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

by Kate Raworth

The most powerful tool in economics is not money, nor even algebra. It is a pencil. Because with a pencil you can redraw the world.

‘You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.’

Humanity’s journey through the twenty-first century will be led by the policymakers, entrepreneurs, teachers, journalists, community organisers, activists and voters who are being educated today.

There may be no perfect frame waiting to be found but, argues the cognitive linguist George Lakoff, it is absolutely essential to have a compelling alternative frame if the old one is ever to be debunked. Simply rebutting the dominant frame will, ironically, only serve to reinforce it. And without an alternative to offer, there is little chance of entering, let alone winning, the battle of ideas.

First, change the goal. For over 70 years economics has been fixated on GDP, or national output, as its primary measure of progress. That fixation has been used to justify extreme inequalities of income and wealth coupled with unprecedented destruction of the living world. For the twenty-first century a far bigger goal is needed: meeting the human rights of every person within the means of our life-giving planet.

Today we have economies that need to grow, whether or not they make us thrive: what we need are economies that make us thrive, whether or not they grow.

Soon growth was portrayed as a panacea for many social, economic and political ailments: as a cure for public debt and trade imbalances, a key to national security, a means to defuse class struggle, and a route to tackling poverty without facing the politically charged issue of redistribution.

human thriving depends upon planetary thriving.

Sometimes pictures can bridge a divide that words cannot cross.

The Doughnut provides us with a twenty-first-century compass but what determines whether or not we can actually move into its safe and just space? Five factors certainly play key roles: population, distribution, aspiration, technology and governance.

As economist Tim Jackson deftly put it, we are ‘persuaded to spend money we don’t have on things we don’t need to make impressions that won’t last on people we don’t care about’.

‘All the world’s a stage,’ Shakespeare famously wrote, ‘And all the men and women merely players.’

EARTH, which is life-giving – so respect its boundaries SOCIETY, which is foundational – so nurture its connections THE ECONOMY, which is diverse – so support all of its systems THE HOUSEHOLD, which is core – so value its contribution THE MARKET, which is powerful – so embed it wisely THE COMMONS, which are creative – so unleash their potential THE STATE, which is essential – so make it accountable FINANCE, which is in service – so make it serve society BUSINESS, which is innovative – so give it purpose TRADE, which is double-edged – so make it fair POWER, which is pervasive – so check its abuse

‘If we remain blinded by the free market ideology that tells us only winner-picking by the private sector can succeed, we will end up ignoring a huge range of possibilities for economic development through public leadership or public-private joint efforts.’

‘our beliefs about human nature help shape human nature itself’.

Change one word and you can subtly but deeply change attitudes and behaviour. Throughout the twentieth century, widespread use of the word ‘consumer’ grew steadily in public life, policymaking and the media until it far outstripped the word ‘citizen’:

‘Unlike the citizen, the consumer’s means of expression is limited: while citizens can address every aspect of cultural, social and economic life … consumers find expression only in the market place.’20

We humans are ready to punish others for their selfishness, even if it costs us.

Rather than presiding at the pinnacle of nature’s pyramid, however, humanity is woven deep into nature’s web. We are embedded in the living world, not separate from or above it: we live within the biosphere, not on the planet.

it is time to recognise ourselves as ‘the connected living self in co-creative partnership with the Earth’.

Beware before you strike a match or start a market: you never know what riches it may reduce to ashes.

Today we would be talking not of the market mechanism but of the market organism – and we’d be so much the wiser for it.

‘Trying to analyse capitalism while leaving out banks, debt, and money is like trying to analyse birds while ignoring that they have wings. Good luck.’

Today’s economy is divisive and degenerative by default. Tomorrow’s economy must be distributive and regenerative by design.

‘The great task of the twenty-first century,’ writes the ecological thinker Peter Barnes, ‘is to build a new and vital commons sector that can resist enclosure and externalization by the market, protect the planet, and share the fruits of our common inheritances more equitably than is now the case.’

It’s people power, not economic growth per se, that protects local air and water quality.

no harm, an ambition that is also known as ‘mission zero’: designing products, services, buildings and businesses that aim for zero environmental impact.

which only look at a very unimaginative bottom line. Profit is the law of business: that has to be considered, but not at the expense of human rights, environmental standards and community.’

our beliefs about economic growth are almost religious: personal in nature, political in consequence, privately held, and little discussed.

No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one.

We have an economy that needs to grow, whether or not it makes us thrive. We need an economy that makes us thrive, whether or not it grows.

A century on from the Model T revolution, however, robots have taken over much more than car production. It is simply no longer feasible to expect GDP growth rates to keep pace with the anticipated scale of lay-offs due to automation,

Doughnut Economics sets out an optimistic vision of humanity’s common future: a global economy that creates a thriving balance thanks to its distributive and regenerative design.

Ours is the first generation to properly understand the damage we have been doing to our planetary household, and probably the last generation with the chance to do something transformative about it.

By deepening our understanding of human nature we can create institutions and incentives that reinforce our social reciprocity and other-regarding values, rather than undermine them.

When it comes to new economic thinking, draw the change you want to see in the world too. By combining the well-known power of verbal framing with the hidden power of visual framing, we can give ourselves a far better chance of writing a new economic story – the one that we so desperately need for a safe and just twenty-first century.