Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist

by Kate Raworth

as the nuclear physicist Al Bartlett warned, ‘The greatest shortcoming of the human race is our inability to understand the exponential function.’2 That is because if something grows exponentially – be it algae on a pond, debt in the bank, or a nation’s energy use – it will get much bigger much faster than we expect. A 10% growth rate means that something will double in size every seven years. A 3% growth rate sounds far more modest but it still leads to doubling in size every 23 years. What would that imply for GDP growth? In 2015, World GDP – also known as Gross World Product – was around $80 billion and the global economy was growing at around 3% per year. If it continued indefinitely at that rate, the global economy would be nearly three times bigger by 2050, over ten times bigger by 2100, and – astonishingly – almost 240 times bigger by 2200. Take note: not a penny of that growth in value would be due to inflation; it is due only to the logic of compound growth.