by Kate Raworth
And here’s the rub. Humanity’s journey through the twenty-first century will be led by the policymakers, entrepreneurs, teachers, journalists, community organisers, 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. Given the fast-changing nature of the twenty-first century, this is shaping up to be a disaster. Of course the twentieth century gave rise to groundbreaking new economic thinking, most influentially in the battle of ideas between Keynes and Hayek. But though those iconic thinkers held opposing perspectives, they inherited flawed assumptions and common blind spots that lay unexamined at the root of their differences. The twenty-first-century context demands that we make those assumptions explicit and those blind spots visible so that we can, once again, rethink economics.
Walking away from economics – and back
As a teenager in the 1980s, I tried to piece together an understanding of the world by watching the evening news. The TV images that flashed daily into our living room took me far beyond my London schoolgirl life, and those images stuck. The unforgettable silent stare of pot-bellied children born into Ethiopia’s famine. Lines of bodies knocked down like matchsticks by the Bhopal gas disaster. A purple-tinted hole gaping in the ozone layer. A vast oil slick swirling out of the Exxon Valdez into Alaska’s pristine waters. By the end of the decade, I knew simply that I wanted to work for an organisation like Oxfam or Greenpeace – campaigning to end poverty and environmental destruction – and I thought that the best way to equip myself was to study economics and put its tools to work for such causes.
So I headed to Oxford University to get the skills that I believed would prepare me for the job. But the economic theory on offer left me frustrated because it made awkward assumptions about how the world worked, while glossing over the very issues I cared about most. I was lucky to have inspiring and wide-minded tutors, but they too were hemmed in by the syllabus that they were required to teach and we to master. So after four years of study, I found myself walking away from theoretical economics, too embarrassed ever to call myself ‘an economist’ and I immersed myself, instead, in real-world economic challenges.
I spent three years working with barefoot entrepreneurs in the villages of Zanzibar, in awe of the women who ran micro-businesses while raising their children without running water, electricity or a school in sight. I then hopped to the very different island of Manhattan, spending four years at the United Nations on the team writing the annual flagship Human Development Report, while witnessing barefaced power games block progress in international negotiations. I left to fulfil a long-held ambition and worked with Oxfam for over a decade. There I witnessed the precarious existences of women – from Bangladesh to Birmingham – employed at the sharp end of global supply chains. We lobbied to change the rigged rules and double standards governing international trade rules. And I explored the human-rights implications of climate change, meeting farmers from India to Zambia whose fields had been turned to bare earth because the rains had never come. Then I became a mother – of twins, to boot – and spent a year on maternity leave, immersed in the bare-bum economy of raising infants. When I returned to work, I understood the pressures on parents juggling job and family like never before.
Through all this, I gradually realised the obvious: that I could not simply walk away from economics, because it shapes the world we inhabit and its mindset had certainly shaped me, even if through my rejection of it. So I decided to walk back towards it and flip it on its head. What if we started economics not with its long-established theories, but with humanity’s long-term goals, and then sought out the economic thinking that would enable us to achieve them? I tried to draw a picture of those goals and, ridiculous though it sounds, it came out looking like a doughnut – yes, the American kind with a hole in the middle. The full diagram is set out in the next chapter, but in essence it is a pair of concentric rings. Below the inner ring – the social foundation – lie critical human deprivations such as hunger and illiteracy. Beyond the outer ring – the ecological ceiling – lies critical planetary degradation such as climate change and biodiversity loss. Between those two rings is the Doughnut itself, the space in which we can meet the needs of all within the means of the planet.
Sugary, deep-fried doughnuts hardly seem a likely metaphor for humanity’s aspirations but there was something about the image that struck a chord in me and in others, so it stuck. And it prompted a profoundly exciting question:
If humanity’s twenty-first-century goal is to get into the Doughnut, what economic mindset will give us the best chance of getting there?
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.
With the Doughnut in hand, I pushed my old textbooks aside and sought out the best emerging ideas that I could find, exploring new economic thinking with open-minded university students, progressive business leaders, innovative academics and cutting-edge practitioners. This book brings together the key insights I have discovered along the way – insights into ways of thinking that I wish had crossed my path at the outset of my own economics education, and that I believe should be part of every economist’s toolkit today. It draws on diverse schools of thought, such as complexity, ecological, feminist, institutional and behavioural economics. They are all rich with insight but there is still a risk that they will remain separated in silos, each school of thought nestled in its own journals, conferences, blogs, textbooks and teaching posts, cultivating its niche critique of last century’s thinking. The real breakthrough lies, of course, in combining what they each have to offer and to discover what happens when they dance on the same page, which is just what this book sets out to do.
Humanity faces some formidable challenges, and it is in no small part thanks to the blind spots and mistaken metaphors of outdated economic thinking that we have ended up here. But for those who are ready to rebel, look sideways, to question and think again, then these are exciting times. ‘Students must learn how to discard old ideas, how and when to replace them … how to learn, unlearn, and relearn,’ wrote the futurist Alvin Toffler.22 This could not be more true for those seeking economic literacy: now is a great moment for unlearning and relearning the fundamentals of economics.
The power of pictures
Everybody’s saying it: we need a new economic story, a narrative of our shared economic future that is fit for the twenty-first century. I agree. But let’s not forget one thing: the most powerful stories throughout history have been the ones told with pictures. If we want to rewrite economics, we need to redraw its pictures too, because we stand little chance of telling a new story if we stick to the old illustrations. And if drawing new pictures sounds frivolous to you – like mere child’s play – believe me it is not. Better still, let me prove it.
From prehistoric cave paintings to the map of the London Underground, images, diagrams and charts have long been at the heart of human storytelling. The reason why is simple: our brains are wired for visuals. ‘Seeing comes before words. The child looks and recognizes before it speaks,’ wrote the media theorist John Berger in the opening lines of his 1972 classic, Ways of Seeing.23 Neuroscience has since confirmed the dominant role of visualisation in human cognition. Half of the nerve fibres in our brains are linked to our vision and, when our eyes are open, vision accounts for two-thirds of the electrical activity in the brain. It takes just 150 milliseconds for the brain to recognise an image and a mere 100 milliseconds more to attach a meaning to it.24 Although we have blind spots in both of our eyes – where the optic nerve attaches to the retina – the brain deftly steps in to create the seamless illusion of a whole.25
As a result, we are born pattern-spotters, seeing faces in the clouds, ghosts in the shadows, and mythical beasts in the stars. And we learn b
est when there are pictures to look at. As the visual literacy expert Lynell Burmark explains, ‘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.’26 With far fewer pen strokes, and without the weight of technical language, images have immediacy – and when text and image send conflicting messages, it is the visual message that most often wins.27 So the old adage turns out to be true: a picture really is worth a thousand words.
It is hardly surprising, then, that imagery has played such a central role in the way that humans have learned to make sense of the world. In the sixth century BCE, the oldest known map of the world, the Imago Mundi, was etched into clay with a sharpened stick in Persia, showing Earth as a flat disc and with Babylon firmly at its centre. The Ancient Greek father of geometry, Euclid, mastered the analysis of circles, triangles, curves and rectangles in two-dimensional space, creating a diagrammatic convention that Isaac Newton later used to lay out his groundbreaking laws of motion, and that is still used in maths classes worldwide today. Few people have heard of the Roman architect Marcus Vitruvius Pollio but Leonardo da Vinci’s visual depiction of his theory of proportion is instantly recognised the world over in the image of Vitruvian Man, standing – naked and open armed – in a circle and square simultaneously. In 1837 when Charles Darwin first drew in his field notebook an irregular little diagram of a branching tree – with the words ‘I think’ jotted above it – he captured the crux of an idea that would turn into The Origin of Species.28
Across cultures and time, it is clear that people have long understood the power of imagery, and its ability to overturn deeply held beliefs. Pictures stick in the mind’s eye and wordlessly reshape our view of the world. No wonder Nicolaus Copernicus – who spent his life studying the motion of the planets – waited until he was on his deathbed before he dared to publish this one:
Copernicus’s 1543 depiction of the universe, which showed Earth revolving around the sun.
By depicting the sun – not Earth – at the centre of our solar system, Copernicus’s picture triggered an ideological revolution that would unravel church doctrine, threaten to upend papal power, and transform humanity’s understanding of the cosmos and our place in it. It is extraordinary what havoc a few concentric circles can unleash.
Think, then, of the circles, parabolas, lines and curves that make up the core diagrams in economics – those seemingly innocuous pictures depicting what the economy is, how it moves, and what it is for. Never underestimate the power of such images: what we draw determines what we can and cannot see, what we notice and what we ignore, and so shapes all that follows. The images that we draw to describe the economy invoke the timeless truths of Euclid’s maths and Newton’s physics in their geometric simplicity. But in doing so, they slip swiftly into the back of our head, wordlessly whispering the deepest assumptions of economic theory that need never be put into words because they have been inscribed in the mind’s eye. They present a very partial picture of the economy, smoothing over economic theory’s own peculiar blind spots, enticing us to search for laws within their lines, and sending us in pursuit of false goals. What’s more, those images linger, like graffiti on the mind, long after the words have faded; they become stowaway intellectual baggage, lodged in your visual cortex without you even realising it is there. And – just like graffiti – it is very hard to remove. So if a picture is worth a thousand words then, in economics at least, we should pay a great deal more attention to the pictures that we teach, draw and learn.
Some might dismiss this suggestion with the rebuttal that economic theory is taught not in pictures but in equations, page after page of them. Economics departments, after all, seek to recruit mathematicians, not artists, to join their ranks. But economics has in fact always been taught with both diagrams and equations, and the diagrams have played a particularly powerful role, thanks to a few maverick characters and surprise twists in the field’s little-known but fascinating past.
Images in economics: a hidden history
Many of the founding fathers of economics used imagery to express their seminal ideas. When in 1758 the French economist François Quesnay published his Tableau économique – with its zigzagging lines depicting the flow of money as it circulated between landowners, labourers and merchants – he effectively drew up the first quantified economic model. In the 1780s the British political economist William Playfair began to invent new ways of presenting data, using what every schoolchild now knows as graphs, bar charts and pie charts. With these tools he powerfully visualised the political issues of his day, such as the sharply rising price of wheat for the day labourer, and England’s shifting balance of trade with the rest of the world. A century later, the British economist William Stanley Jevons drew a picture depicting what he called ‘the law of demand’, plotting incremental changes in price and quantity along a curve in order to show that, as the price of a thing falls, people will want to buy more of it. Aspiring to make his theory seem as scientific as physics, he intentionally drew it in a style that closely resembled Newton’s depiction of the laws of motion. And that demand curve still features in the first diagram encountered by the novice student today.
Aspiring to make economics seem as scientific as physics, Jevons drew his theories in the style of Newton’s diagrams of the laws of motion.
The first half of twentieth-century economics was dominated by Alfred Marshall’s 1890 book, Principles of Economics, the master text used to teach most students. In its preface, Marshall mused on the relative merits of using equations versus diagrams to elucidate the text. Mathematical equations, he believed, were most useful ‘in helping a person to write down quickly, shortly and exactly, some of his thoughts for his own use … But when a great many symbols have to be used, they become very laborious to any one but the writer himself.’ The value of diagrams, he believed, was far greater. ‘The argument in the text is never dependent upon them; and they may be omitted,’ he wrote, ‘but experience seems to show that they give a firmer grasp of many important principles than can be got without their aid; and that there are many problems of pure theory, which no one who has once learnt to use diagrams will willingly handle in any other way.’29
It was Paul Samuelson, however, who decisively placed imagery at the heart of economic thought in the second half of the twentieth century. Known as the father of modern economics, Samuelson spent his seven-decade career at the Massachusetts Institute of Technology (MIT) and on his death in 2009 he was heralded as ‘one of the giants on whose shoulders every contemporary economist stands’.30 He was enamoured of equations and diagrams, and he profoundly influenced the use of both in economic theory and teaching. But, crucially, he believed they were suited to very different audiences: in short, equations were for the specialists; pictures for the masses.
Samuelson’s first major work was the book of his doctoral dissertation, Foundations of Economic Analysis. Published in 1947, it was aimed at the hard-core theorist, and was unapologetically mathematical: equations, he believed, should be the mother tongue of professional economists, serving to cut through muddled thinking and replace it with scientific precision. He wrote his second book, however, for an utterly different audience, and only thanks to a twist of fate.
Paul Samuelson: the man who drew economics.
At the end of the Second World War, US college enrolments ballooned as hundreds of thousands of ex-servicemen returned home in search of the education that they had missed and the jobs that they desperately needed. Many opted to study engineering – essential for post-war construction – and were required to learn a little economics along the way. Samuelson was, at the time, a 30-year-old professor at MIT and a self-declared ‘whippersnapper go-getter in esoteric theory’. But his departmental boss, Ralph Freeman, had a p
roblem on his hands: 800 engineering students at MIT had started a year-long compulsory course in economics and it was not going well. Samuelson recalled the conversation that took place when Freeman turned up at his office one day and closed the door behind him. ‘They hate it,’ Freeman confessed, ‘We’ve tried everything. They still hate it … Paul, will you go on half time for a semester or two? Write a text the students will like. If they like it, yours will be good economics. Leave out whatever you like. Be as short as you wish. Whatever you come up with, that will be a vast improvement on where we are.’31
It was, said Samuelson, an offer he couldn’t refuse and the text that he wrote over the next three years – titled simply Economics – became the 1948 textbook classic that shot him to lifelong fame. Fascinatingly, the strategy he chose in writing it followed right in the footsteps of the medieval Roman Catholic Church. Before the advent of the printing press, the Church had used two quite distinct methods to spread its doctrine. The learned few – monks, priests and scholars – were required to read the Bible in Latin, writing out its verses line by line. In contrast, the illiterate masses were taught the Bible’s stories in pictures, painted as frescoes on church walls and illuminated in stained-glass windows. It turned out to be a highly successful mass communications strategy. Samuelson was just as smart: setting aside the specialist’s equations, he fully embraced diagrams, graphs and charts to create his one-stop-shop economics course for the masses. And since his primary audience was a cohort of engineers, he adopted a visual style that they would have found familiar, drawn in the tradition of mechanical engineering and fluid mechanics. On the next page, for example, is an image from the first edition of his textbook, showing how income circulates round the economy, with new investments topping it up. It evolved to become his most famous diagram – known as the Circular Flow – and was clearly based on the metaphor of water flowing through plumbed pipes.32