As a world war unfolds before our eyes. Truckers rally in the streets. Interest rates rise. Housing prices reach new levels. Gas prices soar. Mandates and restrictions are lifted. The notion of “it’s happening over there” actually does have implications “over here”. I am not an economist, nor do I try to be. But as a person that loves systems thinking and looking at new ways of doing things, from the macro to the micro, Kate Raworth’s book Doughnut Economics – 7 Ways to Think Like a 21st Century Economist was a book that intrigued me. Are there new ways of looking and thinking about the economy? It really starts to put things into perspective when I hear the news, my friends and even my mother tell me that a lot of money is just being parked on the sidelines until the volatility of the market stabilizes. There must be a different way of seeing the market than a lot of lines that go up and down?
In Raworth’s book, it takes up a challenge to set out seven mind-shifting ways we can all learn to think like a 21st-century economist. It’s all about replacing the old with the new. Now, these are big ideas and I’ve quickly summarized them below. I would encourage you to read the full book to really understand the nuances that each point brings to light, to start thinking like a 21st economics.
- Change the goal
We’ve been so fixated on GDP, or national output as its primary measure of progress. We have to think far bigger which is meeting the human rights of every person within the means of our life-giving planet. We have to thrive in balance.
- See the big picture
Mainstream economic depicts the whole economy with just one limited image – The circular flow diagram (see below). We have to embed society within nature which is powered by the sun. This new depiction invites new narratives about the power of the market, the partnership of the state and the core role of the household and the creativity of the commons.
3. Nurture human nature
At the heart of the 20th century stands the portrait of a rational economic man: he has told us that we are self-interested, isolated, calculating, fixed in taste, and dominant over nature. But we are more richer than this. We are social, interdependent, fluid in values, and dependant upon the living world. This shifts a critical aspect of human nature which can be nurtured in ways that help us move into safe and just pace for humanity.
4. Get savvy with systems
The market’s supply and demand curves are what every economics student encounters, but it is rooted in misplaced 19th-century metaphors of mechanical equilibrium. A far smarter starting point for understanding the economy’s dynamism is systems thinking, summed up by a simple pair of feedback loops. It’s time to start stewarding an ever-evolving complex system.
5. Design to distribute
In the 20th century, one simple curve – the Kuznets Curve showcased a powerful message on inequality. This is actually a design of failure, not a necessity. 21st economists will recognize that there are many ways to design economics to be far more distributive of the value they generate. Think like a network of flows. It means going beyond redistributing income to exploring ways of redistributing wealth.
6. Create to regenerate
Economic theory has long portrayed a ‘clean’ environment as a luxury good, affordable only for the well-off. This view was reinforced by the Environmental Kuznets Curve which showcased that pollution has to get worse before it can get better and cleaner. But there is no such law: ecological degradation is simply the result of degenerative industrial design. This century needs to unleash regenerative design in order to create a circular – not linear – economy and to restore humans as full participants in Earth’s cyclical processes of life.
7. Be agnostic about growth
Mainstream economics views endless economic growth as a must, but nothing in nature grows forever, and the attempt to buck that trend is raising tough questions in high-income but low-growth countries. It may be hard to give up having GDP growth as an economic goal, but it is going to be far harder to overcome our addiction to it. Today we have economies that need to grow, whether or not they make us thrive; what we need are economies that make us thrive, whether or not they grow. That radical flip in perspective invites us to become agnostic about growth and explore how economies that are currently financially, politically and socially addicted to growth could learn to live with our without it.
Creating a new economic mindset that is never set but always evolving. For all those visual individuals (like myself) here are the 7 ways below in a graphic form. As you can see. It’s time to move from a singular way of thinking to a systems and even more complex way of looking at the world. Raworth ends by riffing on Gandhi’s most famous quote “be the change you want to see in the world”. That when it comes to new economic thinking, draw the change you want to see int he world as well. 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. So let’s get started…