situation, necessary for understanding how another thinks. People are encouraged to focus on themselves at the expense of others, and so fail to understand others’ worldviews and ways of operating.

Simply put, the self-centeredness of modern culture is antithetical to strategy. It impedes deliberation, which involves patience in the gradual formation of purpose for action. It wages war against the considered politics or statesmanship that many want to see return. In place of this is crisis or catastrophe, in which self-focus leads to clashes with others that could otherwise be avoided or worked through carefully.

The Biblical story of the serpent in the garden is another vantage point for the idea of strategic empathy. Soon after Adam and Eve eat the apple in the garden and become “like gods, knowing good and evil,” God searches for them and asks “Where are you?”

It is right after individuals try to become the judges of good and evil – “like gods,” that Adam and Eve find themselves lost: God’s “Where are you?”

Put differently, when a person is convinced they are right, but without asking questions, they make mistakes, they likely suffer unnecessarily because of this, and then become anchorless – the “Where are you?”

This applies to countries as much as it does to people: the more they moralize, seeking to become the judges of good and evil in a complex geopolitical landscape, the more they drift from their sense of purpose.

The key then, when deliberating on potential right courses of action in ambiguous situations, is to not begin believing that the right way is clear. It rarely is. A belief in evident rightness often leads to error, whereas the ability to suspend such judgment helps reveal – often gradually – the right path forward.

The strategic empathy approach requires both assertiveness – in asking good questions and maintaining persistence in doing so – and self-restraint in the face of believing that the right answer is clear.

The glue between assertiveness on the one hand and restraint on the other is faith, which helps a person to move forward in a trusting manner, but without exerting oneself so much so that they become the centre of the situation.

So, while Google Maps, Waze or other technologies might be at our disposal in our travels, both real and metaphorical, these technologies only get us so far.

The right way forward is seldom initially clear when navigating ambiguous situations, the frequency and stakes of which increase as we embark boldly – with faith – on the adventure of life.

Dr Hill’s strategic empathy – asking questions, listening carefully, suspending a self of sense, seriously considering diverging worldviews, and adjusting as necessary – helps us to achieve the understanding and direction we need.

Indeed, this approach is fundamental to a more effective and resilient political West. It is necessary for sounder deliberation, better strategy and statesmanship, in an increasingly ambiguous world.