Can humanity thrive without destroying the planet? It all depends on your representation of the economic purpose, says Kate Raworth, a “renegade economist” working at Oxford and Cambridge universities.
| This post is part of a reading series on Doughnut Economics by Kate Raworth. To quickly access all chapters, please click here. Disclaimer: This chapter summary is personal work and an invitation to read the book itself for a detailed view of all the author’s ideas. |
The financial crash of 2008 revealed a disconnect in economics that runs far beyond the financial sector. A disconnect, says Kate Raworth, “visible in the gulf between the preoccupations of mainstream economic theory and growing real-world crises such as global inequality and climate change.” The revolution in economics to answer these challenges has begun, but its success depends “not only on debunking old ideas but, more importantly, on bringing forth the new.”
The word “economics” itself was coined by the philosopher Xenophon in Ancient Greece, combining oikos (household) with nomos (rules or norms). This could not be more relevant today with our planetary household and the needs of all its inhabitants. The world’s richest 1% owns more wealth than all the other 99% put together, while human activity imposes unprecedented stress on Earth’s life-giving systems. Meanwhile, mainstream economics’ projections in 2015 (shortly before Doughnut Economics was written) expected a 3 percent growth per year until 2050, doubling the global economy in size by 2037 and almost trebling it by 2050.1 No one can seriously pretend that in today’s conditions such a projection is sustainable. The frame of thinking behind the business-as-usual mindset must consequently be questioned and replaced by a constructive one.
“Economics is the mother tongue of public policy, the language of public life and the mindset that shapes society,” says Kate Raworth. Unfortunately, “[future] citizens of 2050 are being taught an economic mindset that is rooted in the textbooks of 1950, which in turn are rooted in the theories of 1850.” This does not invalidate, of course, economics as such but definitely calls for examining its paradigm. “The twentieth century gave rise to groundbreaking new economic thinking, most influentially in the battle of ideas between Keynes and Hayek. But though those iconic thinkers held opposing perspectives, they inherited flawed assumptions and common blind spots that lay unexamined at the root of their differences. The twenty-first-century context demands that we make those assumptions explicit and those blind spots visible so that we can, once again, rethink economics.”