Doughnut Economics | Review & Notes

Kate Raworth. Doughnut Economics: 7 Ways to Think Like a 21st Century Economist. Chelsea Green Publishing, 2017. (309 pages)

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.


In recent times, I feel that I’ve been doing my most important and consequential reading, and Doughnut Economics is in the top tier of that list. In this one volume, Raworth not only upends the prevailing beliefs and general ideas, but she profoundly articulates the underlying assumptions and mechanisms. In addition, Raworth clearly and powerfully articulates the problem(s) so we can see more accurately what we are dealing with, and then prophetically calls us to consider thoughtfully the solutions that are now available. Without any equivocation, Raworth identifies the challenges, but ultimately exhorts us to act, and act because we can.

Relevant to my personal vocation, what is perhaps most powerful is to read how the human postures by which we will fix our economic predicament are found in religious and philosophical ideas and ideals, much of which resonate with the sacred stories we’ve been telling ourselves for thousands of years. I am hopeful, that just like those stories saved us from barbarian ways of living then, perhaps they can now save us from extractive, wasteful, and degenerative ways of living now.

At the very least, please peruse the highlights below, and begin imagining a wholly new economic reality.


Who Wants to be an Economist?

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

The Twenty-First-Century Challenge

The word ‘economics’ was coined by the philosopher Xenophon in Ancient Greece. Combining oikos [οικος] meaning household with nomos [νομος] meaning rules or norms, he invented the art of household management, and it could not be more relevant today. This century we need some pretty insightful managers to guide our planetary household, and ones who are ready to pay attention to the needs of all its inhabitants. (4)

The Authority of Economics

However we tackle these interwoven challenges, one thing is clear: economic theory will play a defining role. Economics is the mother tongue of public policy, the language of public life and the mindset that shapes society. (5)

In these early decades of the twenty-first century, the master story is economic: economic beliefs, values and assumptions are shaping how we think, feel and act. – F.S. Micahels, Monocolutre: How One Story Is Changing Everything

And here’s the rub. Humanity’s journey through the twenty-first century will be led by the policymakers, entrepreneurs, teachers, journalists, community organizers, activists and voters who are being educated today. But these 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. (7)

Walking Away from Economics–and Back

What if we started economic not with its long-established theories but with humanity’s long-term goals, and then sought out the economy thinking that would (8) enable us to achieve them? (9)

The essence of the Doughnut: a social foundation of well-being that no one should fall below and an ecological ceiling of planetary pressure that we should not go beyond. Between the two lies a safe and just space for all.

Students must learn how to discard old ideas, how and when to replace them…how to learn, unlearn, and relearn – Alvin Toffler

The Power of Pictures

Half of the nerve fibres in our brains are linked to our vision and, when our eyes are open, vision counts for two-thirds of the electrical activity in the brain. It takes just 150 milliseconds for the brain to recognize an image and a mere 100 milliseconds more to attach a meaning to it. (11)

…unless our words, concepts and ideas are hooked onto an image, they will go in one ear, sail through the brain, and go out of the other ear. Words are processed by our short-term memory where we can only retain about seven bits of information…Images, on the other hand, go directly into long-term memory where they are indelibly etched. – Lynell Burmark

Images in Economics: A Hidden History

Aspiring to make economics seem as scientific as physics, [William Stanley] Jevons drew his theories in the style of Newton’s diagrams of the laws of motion.

Samuelson’s 1948 Circular Flow diagram, which depicted income flowing round the economy as if it were water flowing round plumbed pipes.

A Long Struggle of Escape

Rethinking economics is not about finding (19) the correct one (because it doesn’t exist); it’s about choosing or creating one that best serves our purpose–reflecting the context we face, the values we hold, and the aims we have. As humanity’s context, values and aims continually evolve, so too should the way that we envision the economy. (20)

The fact that you have never sat through an economics lecture may just turn out to be a district advantage after all: you’ve less baggage to offload, less graffiti to scrub out. Every now and then, being untutored can be an intellectual asset–and this is one of those moments. (21)

Seven Ways to Think Like a Twenty-First-Century Economist

So here is a whirlwind tour of the ideas and the images at the heart of Doughnut Economics. (22)

First, change the goal. For over 70 years, economics has been fixed 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. And that goal is encapsulated in the concept of the Doughnut. The challenge now is to create economies–local to global–that help to bring all of humanity into the Doughnut’s safe and just space. Instead of pursuing ever-increasing GDP, it is time to discover how to thrive in balance. (22)

Second, see the big picture. Mainstream economics depicts the whole economy with just one, extremely limited image, the Circular Flow diagram. Its limitations have, furthermore, been used to reinforce a neoliberal narrative about the efficiency of the market, the incompetence of the state, the domesticity of the household and the tragedy of the commons. It is time to draw the economy anew, embedding it within society and within nature, and powered by the sun. This new depiction invites new narratives–about the power of the market, the partnership of the state, the core role of the household and the creativity of the commons. (22)

Third, nurture human nature. At the heart of twentieth-century economics stands the portrait of rational economic man: he has told us that we are self-interested, isolated, calculating, fixed in taste and dominant over nature–and his portrait has shaped who we have become. But human (22) nature is far richer than this, as early sketches of our new self-portrait reveal: we are social, interdependent, approximating, fluid in values and dependent upon the living world. What’s more, it is indeed possible to nurture human nature in ways that give us a far greater chance of getting into the Doughnut’s safe and just space. (23)

Fourth, get savvy with systems. The iconic criss-cross of the market’s supply and demand curves is the first diagram that every economics student encounters, but it is rooted in misplaced ninetieth-century metaphors of mechanical equilibrium. A far smarter starting point for understanding the economy’s dynamism is systems thinking, summed up by a simple pair of feedback loops. Putting such dynamics at the heart of economics opens up many new insights, from the boom and bust of financial markets to the self-reinforcing nature of economic inequality and the tipping points of climate change. It’s time to stop searching for the economy’s elusive control levers and start stewarding it as an ever-evolving complex system. (23)

Fifth, design to distribute. In the twentieth century, one simple curve–the Kuznets Curve–whispered a powerful message on inequality: it has to get worse before it can get batter, and growth will (eventually) even it up. But inequality, it turns out, is not an economic necessity: it is a design failure. Twenty-first-century economists will recognize that there are many ways to design economies to be far more distributive of the value that they generate–an idea best represented as a network of flows. It means going beyond redistributing income to exploring ways of redistributing wealth, particularly the wealth that lies in controlling land, enterprise, technology, knowledge and the power to create money. (23)

Sixth, create to regenerate. Economic theory has long portrayed a ‘clean’ environment as a luxury good, affordable only for the well-off. This view was reinforced by the Environmental Kuznets Curve, which once again whispered that pollution has to get worse before it can get better and growth will (eventually) clean it up. But there is no such law: ecological degradation is simply the result of degenerative industrial design. This century needs economic thinking that unleashes regenerative design in order to create a circular–not linear–economy and to restore humans as full participants in Earth’s cyclical processes of life. (23)

Seventh, be agnostic about growth. One diagram in economic theory is so dangerous that it is never actually drawn: the long-term path of GDP growth. Mainstream economics views endless economic growth as a must, but nothing in nature grows forever, and the attempt to buck that trend is raising tough questions in high-income but low-growth countries. It may not be hard to give up having GDP growth as an economic goal, but it is going to be far harder to overcome our addiction to it. 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. That radical flip in perspective invites us to become agnostic about growth and to explore how economies that are currently financially, politically and socially addicted to growth could learn to live with or without it. (26)

Seven Ways to Think: From Twentieth-Century Economics To Twenty-First-Century Economics
1. Change the Goal GDP The Doughnut
2. See the Big Picture self-contained market embedded economy
3. Nurture Human Nature rational economic man social adaptable humans
4. Get Savvy with Systems mechanical equilibrium dynamic complexity
5. Design to Distribute growth with even it up again distributive by design
6. Create to Regenerate growth will clean it up again regenerative by design
7. Be Agnostic about Growth growth addicted growth agnostic

1. Change the Goal from GDP to the Doughnut

In the twentieth century, economics lost the desire to articulate its goals: in their absence, the economic nest got hijacked by the cuckoo goal of GDP growth. It is high time or that cuckoo to fly the nest so that economics can reconnect with the purpose that it should be serving. (28)

How Economics Lost Sight of Its Goal

cf. James Steuart (~1767); Adam Smith (~1770s); John Stuart Mill (~1850s); Jacob Viner (~1930s); Lionel Robbins (~1932); Gregory Mankiw’s, Principles of Economics (1997); Milton Friedman and the Chicago School;…

Cuckoo in the Nest

Though claiming to be value-free, conventional economic theory cannot escape the fact that value is embedded at its heart: it is wrapped up with the idea of utility, which is defined as a person’s satisfaction or happiness gained from consuming a particular bundle of goods. (30)

Economic theory is quick–too-quick–in asserting that the price people are willing to pay for a product or service is a good enough marketplace proxy for calculating their utility gained. Add to this the apparently reasonable assumption that consumers always prefer more to less, and it is a short step to concluding that continual income growth (and therefore output growth) is a decent proxy for ever-improving human welfare. And with that, the cuckoo has hatched. (31)

Growth is one of the stupidest purposes ever invented by any culture. …we should always ask: ‘growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s he cost to the planet, and how much is enough?’ – Donella Meadows, Limits to Growth

[via: the following lectures were given at the University of Michigan Ross School of Business in 1999]

Evicting the Cuckoo

With all the awkwardness of teenagers learning to talk about their feelings for the first time, economists and politicians–along with the rest of us–are searching for words (and of politicians–along with the rest of us–are searching for words (and of course the pictures) to articulate a greater economic purpose than growth. How can we learn to talk again of values and goals, and put them at the heart of an economic mindset that is fit for the twenty-first century? (36)

cf. Jean Sismondi, (1819); John Ruskin, (1860s); E.F. Schumacher; Manfred Max-Neef; Amartya Sen; Nicolas Sarkozy

A Twenty-First-Century Compass

First, to get our bearings, let’s put GDP growth aside and start afresh with a  fundamental question: what enables human beings to thrive? (37)

The Doughnut: a twenty-first-century compass. Between its social foundation of human well-being and ecological ceiling of planetary pressure lies the safe and just space for humanity.

What exactly is the Doughnut? Put simply, it’s a radically new compass for guiding humanity this century. And it points towards a future that can provide for every person’s needs while safeguarding the living world on which we all depend. (39)

the Great Acceleration… Between 1950 and 2010, the global population almost trebled in size, and World GDP increased sevenfold. (40)

It is difficult to overestimate the scale and speed of change. In a single lifetime humanity has become a planetary-scale geological force…This is a new phenomenon and indicates that humanity has a new responsibility at a global level for the planet. – Will Steffen

More extraordinarily, scientists suggest that, if undisturbed, the Holocene’s benevolent conditions would be likely to continue to for another 50,000 years due to the unusually circular orbit that the Earth is currently making of the sun–a phenomenon so rare that it last happened 400,000 years ago. This is certainly something to sit back and ponder. Here we are on the only known living planet, born into its most hospitable era which, thanks to the odd way we happen to be circling the sun right now, is set to run and run. (41)

So, the scientists proposed a set of nine boundaries, like guard-rails, where they believe each danger zone begins… (42)

And it is these nine planetary boundaries that define the Doughnut’s ecological ceiling: the lints beyond which we should put no further pressure not he planet if we want to safeguard the stability of our home. (42)

Transgressing both sides of the Doughnut’s boundaries. The dark wedges below the social foundation show the proportion of people worldwide falling short on life’s basics. The dark wedges radiating beyond the ecological ceiling show the overshoot of planetary boundaries (for complete data see the Appendix).

Billions of people still far short of their most basic needs, but we have already crossed into global ecological danger zones that profoundly risk undermining Earth’s benevolent stability. In this context, what could progress possibly look like? (45)

From Endless Growth to Thriving in Balance

That calls for a profound shift in our metaphors: from ‘good is forwards-and-up’ to ‘good is in-balance.’ And it shifts the image of economic progress from endless GDP growth to thriving-in-balance in the Doughnut. (46)

What might (46) the words for that new vision be? A first suggestion: human prosperity in a flourishing web of life. (47)

We are the first generation to know that we’re undermining the ability of the Earth system to support human development. This is a profound new insight, and it is potentially very, very scary…It is also an enormous privilege because it means that we are the first generation to know that w now need to navigate a transformation to a globally sustainable future. – Johan Rockström

Ancient symbols of dynamic balance: the Taoist yin yang, Maori takarangi, Buddhist endless knot and Celtic double spiral.

Imagine, then, if ours could be the turnaround generation that starts putting humanity on track for that future. What if we each were to mentally map our own lives on to the Doughnut, asking ourselves: how does the way that I shop, eat, travel, earn a living, bank, vote and volunteer affect my personal impact on social and planetary boundaries? What if every company strategies around a Doughnut table, asking itself: is our brand a Doughnut brand, whose core business helps to bring humanity into that safe and just space? Imagine if the G20 finance ministers–representing the world’s most powerful economies–met around a Doughnut-shaped conference table to discuss how to design a global financial system that served to bring humanity into that sweet spot. These would be world-changing conversations. (48)

Ours is the era of the planetary household–and the art of household management is needed more than ever for our common home. (49)

Can We Live within the Doughnut?

…what determine whether or not we can actually move into its safe and just space? Five factors certainly play key roles: pupation, distribution, aspiration, technology and governance. (49)

…the most effective way to stabilize the size of the human population is to ensure that every person can lead a life free of deprivation, above the social foundation. (49)

…[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. – Tim Jackson

2. See the Big Picture from self-contained market to embedded economy

Setting the Stage

Households supply their labour and capital in return for wages and profits, and then spend that income buying goods and services from firms. It is this interdependence of production and consumption that creates income’s circular flow. And that flow would be uninterrupted if it were not for three outer loops–involving commercial banks, government and trade–that divert some income for other uses. (55)

The Circular Flow diagram, which for 70 years was the defining depiction of the macroeconomy.

The most important assumptions of a model are not in the equations, but what’s not in them; not in the documentation, but unstated; not in the variables on the computer screen, but in the blank spaces around them. – John Sterman

The Circular Flow diagram certainly needs to be introduced with this caveat. It makes no mention of the energy and materials on which economic activity depends, nor on the society within which those activities take place.: they are simply missing from its cast of characters. (58)

Scripting the Play

Economics: The Twentieth-Century Neoliberal Story
(in which we go to the brink of collapse)

THE MARKET, which is efficient–so give it free reign. (59)

BUSINESS, which is innovative–so let it lead. (59)

FINANCES, which is infallible–so trust in its ways. (59)

TRADE, which is win-win–so open your borders. (60)

THE STATE, which is incompetent–so don’t let it meddle (60)

Other characters not required on stage:

THE HOUSEHOLD, which is domestic–so leave it to the women. (60)

THE COMMONS, which are tragic–so sell them off. (60)

SOCIETY, which is non-existent–so ignore it. (60)

EARTH, which is inexhaustible–so take all you want. (61)

POWER, which is irrelevant–so don’t mention it. (61)

It was, undeniably, a brilliant line-up–and almost a stitch-up. The market, promised the neoliberal script, is the road to freedom, and who could be against that? But putting blind faith in markets–while ignoring the living world, society and the runaway power of banks–has taken us to the brink of ecological, social and financial collapse. It is time for the neoliberal show to leave the stage: a very different story is emerging. (61)

A New Century, A New Show

So let’s start afresh with an economic question better suited to our own times: what do we depend upon to provision for our needs? (61)

The Embedded Economy, which nests the economy within society and within the living world while recognizing the diverse ways in which it can meet people’s needs and wants.

Economics: The Twenty-First-Century Story
(in which we create a thriving balance)

EARTH, which is life giving–so respect its boundaries. (62)
SOCIETY, which is foundational–so nurture its connections. (63)
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. (63)

EARTH, which is life giving–so respect its boundaries … But if the economy is so evidently embedded in the biosphere, how has economics so blatantly ignored it? (63)

The classical economists, led by Smith and Ricardo, and recognized labour, land and capital as three distinct factors of production. But by the late twentieth century, mainstream economics had reduced the focus to just two: labour and capital–and if ever land did get a mention, it was as just another form of capital, interchangeable with all the rest. As a result, mainstream economics is still taught today with scant attention paid to the living planet that supports us and the blazing start hose energy we depend upon. It relegates ecological stresses such as climate change, deforestation and soil degradation to the periphery of economic thought until they become so severe hat their damaging economic impacts demand attention. (64)

| So let’s restore sense from the outset and recognize that, far from being a closed, circular loop, the economy is an open system with constant inflows and outflows of matter and energy. The economy depends upon Earth as a source–extracting finite resources such as oil, clay, cobalt and copper, and harvesting renewable ones such as timber, crops, fish and fresh water. The economy likewise depends upon Earth as a sink for its wastes–such as treehouse gas emissions, fertilizer run-off and throwaway plastics. Earth itself, however, is a closed system because almost no matter leaves or arrives on this planet: energy from the sun may flow through it, but materials can only cycle within it. (64)

SOCIETY, which is foundational–so nurture its connections

Community connectedness is not just about warm fuzzy tales of civic triumph. In measurable and well-documented capital makes us smarter, healthier, safer, richer and better able to govern a just and stable democracy. – Robert Putnam, Bowling Alone, p.290

Democratic governance of society and the economy rests on the right and capacity of citizens to engage in public debate–hence the importance of ‘political voice’ within the Doughnut’s social foundation. (67)

THE ECONOMY, which is diverse–so support all of its systems

Households produce ‘core’ goods for their own members; the market produces private goods for those willing and able to pay; the commons produce co-created goods for the communities involved; and the state produces public goods for all the populace. I wouldn’t want to live in a society whose economy lacked any of these four realms of provisioning because each one has distinct qualities and much of their value arises through their interactions. In other words, they work best when they work together. (67)

THE HOUSEHOLD, which is core–so value its contribution

By largely ignoring the core economy, mainstream economics has also overlooked just how much the paid economy depends upon it. Without all that cooking, washing, nursing and sweeping there would be no workers–today or in the future–who were healthy, well-fed and ready for work each morning. (69)

How productive would your workforce be if it hadn’t been toilet trained? – Alvin Toffler

Why does it matter that this core economy should be visible in economics? Because the household provision of care is essential for human well-being, and productivity in the paid economy depends directly upon it. (69)

In short, including the household economy in the new diagram of the macroeconomy is the first step in recognizing its centrality, and in reducing and redistributing women’s unpaid work. (70)

THE MARKET, which is powerful–so embed it wisely

…whenever I hear someone praising the ‘free market,’ I beg them to take me there because I’ve never seen it at work in any country that I have visited. …markets (and hence their prices) are strongly shaped by a society’s context of laws, institutions, regulations, policies and culture. (70)

A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them. – Ha-Joon Chang

Forget the free market: think embedded market. And, strange though it sounds, that means there is no such thing as deregulation, only reregulation that embeds the market in a different set of political, legal and cultural rules, simply shifting who bears the risks and costs and who reaps the gains of change. (71)

THE COMMONS, which are creative–so unleash their potential

Natural commons have traditionally emerged in communities seeking to steward Earth’s ‘common pool’ resources, such as grazing land, fisheries, watersheds and forests. Cultural commons serve to keep alive a community’s language, heritage and rituals, myths and music, traditional knowledge and practice. And the fast-growing digital commons are stewarded collaboratively online, co-creating open-source software, social networks, information and knowledge. (71)

THE STATE, which is essential–so make it accountable

First, by providing public goods–ranging from public education and healthcare to roads and street lighting–that deliver for all, not just for those who can pay, so enabling a society and its economy to thrive. Second, by supporting the core caring role of the household, such as with maternal and paternal leave policies that empower both parents, investment in early-years education and care support for seniors. Third, by unleashing the dynamism of the commons, with laws and institutions that enable their collaborative potential and protect them from encroachment. Fourth, by harnessing the power of the market by embedding it in institutions and regulations that promote the common good–from banning toxic pollutants and insider trading to protecting biodiversity and workers’ rights. (73)

The threat of the authoritarian state is very real, but so too is the danger of market fundamentalism. To avoid the tyranny of the state and the tyranny of the market alike, democratic politics are key–thus reinforcing the foundational role played by society in generating the civic engagement needed for participation and accountability in public and political life. (74)

FINANCE, which is in service–so make it serve society

And far from providing a valuable service to the productive economy, finance has turned into the tail that wags the dog. (74)

| First, contrary to the textbook story and the Circular Flow diagram, banks do not merely lend out the money that has been deposited by their savers. They create money from nothing each time they issue loans–recording on their books both a liability (since the loan is withdrawn by the borrower) and a credit (since the loan will be repaid with interest over time). (74)

Second, financial markets do not tend to promote economic stability, despite the claims that they do. (74)

Lastly, far from playing a supporting role to the productive economy, finances has come to dominate it. … It is time to turn this upside-down scenario the right way up and redesign finance so that it flows in service of the economy and society. Such a redesign also invites a rethink of how money could be created–not just by the market but by the state and the commons too… (75)

BUSINESS, which is innovative–so give it purpose

TRADE, which is double-edged–so make it fair

Today, everything but land moves, with cross-border flows including trade in products and services (from fresh fruit to legal advice); foreign direct investment (in businesses and properties); financial flows (from bank loans to corporate stocks); and the migration of people in search of a livelihood. (76)

Just as there is no such thing as the free market, it turns out that there is no such thing as free trade: all cross-border flows are set against the backdrop of national history, current institutions and international power relations. (77)

POWER, which is pervasive–so check its abuse

Wherever people are present, so too are power relations: think of them as running throughout the Embedded Economy diagram, within each of its domains and at the interface between them too. (77)

| Out of all of these power relationships, when it comes to the workings of the economy, one in particular demands attention: the power of the wealthy to reshape the economy’s rules in their favor. (77)

Raising the Curtain on a Twenty-First-Century Story

It shifts our attention from merely tracking the flow of income to understanding the many distinct sources of wealth–natural, social, human, physical and financial–on which our well-being depends. (79)

| This new vision prompts new questions. Instead of immediately focusing on making markets work more efficiently, we can start by considering: when is each of the four realms of provisioning–household, commons, market and state–best suited to delivering humanity’s diverse wants and needs? What changes in technology, culture and social norms might alter that? How can these four realms most effectively work together–such as the market with the commons, the commons with the state, or the state with the household? Likewise, rather than focusing by default on how to increase economic activity, ask how the content and structure of that activity might be shaping society, politics and power. And just how big can the economy become, given Earth’s ecological capacity? (79)

3. Nurture Human Nature from rational economic man to social adaptive humans

The Story of Our Self-Portrait

…although [Adam Smith] believed self-interest was ‘of all virtues that which is most helpful to the individual’, Smith also believed it was afar from the most admirable of our traits, knocked off that top spot by our ‘humanity, justice, generosity and public spirit…the qualities most useful to others.’ (83)

[Political economy] does not treat the whole of man’s nature…nor the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth. – John Stuart Mill

To this desire for wealth, Mill added two other exaggerated features: a deep dislike of work and a love of luxuries. (84)

Seizing upon the mathematical potential of this concept, [William Stanley] Jevons drew up ‘calculating man,’ whose fixation on maximising (84) his utility had him constantly weighing up the consumption satisfaction that he might derive from every possible combination of his options. (85)

| With this move, Jevons placed utility at the heart of economic theory–a spot it occupies to this day–and from it he derived the law of diminishing returns: the more of a thing that you consume (be it bananas or shampoo), the less you will desire still more of it. (85)

Human wants and desires are countless in number and very various in kind. The uncivilized man indeed has not many more than the brute animal; but every step in his progress upwards increases the variety of his needs…he desires a greater choice of things, and things that will satisfy new wants growing up in him. – Alfred Marshall, Principles of Economics

…in the 1920s, Chicago-school economist Frank Knight decided to endow economic man with two godlike traits–perfect knowledge and perfect foresight–enabling him to compare all goods and prices across all time. … And with that, he had turned the caricature into a cartoon. He knew it too: he admitted that his depiction of humanity was loaded with ‘a formidable array’ of artificial abstractions, resulting in a creature who ‘treats other human beings as if they were slot machines.’ (85)

Rational economic man came to define rationality, recounts the economic historian Mary Morgan, and turned into ‘a normative model of behavior for real economic actors to follow.’ (86)

Life Imitates Art

…our beliefs about human nature help shape human nature itself. – Robert Frank

Research by Frank and others has revealed, first, that the discipline of economics tends to attract self-interested people. Experimental research in German, for example, found that economics students were more likely than other students to be corruptible–willing to give a biased answer–if it led to a personal payout. Research in the United States likewise found that economics majors were more approving of their own and others’ self-serving behaviour, while economics professors gave significantly less money to charity than their worse-paid colleagues in many other disciplines. (86)

| Beyond attracting self-interested people, however, studying Homo economicus can alter us too, reshaping who we think we are and how we should have. In Israel, third-year economics majors rated altruistic values–such as helpfulness, honesty and loyalty–as far less important in life than did their freshman equivalents. (86)

The pernicious effects of the self-interest theory have been most disturbing. By encouraging us to expect the worst in others, it brings out the worst in us: dreading the role of the chump, we are often loath to heed our nobler instincts. – Robert Frank

cf. Constructing a market, performing theory: the historical sociology of a financial derivatives exchange; Economics Langauge and Assumptions, How Theories Can Become Self-Fulfilling

…the traders had started to behave as if the theory were true and, so, were using the model’s predicted prices as a benchmark for setting their own bids. (87)

cf. Cuing Consumerism: Situational Materialism Undermines Personal and Social Well-Being

The Twenty-First-Century Portrait

First, rather than narrowly self-interested, we are social and reciprocating. Second, in place of fixed preferences, we have fluid values. Third, instead of isolated, we are interdependent. Fourth, rather than calculate, we usually approximate. And fifth, far from having dominion over nature, we are deeply embedded in the web of life. (88)

Understanding the range of behavioral differences between cultures and societies–and the reasons behind them–is clearly a subject for much-needed research, but for now, we can cut on two givens. First, although human behaviour may vary between societies, one important thing unites humanity: none of us resemble that narrow old model of rational economic man. Second, until a more nuanced and diverse image of humanity has been sketched out, the emerging portrait described in the five shifts below most closely resemble people in WEIRD societies. (89)

From self-interested to socially reciprocating

According to economists Sam Bowles and Herb Gitis, we WEIRD ones typically practice what is known as ‘strong reciprocity’: we are conditional cooperators (tending to cooperate so long as others do too) but also altruistic punishers (ready to punish defectors and free riders even if it costs us personally). And it is the combination of these two traits that leads to the success of large-scale cooperation in society. (90)

People’s sense of reciprocity appears to co-evolve with their economy’s structure: a fascinating finding with important implications for those aiming to rebalance the roles of the household, market, commons and state in any society. (91)

From fixed preferences to fluid values

We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. … It is they who pull the wires which control the public mind. – Edward Bernays, Propaganda

When it comes to nurturing human nature, three things stand out in [Shalom Schwartz and colleagues]’ findings. (92)

| First, all ten basic values are present in us all, and each one of us is motivated by their full array but to widely differing degrees that vary between cultures and individuals. … Second, each of the values can be ‘engaged’ in us if it is triggered: when reminded of security, for example, we are likely to take fewer risks; when power and achievement are brought to mind, we are less likely to take care of others’ needs. Third, and most interestingly, the relative strength of these different values changes in us not just over the course of a (92) lifetime, but in fact many times in a day, as we switch between social roles and contexts, whether moving from the workplace to the social space, the kitchen table to the conference table, from the commons o the market to the home. (93)

Schwartz’s value circumflex, which shows the ten basic personal values that are common across cultures.

From isolated to interdependent

We follow social norms, typically preferring to do what we expect others will do, and especially if filled with fear or doubt, we tend to go with the crowd. (94)

From calculating to approximating

…nudge policies…’any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. (Richard Thaler and Cass Sunstein, Nudge) (96)

…we have survived and thrived not despite our cognitive biases but because of them. (Gerd Gigerenzer) Over millennia, the human brain has evolved to rely on quick decision-making tools in a fast-moving and uncertain world, and in many contexts those heuristics lead us to make better decisions than exact calculations would do. (97)

From dominant to dependent

This shift in perspective–from pyramid to web, from pinnacle to participant–also invites us to move beyond anthropocentric values and to recognize and respect the intrinsic value of the living world. ‘What’s really needed’, suggests the thinker Otto Scharmer, ‘is a deeper shift in consciousness so that we begin to care and act, not just for ourselves and other stakeholders but in the interests of the entire ecosystem in which economic activities take place.’ (99)

How do we belong in this world, and what is our role? Finding the words to say it may turn out to be more important than we can imagine in determining whether or not we as a species can learn to thrive with others. (100)

Markets and Matches: Handle with Care

But while prices matter, getting them ‘right’ is not such a simple solution as it first promises to be: twentieth-century theory has led economists to overestimate the effectiveness of price as a lever and to underestimate the role of values, sense of reciprocity, networks and heuristics. Crucially, the theory overlooks the fact that some things may be put in jeopardy when they are given a price. That is especially true when it comes to relationships that we have traditionally managed with our morals. Here’s why. Setting a price is like striking a match: it sparks intense interest, but that spark unites both power and danger. (101)

Markets are not mere mechanisms; they embody certain values. And sometimes, market values crowd out non market norms worth caring about. – Michael Sandel

Simply thinking like a consumer, it seems, triggers self-regarding behaviour and divides rather than unites groups who are facing a common scarcity. In the context of twenty-first-century pressures on Earth’s sources and sinks–from fresh water and fish to the oceans and atmosphere–that insight could turn out to have pivotally important implications for how we describe (103) ourselves in the challenges that we collectively face. Suddenly the words ‘neighbors’, ‘community members’, ‘community of nations’ and ‘global citizens’ seem incredibly precious for securing a safe and just economic future. (104)

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

Evidence from a wide range of policy initiatives–from school enrollments to forest conservation–raises a warning signal around introducing cash incentives in social spaces: their deeper effects are still so little understood and the evidence to date shows that they can so often go wrong. Furthermore, there are other means of motivating behaviour change–drawing on reciprocity, values, and nudging and networks–that may cost far less, in both cash and consequences. (105)

Tapping into Nudge, Networks and Norms

Meeting Ourselves All over Again

Three images keep cropping up time and again: humanity as a community, as sowers and reapers, and as acrobats. (108)

The image of community reminds us that we are the most social of species, dependent upon each other throughout the cycles of our lives. The sower-reaper embeds us within the web of life, making clear that our societies co-evolve with the living world on which we depend. And the acrobats exemplify our skill of trusting, reciprocating, and cooperating with each other to achieve things that none of us could do alone. (108)

Homo economicus, that solitary figure poised with money in his hand, calculator in his head, nature at his feet, and an insatiable appetite in his heart. It is time to redraw ourselves as people who thrive by connecting with each other and with this living home of ours that is not ours alone. (108)

4. Get Savvy with System from mechanical equilibrium to dynamic complexity

Craving the authority of science, economists then mimicked Newton’s laws of motion in their theories, describing the economy as if it were a stable, mechanical system. But we now know it is far better understood as a complex adaptive system, made up of interdependent humans in a dynamic living world. So if we are to have half a chance of bringing ourselves into the Doughnut, then it is essential to shift the economist’s attention from the apple as it falls to the apple as it grows, from linear mechanics to complex dynamics. (112)

Overcoming Our Inheritance

problems of organized complexity, which involve a sizable number of variables that are ‘interrelated in an organic whole’ to create a complex but organized system. (117)

The Dance of Complexity

At the heart of systems thinking lie three deceptively simple concepts: stocks and flows, feedback loops, and delay. (118)

So what is a system? Simply a set of things that are interconnected in ways that produce distinct patterns of behaviour–be they cells in an organism, protestors in a crowd, birds in a flock, members of a family, or banks in a financial network. And it is the relationships between the individual parts–shaped by their stocks and flows, feedbacks, and delay–that give rise to their emergent behaviour. (119)

Feedback loops: the fundamentals of complex systems. Reinforcing feedback (R) amplifies what is happening, while balancing feedback (B) counters it.

Let’s face it, the universe is messy. It is nonlinear, turbulent, and chaotic. It is dynamic. It spends its time in transient behaviour on its way to somewhere else, not in mathematically neat equilibria. It makes the world interesting, that’s what makes it beautiful, and that’s what makes it work. – Donella Meadows

Complexity in Economics

There are no side effects–just effects. – John Sterman

Bubble, Boom, and Bust: The Dynamics of Finance

…when it comes to finance, stability breeds instability. Why? Because of reinforcing feedback loops, of course. During good economic times, banks, firms and borrowers all gain in confidence and start to take on greater risks, which pushes up the price of housing and other assets. This asset price rise, in turn, reinforces borrowers’ and lenders’ confidence along with their expectations that asset values will keep on rising. In Minsky’s own words, ‘The tendency to transform doing well into a speculative investment boom is the basic instability in a capitalist economy.’ (125)

Success to the Successful: The Dynamics of Inequality

She created two sets of rules for her game: an anti-monopolist set in which all were rewarded when wealth was created, and a monopolist set in which the goal was to create monopolies and crush opponents. Her dualistic approach was a teaching tool meant to demonstrate that the first set of rules was morally superior.

And yet it was the monopolist version of the game that caught on,

cf. Monopoly’s Inventor: The Progressive Who Didn’t Pass ‘Go’, NYTimes, February 13, 2005.

…’the Matthew Effect’. Its tell-tale pattern of accumulative advantage, coupled with spiraling disadvantage, can be seen in children’s educational outcomes, in adults’ employment opportunities, and of course in terms of income and wealth. (129)

Getting into the Doughnut requires reversing these widening gaps of income and wealth, so finding ways to offset and weaken the Success to the Successful feedback loop will be key,… (130)

Water in the Tub: The Dynamics of Climate Change

Avoiding Collapse

When a society starts to destroy the resource base on which it depends, argues the environmental historian Jared Diamond, it is going to be far less adept at changing its ways if it also stratified, with a small elite that is quite separate from the masses. And when the short-term interests of that decision-making elite diverged from the long-term interests of society as a whole it is, he warns, ‘a blueprint for trouble.’ (132)

cf. Diamond, J. (2005) Collapse: how societies choose to fail or survive.

Today’s economy is divisive and degenerative by default.
Tomorrow’s economy must be distributive and regenerative by design. (133)

An economy that is distributive by design is one whose dynamics tend to disperse and circulate value as it is created, rather than concentrating it in ever-fewer hands. An economy that is regenerative by design is one in which that we thrive within planetary boundaries. (133)

Goodbye Wrench, Hello Pruners

Say farewell to economy-as-machine and embrace economy-as-organism. (133)

To be a gardener is not to let nature take its course; it is to tend. Gardeners don’t make plants grow but they do create conditions where plants can thrive and they do make judgments about what should and shouldn’t be in the garden. – Eric Liu and Nick Hanauer, The Gardens of Democracy

…effective systems tend to have three properties–healthy hierarchy, self-organization and resilience… (136)

First, healthy hierarchy is achieved when nested systems serve the greater whole of which they are a part. (136)

Second, self-organization is born out of a system’s capacity to make its own structures more complex, such as a dividing cell, a growing social movement or an expanding city. (136)

Lastly, resilience emerges out of a system’s ability to endure and bounce back from stress, like a jelly that wobbles on a plate without losing its form or a spider’s web that survives a storm. (136)

Getting Ethical

When a profession seeks influence over others it necessarily takes on ethical obligations–whether it recognizes them or not. I’m aware of no other profession that has been so cavalier regarding its responsibilities. – George DeMartino

…here are four ethical principles for the twenty-first-century economist to consider. First, act in service to human prosperity in a flourishing web of life, recognizing all that it depends upon. Second, respect autonomy in the communities that you serve by ensuring their engagement and consent, while ever aware of the inequalities and differences that may lie within them. Third, be prudential in policymaking, seeking to minimize the risk of harm–especially to the most vulnerable–int he face of uncertainty. Lastly, work with humility, by making transparent the assumptions and shortcomings of your models, and by recognizing alternative economic perspectives and tools. (138)

The future can’t be predicted, but it can be envisioned and brought lovingly into being. Systems can’t be controlled, but they can be designed and redesigned. … We can listen to what the system tells us, and discover how its properties and our values can work together to bring forth something much better than can ever be produced by our will alone. – Donella Meadows

5. Design to Distribute from ‘growth will even it up again’ to distributive by design

Rather than accepting 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. (140)

The Economic Rollercoaster Ride

By asking not just who earns what but also who owns what, he [Thomas Piketty] distinguished between two kinds of households: those that own capital–such as land, housing, and financial assets which generate rent, dividends and interest–and those households that own only their labour, which generates only wages. (144)

Why Inequality Matters

Contrary to the founding theories of development economics, inequality does not make economies grow faster: if anything, it slows them down. And it does so by wasting the potential of much of the population: people who could be schoolteachers or market traders, nurses or mico-entrepreneurs–actively contributing to the wealth and well-being of their community–instead have to spend their time desperately trying to meet their families’ most basic daily needs. (147)

Get with the Network

…a new mindset is emerging. Its message is simple:

Don’t wait for economic growth to reduce inequality–because it won’t.
Instead, create an economy that is distributive by design.

too much efficiency makes a system vulnerable (as global (148) financial regulators realized too late in 2008) while too much resilience makes it stagnant: vitality and robustness lie in a balance between the two. (149)

| What design principles can nature’s thriving networks teach us for creating thriving economies? In two words: diversity and distribution. (149)

Redistributing Income–and Redistributing Wealth

Distributive design has an unprecedented opportunity this century to transform the dynamics of wealth ownership. Five opportunities stand out, concerning who controls land, the power to create money, enterprise, technology and knowledge–and all five are explored below. (151)

Who owns the land?

Buy land. They’re not making it anymore. – Mark Twain

Who makes your money?

It is, in essence, a (154) social relationship: a promise to repay that is based on trust. (155)

Once the current design of money is spelled out this way–its creation, its character and its use–it becomes clear that there are many options for redesigning it, involving the state and the commons along with the market. What’s more, many different kinds of money can coexist, with the potential to turn a monetary monoculture into a financial ecosystem. (155)

What if, instead, central banks tackled such deep recessions by issuing new money directly to every household as windfall cash to be used (156) specifically for paying down debts–an idea that has come to be known as ‘People’s QE’. (157)

Additionally, suggests the tax expert Richard Murphy, central banks could channel new money into national investment banks for ‘green’ and social infrastructural projects, such as community-based renewable energy systems, as part of the long-term infrastructural transformation that is urgently needed–an idea now known as ‘Green QE’. (157)

Who owns your labour?

For enterprise to be inherently distributive of the value it creates, she argues, two design principles are particularly key: rooted membership and stakeholder finance, and together they flip the dominant ownership model on its head. (161)

What is underway is an ownership revolution. – Todd Johnson

Who will own the robots?

The digital revolution is far more significant than the invention of writing or even of printing. – Douglas Engelbart

[via: These statements are more chauvinistically sensational than they are honest evaluations. It is important to understand that technologies are progressive, capitalizing and building on previous innovations (cf. Kevin Kelly’s What Technology Wants). This is important to understand, a) to be indebted to the human ingenuity that has come before us, and b) to maintain humility as technology not only advances our physical and cognitive reach, but our moral sensibilities as well.]

So how could distributive design help to prevent the economic segregation that technology appears to be driving? An obvious starting point is to switch from taxing labour to taxing the use of non-renewable resources: it would help to erode the unfair tax advantage currently given to firms investing in machines (a tax-deductible expense) rather than in human beings (a payroll tax expense). At the same time, invest far more in skilling people up where they beat robots hands-down: in creativity, empathy, insight and human contact–skills that are essential for many kinds of work, from primary school teachers and artistic directors to psychotherapists, social workers and political commentators. (164)

Humans have economic wants that can be satisfied only by other humans, and that makes us less likely to go the way of the horse. – Erik Brynjolfsson and Andrew McAfee

…it is also time to look beyond the traditional binary choice of market versus state when it comes to controlling technology. Turn instead to the innovation taking place in the collaborative commons, which have the potential to transform the control of knowledge. (165)

Who owns the ideas?

We have designed an expensive and unfair intellectual property regime that works more to the advantage of patent lawyers and large corporations than to the advancement of science and small innovators. – Joseph Stiglitz

How can the state start helping the knowledge commons to realize its potential? In five key ways. (167)

| First, invest in human ingenuity by teaching social entrepreneurship, problem-solving and collaboration in schools and universities worldwide… Second, ensure that all publicly funded research becomes public knowledge by contractually requiring it to be licensed in the knowledge commons, rather than permitting it to be locked away under patents and copyright for private commercial gain. Third, roll back the excessive reach of corporate intellectual property claims in order to prevent spurious patent and copyright applications from encroaching on the knowledge commons. Fourth, publicly fund the set-up of community makerspaces–places where innovators can meet and experiment with shared use of 3D printers and essential tools for hardware construction. And lastly, encourage the spread of civic organisations–from cooperative societies and student groups to innovation clubs and neighborhood associations–because their interconnections turn into the very nodes that bring such peer-to-peer networks alive. (167)

Going Global

If universal access to markets is to become a twenty-first-century norm, along with universal access to public services, then so too should universal access to the global commons–particularly to Earth’s life-giving systems and to the global knowledge commons. (170)

The great task of the twenty-first century 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. – Peter Barnes

6. Create to Regenerate from ‘growth will clean it up again’ to regenerative by design

Ecological degradation is not a luxury concern for countries to leave on one side until they are rich enough to give it their attention. Rather than wait for growth to clean it up–because it won’t–it is far smarter to create economies that are regenerative by design, restoring and renewing the local-to-global cycles of life on which human well-being depends. It is time to erase the old diagram whose influence lingers on, and replace it with a twenty-first-century vision of regenerative economic design. (176)

What Goes Up Might Not Come Down

The Environmental Kuznets Curve, which suggests that growth will eventually fix the environmental problems that it creates.

Facing up to the Degenerative Linear Economy

Economics, it turns out, is not a matter of discovering laws: it is essentially a question of design. (180)

The caterpillar economy of degenerative industrial design.

This ubiquitous industrial model has delivered strong profits to many businesses and has financially enriched many nations in the process. But its design is fundamentally flawed because it runs counter to the living world, which thrives by continually recycling life’s building blocks such as carbon, oxygen, water, nitrogen and phosphorus. (181)

Eventually a one-way system destroys the landscapes on which it depends. The clock is always running and the flows always approaching the time when they can flow no more. In its essence, this is a degenerative system, devouring the sources of its own sustenance. – John Tillman

Can We Do Business in the Doughnut?

…the ‘Corporate To Do List.’ (183)

| The first and oldest response is simple: do nothing. (183)

…the next-step response has become the most common do what pays, by adopting eco-efficiency measures that cut costs or boost the brand. (183)

The third response–getting more serious now–is to do our fair share in making the switch to sustainability. (184)

The fourth response–and it is a true step-change in outlook–is to do no harm, an ambition that is also known as ‘mission zero’: designing (184) products, services, buildings and businesses that aim for zero environmental impact. (185)

And once you think about it, pursuing mission zero is an odd vision for an industrial revolution, as if intentionally stopping on the threshold of something far more transformative. After all, if your factory can produce as much energy and clean water as it uses, why not see if it could produce more? If you can eliminate all toxic materials from your production process, why not introduce health-enhancing ones in their place? Instead of aiming merely to ‘do less bad’, industrial design can aim to ‘do more good’ by continually replenishing, rather than more slowly depleting, the living world. Why simply take nothing when you could also give something? (185)

| That’s the essence of the fifth business response: be generous by creating an enterprise that is regenerative by design, giving back to the living systems of which we are a part. (185)

We are big-brained animals, but we are newcomers on this planet, so we are still acting like toddlers expecting Mother Nature to clean up after us. I want us to take on this design task and become full participants in every one of nature’s cycles. Start with the carbon cycle–let’s learn to halt our industrial ‘exhale’ of carbon pollution and then, by mimicking plants, learn to ‘inhale’ carbon dioxide into or products and store it for centuries in rich agricultural soils. Once we’ve cut our teeth on the carbon cycle, let’s apply what we have learned to the phosphorus, nitrogen and water cycles, too. – Janine Benyus

To discover the essence of generous design, she suggests that we take nature as our model, measure and mentor. With nature as model, we can study and mimic life’s cyclical processes of take and give, death and renewal, in which one creature’s waste becomes another’s food. As measure, nature sets the ecological standard by which to judge the sustainability of our (186) own innovations: do they measure up and fit in by participating in natural cycles? And with nature as mentor, we ask not what we can extract, but what we can learn from its 3.8 billion years of experimentation. (187)

The Circular Economy Takes Flight

The butterfly economy: regenerative by design.

Welcome to the Generous City

cf. Newlight Technologies; Sundrop Farms; Sanergy; ProComposto

In Search of the Generous Economist

Regenerative industrial design can only be fully realised
if it is underpinned by regenerative economic design. (194)

The Circular Future is Open

Open Source Circular Economy (OSCE) movement. (195)

cf. Apertus° (open-source video camera for film makers); OSVehicle (open-source future of 100 percent electric cars;

Redefining the Business of Business

Indeed the most profound act of corporate responsibility for any company today is to rewrite its corporate by-laws, or articles of association, in order to redefine itself with a living purpose, rooted in regenerative and distributive design, and then to live and work by it. (198)

Finance in Service to Life

Bring on the Partner State

In 2012, over 50 percent of tax revenue raised in the EU came from taxing labour; in the United States, the percentage was even higher. (cf. New Era. New Plan.)

The Era of Living Metrics

Monetary metrics alone will inevitably fall far short of reflecting the value created in a regenerative economy: financial income is just one narrow slice of what an economy generates when its aim is to promote human prosperity in a flourishing web of life. The monopoly of monetary metrics is over: it’s time for a panoply of living metrics. (203)

It is clearly time for economists to leave behind the foolhardy search for economic laws of motion. Instead, step up to the design table and take a seat alongside those innovative architects, industrial ecologists and product designers who are spearheading the regenerative design revolution. (205)

7. Be Agnostic about Growth from growth addicted to growth agnostic

…our beliefs about economic growth are almost religious: personal in nature, political in consequence, privately (207) held and little discussed. (208)

Here’s the conundrum:

No country has ever ended human deprivation without a growing economy.
And no country has ever ended ecological degradation with one. (208)

I mean agnostic in the sense of designing an economy that promotes human prosperity whether GDP is going up, down, or holding steady. (209)

Too Dangerous to Draw

Every country, [Walt W. Rostow] claimed [in his book The Stages of Economic Growth] must pass through five stages of growth so that it can come to ‘enjoy the blessings and choices opened up by the march of compound interest. (211)

W.W. Rostow’s Five Stages of Growth
(Twentieth-Century Journey)

  1. Traditional society
  2. Preconditions for take-off
  3. Take-off
  4. Drive to maturity
  5. Age of high mass-consumption

Rostow’s economic plane flight…differs from every other plane flight in one crucial respect: the plane never actually lands but cruises instead at a constant growth rate into the sunset of consumerism. (212)

The Miscast Star of the Stage

The S curve of growth. Early economists acknowledged what most of their successors have since ignored: that economic growth must eventually reach a limit.

…the S curve’s talents were spotted by ecologists, biologists, demographers and statisticians who realize that it was a strong fit for describing many processes of growth in the natural (214) world–from a child’s feet and the world’s forests to bacteria in a Petri dish and tumors in a body–and so they have used it ever since. … Without ever actually drawing it on the page, [Nicholas Georgescu-Roegen] boldly cast the S curve as GDP itself in a plot that brings the global economy face to face with he carrying capacity of the Earth. (215)

…a far more interesting question comes into view: not ‘is endless economic growth possible?’ but rather, ‘where are we now on the growth curve: still near the bottom or close to the top?’ (215)

…all of these countries’ global ecological footprints already far exceed Earth’s capacity: it would take four planets for everyone int he world to live as they do in Sweden, Canada and the United States, and vie planets for all to live like an Australian or Kuwaiti. (217)

It is difficult to get a man to understand something, when his salary depends on his not understanding it. – Upton-Sinclair

Can We Keep on Flying?

So can sufficient absolute decoupling be compatible with an ever-growing GDP? According to the keep-on-flying crowd, yes, in three broad ways. First, by rapidly shifting energy supply away from fossil fuels and into renewables such as solar, wind and hydro–a trend that is being sped along by the fast-falling cost of renewables, especially solar photovoltaics. Second, by creating a resource-efficient circular economy whose material through flow becomes a round-flow within the capacity of Earth’s sources and sinks. And third by expanding the ‘weightless’ economy made possible by digital products and services, in which ‘mind not matter, brain not brawn, ideas not things’ drive future GDP growth. (222)

…a single gallon of oil is equivalent to 47 days of hard human labour, making current global oil production equivalent to the daily work of billions of invisible slaves. (224)

cf. Easterlin Paradox

Our societies, like our economies, have evolved to expect growth and have come to depend upon it: it seems we do not yet know how to live without it. (226)

Are We There Yet?

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

W.W. Rostow’s Six Stages of Growth
(Twenty-First Century Update)

  1. Traditional society
  2. Preconditions for take-off
  3. Take-off
  4. Drive to maturity
  5. Preparation for landing
  6. Arrival

Learning How to Land

Financially Addicted: What’s to Gain?

…demurrage, a small fee incurred for holding money, so that it tends to lose rather than gain in value the longer it is held. (233)

Politically Addicted: Hope, Fear and Power

Hope for raising revenue without raising taxes (234)

First, reframe the purpose of taxes to help build social consensus for the kind of higher-tax, higher-returns public sector that has been a proven success in many Scandinavian countries. (235)

Second, end the extraordinary injustice of tax loopholes, offshore havens, profit shifting and special exemptions that allow many of the world’s richest people and largest corporations–from Amazon to Zara–to pay negligible tax in the countries in which they live and do business. (235)

Third, shifting both personal and corporate taxation away from taxing income streams and toward taxing accumulated wealth–such as real estate nd financial assets–will diminish the role played by a growing GDP in ensuring sufficient tax revenue. (235)

Fear of the unemployment line (235)

Power in the G20 family photo (237)

Socially Addicted: Something to Aspire To

Wherever and whenever we are excessive in our lives it is the sign of an as yet unknown deprivation. Our excesses are the best clue we have to our own poverty, and our best way of concealing it from ourselves. – Adam Phillips

When it comes to consumerism, perhaps the poverty that we aim to conceal lies in our neglected relationships with each other and with the living world. (240)

Although we have relative material abundance, we do not in fact have emotional abundance. Many people are deprived of what really matters. – Sue Gerhardt, The Selfish Society

…the New Economics Foundation has distilled the findings down to five simple acts that are proven to promote well-being: connecting to the people around us, being active in our bodies, taking notice of the world, learning new skills, and giving to others. (240)

If there is one task that merits the attention of the twenty-first century economist, it is this: to come up with economic designs that would enable nations coming toward the end of their GDP growth to learn to thrive without it. (241)

Welcome to the Arrivals Lounge

We Are All Economists Now

Ours is the first generation to deeply 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. And we know full well, as an international community, that we have the technology, know-how, and financial means to end extreme poverty in all its forms should we collectively choose to make that happen. (243)

Storming the Citadels

So to today’s economics students, I would simply say this: be watchful over the ideas that others try to sketch upon your mind. Look out for the words, be wary of the equations, but most of all pay attention to the pictures, especially the most fundamental ones, because they go in deep without your even realizing it. What’s more, don’t let anyone make the extraordinary presumption that, whether 18 or 81, your tabula is rasa, your economic slate blank. It has in fact been etched with experience from birth, starting with years of nurture in the core economy, backed up by the dependence of eery one of us on the living world. And each of us plays multiple roles in the economy throughout our lives, whether as citizen, worker, consumer, entrepreneur, saver or commoner. So don’t let anyone try to wipe your slate clean: draw on its rich bank of experience as a personal reference point for sense-checking the economic theories that are put before you–including the ones in this book, of course. (247)

Economic Evolution: One Experiment at a Time

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