A healthy economy should be designed to thrive, not grow | Kate Raworth

Summary

The speaker challenges the traditional notion of economic growth as the ultimate goal, advocating for a shift in mindset towards economies that prioritize human thriving over mere expansion. They introduce the 'doughnut' model, a visual representation of a balanced approach to meeting human needs within ecological limits, highlighting the need for regenerative and distributive economic design. This thought-provoking talk calls for innovative solutions to overcome our growth obsession and create a sustainable and equitable future.

Takeaways

• 🧒 The script begins with an analogy of a baby learning to crawl, illustrating the basic human direction of progress as moving forward and upwards.
• 📈 It challenges the traditional belief that economic progress should always be represented by an ever-rising line of growth, suggesting a need to reimagine progress for thriving economies.
• 💡 The concept of GDP, invented in the 1930s, became the main goal of policymaking, leading to an obsession with growth as the solution to economic problems.
• 📚 Reference is made to W.W. Rostow's 'The Stages of Economic Growth: A Non-Communist Manifesto', which outlines five stages of economic growth and the continuous pursuit of it.
• 🛫 The metaphor of an airplane that can never land is used to describe our current economies, which are addicted to endless growth, both financially and politically.
• 🌍 The script highlights the negative impacts of this growth, such as increased inequality and environmental degradation, destabilizing the planet.
• 💼 It points out that we are socially addicted to growth due to a century of consumer propaganda, which has led people to believe in the transformative power of consumption.
• 🌳 The need for a new economic model is emphasized, one that is regenerative and distributive by design, focusing on meeting the needs of all people within the means of the planet.
• 🍩 The 'doughnut' model is introduced as a visual representation of this new economic model, with a social foundation and an ecological ceiling, aiming for a balance between the two.
• 🔄 The script calls for economies that work within the cycles of the living world, using resources regeneratively, and technologies that distribute wealth and knowledge more equitably.
• 🚀 It concludes by urging for financial, political, and social innovations to overcome the dependency on growth, focusing instead on thriving within the social and ecological boundaries.

Q & A

What is the basic direction of progress that humans recognize according to the script?

The basic direction of progress that humans recognize is the motion of moving forwards and upwards, as illustrated by the example of a baby learning to crawl.

Why do we associate economic progress with an ever-rising line of growth?

We associate economic progress with an ever-rising line of growth because of our belief in the narrative of evolution, where progress is depicted as moving from primitive to advanced stages, symbolized by the transition from crawling to standing and walking upright.

What does the speaker suggest is the problem with economies that focus solely on growth?

The speaker suggests that the problem with economies that focus solely on growth is that they may not necessarily contribute to human thriving, and instead, can lead to divisiveness and environmental degradation.

What is the origin of the obsession with economic growth as described in the script?

The obsession with economic growth originated from the invention of GDP in the 1930s, which soon became the overriding goal of policymaking, influencing governments to believe that more growth is the solution to economic problems.

What are the five stages of economic growth as outlined by W.W. Rostow in his book?

The five stages of economic growth according to W.W. Rostow are: 1) traditional society, 2) preconditions for takeoff, 3) takeoff, 4) drive to maturity, and 5) the age of high-mass consumption.

Why does the speaker argue that the pursuit of endless growth is not sustainable?

The speaker argues that the pursuit of endless growth is not sustainable because it leads to financial, political, and social addictions that destabilize the planet and widen inequality, without addressing the real needs of people and the environment.

What is the 'doughnut' model of economic progress proposed by the speaker?

The 'doughnut' model of economic progress is a visual representation where the hole in the middle represents the shortfall of life's essentials for people, and the outer circle represents the ecological ceiling beyond which we risk destabilizing the planet. The goal is to ensure that all people's needs are met without exceeding the planet's boundaries.

How does the speaker describe the current state of the global economy in relation to the 'doughnut' model?

The speaker describes the current state of the global economy as being far from balanced, with millions of people falling short on basic needs while also overshooting planetary boundaries, indicating a simultaneous shortfall and overshoot.

What are the key characteristics of the economies that the speaker suggests we need to create?

The speaker suggests we need to create economies that are regenerative and distributive by design, focusing on meeting human needs within ecological limits, and ensuring that wealth, knowledge, and power are more equitably distributed.

What role does the speaker believe technology can play in creating a more balanced and regenerative economy?

The speaker believes that technology, including AI, blockchain, the Internet of Things, and material science, can play a crucial role in creating a more balanced and regenerative economy if harnessed in service of distributive and regenerative design.

How does the speaker relate the concept of growth in nature to the concept of economic growth?

The speaker relates the concept of growth in nature to economic growth by pointing out that in nature, growth is a phase that leads to maturity, not an endless process. This suggests that the idea of economies growing forever is contrary to the natural cycles and is unsustainable.

Outlines

00:00

🌱 Rethinking Economic Progress

The speaker opens by drawing a parallel between a baby learning to crawl and the human perception of progress as a forward and upward movement, symbolized by economic growth. They challenge the traditional belief that economies must grow to be successful, suggesting that we need to reconceptualize progress to focus on thriving rather than growth alone. The speaker introduces the concept that economic policies, heavily influenced by GDP, have led to an obsession with growth, which may not necessarily contribute to societal well-being. They reference W.W. Rostow's 'The Stages of Economic Growth: A Non-Communist Manifesto' to illustrate how the idea of growth has been ingrained in economic policy and question the sustainability of endless growth, hinting at the need for a new economic mindset.

05:03

🌐 The Illusion of Endless Growth

This paragraph delves into the societal, financial, and political dependencies on economic growth. It discusses the historical and psychological roots of consumerism, traced back to Edward Bernays, and how it has been used to propagate the idea that purchasing goods equates to personal transformation. The speaker points out the consequences of relentless growth, such as increased inequality and environmental degradation, and criticizes the current approach to solving economic issues by simply pursuing more growth. They introduce the concept of a 'doughnut' model of progress, which includes a social foundation and an ecological ceiling, aiming to meet human needs without exceeding planetary boundaries.

10:03

🌿 Building a Regenerative and Distributive Economy

The speaker advocates for a shift towards an economy that is both regenerative and distributive by design. They argue that the current degenerative industries, which extract, produce, and discard, are unsustainable and must be transformed into循环 systems that mimic the cycles of the living world. The paragraph highlights examples of cities and regions adopting renewable energy and circular design to create more sustainable and resilient systems. The speaker also emphasizes the importance of harnessing new technologies, such as AI and blockchain, to distribute wealth, knowledge, and power more equitably, moving away from the shareholder-centric model of the past.

15:05

🎨 Embracing Boundaries for Creative Thriving

In the final paragraph, the speaker addresses the potential of boundaries to inspire creativity and innovation, using the metaphor of the 'doughnut' to represent the balanced space between social and ecological limits where humanity can thrive. They reject the notion of perpetual growth as unrealistic and potentially harmful, drawing an analogy to the natural world where growth is a phase, not a permanent state. The speaker calls for financial, political, and social innovations to break the structural dependency on growth and instead focus on achieving a dynamic balance within the doughnut model. They conclude with an optimistic view of the potential for human ingenuity to flourish within these defined parameters.

Keywords

💡Crawl

Crawl refers to the act of moving on hands and knees, typically the first method of locomotion for human infants. In the script, it is used metaphorically to describe the initial stages of human progress, highlighting the natural progression from crawling to standing and walking as a parallel to societal and economic development.

💡Economic Progress

Economic progress is the concept of continuous improvement in an economy's performance, often measured by growth metrics like GDP. The script challenges the traditional belief in an ever-rising line of economic growth, suggesting that true progress should focus on societal well-being rather than mere expansion of the economy.

💡GDP (Gross Domestic Product)

GDP is the total monetary or market value of all the finished goods and services produced in a country within a specific time period. It is a common measure of a country's economic health. The script discusses how GDP became the primary goal of economic policy, leading to an obsession with growth regardless of its impact on societal well-being.

💡Stages of Economic Growth

This concept, introduced by W.W. Rostow, outlines five stages that economies must pass through to achieve growth. The script critiques this model as it implies endless growth is necessary and does not account for the potential negative consequences of such growth on society and the environment.

💡Mass Consumerism

Mass consumerism refers to a society where a large quantity of goods is widely available for purchase and consumption. The script uses this term to describe the final stage of Rostow's economic growth model, suggesting that this stage has led to a culture of overconsumption and environmental degradation.

💡Doughnut Model

The doughnut model is a visual representation of the ecological and social boundaries within which humanity should operate to ensure a thriving and sustainable existence. The script introduces this model as an alternative to the traditional growth-focused economic models, illustrating a 'sweet spot' between meeting basic needs and avoiding ecological harm.

💡Ecological Ceiling

The ecological ceiling in the doughnut model represents the upper limit of resource use beyond which humanity should not go to prevent environmental damage. The script emphasizes the importance of not exceeding this limit to avoid irreversible impacts such as climate breakdown and ecosystem collapse.

💡Resource Use

Resource use refers to the consumption of natural resources for human activities. The script discusses the need to balance resource use with the ecological ceiling to ensure sustainability, pointing out that current levels of consumption are already causing significant environmental stress.

💡Regenerative Design

Regenerative design is an approach to design that seeks to regenerate and sustain natural systems and human communities. The script highlights the need for such design in economic systems to create a circular flow of resources, mimicking natural cycles and ensuring that waste from one process becomes input for another.

💡Distributive Design

Distributive design is the concept of creating systems that distribute wealth, knowledge, and power more equitably. The script suggests that technologies and institutions of the 21st century should be designed with distributive principles in mind to ensure that benefits are shared widely and not concentrated in the hands of a few.

💡Planetary Boundaries

Planetary boundaries are limits to the extent to which humanity can alter Earth's natural systems without causing unacceptable environmental degradation. The script argues that current economic practices have already exceeded several of these boundaries, emphasizing the urgency of reining in growth to prevent further damage.

Highlights

The comparison of a baby learning to crawl to the basic direction of human progress, emphasizing the ingrained belief in the ever-rising line of economic growth.

The need to reimagine progress towards economies that prioritize human thriving over mere growth.

The origin of the growth obsession traced back to the invention of GDP in the 1930s and its influence on policy-making.

W.W. Rostow's 'The Stages of Economic Growth: A Non-Communist Manifesto' as a key narrative shaping the understanding of economic development.

The critique of Rostow's model, highlighting its perpetuation of endless growth without addressing its sustainability.

The financial system's design driving companies towards constant growth to achieve the highest monetary return.

Political motivations behind the pursuit of growth, including tax revenue and global economic ranking.

Social addiction to growth, stemming from a century of consumer propaganda influencing our self-perception through consumption.

The global impact of economic growth, including increased prosperity but also divisiveness and environmental degradation.

Politicians' offers of various types of growth (green, inclusive, smart, etc.) as a way to address economic and environmental challenges.

The introduction of the 'doughnut' model as a visual representation of a balanced approach to economic and ecological health.

The 'doughnut' model's inner circle representing the shortfall of life essentials for many, and the outer circle signifying the ecological ceiling.

The call for a new shape of progress that balances between the social foundation and ecological ceiling, rather than endless growth.

The recognition of the need for economies to be both regenerative and distributive by design to address current shortfalls and overshoots.

Examples of regenerative design in cities, agriculture, and energy production that work within the cycles of the living world.

The potential of 21st-century technologies to enable distributive design, ensuring equitable access to essential services and opportunities.

The challenge to the notion of endless growth, drawing parallels to natural systems that grow, mature, and thrive without perpetual expansion.

The argument for financial, political, and social innovations to overcome the structural dependency on growth and focus on thriving within boundaries.

The metaphor of boundaries as a source of creativity and potential, encouraging us to rethink the limitations of the 'doughnut' model as opportunities.

Transcripts

Have you ever watched a baby learning to crawl?

Because as any parent knows, it's gripping.

First, they wriggle about on the floor,

usually backwards,

but then they drag themselves forwards,

and then they pull themselves up to stand,

and we all clap.

And that simple motion of forwards and upwards,

it's the most basic direction of progress we humans recognize.

We tell it in our story of evolution as well,

from our lolloping ancestors to Homo erectus, finally upright,

to Homo sapiens, depicted, always a man,

always mid-stride.

So no wonder we so readily believe

that economic progress will take this very same shape,

this ever-rising line of growth.

It's time to think again,

to reimagine the shape of progress,

because today, we have economies

that need to grow, whether or not they make us thrive,

and what we need, especially in the richest countries,

are economies that make us thrive

whether or not they grow.

Yes, it’s a little flip in words

hiding a profound shift in mindset,

but I believe this is the shift we need to make

if we, humanity, are going to thrive here together this century.

So where did this obsession with growth come from?

Well, GDP, gross domestic product,

it's just the total cost of goods and services

sold in an economy in a year.

It was invented in the 1930s,

but it very soon became the overriding goal of policymaking,

so much so that even today, in the richest of countries,

governments think that the solution to their economic problems

lies in more growth.

Just how that happened

is best told through the 1960 classic by W.W. Rostow.

I love it so much, I have a first-edition copy.

"The Stages of Economic Growth: A Non-Communist Manifesto."

(Laughter)

You can just smell the politics, huh?

And Rostow tells us that all economies

need to pass through five stages of growth:

first, traditional society, where a nation's output is limited

by its technology, its institutions and mindset;

but then the preconditions for takeoff,

where we get the beginnings of a banking industry,

the mechanization of work

and the belief that growth is necessary for something beyond itself,

like national dignity or a better life for the children;

then takeoff, where compound interest is built into the economy's institutions

and growth becomes the normal condition;

fourth is the drive to maturity where you can have any industry you want,

no matter your natural resource base;

and the fifth and final stage, the age of high-mass consumption

where people can buy all the consumer goods they want,

like bicycles and sewing machines --

this was 1960, remember.

Well, you can hear the implicit airplane metaphor in this story,

but this plane is like no other,

because it can never be allowed to land.

Rostow left us flying into the sunset of mass consumerism,

and he knew it.

As he wrote,

"And then the question beyond,

where history offers us only fragments.

What to do when the increase in real income itself loses its charm?"

He asked that question, but he never answered it, and here's why.

The year was 1960,

he was an advisor to the presidential candidate John F. Kennedy,

who was running for election on the promise of five-percent growth,

so Rostow's job was to keep that plane flying,

not to ask if, how, or when it could ever be allowed to land.

So here we are, flying into the sunset of mass consumerism

over half a century on,

with economies that have come to expect, demand and depend upon

unending growth,

because we're financially, politically and socially addicted to it.

We're financially addicted to growth, because today's financial system

is designed to pursue the highest rate of monetary return,

putting publicly traded companies under constant pressure

to deliver growing sales, growing market share and growing profits,

and because banks create money as debt bearing interest,

which must be repaid with more.

We're politically addicted to growth

because politicians want to raise tax revenue

without raising taxes

and a growing GDP seems a sure way to do that.

And no politician wants to lose their place in the G-20 family photo.

(Laughter)

But if their economy stops growing while the rest keep going,

well, they'll be booted out by the next emerging powerhouse.

And we are socially addicted to growth,

because thanks to a century of consumer propaganda,

which fascinatingly was created by Edward Bernays,

the nephew of Sigmund Freud,

who realized that his uncle's psychotherapy

could be turned into very lucrative retail therapy

if we could be convinced to believe that we transform ourselves

every time we buy something more.

None of these addictions are insurmountable,

but they all deserve far more attention than they currently get,

because look where this journey has been taking us.

Global GDP is 10 times bigger than it was in 1950

and that increase has brought prosperity to billions of people,

but the global economy has also become incredibly divisive,

with the vast share of returns to wealth

now accruing to a fraction of the global one percent.

And the economy has become incredibly degenerative,

rapidly destabilizing this delicately balanced planet

on which all of our lives depend.

Our politicians know it, and so they offer new destinations for growth.

You can have green growth, inclusive growth,

smart, resilient, balanced growth.

Choose any future you want so long as you choose growth.

I think it's time to choose a higher ambition, a far bigger one,

because humanity's 21st century challenge is clear:

to meet the needs of all people

within the means of this extraordinary, unique, living planet

so that we and the rest of nature can thrive.

Progress on this goal isn't going to be measured with the metric of money.

We need a dashboard of indicators.

And when I sat down to try and draw a picture of what that might look like,

strange though this is going to sound,

it came out looking like a doughnut.

I know, I'm sorry,

but let me introduce you to the one doughnut

that might actually turn out to be good for us.

So imagine humanity's resource use radiating out from the middle.

That hole in the middle is a place

where people are falling short on life's essentials.

They don't have the food, health care, education, political voice, housing

that every person needs for a life of dignity and opportunity.

We want to get everybody out of the hole, over the social foundation

and into that green doughnut itself.

But, and it's a big but,

we cannot let our collective resource use overshoot that outer circle,

the ecological ceiling,

because there we put so much pressure on this extraordinary planet

that we begin to kick it out of kilter.

We cause climate breakdown, we acidify the oceans,

a hole in the ozone layer,

pushing ourselves beyond the planetary boundaries

of the life-supporting systems that have for the last 11,000 years

made earth such a benevolent home to humanity.

So this double-sided challenge to meet the needs of all

within the means of the planet,

it invites a new shape of progress,

no longer this ever-rising line of growth,

but a sweet spot for humanity,

thriving in dynamic balance between the foundation and the ceiling.

And I was really struck once I'd drawn this picture

to realize that the symbol of well-being in many ancient cultures

reflects this very same sense of dynamic balance,

from the Maori Takarangi

to the Taoist Yin Yang, the Buddhist endless knot,

the Celtic double spiral.

So can we find this dynamic balance in the 21st century?

Well, that's a key question,

because as these red wedges show, right now we are far from balanced,

falling short and overshooting at the same time.

Look in that hole, you can see that millions or billions of people worldwide

still fall short on their most basic of needs.

And yet, we've already overshot at least four of these planetary boundaries,

risking irreversible impact of climate breakdown

and ecosystem collapse.

This is the state of humanity and our planetary home.

We, the people of the early 21st century,

this is our selfie.

No economist from last century saw this picture,

so why would we imagine that their theories

would be up for taking on its challenges?

We need ideas of our own,

because we are the first generation to see this

and probably the last with a real chance of turning this story around.

You see, 20th century economics assured us that if growth creates inequality,

don't try to redistribute,

because more growth will even things up again.

If growth creates pollution,

don't try to regulate, because more growth will clean things up again.

Except, it turns out, it doesn't,

and it won't.

We need to create economies that tackle this shortfall and overshoot together,

by design.

We need economies that are regenerative and distributive by design.

You see, we've inherited degenerative industries.

We take earth's materials, make them into stuff we want,

use it for a while, often only once, and then throw it away,

and that is pushing us over planetary boundaries,

so we need to bend those arrows around,

create economies that work with and within the cycles of the living world,

so that resources are never used up but used again and again,

economies that run on sunlight,

where waste from one process is food for the next.

And this kind of regenerative design is popping up everywhere.

Over a hundred cities worldwide, from Quito to Oslo,

from Harare to Hobart,

already generate more than 70 percent of their electricity

from sun, wind and waves.

Cities like London, Glasgow, Amsterdam are pioneering circular city design,

finding ways to turn the waste from one urban process

into food for the next.

And from Tigray, Ethiopia to Queensland, Australia,

farmers and foresters are regenerating once-barren landscapes

so that it teems with life again.

But as well as being regenerative by design,

our economies must be distributive by design,

and we've got unprecedented opportunities for making that happen,

because 20th-century centralized technologies,

institutions,

concentrated wealth, knowledge and power in few hands.

This century, we can design our technologies and institutions

to distribute wealth, knowledge and empowerment to many.

Instead of fossil fuel energy and large-scale manufacturing,

we've got renewable energy networks, digital platforms and 3D printing.

200 years of corporate control of intellectual property is being upended

by the bottom-up, open-source, peer-to-peer knowledge commons.

And corporations that still pursue maximum rate of return

for their shareholders,

well they suddenly look rather out of date

next to social enterprises that are designed to generate

multiple forms of value and share it with those throughout their networks.

If we can harness today's technologies,

from AI to blockchain

to the Internet of Things to material science,

if we can harness these in service of distributive design,

we can ensure that health care, education, finance, energy, political voice

reaches and empowers those people who need it most.

You see, regenerative and distributive design

create extraordinary opportunities for the 21st-century economy.

So where does this leave Rostow's airplane ride?

Well, for some it still carries the hope of endless green growth,

the idea that thanks to dematerialization,

exponential GDP growth can go on forever while resource use keeps falling.

But look at the data. This is a flight of fancy.

Yes, we need to dematerialize our economies,

but this dependency on unending growth cannot be decoupled from resource use

on anything like the scale required

to bring us safely back within planetary boundaries.

I know this way of thinking about growth is unfamiliar,

because growth is good, no?

We want our children to grow, our gardens to grow.

Yes, look to nature and growth is a wonderful, healthy source of life.

It's a phase, but many economies like Ethiopia and Nepal today

may be in that phase.

Their economies are growing at seven percent a year.

But look again to nature,

because from your children's feet to the Amazon forest,

nothing in nature grows forever.

Things grow, and they grow up and they mature,

and it's only by doing so

that they can thrive for a very long time.

We already know this.

If I told you my friend went to the doctor

who told her she had a growth

that feels very different,

because we intuitively understand that when something tries to grow forever

within a healthy, living, thriving system,

it's a threat to the health of the whole.

So why would we imagine that our economies

would be the one system that could buck this trend

and succeed by growing forever?

We urgently need financial, political and social innovations

that enable us to overcome this structural dependency on growth,

so that we can instead focus on thriving and balance

within the social and the ecological boundaries of the doughnut.

And if the mere idea of boundaries makes you feel, well, bounded,

think again.

Because the world's most ingenious people

turn boundaries into the source of their creativity.

From Mozart on his five-octave piano

Jimi Hendrix on his six-string guitar,

Serena Williams on a tennis court,

it's boundaries that unleash our potential.

And the doughnut's boundaries unleash the potential for humanity to thrive

with boundless creativity, participation, belonging and meaning.

It's going to take all the ingenuity that we have got to get there,

so bring it on.

Thank you.

(Applause)