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NZ and the Doughnut Economy

Article – Hugh Steadman

In the lead up to Christmas I have found myself with time to pull together a series of separate trains of thought. Over the same period that we have had Boris Johnsons election victory (and more significantly, the UK Labour Partys rout) I have been …

In the lead up to Christmas I have found myself with time to pull together a series of separate trains of thought. Over the same period that we have had Boris Johnson’s election victory (and more significantly, the UK Labour Party’s rout) I have been reading Kate Raworth’s ‘Doughnut Economics.’ Also, this week, I received my bi-monthly copy of the New Zealand International Review. Within it I found an article entitled ‘Thinking the unthinkable’ by Hugh White, an Australian professor of strategic studies, who then, proceeds to think about it very sensibly.

I suspect that Boris’s victory will mark an historic landmark on the long road of Britain’s decline – but then, so too, for very different reasons, would have Jeremy Corbyn’s, had he got into power. As a Middle Eastern diplomat once told me, the choice that western democracies tend to offer their electorates’ is between drinking piss and eating shit. Both the recent UK and the Trump/Clinton election would seem to support his argument. An Israeli voter might have something similar to say on the subject.

The West’s growth dependent economic system is now facing its apogee (apogee being the furthest distance it can move before it starts its return to Earth.) Whether or not the EU manages to hold together, under the strains of the West’s growth-dependent, economic system, it seems likely that Johnson’s Brexit will result either in Scotland and/or Ulster devolving from the Union. The alternative might be such militant unrest that the cost far exceeds the benefits of their being retained against their will.

Jeremy Corbyn’s Labour Party was totally routed at the hands of Tory elitists. The Tories, having in their previous governments destroyed the Labour Party’s trade union constituency, managed to oust it from its traditional, northern strongholds: unsurprisingly in uncertain times, a demagogic appeal to nationalist sentiment struck a chord among the embittered and bewildered members of the elder generation.

One of the most significant facts to emerge from the first-past-the-post: winner-takes-all election was the enormous preponderance of the Conservatives’ funds https://www.bbc.com/news/election-2019-50508009 Until a democracy finds a way of controlling such inequalities in power at the ballot box, it is unlikely to succeed in ending social divisions and bringing equity into the distribution of income and wealth in society. A second most significant fact was that less than 30% of voters under 40 years of age, voted for the Conservatives (who received 60% of the over sixties’ votes.) These figures do not bode well for the Conservatives’ future. They will no doubt, bode even worse with a further round of Tory inequality built into the sharing of what, after Brexit, will probably prove to be a dwindling national cake.

But the future does not look much better for the UK’s Labour Party. Their traditional, aging Trade Unionist support has withered. Their leadership appears to lack the flexibility of wit and openness to new ideas that the developing national and global situation is urgently calling for. The younger generation voters that have come their way, are birds of passage and unlikely to represent a permanent support base on which they can rely. The future probably lies in the hands of whichever party is most successful in adapting to the existential crisis facing the global civilisation.

The generational divide, so clearly displayed in the UK’s recent election is also visible in other OECD advanced economies. The dilemma facing today’s younger generations is clearly set out in “Doughnut Economics.” This has to be seen as a seminal work for anyone wishing to understand the future that is unrolling before our eyes. George Monbiot wrote in The Guardian “At last – an economic model that won’t destroy the planet …. I view Raworth as the John Maynard Keynes of the 21st Century….”

Raworth’s doughnut is composed of two concentric rings. Inside the hole at the centre of the doughnut is humanity striving to get into the doughnut to obtain the necessities of a decent life. Outside the doughnut are the overshoots by which the human economy, in its lack of adequate self-governance, is taking more of the Earth’s resources than is sustainable. The dominant economic model has resulted in too many of our fellow humans living in the hole, while the economy makes demands on the outside of the doughnut so great that, should the current behaviour continue, life inside the doughnut will first prove uncomfortable and then, impossible.

The use-by date of the current economic model is now time expired. A new economic model is required to explain how it is possible for humanity to live entirely within the doughnut. Societies that judge their success by the growth of their GNP are running up against the limits of growth. In current prevailing economic theory, the consumer society is based on just two actors; the greedy, selfish, solitary, individual consumer interacting with the profit-motivated business/provider/investor. Their interaction is a simplistic taking up of the Earth’s raw materials making them usable and then, after use, discarding them. The behaviour based on this model has now passed the limits of the Earth’s ability to provide. Societies are going to have to learn to live comfortably in economies that are no longer expected to provide year on year of economic growth.

As an economist, Raworth proposes a far different model that would allow humanity to thrive within the doughnut. In this model the economy is viewed as something infinitely more complex; more akin to an ever-changing, living eco-system than a primitive sewer. The model can be viewed as a plumbing system around which activity flows endlessly between, in no particular order, business, the household, with the complex motives and interactions of the individuals sheltering within; the commons which are shared between nations, groups and communities: the state, which most definitely has a part to play in governance and in nudging actors into the protection of the doughnut. The economy is designed around the needs of the community – not of business, which in the current model too often can buy from politicians whatever share of the cake it decides is its due.

The new economy is a work at the outset of its progress. Raworth cites many examples of individual initiatives inspired by the vision of the imminent ecological disaster and the urge to revitalise social and cooperative interaction within communities. The new, growth-agnostic, economy is at the early stage of its development with multiple entrepreneurial initiatives based on the shared, twin vision of the UN’s sustainable development goals being achieved for those inside the hole and frugality and restraint when it comes to drawing down stocks that might lay beyond the rim.

It is those living in this new environment, who will not be voting for conservative parties that wish to conserve the old systems. Nor will they be loyal in their voting to parties led by a generation which largely has little understanding of the modern dynamic and that views society’s complex problems through an obsolescent and simplifying prism.

And so we come to a New Zealand political system that is still dominated by two party ideological groupings: National, ACT and NZ First on one side of the divide and the Labour Party and Greens on the other. Happily, in NZ the Labour Party, in contrast to the UK, is not dependent on a single social stratum for its support. Under the MMP system, governments tend to be hampered by the odd marriages of convenience that the search for power can force them into. In the present government’s situation, it is NZ First which has bought greater control over NZ’s foreign and defence policies in return for giving the Labour and Green parties greater control over domestic issues.

This represents a problem for New Zealand as it attempts to enter an international community that has to change rapidly to a doughnut view of its economy. ‘Defence’ is probably the most significant global expenditure currently deployed in keeping humanity’s demand on Earth’s resources well beyond the sustainability rim of the doughnut. This expense is a direct consequence of conflicts instigated by the Western drive for political and economic dominance. Were the expenditure instead diverted to helping those in the hole to clamber aboard the doughnut two birds would be killed with one stone and humanity would be very much closer to where it has to be.

In his article in the NZ International Review, Hugh White argues that Australia and New Zealand now face the very real need to reassess their whole defence postures. They used to be based on the assumption that the USA would always remain the dominant military power in their sector of the globe. Provided that care was taken to be reasonably (in NZ’s case) or enthusiastically (in Australia’s case) supportive of the USA’s excessive demands on the planet, safety (and other wonders) could be found under Uncle Sam’s kilt. White argues, very convincingly that in the era of Trump and dawning Chinese economic parity, such dependence is no longer a safe option. It is particularly hazardous given both countries’ reliance on trade and the maintenance of friendly relations with the China that the western alliance is struggling to contain. Alternative policies have to be looked for (and New Zealanders have no good cause to look to NZ First for such initiatives.)

For far too long, NZ has looked at itself as a Western, northern hemisphere implant in an Asian environment. This is in defiance of the fact that the indigenous Maori are of Asian origin and the land itself is firmly positioned at the Asian end of the southern hemisphere. To decouple from the cold (could turn Hot) war that the USA and NATO are energetically promoting, a change in defence policy is overdue.

New Zealand is already well in advance of the majority of other OECD countries in its move towards the UN’s sustainable development goals. Being so light on population, it is on a scale that should allow it to move faster than most in developing a national economy closer to the Raworth ecological model. The Labour Green coalition is already moving in that direction. However, for the global economy there can be no victory in just one country.


Non-Aligned Nations Movement: Dark blue full members: light blue Observer status

New Zealand’s achievements have to be positioned so that they can serve as an example and nudge other countries in the same direction. The vast majority of humanity will pay scant attention to NZ’s example, while it remains committed to the Western camp in the East-West conflict now emerging and that is so prodigal of the planet’s diminishing resources. New Zealand needs to abandon the fast diminishing security offered by a western alliance and instead join the majority of its fellow southern hemisphere nations (and indeed of the global population) in joining the non-aligned nations organisation. https://en.wikipedia.org/wiki/Non-Aligned_Movement
The initial move might be to apply for observer status. There are no obstacles or diplomatic hurdles to be crossed in such a move. The long-term goal would be to cooperate as fully as possible with New Zealand’s neighbours in that group and in helping them to achieve their doughnut economies. It is remarkable how many of the immediate South Pacific community, are already members of this grouping. Its effectiveness will certainly be enhanced by the acquisition of more members from the developed world.

For the past four years Hugh Steadman has been writing a blog from his
home in Marlborough. If you/readers want to know more about who he is,
you can find it at https://paddlenow.org.nz/who-are-we/ If you want to
know how he sees the world, you can follow his journey of discovery at
www.khakispecs.com

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