Key: Rob’s comments are in italics, Derek’s are in normal font.

So we're going to talk about doughnut economics today. And you mentioned before the call that there's a topical item for us to talk about too. So what is that topical item?

Developments in the BRICS Alliance…

Well, the topical item is that already it must be a year since the last time this was happening because they've just had a conference or they're in the process of having a conference of the so-called BRICS nations. BRICS acronym for Brazil, Russia, India, China and South Africa. Of course, that alliance group is getting expanded more or less on a weekly basis and now seems to encompass, I'm wondering whether it's actually a majority of the sovereign nations of the world.

Seems to be getting bigger.

So it's a pretty significant power block and it was quite interesting to see that Vladimir Putin was there, naturally enough, and addressed the leaders of all the other nations that had come to this conference and listened to attentively. It's very interesting that that contrasts with the situation in the West where we don't get to be addressed by Putin at all and nothing he says directly is seen to be reported in our media except to put some specific spin on it.

When one of our journalists, Tucker Carlson, went over to Moscow and interviewed him, he was roundly condemned for doing so. You would have thought that in a strange world, any leader of a large, prosperous, resourceful country would be of interest to the population at large and any journalist would be congratulated for having talked to them. And at least we would get to evaluate him on the merits of what we make of what he says. Anyway, the point being that it's yet again come back to the top of the agenda that these people are trying to set up a mechanism for trading between themselves that doesn't involve the dollar financing and the American banking settlement system. That is going to very seriously change the landscape of the financial structure of the world, if and when it happens. So watch this space really.

Anyway, let's get back to the topic of doughnut economics…

What is Doughnut Economics?

I mean, it's a funny name. It's the title of a book by a woman called Kate Raworth who studied economics at Oxford and was thoroughly disillusioned with it in terms of its relevance to the current world. That slightly odd title, Doughnut Economics, is a metaphor for her view of how we should be looking at economic activity.

And the image is that you have, if you like, a ring doughnut. And on the inside of the edge of the ring, you've got what she calls the social foundation of various aspects of human wellbeing, water, food, health, education and so forth and what we consider to be a satisfactory level of that. And on the outer edge of the doughnut you've got the ecological ceiling. It's quite interesting because virtually everything that she's highlighted - and the idea is the little ring because if you like there are segments of that inner boundary that cover different aspects as I indicated, you know, water, food, health, education and so on. And then there are segments around the outside of the ecological limitations.

And with one exception, all of the ecological aspects that she was enumerating were all aspects of what we might broadly call pollution. Whereas the way I would look at it personally is that pollution and all the different aspects of pollution are part of the ecological limitations. But other parts of the ecological limitations are things like resources, resources of raw materials, resources of energy, resources of food and agricultural land and so forth.

Yeah, having good quality topsoil and things like that.

And she has a number of images covering different aspects of what is covered in economic thinking. The seven ways to think, as outlined in the book, are:

* Change the Goal: Move beyond GDP growth as the sole objective and adopt a doughnut framework that sets a minimum threshold for human well-being (social foundation) and caps it by available ecological resources (ecological ceiling).

* Think in Systems: Recognize that economies are part of larger systems, including natural and social systems, and consider the interconnections and feedback loops between them.

* Design for Distribution: Prioritize distribution and equity, ensuring that economic benefits are shared fairly and that no one is left behind.

* Measure What Matters: Move beyond narrow economic indicators like GDP and focus on metrics that capture human well-being, such as life expectancy, education, and social connections.

* Regenerate the Economy: Emphasize regeneration and restoration of natural systems, rather than just exploiting them for growth.

* Decentralize and Democratize: Encourage decentralized decision-making and democratic participation, allowing diverse voices to shape economic policies and outcomes.

* Explore and Experiment: Foster a culture of experimentation and learning, recognizing that economic systems are complex and evolving, and that we need to continually adapt and improve our approaches.

Questioning Indefinite Economic Growth

She has a bunch of images about the way that this was seen in 20th century economics and the way it should be seen in what she calls 21st century economics. I think these are all well worth looking at and of course the goal in 20th century economics and the goal that all of our politicians, economists, and business people are talking about is that economic growth cannot be questioned. More economic growth is better and anything that inhibits it is bad!

I have a big problem with assumptions, can't be questioned. This runs across the board. If you can't question it, it's got something to hide.

There are several things about this. Whether we like it or not, we live in a finite world and growth of anything doesn't go on indefinitely. So that whole way of framing the discussion is absurd on its own grounds. And also, we've discussed previously that what they mean by economic growth is not the growth of more wealth or more prosperity, it's the growth of the rate of transactions.

It's extraordinary to me that that even gets off the ground as an idea.

Could you just define that, sorry, the growth of the rate of transactions?

Economic growth is defined as growth of gross domestic product. When you're talking about an individual country and if you're talking about the world as a whole, you're talking about the total of gross domestic product. And gross domestic product is within a year or some other period. It’s the total volume of economic transactions that have been made, the total volume of sales if you like.

You could have the situation that we have at the moment, for example, where over the course of our lifetime, we buy numerous washing machines, for example, and we have to replace them every few years. Now that obviously creates more transactions, which creates greater economic growth. But I'm no wealthier when my old washing machine wears out and I'm forced to buy a new one than I would had that been made to be more long-lasting and I still had the original one.

It's the opposite, you're poorer!

Yes, quite so. And so she suggests changing the goal to be living within this doughnut, the doughnut constrained on its inner ring by satisfactory social living conditions for every human being on the planet and on its outer ring by living within the constraints of our environment. As I say, she's mainly focusing on the negative aspects.

The Self-Contained Market No Longer Applies

She contrasts the 20th century economics as being the self-contained market. As most of these are from most of the 20th century images she has of the market are from Paul Samuelson's seminal work on economics written in about 1946 or 48, which is the basis of most economic courses at universities.

Samuelson’s big picture was the self-contained market where you've got businesses and households and the transactions are going round between the two. Rawson’s image for the 20th century is what she calls the ‘embedded economy’, which is interesting because it's got energy coming in from the sun and energy going out into space and in between the two of them it carries out all the transactions on the earth, which is an image that we've had before.

The third one was the question of human nature and it's a core concept in economics as I'm sure you'll remember from when you studied it somewhat that the idea is that we're all self-motivated individuals who are aware of the situation and act to optimize our own situation.

And apparently we have infinite wants and desires.

Yes, of course that homo economicus is a complete myth. It's an abstraction that bears no resemblance to reality. Everybody's knowledge of the marketplace or anything else is finite and limited and constrained. And mercifully, most people are not 100% self-interested and self-directed.

This was famously summed up by Margaret Thatcher saying there's no such thing as society. Whereas that is the attitude that taken to the logical extreme has created all the unworkability of the world.

So the contrasting image for 21st century economics is socially adaptable humans. This is what we have to be moving toward if we are ever going to create a functional workable world. And it's got to be one which is based on empathy and based on collaboration.

Dynamic Complexity Instead of Market Equilibrium

The image of systems in the 20th century was an attempt to be rather like physics and to be seeking equilibrium. One example of this is the crossover between supply and demand, which produces a certain equilibrium rate of production of goods and ...