These seven ways of thinking like a twenty-first-century economist don't lay out specific policy prescriptions or institutional fixes. They promise no immediate answers for what to do next, and they are not the whole answer. But I am convinced that they are fundamental to the radically different way of thinking about economics that this century demands. Their principles and patterns will equip new economic thinkers — and the inner economist in us all — to start creating an economy that enables everyone in the house to prosper.
Given the speed, scale and uncertainty of change that we face in coming years, it would be foolhardy to attempt to prescribe now all the policies and institutions that will be fit for the future: the coming generation of thinkers and doers will be far better placed to experiment and discover what works as the context continually changes. What we can do now — and must do well — is bring together the best of the emerging ideas, and so create a new economic mindset that is never set but always evolving.
The task for economic thinkers in the decades ahead will be to bring these seven ways of thinking together in pratice, and to add to them many more. We have barely set out on this adventure in rethinking economics. Join the crew. Doughnut's safe and just space. Instead of pursuing ever-in-creasing GDP, it is time to discover how to thrive in balance.
What on Earth is the Doughnut?… Humanity’s 21st century challenge is to meet the needs of all within the means of the planet. In other words, to ensure that no one falls short on life’s essentials (from food and housing to healthcare and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend – such as a stable climate, fertile soils, and a protective ozone layer. The Doughnut of social and planetary boundaries is a playfully serious approach to framing that challenge, and it acts as a compass for human progress this century.
The environmental ceiling consists of nine planetary boundaries, as set out by Rockstrom et al, beyond which lie unacceptable environmental degradation and potential tipping points in Earth systems. The twelve dimensions of the social foundation are derived from internationally agreed minimum social standards, as identified by the world’s governments in the Sustainable Development Goals in 2015. Between social and planetary boundaries lies an environmentally safe and socially just space in which humanity can thrive.
If you want to look deeper into the Doughnut, and Doughnut Economics, join us at Doughnut Economics Action Lab where we dive into much more detail on what it means for transforming our economies.
See you in the Action Lab!
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.
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 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.
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 nineteenth-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.
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 better, 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 recognise 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.
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.
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 for ever 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.
The Sustainable Development Goals are a universal call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere. The 17 Goals were adopted by all UN Member States in 2015, as part of the 2030 Agenda for Sustainable Development which set out a 15-year plan to achieve the Goals.
Today, progress is being made in many places, but, overall, action to meet the Goals is not yet advancing at the speed or scale required. 2020 needs to usher in a decade of ambitious action to deliver the Goals by 2030.
The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change.
What is IPBES? The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) is an independent intergovernmental body established by States to strengthen the science-policy interface for biodiversity and ecosystem services for the conservation and sustainable use of biodiversity, long-term human well-being and sustainable development.See here for more information on the history of IPBES.
It was established in Panama City, on 21 April 2012 by 94 Governments. It is not a United Nations body. However, at the request of the IPBES Plenary and with the authorization of the UNEP Governing Council in 2013, the United Nations Environment Programme (UNEP) provides secretariat services to IPBES.
See here for more information on the history of IPBES.
