by Kate Raworth
Think, then, of the students heading to universities worldwide to study economics every year. Many of them will have chosen this subject because they too see the glass half full and passionately want to be part of better managing humanity’s shared home in the interests of all. And they believe – as I did – that mastering the mother tongue of public policy is the best way to skill themselves up for the task. Those students deserve the most enlightened economics education possible, whether in words, equations or pictures, and I believe it starts with the seven ways of thinking set out in this book.
The twenty-first-century task is clear: to create economies that promote human prosperity in a flourishing web of life, so that we can thrive in balance within the Doughnut’s safe and just space. It starts with recognising that every economy – local to global – is embedded within society and within the living world. It also means recognising that the household, the commons, the market and the state can all be effective means of provisioning for our many needs and wants, and they tend to work best when they work together. By deepening our understanding of human nature we can create institutions and incentives that reinforce our social reciprocity and other-regarding values, rather than undermine them. Once we accept the economy’s inherent complexity, we can shape its ever-evolving dynamics through smart stewardship. That opens up the possibility of turning today’s divisive and degenerative economies into ones that are distributive and regenerative by design. And it invites us to become agnostic about growth, creating economies that enable us to thrive, whether or not they are growing.
This book has set out just seven ways to think (and draw) like a twenty-first-century economist; there are no doubt many more. But I am convinced that these seven are the best way to start erasing the old economic graffiti that has for so long occupied our minds. Still, even these seven will keep on evolving because we have only just begun drawing their pictures, sensing their patterns, and understanding their interplay. And the politics won’t go away either. Given the diverse technological, cultural, economic and political routes that could take us into the Doughnut, there will be many possible ways of distributing the costs and benefits, power and risk, within and between countries and communities. That makes the political process of adjudicating between alternative policies as important as ever.1
Storming the citadels
Many of the most exciting insights driving new economic thinking seem to be emerging from every quarter but economics departments themselves. There are of course some important exceptions to that, but they are too rare. So many of the transformative ideas are originating in other fields of thought such as psychology, ecology, physics, history, Earth-system science, geography, architecture, sociology, and complexity science. Economic theory would be wise to embrace what these other perspectives have to offer. In the dance of the intellects, it is time for economics to step back from soloing in the limelight and join the troupe instead. Less Lord of the Dance and more maypole dance, more actively interweaving its theories with insights arising in other disciplines.
The smartest economists have always understood the importance of such intellectual maypole dancing. John Stuart Mill believed that his 1848 book Principles of Political Economy was acclaimed in his own day because it treated political economy, ‘not as a thing in itself, but as a fragment of a greater whole; a branch of social philosophy, so interlinked with all the other branches that its conclusions, even in its own peculiar province, are only true conditionally, subject to interference and counteraction from causes not directly within its scope’.2 John Maynard Keynes would clearly have danced round this maypole too. ‘The master-economist must possess a rare combination of gifts,’ he wrote. ‘He must be mathematician, historian, statesman, philosopher … He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard.’3 Some prominent contemporary economists echo this view, such as Joseph Stiglitz, who has advised prospective students to ‘study economics, but study it with skepticism and study it within the broader context’.4
So is intellectual maypole dancing gaining equal popularity in the citadels – the university economics departments themselves? This question inspired me to track down Yuan Yang, the disillusioned economics student who helped to launch a protest movement and whose story opened this book. Nearly a decade on – incongruous though it may sound – she is now a Beijing correspondent for the Financial Times, the UK’s most prestigious financial newspaper, at the same time as being co-chair of trustees of Rethinking Economics, the international student network that she helped to launch, which is demanding a revolution in economics education. How did she come to straddle two such different worlds? On completing her Master’s degree, Yuan turned down a place on a PhD programme because she was convinced that she would learn more about the real economy by working as an economic journalist than she ever would by studying in an economics department. And so she reports on issues at the forefront of China’s fast-changing economy, from the large-scale loss of jobs in coal and steel industries to the rise of Beijing as the world’s capital for billionaires.
At the same time, Yuan has helped to take Rethinking Economics from strength to strength. Since it was founded in 2013, this student-led movement has built a broad coalition, teaming up with employers who are likewise frustrated by the vast gap between what their graduate recruits understand and the workings of the real economy. The movement has won the support of the wider public too. ‘When we travel around the UK giving talks we meet people on the train who ask what we are doing,’ Yuan told me. ‘When we say we think the economists have got it wrong, they immediately know what we are talking about. The financial crisis has turned economics – this strange and awkward profession – into an issue of public discussion and debate.’
To counter the narrow curricula on offer, students at universities worldwide have held teach-ins, set up reading groups, helped to design massive open online courses, or MOOCs, and lobbied their own professors to revamp and diversify the curricula that they are being taught. A few universities, say the students, have embraced their call for a pluralistic education – including Kingston and Greenwich in the UK, Siegen in Germany, Paris 7 and 13 in France, and Aalborg in Denmark. They are bringing economic history and the history of economics back on to the syllabus, updating their macroeconomic models to include the financial sector, and introducing critiques from more diverse schools of thought such as feminist, ecological, behavioural, institutional and complexity economics.
The least responsive universities to date, say the students, have been the most prestigious ones, such as Harvard and the London School of Economics. ‘The highest-ranked departments don’t want to do anything that would risk losing their place in the league tables,’ Yuan told me. ‘Their high scores come from publishing research in what are known as the “top” journals, but those journals simply maintain the status quo.’ What’s more, the league-topping universities set a norm that others follow, with universities in China, India, Brazil and elsewhere training up students to get a place on their elite graduate courses. This intellectual inertia at the top has left Yuan far from satisfied. ‘We have to storm the citadels,’ she told me, ‘we can’t just build our camps outside. You can have as many extra-curricular reading groups and MOOCs as you like but unless the university accepts that what you are doing is economics then it’s not seen as economics. In the end, we don’t just want to talk about the narrowness of the current teaching, we want to change it.’
Her words made me recall just how much Paul Samuelson relished being the one who got to define what is and is not seen as good economics. Remember his gleeful claim as textbook author knowing that ‘the first lick is the privileged one, impinging on the beginner’s tabula rasa at its most impressionable state’. The tabula rasa – or blank slate – is how he saw the novice student’s mind. So to today’s economics students I would simply say this: be watchful over the ideas that others t
ry to sketch upon your mind. Look out for the words, be wary of the equations, but most of all pay attention to the pictures, especially the most fundamental ones, because they go in deep without your even realising it. What’s more, don’t let anyone make the extraordinary presumption that, whether 18 or 81, your tabula is rasa, your economic slate blank. It has in fact been etched with experience from birth, starting with years of nurture in the core economy, backed up by the dependence of every one of us on the living world. And each of us plays multiple roles in the economy throughout our lives, whether as citizen, worker, consumer, entrepreneur, saver or commoner. So don’t let anyone try to wipe your slate clean: draw on its rich bank of experience as a personal reference point for sense-checking the economic theories that are put before you – including the ones in this book, of course.
Economic evolution: one experiment at a time
Yuan’s frustration with the privileged position still given to old economic theory is palpable. ‘Many university departments – such as sociology or political science – teach their students to think in different ways about the economy,’ she told me, ‘but only people who study neoclassical economic theory in economics departments go out into the world labelled as “economists”, with all the power that the label grants them. We have to break down the power of the expert which is concentrated in that title and make it mean lots of different things.’5
One promising way of redefining the meaning of ‘economist’ is to look to those who have gone beyond new economic thinking to new economic doing: the innovators who are evolving the economy one experiment at a time. Their impact is already reflected in the take-off of new business models, in the proven dynamism of the collaborative commons, in the vast potential of digital currencies, and in the inspiring possibilities of regenerative design. As Donella Meadows made clear, the power of self-organisation – the ability of a system to add, change and evolve its own structure – is a high leverage point for whole system change. And that unleashes a revolutionary thought: it makes economists of us all.
If economies change by evolving then every experiment – be it a new enterprise model, complementary currency, or open-source collaboration – helps to diversify, select and amplify a new economic future. We all have a hand in shaping that evolution because our choices and actions are continually remaking the economy and not merely through the products that we do or don’t buy. We remake it by: moving our savings to ethical banks; using peer-to-peer complementary currencies; enshrining living purpose in the enterprises that we set up; exercising our rights to parental leave from work; contributing to the knowledge commons; and campaigning with political movements that share our economic vision.
Of course these innovations face the challenge of attempting to grow and thrive within economies that are still heavily dominated by last century’s economic thinking and doing. Enterprises that are committed to generous industrial design may sometimes struggle when positioned side by side with last-century businesses that are merely intent on maximising shareholder returns. It cannot be easy to launch a complementary currency if you think the government’s first response will be to arrest you. Regenerative finance must feel like an ambitious pitch to clients who are used to focusing on short-term returns. Designing a building that gives back to the city is a tough sell if your client’s first reaction is going to be, ‘But why would I do that?’ Yet from Bangla Pesa’s community traders in Kenya and Woelab’s recycled 3D printers in Togo to Newlight’s plastic-from-methane in California and the worldwide potential of peer-to-peer digital currencies, economic innovators are clearly succeeding in reshaping the economy’s evolution, making it distributive and regenerative, design by design.
‘Be the change you want to see in the world’ is Gandhi’s most famous phrase, and in terms of remaking the economy, today’s economic innovators are doing him proud. But with all due respect, I want to riff on Gandhi’s theme. When it comes to new economic thinking, draw the change you want to see in the world too. By combining the well-known power of verbal framing with the hidden power of visual framing, we can give ourselves a far better chance of writing a new economic story – the one that we so desperately need for a safe and just twenty-first century.
It’s easy to get started. Just pick up a pencil and draw.
APPENDIX: THE DOUGHNUT AND ITS DATA
The Doughnut of social and planetary boundaries is a simple visualisation of the dual conditions – social and ecological – that underpin collective human well-being. The social foundation demarks the Doughnut’s inner boundary, and sets out the basics of life on which no one should be left falling short. The ecological ceiling demarks the Doughnut’s outer boundary, beyond which humanity’s pressure on Earth’s life-giving systems is in dangerous overshoot. Between the two sets of boundaries lies the ecologically safe and socially just space in which humanity can thrive.
The social foundation comprises 12 social dimensions that are derived from the social priorities specified in the United Nation’s 2015 Sustainable Development Goals. Table 1 sets out the variables and data used to gauge and illustrate the extent of humanity’s shortfall in these 12 areas.
The ecological ceiling comprises the nine planetary boundaries proposed by an international group of Earth-system scientists led by Johan Rockström and Will Steffen. These nine critical processes are:
Climate change. When greenhouse gases such as carbon dioxide, methane and nitrous oxide are released into the air, they enter the atmosphere and amplify Earth’s natural greenhouse effect, trapping more heat within the atmosphere. This results in global warming, whose effects include rising temperatures, more frequent extremes of weather, and sea level rise.
Ocean acidification. Around one quarter of the carbon dioxide emitted by human activity is eventually dissolved in the oceans, where it forms carbonic acid and decreases the pH of the surface water. This acidity reduces the availability of carbonate ions that are an essential building block used by many marine species for shell and skeleton formation. This missing ingredient makes it hard for organisms such as corals, shellfish and plankton to grow and survive, thus endangering the ocean ecosystem and its food chain.
Chemical pollution. When toxic compounds, such as synthetic organic pollutants and heavy metals, are released into the biosphere they can persist for a very long time, with effects that may be irreversible. And when they accumulate in the tissue of living creatures, including birds and mammals, they reduce fertility and cause genetic damage, endangering ecosystems on land and in the oceans.
Nitrogen and phosphorus loading. Reactive nitrogen and phosphorus are widely used in agricultural fertilisers but only a small proportion of what is applied is actually taken up by crops. Most of the excess runs off into rivers, lakes and oceans, where it causes algae blooms that turn the water green. These blooms can be toxic and they kill off other aquatic life by starving it of oxygen.
Freshwater withdrawals. Water is essential for life and is widely used by agriculture, industry and households. Excessive withdrawals of water, however, can impair or even dry up lakes, rivers and aquifers, damaging ecosystems and altering the hydrological cycle and climate.
Land conversion. Converting land for human use – such as turning forests and wetlands into cities, farmland and highways – depletes Earth’s carbon sinks, destroys rich wildlife habitats, and undermines the land’s role in continually cycling water, nitrogen and phosphorus.
Biodiversity loss. A decline in the number and variety of living species damages the integrity of ecosystems and accelerates species extinction. In doing so it increases the risk of abrupt and irreversible changes to ecosystems, reducing their resilience and undermining their capacity to provide food, fuel and fibre, and to sustain life.
Air pollution. Micro-particles, or aerosols, emitted into the air – such as smoke, dust and pollutant gases – can damage living organisms. Furthermore, they interact with water vapour in the air and so affect cloud formation. When emitted in large volumes
these aerosols can significantly alter regional rainfall patterns, including shifting the timing and location of monsoon rains in tropical regions.
Ozone layer depletion. Earth’s stratospheric ozone layer filters out ultraviolet radiation from the sun. Some human-made chemical substances, such as chlorofluorocarbons (CFCs) will, if released, enter the stratosphere and deplete the ozone layer, exposing Earth and its inhabitants to the sun’s harmful UV rays.
Table 2 sets out the indicators and data used to gauge the current extent of overshoot of these planetary boundaries.
NOTES
Who Wants to be an Economist?
1. Autisme-economie (17 June 2000) ‘Open letter from economic students’. http://www.autisme-economie.org/article142.html
2. Delreal, J. (2011) ‘Students walk out of Ec 10 in solidarity with “Occupy”’, The Harvard Crimson 2 November 2011. http://www.thecrimson.com/article/2011/11/2/mankiw-walkout-economics-10/
3. International Student Initiative for Pluralism in Economics (2014) ‘An international student call for pluralism in economics’, available at: http://www.isipe.net/open-letter/
4. Harrington, K. (2015) ‘Jamming the economic high priests at the AEA’, 7 January 2015, http://kickitover.org/jamming-the-economic-high-priestsat-the-aea/
5. Kick It Over (2015) Kick It Over Manifesto, http://kickitover.org/kick-it-over/manifesto/
6. Roser, M. (2016) Life Expectancy, published online at OurWorldInData.org. Retrieved from https://ourworldindata.org/life-expectancy/
7. UNDP (2015) Human Development Report 2015. New York: United Nations, p. 4.