Design to Distribute

Conventional economic wisdom is that austerity and inequality are necessary pains of growth. Data show, on the contrary, that to benefit all people the economy must first be designed this way.

At the time when Doughnut Economics was written in 2016, three-quarters of the world’s poorest people lived in middle-income countries, while the gap between rich and poor was at its highest level in over 30 years in high-income countries¹. In the United States, for instance, growing inequality means that today one child in five lives below the federal poverty line. Consequently, “the new geography of deprivation puts tackling national inequalities high on the agenda of ending poverty for all.” But to do that, there needs to be a clear understanding of how austerity—which hits the poorest hardest—and the social pain of high inequality came to appear as necessary steps toward a more equitable society for all.

This chapter aims to show that “Rather than accept growing inequality as a law of economic development, an inevitability that must be endured, twenty-first-century economists will regard it as a failure of economic design and will seek to make economies far more distributive of the value that they generate. Instead of focusing primarily on redistributing income earned, they will aim to redistribute wealth too—especially the wealth that comes from controlling land, money creation, enterprise, technology and knowledge. And instead of focusing on market and state solutions alone, they will also harness the power of the commons. It’s a fundamental shift in perspective, and it is well under way.”

1. Cingano, F. (2014) Trends in Income Inequality and Its Impact on Economic Growth, OECD Social, Employment and Migration Working Papers, no. 163, OECD publishing