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The economy. Most of us think of it as something inaccessible, impossible to understand, disconnected and separate from us. Something that affects us all, but that we have no power over. In this empowering interview, Kate Raworth, Senior Research Associate at Oxford, explains why we feel disconnected from economics and how we absolutely aren’t. In fact we are all economists and it is within our power to change the economy in order to reverse inequality, save our planet, and ourselves.
Problem With Economic Growth
Today’s economic goal is growth. But uncontrolled growth and sustainable development cannot exist. Anything that grows forever becomes a cancer and destroys the very system upon which it depends. We must replace society’s addiction to growth with a new goal of thriving and balance in order to create an economy which eliminates inequality and protects our planet. But how?
Reshaping The Narrative
How we imagine ourselves is who we become. The language we use and the decisions we make everyday have an impact on all sorts of planetary boundaries and social systems. We can and we must rewrite the story we are telling ourselves. The more of us who speak about sustainability and prosperity rather than growth – in our households, our communities and on social media – the quicker journalists and politicians will pick up on this language. Our language creates our economy.
Progress is Happening
Look around you. Surely you have seen the rise in open-source platforms, employee owned companies, community owned renewable energy projects. Ideas in the creative commons. A movement to reshape the economy is already underway. In this delightful and humorous interview, Kate clearly explains how we got here, and lays out her 7-step plan to help us create an economy that serves the needs of humanity within the means of the planet.
– Welcome back to The Urban Monk, Dr. Pedram Shojai in studio, so happy to be in Southern California, I’m about to start traveling again, and I love home. I gotta say, it used to have so much allure going on these business trips and now it’s just like, I wanna be home, I wanna see my kids, I wanna be in my garden. We are really working hard on finishing the post production of the Prosperity movie, it is really coming together well as a film, and we have been very busy looking at the ecosystem and the conversation around sustainability, conscious capitalism and how we can better coexist and how we can vote with our dollars and all the different kind of pieces of this narrative that I’ve been sharing over the last few months. With me today, Kate Raworth who has written a book called Donut Economics, very, very well spoken and positioned in this space over at Oxford, so she must be smart, right? And has written this book really around the principles that we have to use to really think differently about economics and how we coexist together in this monetary system, I promise not to get too geeky and heady about it because this involves you and where you spend every single cent in your life and how you can make choices differently to change the world, so welcome to the show, hi.
– Thank you very much, a pleasure to be with you.
– Great to be here, we are using Skype the way it should be used which is bridging the big pond and the small pond to be able to have conversations like this across all ponds, and so you are a Senior Research Associate at Oxford. You’ve been looking at coming up with a new approach to sustainability leadership, what got you into this in the first place?
– Oh, well I studied economics at university 25 years ago. Because I wanted to change the world and work on social justice and environmental integrity, and I was just deeply frustrated by what I was taught, because everything that I cared about seemed to be brushed to the margins or swept over, and so I walked away from economics thinking I would immerse myself in real world challenges, I worked in the villages of Zanzibar for three years, I worked at the UN headquarters for four years, I worked with Oxford for a decade, I became a mother of twins, and through all of these experiences I realized that you can’t walk away from economics because it frames the world we live in, it’s the mother tongue of public policy. And so we need to change economics if we’re going to make it fit for taking on the challenges of the 21st century. So I decided to talk back towards it but flip it on it’s head and start with human well being in the 21st century and what the heck that looks like, and by describing that, then ask ourselves what kind of economic mindset will give us half a chance of getting there? So that’s where I came to this from.
– Interesting, so I’ve been traveling the world interviewing people about this concept of prosperity, and so everyone I ask what is prosperity? They have a slightly different answer, right? But you know there’s kind of this all inclusive narrative, as like for me my prosperity definition includes time with my kids, time in my garden, skiing, and all the things that are included in what would make my life whole. And to have a triple quadruple bottom line type of answer to that is really where most people are at in their personal sentiment but when you talk about economics, it’s just kind of, you know, this very cut and dry system that is so separate than us, it’s top down from Wall Street or wherever the victim is, and it’s just this kind of concrete structure that we can’t get out of. So you’re now looking at shifting that, you’re looking at,
– Yeah, well,
– you’re looking at shift, right?
– Economics sounds pretty bad, right, and who would want to have anything to do with it the way you described it is exactly how most of us feel about it. But economics, let’s go back to the ancient Greek, economics means household management, and when it comes to the management of our planetary household, it couldn’t be more relevant, we need to reclaim that word. I mean I never wanted to be an economist when it was about finance and equations and obscure things, when I reframe it and think household management for the 21st century, I want to be part of that, I’m up for that. So I believe in reclaiming it to it’s original meaning. And the way I think of it since you talk about all the different ways people talk about it, I think of it as a bean and a marble, this to me is prosperity in the 21st century, so here’s a little bean and that bean stands for meeting everybody’s daily needs of food. We have needs for water, healthcare, housing, education. So prosperity lies in ensuring the health and well being of every person. But at the same time, as we now more recently understand, it also lies in this little blue marble which is like planet Earth, and it lies in the health of our whole planet, and realizing this tiny little blue marble we live on is the only living planet that we know of in the universe, it’s exquisite and extraordinary. And over the last 11,000 years, the stability of the Earth has been so benevolent to humanity, so now we just multiply and thrive, and we depend upon keeping a stable climate, ample fresh water, bountiful biodiversity, a protective ozone layer, fertile soils, all these core systems that keep Earth in this stable benevolent state. So our well being actually lies in both of those. We need the bean for our food and we need to protect that little blue marble, and I turned those two ideas into a diagram which has come to be known as the Doughnut. So it’s talking about meeting the needs of all within the means of the planet and that in my mind is a very simple way of encapsulating human progress and well being in the 21st century.
– Beautiful, so we live, especially here, you guys are going through a Brexit and we’re going through our own upheaval here politically, where now we have some morons denying climate change and we have all sorts of really kind of regressive thinking that is really, you know, challenging your marble there. So how can we use economics as a lever to start to drive better behavior, better consumption, better utilization whatever it is towards getting the business community, getting the end user, if you will, to be supportive of the marble while supporting the bean? Like that’s really kind of the question of our era to me is how do we do this without the top down control systems, because they’re corrupt and broken?
– Right, so just to go to the Trump situation there in the US, fascinating because Trump studied economics at the Wharten school in Pennsylvania in the early 1960s. So I am fascinated by the mindset that he got from that, 20th century mindset that looks and thinks the economy is the market, and that it’s self contained. And what did Trump stand on the platform for election, he wanted to call four percent growth, he just talks about being pro growth, he’s actually echoing JFK, who stood on election platform for 5% growth in 1960, so I think of Trump’s economics as 1960 economics. Conveniently before Rachel Carson even wrote Silent Spring, before we understood about climate change, and that’s why he needs to dismiss climate change, because it completely jars what economics that works for him in terms of growth and markets only. We need to leap away from that 1960s mentality and first want to make progress even during these tough times have to frame it around a new vision, so for me the new vision is purpose of the economy for household management is to meet the needs of all within the means of our planet. How do we do that? First of all we need to understand that the economy is not just the market and it’s not just the state, this 20th century boxing match between two ideologies that we’ve lived through. It’s also the household, you talked about your kids. We begin every day in the household where we wash our clothes, feed ourselves, sweep up, raise our children, give each other love and care, that is the core economy of the household where we meet so many wants and needs. But there’s also a fourth sector which is the common, the place where communities get together, whether online or in the neighborhood, and self organize to create things they value, whether it’s a neighborhood garden or a world wide web, so we’ve got the market, the state, the household and the commons and these are all ways that we provision for our wants and needs, and when I think of those four together, I find it much richer than just thinking economy is the market and finance, because it’s not it’s all these different ways, and they interact, I wouldn’t want to live in an economy that was lacking any one of them. And then we can think, okay, what kind of business which is in the market can help us thrive in the 21st century? Some of those businesses are gonna be ones that interact with the commons, that build on open source platforms, for example, that put their intellectual property in a creative commons so that the ideas can be used and built upon. They’re also going to be businesses that realize that we need to create an economy that’s distributive by design and generative by design, I’ll just say what I mean by each of those, distributive in that the value that’s created in enterprise is shared far more widely and equatively with all of those who helped to create it, whether that’s through an employee owned company, through putting ideas in the creative commons, through community owned renewable energy projects for example, and we need to be regenerative by design, ensuring that we’re not using up those resources, putting that pressure on the blue marble, but actually using them again and again and again, so that we become part of Earth’s cyclical processes of life, returned the cycles of life rather than cutting through Earth, taking from her sources and dumping in her sinks, which has put so much pressure on this planet.
– Amen, you know it seems in the current climate that the dogs of war are kind of back at it, and so it’s like okay well that’s all fair if we’re talking about Western civilization but we have big bad Putin and the Chinese and the North Koreans, and they’re not playing fair, so now we can’t share IP, we have to be protective of all it’s isolationism that kind of becomes this regressive energy and it recoils from some of that thinking, so, how do we win with that? How do we bring the bigger thinking forth and allow that to drive the narrative and kind of dispel some of this fear?
– It’s very easy to get sucked into that nation against nation language, and actually I think that geopolitical sparring can really be harnessed by government to push through the agenda that they want, in my own country, Mrs. Thatcher knew back in the 80s that war was the biggest excuse to push through her agenda, so if you can create an enemy or a threat outside your national borders, it somehow gives you permission to do all sorts of things in their borders, so I really suspect when I hear this geopolitical rivalry between countries, and of course it’s the last thing we need, because Earth’s scientists are at the point of understanding Earth as a whole, that blue marble as a whole, we need to collaborate and listen and work together if we’re gonna have half a chance of protecting these life giving systems on which we all depend. So how do you do that? I don’t know how to solve the geopolitical rambling, but I know that one powerful way of working against it comes as an inspiration from Donella Meadows is to speak to the narrative that you believe in, to speak in the words and the framing that inspires you, that is a positive image of the world you want to create, because the more people who start speaking to that, and making the language normal, talking about distributive and regenerative design, talking about prosperity, not growth, for example. The more we do that, we begin to create a language that people understand, that journalists might start to pick up, that politicians might even begin to use, so we create these new ideas that become normal, it’s at the level of paradigm change and it might sound impractical, but as Donella Meadows so beautifully said, the thing about paradigm changes, it doesn’t take decades, it can happen like that, somebody gets the idea, so it’s a very powerful leverage point for change.
– Yeah, yeah. So you have a seven step change process that you’ve highlighted in your book that is part of these game changing concepts and the foundation of transformative change, and there’s all sorts of language around, there’s second ordered change, there’s lots of different ways of talking about doing this paradigm shift versus incremental change, so I would love to dive into your framework to really start to understand how we go about making this happen.
– Okay, so for me the change, the way I want to come about contributing to change and generating prosperity is through challenging fundamental ideas that students are taught in economics, and even if you’ve never studied economics, don’t think you’re immune to it because actually it shapes the way we all think and talk about economy from the way journalists ask questions on the news, to the way politicians pose questions in Congress, so it shapes the language everybody’s using. And the problem is this, that the students today are going to be the policy makers and the citizens in 2050. But the economics that have been taught comes from the textbooks of 1950. Those in turn are based on the concepts and theory of 1850. Given the challenges we face in the 21st century, this is shaping up to be a disaster. So we need to revisit the fundamental concepts of what the economy is, what it’s for, who we are in it and how it works, and that’s what these seven steps in my book set out to do. So the first one is the simplest and at the top level, is to change the goal, as I said, economics means household management, so what are we trying to manage our household for? I think the last 100 years has become obsessed with managing the household for GDP growth, this is be given as the defacto goal as if growth is the sign of success. And yet it’s come with rising inequality in many countries and extreme environmental degradation too. So we need to reframe that, and for me the goal is getting into the donut, the safe and just space for humanity where we can meet the needs of all within the means of the planet, it’s a big goal, it’s a long term goal, but heck, we need the big long term visions to guide what we’re trying to do. So that’s the first one.
– Let me ask you about that,
– And then what,
– Sorry, on the first one, the United Nations has it’s 17 I think, 16 or 17 kind of sustainability benchmarks and each of them are really well researched, well developed, saying look, here’s where we are, here’s where we need to be, here’s the delta, and there seems to be, I think, I’ve heard varying numbers but somewhere around 6 trillion dollar deficit in what’s needed and what’s funded and what needs to happen to actually execute on each of these to make it happen, is that a framework, does that fall within your doughnut paradigm to say look, these are the sustainability goals that we can kind of really all work together on because they’re well researched and we know if we did this it’s going to get us where we need to be?
– Yeah, the sustainable development goals and the doughnut I would say are like cousin concepts. I created the doughnut back in 2012 and it was launched and became very widely viewed at the very same UN meeting where they said let’s create sustainable development goals. And I was told by people who were on the inside of the UN process that in the last hours that they were hammering out next to greedy sustainable development goals, you know when they can so easily get distracted about negotiating over a comma or changing tiny words, somebody told me there was a picture of your doughnut on the table, almost to remind us, don’t lose sight of the vision, so the doughnut shaped the sustainable development goals, I’ve rewritten and reframed the doughnut in light of the sustainable development goals,shaping each other, which is
-because it’s important to embrace the values of the UN, what I think the doughnut does that the sustainable development goals don’t do is it bases it on the latest Earth system science of understanding how much pressure we believe we can put on the planet’s systems before we start to kick them out of kilter. So it brings in the reality of limits of pressure we can put on the planet, I think that in the sustainable development, they sort of avoided that and one of the goals is economic growth, GDP growth, I don’t think that’s a goal. It might be a means in some countries but it’s not a goal but by writing it into the set of goals, in a way you limit your own ability to rethink economics if you’ve gone and put in growth as one of the goals. So I’ve taken that out and questioned instead.
– Interesting, well, I mean because the definition of growth is a tumor, right? Within that paradigm, and so it’s a cancerous growth, and if you’re feeding a cancer, the rest of the cells of the system are all compromised, right? And so I agree with you on that, but so many people have so much at stake in kind of the fundamental questioning or reinvention of this economic model that it almost seems like that was a concession to get governments to play along. I don’t understand why that was there.
– Right, and when you listen to the way talk about reenvisioning economy, because they’re all reaching for these words, they all talk about shared growth or inclusive growth or green growth or good growth or smart growth, add all the adjectives you like, it’s always gotta have growth attached to the end of it, so there’s a real lock in for this desire for growth, and as you said, it becomes like a cancer, anything that grows forever destroys itself or the system on which it depends.
– That’s it, that’s it, okay cool, so you are one of the inspirations and one of the voices in the development of those goals, there’s a lot of talk around these goals, and I’ll share them in the blog that’s associated with this just so we can see, you know, the image of the doughnut, I’ll share the book with you in a minute and then we’ll also put links to that just so my viewers and listeners can get a better sense of what this kind of bigger conversation is, so, number one, change the goal, number two.
– Yeah. Number two, see the big picture, let’s put the economy in context, as I was describing earlier, often economists tend to draw the economy as if it’s just market. In fact there’s a lovely story behind it, the man who drew the picture of the economy that every student still studies today, he drew it in 1948, guy called Paul Samuelson and he was teaching at MIT, and he was teaching engineering students, so he drew the economy in a way they’d understand, made it look a bit like a radiator system. The tanks and water going around and around inside an enclosed system, and that water going around and around supplies money and goods, circulating around the economy and it’s called the Circular Flow of Income diagram. It’s the biggest picture of the economy that the economists can give you, if you say show me the biggest picture you’ve got of the economy and what it looks like bird’s eye view. That’s what they show you. There’s absolutely no mention of the living world on which all of goods and services are drawing and ending. It’s got no mention on the work of parents creating labor. This worker who appears fresh and ready for work everyday. It’s got no mention of the creative commons in which we do so many dynamic things. So it’s completely narrow view of the economy but it still frames the way so many economists think about the economy. And in fact, almost exactly 70 years ago today, at the beginning of April 1947, a small band of economists got together in a little village in Switzerland called Mont Pelerin, and they decided to write what they called a neoliberal script for the economy, and they used this narrow framing that came from the textbooks to start writing theliberalism and they did a brilliant job, there’s people like Fredan Kayek, Milton Freedman, and they used brilliant words and phrases and humor to convince everybody to believe their script, so they told us that the market is efficient, so we give it free reign, the trade is win win, so we should open our borders, that finance is infallible so we should trust in it’s ways and that the state is incompetent. So don’t let it meddle, roll back the state. Now they wrote that in 1947. They had to wait for decades for their play to actually hit the international stage, but when Mrs. Thatcher and Reagan came to power in the early 1980s, they put that play on the stage and we’ve all been living this neoliberal script of what the economy is and is for ever since. We have to rewrite that narrative, take away that framing that they’ve given us and totally turn it around. Because we now understand the power of stories, the power of pictures and we tell ourselves stories about the economy, so I’m really passionate about rewriting that neoliberal script and turning it into one of a new story for the economy, so that’s the step two of the book.
– Love that. It’s funny, I remember sitting next to a nuclear scientist on a flight, and I was like wow, what do you do? He’s like I design nuclear submarines for the Navy. And I had him describe the entire thing to me, the whole process, and I was marveling at the fact that this nuclear submarine is just still an elaborate steam engine, right? And, I was like oh my God, you’re using fuel rods from nuclear to make steam to propel, wow, nothing’s really changed, that is really, that’s kind of tragic, and so this, and it’s funny, this guy, Milton Freedman, you hear about him all the time and then so I went and started looking at him and researching, he’s very intelligent, right? But within the framework of a paradigm that is very much within the bumpers of what you’re talking about here, and most of the conscious capital leaders that I’ve interviewed have referenced him as being one of the major departures away from a more holistic view of the economy that doesn’t put the tragedy of the commons at the forefront and all these other issues, and his name has come up time and time again, this is a dude in 1947, right?
– Right around when Donald Trump’s haircut was invented, right? And these guys are talking about stuff that we’re now living today, and suffering today.
– So okay, so we look at the big picture, and so how do we take this new paintbrush and start to look at something that doesn’t look like a radiator, right? Like what does that vision look like? Is it a doughnut, right? How do we visualize it?
– Do you know those little Russian dolls, the little doll sits inside the next doll sits inside the next doll, so I think, since I like playing with very every day objects it’s not a radiator, the economy is not just a radiator with money going around and around floating on a white background, it’s like the little Russian dolls, and in the middle you’ve got these four systems of provisioning I was talking about, you’ve got the market which produces goods through monetary exchange, you’ve state which produces goods through raising taxes and spending for public benefit. You’ve got the household which produces goods within the home for those members of the family and you’ve got the commons which produces goods through those people and those commoners getting together, self organizing, creating things they value. It’s all very different kinds of provisioning, all sitting together in the middle, and those are the forms of provisioning for the economy, they make up the four branches of the economy, and economy is embedded within society, the next Russian doll of society, whether it’s thesociety, the institutions by which we let governments to set the rules for how these different kinds of economic provisioning interact, but also the that creates the trust that we will interact with each other we interact with strangers many times a day and all of this comes out to social trust, and then society is embedded within an even bigger Russian doll, a big mama Russian doll, which is Earth, this live giving planet, from which the economy every day is drawing in resources, energy and matter and living materials, transforming them into things and then spewing out waste and waste heat back into the Earth system. So once you do that you put the economy in the middle of society in the middle of Earth, already we see that the economy is embedded in something bigger and more dynamic and thriving, as you were mentioning, something that grows forever becomes cancerous, it has to understand how it relates to the whole, and so we need to also think about how the economy relates to society and the Earth system on which it depends. And let’s just think about finance because I haven’t mentioned it, finance, it needs to be in service to society, and to the economy, at the moment, we all feel that we’re serving finance, that financial markets all pump money and bail them out, we need to flip that around, finance should be a service enabling economic interactions within society and within the living world. The beginning of a new story, and we can write a new narrative, if only we had Milton Freedman on our side because he was a genius with words, but he used words to sell us a very dangerous story that’s taken us to the brink of collapse, we need to use his way with words and his creativity and write a powerful new narrative that actually tells the story of the economy that we want to create.
– Amen, you know, you always think about, you have to think context, 1947, World War II is over, these guys are drunk on a new society, a new way of living, they hadn’t really played that out to the extent where the oceans were filled with mercury, and you know,
– Presumably, I mean this guy isn’t some evil guy trying to conceive of a way to destroy the planet, a lot of well intentioned smart people have had ideas that turned out to not work within an ecological framework because that just wasn’t part of their paradigm yet. But I like this, I like, it’s almost like an ecological economics, right? It really kind of becomes a symbiotic system of checks and balances that’s really what’s missing from that other narrative which is more parasitic and extraction oriented,
– You know, Earth is free.
– Yeah, because when you have that narrow diagram that Samuelson drew of just the economy with money and goods going around and around, well, what would you want to do it? Well you’d want to send more and more money and goods round and round, that’s the only thing there is to do. But when you embed the economy in a richer picture and see it interacting with society and the living world, then you want to have, as you said, this symbiotic relationship about, how big should the economy be in relation to society, in relation to the living world so that we all thrive? So just drawing a different picture allows us to ask a completely different set of questions, I’ve really learned the power of pictures to open up our questioning, it’s profound.
– You have this, your third item is called nurturing human nature, and before you jump into it, what gets me is I listen to this, I hear this, and I think okay great, we need to rethink this and it’s worth doing, and there’s a significant majority of the human population that says what the hell is the point, the rapture is coming, it’s all over anyways, we’re all gonna go extinct, it doesn’t matter, it’s over. And that’s such a beautiful narrative for the companies and the industries that are profiting off of this particular paradigm because it means people don’t care enough to want a change, and you know, human nature has all these weird shunts where we kind of go off and forget and are distracted and not realize that this conversation is the future for our children’s children, and so, I just, you know, there are so many kind of memetics involved in this bigger conversation that need to be questioned in our time, and I’m just so happy to be talking to you about this, so, so what is number 3, what is human nature?
– So number three, so I talked about rewriting the narrative and redrawing the stage, the international stage on which we understand economics, of course we need that protagonist, humanity, and how we imagine our selves is key. The power at the heart of economic theory is known as rational economic man, and he’s been drawn down over the centuries and as you mentioned before, it was Adam Smith who first drew his portrait, and Smith drew a very nuanced portrait, he was a smart, reflective man, he’s been given a bad name through history, because he understood both the importance of self interest, for making market work, but also our interest in others, for making society work, and he said this was by far the nobler and more important value for public interest such as our sense of justice, our sense of generosity and altruism. So Smith had this nuanced picture, but economists who came after him wanted to turn economics into a science. They have to pair this down because the nuance gets in the way of modeling, so they just said we’ll pluck out the self interest part, the self interest trait, and we’ll just make that the character of economic man, so they narrowed him down and turned him into a little caricature and his portrait is never actually painted in the textbook but if it was, he’d have to be a little stick man standing alone with money in his hand, ego in his heart, a calculator in his head, and nature at his feet. He hates work, he loves luxury and he knows the price of everything and has insatiable wants, this is who economics tells us we are. Now the trouble with it is not just that it’s absurdly narrow, the real trouble with it is that it actually changes us when we look at it. The most fascinating research I came across is with economic students in the US and in Israel, the researchers found that the more economic students learn about economic man, the more self interested they become, so in being told that he’s like us, we actually become more like him, and that’s huge to realize that, that the portrait of ourselves that we show ourselves makes us become more like the portrait. That portrait matters a great deal, so when we tell ourselves that we’re self interested, that we calculate everything, that we put our money first, what begins as a model of man in economic theory actually turns into a model for man, and we hear it, you know, people say well that’s not rational, if you’re making your decisions rationally, we’re not like that though, and we have to discard that because we’re soon gonna be 10 billion people on this planet, and if we head towards that future, imagining and conducting and justifying ourselves as rational economic man, we stand very little chance of thriving together, so we need to take his old portrait down from the gallery wall and create a new one, and the wonderful thing of course is that a new one is being painted, it’s being painted by political scientists by cognitive scientists, by behavioral scientists, who do actual research with humans, not creating some model out of the air but finding out how we behave. And they’re finding a much, much richer picture, we’re not merely self interested, of course we’re interested in others, we’re altruistic, we care for others. We socially reciprocate so we cooperate with each other, and I’ll punish you if you don’t cooperate with me, I’d rather punish you and cut off my own nose if you desert me, so, we look for reciprocity with each other. We’re not calculating, we don’t have little calculators in our head, ever calculating the exact price of everything. We work by the rule of thumb, heuristics as it’s called, and actually the rule of thumb serves us very well most of the time. We don’t have fixed preferences, economics tells us we come to the market and we have fixed preferences and we want to buy those things, not at all, we’re deeply fluid and our values can be triggered and we touch stuff all the time, so if I call you a consumer, you’ll actually respond very differently than if I call you a citizen. So even just the words I give to how I describe you will trigger all different values in you. So we’re very fluid in these ways, and also, we’re not dominant over nature, we’re deeply dependent and embedded within the web of life, so the beginnings of this new portrait are coming through, and I think of it as the early sketches of a sort of Leonardo portrait, we’ve got the beginnings of it, but it’s probably going to be the most important portrait commission in the 21st century, because of who we tell us we are shapes who we become, we really need to care about how economics describes us and we need to nurture the best of our nature, we can go both ways, as David Hume, the philosopher said, in each of us lies a little of the serpent and a little of the dove. We need to tell ourselves more about how we can be savvy as the dove in order to bring that out in ourselves, so I deeply believe we can nurture our nature to be more cooperative, to be more aware of how we are embedded in the world and this is gonna give us half a chance of thriving this century.
– I love it, you know what’s funny is they made, the wealth of nations, I mean he is the founding father of economics and economic theory, but his prior book, Theory of Moral Sentiments was very much tied in to what you’re saying here, but, it’s almost like his words were cherry picked, I mean poor guy is rolling over in his grave somewhere in Scotland right now.
– You know, it’s like if you took half of Jesus’ narrative and put it somewhere else and just hid it away and said this is all that matters then what does that do to your doctrine, it’s the same thing with capitalism, you take the founding father and start just messing with what he’s saying, and that’s very powerful, the picture that is being painted, and we’re mistaking the map for the terrain in a lot of ways, it’s like we buy in to that picture and so it’s time to draw a new picture. I appreciate that, I really like that sentiment. I want to get to number four, we have not enough time left because I’d love this conversation just for days, and I want to go through your seven and I really want to unpack them because this is important stuff, so number four is?
– Okay, I’ll bundle a few of them together because the next three relate very closely together, number four, in the 1870s, a small band of economists wanted to make economics as reputable as physics, they saw the genius of Isaac Newton and his physical laws of motion and they wanted to make economics as respected as that. So what they started to do was actually imitate physics and they tried to say just as gravity pulls an object to rest, so prices in markets pull markets into equilibrium, it was poorly chosen analogy but it seemed to work and it sounded grand, they started drawing their diagrams just like Newton has drawn his and they started putting it in equations, they talked of the market mechanism, right? That’s in all of our language, market forces, market equilibrium, this is Newtonian physics, but if the 2008 financial crash proved anything, it’s that the idea of equilibrium is not a very good way of describing markets, they’re far more like a flock of birds or a swarm of bees moving and fluctuating like this. So we need to shift from equilibrium Newtonian thinking to complexity. And we need to embrace the ideas of feedback loops and emergent trends and then we can begin to understand the rise of the 1% of the collapse of an ecosystem. So the number four is get savvy with systems thinking and understanding those feedback loops and ditching this Newtonian idea, for economists it means a metaphorical career change, we need to stop thinking of ourselves as engineers looking for those levers of the economy, these market forces that you can pull on and become gardeners, realizing actually as gardeners there’s a lot of hard work to do in the garden, it’s not laissez faire, you’ve got to dig, weed, prune, nurture that garden because the garden is grown organically and the gardener’s job is to design it and shape it. Now just linking to the next two ways of thinking, if we’re thinking in systems, we can shape that system, it’s a really empowering idea because it’s evolving, we can help evolve it and as we all know a butterfly can kick off the winds of change. So how do we want to design that system? Well one of the most pernicious things that came out of this search for making economics like physics was that economists wanted to find the economic laws of motion and there were two that have done particular damage over the last 50 years. In 1955 an economist thought he found a law of motion about how the economy moves in relation to inequality. He thought he saw in the data that as a society gets richer, first inequality has to rise and then it will fall again. And he believed this was a pattern that every economy will go through. Sounds fantastic, guys, if things are more unequal, don’t worry, it needs to get worse before it can get better, and growth will make it better, more growth will make us more equal, things will trickle down to you in the end, you can already hear where those metaphors are coming from, right, trickle down economics, it’s gonna get a lot more unequal but then it’ll trickle down and we’ll all be better off in the end. Actually, that’s just completely false. We need to design an economy to be distributive as I mentioned at the outset we need to make it distributive by design because things don’t trickle down, inequality can actually spiral up and up and up, it’s government intervention and shaping the economy to be distributive that makes it more equitable. So we need to think of more distributive ways, not just redistributing income. Distributive ownership of wealth. Now if that sounds radical, it’s actually already happening. Think of employee owned companies, they are distributing the benefits that that company makes amongst all of the employees, not just siphoning it off the shareholders. Think of community owned renewable energy projects. The network of energy services is coming in through the solar panels and the wind farms and the benefits are being shared by the community. Think of ideas that get put in the creative commons, rather than holding it as a patent or copyright, it’s being shared and added to value. So these every day forms of distributive design are already with us and already proof that it can happen. So that was actually the sixth way of thinking is to design to distribute, now one of the next ways of thinking is to create an economy that’s regenerative. Because another of those laws of motion that those economists were searching for, trying to be like physicists, they believed that on pollution we had the same story, they believed as an economy grows, pollution is gonna rise but don’t worry because after a certain point it will fall again, same story. When it comes to pollution it has to get worse before it can get better, and guess what? Growth will make it better. This promise that growth will like a well trained child growth will clean up after itself. It’s turned out just not to be the case, it might be true for local pollutants but on a global scale for carbon dioxide, for greenhouse gases, for global it’s not true, we can create regenerative economies by design and the old economics that we have is degenerative by design, we have an industrial system that takes Earth’s resources, makes them into stuff, we use it for a while and then we throw it away. It’s a linear through cut of the Earth. We need to transform that linear process into a cyclical one where we use Earth’s resources again and again and we re-embed ourselves in the cyclical processes of life. So just to recap those three, instead of trying to be like physicists and engineers we need to be like design the garden so that it’s distributive by design, sharing value amongst those who created it, by design so that we become part of Earth’s cycles of life instead of using resources up, we use them again and again. So those are three more of the ways to think.
– I love it, and like any good gardener, we know that there is no unsustainable growth that continues to go, I mean, I’m in the spring right now in the northern hemisphere and my garden is, you know, we’ve planted and things are starting to grow and this is the phase but I remember pulling things just a few weeks ago and that’s part of this kind of ecological growth cycle and understanding that growth for growth’s sake, I mean, look at the income disparity, the 1% is getting richer and everyone else is pissed off, yet we’re all pro-growth, for what and for whom?
– Yes. Exactly, and it takes us on to the last way of thinking. Right at the end of my book I call for now you sound quite comfortable with that but you and I know that that’s a pretty radical idea out there in the mainstream, and I say it’s because we have societies that have a Peter Pan attitude to growth, we always want growth, it’s as if we’re stuck in the growth phase of life, because think of anything natural from your children’s feet to the Amazon forest, it’s healthy and natural to grow but anything that’s organic grows and then it matures and it thrives at a mature size. It’s shocking to me when I look back at my economics education that not once in my education of four years of studying economics did we ever ask whether an economy could grow forever or should grow forever and what would happen if it couldn’t? So the last way of thinking is to say look, if our aim is to design economies that are distributive and regenerative, what does that mean for growth? Instead of being a goal, we’ve dismissed it as a goal now, it becomes a response, GDP, the total value of goods and services sold in the economy, maybe it needs to go up and then I’ll go level, maybe it needs to go down and then it’ll oscillate, I don’t know, because we’re going to go through an extraordinary transformation. Growth or GDP needs to be a response variable to the transformations we want to make. The trouble is that at the moment, our societies are addicted to growth, financially, through the rate of return that shareholders demand, they’re addicted politically, every government wants to keep their economy growing because otherwise they get bumped out of the G20, and we’re socially addicted to growth because 100 years of consumerism has told us that the best form of therapy is retail therapy, so we need to overcome these addictions to growth and make an economy that can be agnostic about growth so that it can indeed become distributive and regenerative and meet the needs of all within the means of this planet.
– I love it, i mean to me that is the spiritual malady of humanity in a nutshell, if we weren’t focused on an unsustainable cancerous growth then what the hell would we do? I don’t know, hang out with your children, right? Like what is all the fuss about right? Like have everyone not be hungry, crime goes down, we can figure out better ways to coexist and we don’t, growth for growth’s sake, why don’t we go mine the moon, why don’t we go destroy Mars while we’re at it? And so I love the real bold stance that you’re taking with this seventh step because it’s almost sacrilegious, like you are such an anti-capitalist like you’re gonna get locked up somewhere, right?
– And so many people, when you talk about the idea of boundaries, of pressure we should put on the planet, oh no but you know growth, we need to grow. But I say some of the most creative people in the world have worked with boundaries, Jimi Hendrix, he didn’t ask for 20 string guitar, he just got on and did phenomenal solos within that fret board. Mozart didn’t ask for 20 octet piano, he just got more creative within the space he was in, he wasn’t trying to grow the piano, he was becoming more ingenious. So when we unhook ourselves from this idea of something that needs to increase, increase, increase, increase, we can be creative within that space, and actually, most people’s hearts come alive when they move into that creative space.
– That’s it, and that’s where our humanity lies, it’s where there’s arts, there’s culture, there’s all the beauty in all the things that we’re missing while we’re busy trying to make money and pay for things we don’t need, I mean come on, right? It gets really ridiculous really fast, look I am so happy that you’re doing this work, I’m gonna share your work far and wide, how can people get involved in this? How do I, I mean listening to this, obviously the first step is it’s called Doughnut Economics, here’s the book, get the book, read the book, understand the book and share the book because this is a powerful reframe on all that we think that we know, right? You gotta challenge the assumptions of the system that you live in or else you’re just a slave to the system. And then what are the next couple steps? Like how do I move this into my life, like what do I need to do to be better at thinking this way?
– Great, so first of all when I say I’ve written a book on economics people sayI don’t think I’d understand that, I was never very good at math at school, and I’ll say look, the only numbers in my book are the page numbers, so it’s about words, it’s about radiators, it’s about birds, it’s about all the things we’ve been talking about here. So I hope it’s written in a really accessible way that anybody can get it and say wow, actually i understand economics and damn I’m gonna be involved because I realize it’s part of my world. Secondly, the idea of the doughnut that I’ve described ismeet the needs within the means of the planet, we can all imagine putting ourselves on the doughnut table and as it’s on the table before you ask yourself how does the way that I shop and travel and eat affect humanity’s ability to come into this doughnut? Do I have meat everyday or actually am I eating more plant based food, that’s gonna have an impact on all sort of planetary boundaries, am I taking jet flights all over the place for the weekend or actually am I thinking more consciously about the impact of carbon? But also it goes beyond consumerism and it’s not just the pennies we spend, how does the way that I invest my money or vote or volunteer in my community or communicate with my neighbors or the language I use, all of these things help reshape the narrative? So I hope that people feel they can look at your own life and how am I involved in the commons, how am I contributing to the household, what is my role in market and how can I reshape that? Can I create a social enterprise? What’s my relationship to the state? We’re all are embedded in this economy and we can like butterflies kick off the winds of change. If people are interested in helping spread the ideas further I’ve had the privilege of working with four fantastic stop motion animation teams, one’s in Brooklyn, one’s in London, one’s in Barcelona, one’s in Edinburgh, and I’ve turned the seven ways of thinking that we discussed briefly here today into 60 second little animations, really witty, funny, great fun and very accessible. Those are all going to be on my website from the beginning of April, and my website’s www.kateraworth.com, so if anybody wants to share these ideas with their university friends, with their classroom, with their colleagues at a conference, go there and have a look at these videos and I hope they’ll make it funny and accessible, and we can all start speaking this new narrative and realize that we are creating a new economy if you put the words and pictures behind it.
– I love it, I love it, Raworth is spelled without a Y, Raworth, and we’ll put a link to it in the blog, we’ll put a link to it
– That’s great.
– So you can get it, I am such a big fan of your work, thank you for coming back from Zanzibar and getting on the main stage, I was up in monasteries up in Nepal and I realized that the answer, the solution set to the world’s problems wasn’t going to be had there, it was going to be, you know, you go back to Rome to fix the Empire, so we have to fix this in the places we live, in the places we work, you know, where we dwell, so I’m glad you stepped into the world at large to fight this fight, this is the fight of our time, right? It’s a powerful reframe that has to happen within each of our minds before it happens in reality and like you said, it’s just a decision away.
– Yeah, and the way I think of it is I feel like the work I’m doing is one little boat in a big flotilla of boats. You’re a boat in the flotilla, there’s many different ships, large ones, small ones, all different shapes but we’re all sailing together towards the idea of creating a new economy and there’s a wonderful network of people who are in this space, so it’s great to sail alongside you and I hope theand I hope everybody who’s listening feels inspired to realize that they are actually agents in the economy, we’re all economists because we’re all household managers from the very local up to the global and we can all reshape this thing and create a thriving 21st century.
– And we have to, and we have to for our children.
– We have to.
– For your twins, for my kids and for their children’s children. So thank you so much, I am honored, here’s the book, get the book if you haven’t seen it, if you’re just on audio, it’s called Doughnut Economics, and last name Raworth, Kate thank you so much and I’m looking forward, I’m gonna be following you around and I promise you this isn’t the last you hear from me.
– I hope not and neither from me, thank you very much indeed.
– Cheers. Thank you.
– Let me know what you think, I’ll see you in the next show, Dr. Pedram Shojai, the Urban Monk.