I’m not an economist. But I do know that economics is broken. The economic models of the past have created a world in which human well-being and our planet’s natural resources are being sacrificed on the altar of economic growth.
These models have failed to predict, to prevent or to respond to the financial crises that have shaken our society. They have allowed inequality to flourish. And yet they are still taught in classrooms and lecture theatres across the world.
We need a new way of thinking about economics. And we need it now.
Thankfully, many economic thinkers are already on the case. And leading among them is Kate Raworth, former Oxfam researcher and now Senior Associate at the Cambridge Institute for Sustainability Leadership and Senior Visiting Research Associate at Oxford University’s Environmental Change Institute.
In her book, Doughnut Economics, Kate tears up the old way of thinking about economics and suggests seven new rules for the twenty-first century economist.
The main challenge for economics, she argues, is to create a strong social foundation, where everyone has access to food, water, housing and other social goods. But it needs to do so within the constraints of an economic ceiling of planetary factors, such as air pollution, ocean acidification and climate change.
Between this social foundation and the economic ceiling lies the ‘Doughnut’, a safe and just space for humanity:
The seven new rules that Kate proposes are designed to provide us with the economic tools, models and ideas to live successfully within the doughnut. These include relaxing our obsession on GDP growth, replacing the concept of rational economic man with that of socially adaptable human beings, and using systems thinking to embrace the benefits of dynamic complexity.
But the book is more than just a list of rules. It is an in-depth exploration of how we think about economics, why this way of thinking doesn’t work any more and what we can create to take its place. It is both a potted economic history and a modern-day call to arms for those who want to create a better, more sustainable and more prosperous world.
If that’s you (and I hope it is), then you really should read this book. And then you should act on it. Because while economics may be broken, there’s much that we all – governments, organisations and individuals alike – can do to fix it.