Who Wants to Be an Economist?

When reviewing this book by Kate Raworth, the journalist George Monbiot summed it up by saying “Instead of growth at all costs, a new economic model allows us to thrive while saving the planet”. Let’s explore.

Join our “Book Club”! This post is part of a reading series of Doughnut Economics by Kate Raworth. You are kindly invited to add to this chapter summary by answering the question(s) in the comment section.

Introduction: Who Wants to Be an Economist?

Kate Raworth makes the case for a new intelligence of economics by first explaining why we should be concerned. This relates not only to the present state of the world—however appalling the diagnostic might be—but also, and more importantly, to the transition to a valid economic framework and the new narrative that needs to replace conventional economics.

Today, the richest 1% of people on the planet own more wealth than the other 99% put together. According to Oxfam, the world’s 26 richest people own as much as poorest 50%.1 This is the symptom of a system using financial wealth as its sole metric of success, be it for individuals, countries, or corporations. With such a narrow logic and in the absence of proper regulations, money interests will always be prioritized over the genuine added value of everybody else’s hard work. The financialization of the economy is a permanent risk at the core of the system, as illustrated by the depressions of 1929 and 2008, as well as by the stunning income inequality in almost every country of the world.

At a deeper level, the reference to money as the primary metric of economic development implicitly means that progress can be equated to more of everything ad infinitum. The movement is not supposed to stop ever. In a violent contradiction that would make any four years old wonder, humanity is thus invited to pillage and harm the finite planet it depends upon as if it was, well, infinite.

Not only is the concept of growth to infinity self-contradictory because it ignores that growth is necessarily relative to its own conditions but, practically speaking, the world we live in is in a state of environmental collapse. Bio-diversity is disappearing at an alarming rate, climate change is likely to turn soon in a runaway global warming process, and soil and water have been degraded almost everywhere due to intensive agricultural practices and unfettered industrial pollution.

The point is not to deny the advantages of a healthy economy but to make it effectively such. Conventional economics does not answer the challenges mentioned above. It created them. To correct the course, we have to consider that today’s citizens “are being taught an economic mindset that is rooted in the textbooks of 1950, which in turn are rooted in the theories of 1850. Given the fast-changing nature of the twenty-first century, this is shaping up to be a disaster.” (Id. p. 7). The solution? “What if we started economics not with its long-established theories but with humanity’s long-term goals, and then sought out the economic thinking that would enable us to achieve them?” (Id. pp. 8-9).

What you see here is the “doughnut”. By recognizing the boundaries within which the economy has to operate, this model also puts it back into the system of systems that the world really is. Far from being a constraint to human development, it promotes an integrated approach to the economy that can only provide the best social, environmental, and economic output. When reviewing Kate Raworth’s book, the journalist George Monbiot adequately summed up this Copernican revolution by saying “Instead of growth at all costs, a new economic model allows us to thrive while saving the planet”.2 Let’s thrive!

We will explore seven mind-shifting ways of thinking like a twenty-first-century economist:

Conventional Economics
Doughnut Economics
Gross Domestic ProductEconomic Doughnut (environmental outer boundary and human needs inner boundary)
Circular FlowEmbedded economy (in society and in nature)
Rational Economic ManMan (human)
Mechanical equilibriumDynamic complexity (systems of systems)
CumulativeDistributive by design (network of flows [not just money])
LinearRegenerative (circular)
Growth addictedGrowth agnostic (thriving instead of growing)
Share your thoughts: Environmentalist David Suzuki once said that conventional economics is a form of “brain damage”. Would you say that is a fair and relevant characterization? Why?

Footnotes

  1. World’s 26 richest people own as much as poorest 50%, says Oxfam
  2. Finally, a breakthrough alternative to growth economics – the doughnut

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