TED2018
Kate Raworth: A healthy economy should be designed to thrive, not grow
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What would a sustainable, universally beneficial economy look like? "Like a doughnut," says Oxford economist Kate Raworth. In a stellar, eye-opening talk, she explains how we can move countries out of the hole -- where people are falling short on life's essentials -- and create regenerative, distributive economies that work within the planet's ecological limits.
Kate Raworth - Renegade economist
Kate Raworth is passionate about making economics fit for the 21st century. Full bio
Kate Raworth is passionate about making economics fit for the 21st century. Full bio
Double-click the English transcript below to play the video.
00:12
Have you ever watched
a baby learning to crawl?
a baby learning to crawl?
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Because as any
parent knows, it's gripping.
parent knows, it's gripping.
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First, they wriggle about on the floor,
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usually backwards,
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but then they drag themselves forwards,
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and then they pull themselves up to stand,
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and we all clap.
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And that simple motion
of forwards and upwards,
of forwards and upwards,
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it's the most basic direction
of progress we humans recognize.
of progress we humans recognize.
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We tell it in our story
of evolution as well,
of evolution as well,
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from our lolloping ancestors
to Homo erectus, finally upright,
to Homo erectus, finally upright,
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to Homo sapiens, depicted, always a man,
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always mid-stride.
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So no wonder we so readily believe
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that economic progress
will take this very same shape,
will take this very same shape,
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this ever-rising line of growth.
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It's time to think again,
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to reimagine the shape of progress,
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because today, we have economies
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01:11
that need to grow,
whether or not they make us thrive,
whether or not they make us thrive,
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and what we need,
especially in the richest countries,
especially in the richest countries,
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are economies that make us thrive
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whether or not they grow.
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Yes, it's a little flippant word
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hiding a profound shift in mindset,
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but I believe this is the shift
we need to make
we need to make
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if we, humanity, are going to thrive
here together this century.
here together this century.
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So where did this obsession
with growth come from?
with growth come from?
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Well, GDP, gross domestic product,
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it's just the total cost
of goods and services
of goods and services
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sold in an economy in a year.
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It was invented in the 1930s,
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but it very soon became
the overriding goal of policymaking,
the overriding goal of policymaking,
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so much so that even today,
in the richest of countries,
in the richest of countries,
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governments think that the solution
to their economic problems
to their economic problems
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lies in more growth.
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Just how that happened
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is best told through
the 1960 classic by W.W. Rostow.
the 1960 classic by W.W. Rostow.
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I love it so much,
I have a first-edition copy.
I have a first-edition copy.
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"The Stages of Economic Growth:
A Non-Communist Manifesto."
A Non-Communist Manifesto."
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(Laughter)
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You can just smell the politics, huh?
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And Rostow tells us that all economies
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need to pass through
five stages of growth:
five stages of growth:
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first, traditional society,
where a nation's output is limited
where a nation's output is limited
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by its technology,
its institutions and mindset;
its institutions and mindset;
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but then the preconditions for takeoff,
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where we get the beginnings
of a banking industry,
of a banking industry,
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the mechanization of work
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and the belief that growth is necessary
for something beyond itself,
for something beyond itself,
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like national dignity
or a better life for the children;
or a better life for the children;
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then takeoff, where compound interest
is built into the economy's institutions
is built into the economy's institutions
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and growth becomes the normal condition;
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fourth is the drive to maturity
where you can have any industry you want,
where you can have any industry you want,
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no matter your natural resource base;
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and the fifth and final stage,
the age of high-mass consumption
the age of high-mass consumption
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where people can buy
all the consumer goods they want,
all the consumer goods they want,
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like bicycles and sewing machines --
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03:14
this was 1960, remember.
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Well, you can hear the implicit
airplane metaphor in this story,
airplane metaphor in this story,
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but this plane is like no other,
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because it can never be allowed to land.
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Rostow left us flying
into the sunset of mass consumerism,
into the sunset of mass consumerism,
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and he knew it.
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As he wrote,
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"And then the question beyond,
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where history offers us only fragments.
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What to do when the increase
in real income itself loses its charm?"
in real income itself loses its charm?"
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He asked that question,
but he never answered it, and here's why.
but he never answered it, and here's why.
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The year was 1960,
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he was an advisor to the presidential
candidate John F. Kennedy,
candidate John F. Kennedy,
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who was running for election
on the promise of five-percent growth,
on the promise of five-percent growth,
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so Rostow's job was
to keep that plane flying,
to keep that plane flying,
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not to ask if, how, or when
it could ever be allowed to land.
it could ever be allowed to land.
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So here we are, flying into the sunset
of mass consumerism
of mass consumerism
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over half a century on,
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with economies that have come
to expect, demand and depend upon
to expect, demand and depend upon
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unending growth,
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because we're financially,
politically and socially addicted to it.
politically and socially addicted to it.
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We're financially addicted to growth,
because today's financial system
because today's financial system
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is designed to pursue
the highest rate of monetary return,
the highest rate of monetary return,
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putting publicly traded companies
under constant pressure
under constant pressure
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to deliver growing sales,
growing market share and growing profits,
growing market share and growing profits,
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and because banks create money
as debt bearing interest,
as debt bearing interest,
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which must be repaid with more.
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We're politically addicted to growth
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because politicians
want to raise tax revenue
want to raise tax revenue
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without raising taxes
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and a growing GDP
seems a sure way to do that.
seems a sure way to do that.
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05:02
And no politician wants to lose
their place in the G-20 family photo.
their place in the G-20 family photo.
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(Laughter)
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But if their economy stops growing
while the rest keep going,
while the rest keep going,
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well, they'll be booted out
by the next emerging powerhouse.
by the next emerging powerhouse.
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And we are socially addicted to growth,
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because thanks to a century
of consumer propaganda,
of consumer propaganda,
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which fascinatingly
was created by Edward Bernays,
was created by Edward Bernays,
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the nephew of Sigmund Freud,
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who realized that
his uncle's psychotherapy
his uncle's psychotherapy
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could be turned into
very lucrative retail therapy
very lucrative retail therapy
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if we could be convinced
to believe that we transform ourselves
to believe that we transform ourselves
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every time we buy something more.
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None of these addictions
are insurmountable,
are insurmountable,
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but they all deserve far more attention
than they currently get,
than they currently get,
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because look where this journey
has been taking us.
has been taking us.
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Global GDP is 10 times bigger
than it was in 1950
than it was in 1950
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and that increase has brought
prosperity to billions of people,
prosperity to billions of people,
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but the global economy
has also become incredibly divisive,
has also become incredibly divisive,
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with the vast share of returns to wealth
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now accruing to a fraction
of the global one percent.
of the global one percent.
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And the economy has become
incredibly degenerative,
incredibly degenerative,
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rapidly destabilizing
this delicately balanced planet
this delicately balanced planet
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on which all of our lives depend.
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Our politicians know it, and so they offer
new destinations for growth.
new destinations for growth.
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You can have green growth,
inclusive growth,
inclusive growth,
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smart, resilient, balanced growth.
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Choose any future you want
so long as you choose growth.
so long as you choose growth.
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I think it's time to choose
a higher ambition, a far bigger one,
a higher ambition, a far bigger one,
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because humanity's
21st century challenge is clear:
21st century challenge is clear:
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to meet the needs of all people
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within the means of this
extraordinary, unique, living planet
extraordinary, unique, living planet
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so that we and the rest
of nature can thrive.
of nature can thrive.
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Progress on this goal isn't going
to be measured with the metric of money.
to be measured with the metric of money.
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We need a dashboard of indicators.
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And when I sat down to try and draw
a picture of what that might look like,
a picture of what that might look like,
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strange though this is going to sound,
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it came out looking like a doughnut.
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I know, I'm sorry,
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but let me introduce you
to the one doughnut
to the one doughnut
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that might actually turn out
to be good for us.
to be good for us.
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So imagine humanity's resource use
radiating out from the middle.
radiating out from the middle.
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That hole in the middle is a place
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where people are falling short
on life's essentials.
on life's essentials.
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They don't have the food, health care,
education, political voice, housing
education, political voice, housing
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that every person needs
for a life of dignity and opportunity.
for a life of dignity and opportunity.
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We want to get everybody out of the hole,
over the social foundation
over the social foundation
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and into that green doughnut itself.
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But, and it's a big but,
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we cannot let our collective resource use
overshoot that outer circle,
overshoot that outer circle,
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the ecological ceiling,
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because there we put so much pressure
on this extraordinary planet
on this extraordinary planet
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that we begin to kick it out of kilter.
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We cause climate breakdown,
we acidify the oceans,
we acidify the oceans,
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a hole in the ozone layer,
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pushing ourselves
beyond the planetary boundaries
beyond the planetary boundaries
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of the life-supporting systems
that have for the last 11,000 years
that have for the last 11,000 years
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made earth such a benevolent
home to humanity.
home to humanity.
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So this double-sided challenge
to meet the needs of all
to meet the needs of all
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within the means of the planet,
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it invites a new shape of progress,
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no longer this ever-rising line of growth,
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but a sweet spot for humanity,
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thriving in dynamic balance
between the foundation and the ceiling.
between the foundation and the ceiling.
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And I was really struck
once I'd drawn this picture
once I'd drawn this picture
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to realize that the symbol of well-being
in many ancient cultures
in many ancient cultures
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reflects this very same sense
of dynamic balance,
of dynamic balance,
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from the Maori Takarangi
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to the Taoist Yin Yang,
the Buddhist endless knot,
the Buddhist endless knot,
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the Celtic double spiral.
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So can we find this dynamic balance
in the 21st century?
in the 21st century?
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Well, that's a key question,
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because as these red wedges show,
right now we are far from balanced,
right now we are far from balanced,
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falling short and overshooting
at the same time.
at the same time.
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Look in that hole, you can see that
millions or billions of people worldwide
millions or billions of people worldwide
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still fall short
on their most basic of needs.
on their most basic of needs.
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And yet, we've already overshot at least
four of these planetary boundaries,
four of these planetary boundaries,
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risking irreversible impact
of climate breakdown
of climate breakdown
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and ecosystem collapse.
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This is the state of humanity
and our planetary home.
and our planetary home.
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We, the people of the early 21st century,
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this is our selfie.
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No economist from last century
saw this picture,
saw this picture,
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so why would we imagine
that their theories
that their theories
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would be up for taking on its challenges?
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We need ideas of our own,
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because we are the first
generation to see this
generation to see this
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and probably the last with a real chance
of turning this story around.
of turning this story around.
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You see, 20th century economics assured us
that if growth creates inequality,
that if growth creates inequality,
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don't try to redistribute,
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because more growth
will even things up again.
will even things up again.
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If growth creates pollution,
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don't try to regulate, because more growth
will clean things up again.
will clean things up again.
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Except, it turns out, it doesn't,
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and it won't.
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We need to create economies that tackle
this shortfall and overshoot together,
this shortfall and overshoot together,
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by design.
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We need economies that are regenerative
and distributive by design.
and distributive by design.
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You see, we've inherited
degenerative industries.
degenerative industries.
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We take earth's materials,
make them into stuff we want,
make them into stuff we want,
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use it for a while, often only once,
and then throw it away,
and then throw it away,
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and that is pushing us
over planetary boundaries,
over planetary boundaries,
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so we need to bend those arrows around,
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create economies that work with and within
the cycles of the living world,
the cycles of the living world,
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so that resources are never used up
but used again and again,
but used again and again,
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economies that run on sunlight,
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where waste from one process
is food for the next.
is food for the next.
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And this kind of regenerative design
is popping up everywhere.
is popping up everywhere.
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Over a hundred cities worldwide,
from Quito to Oslo,
from Quito to Oslo,
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from Harare to Hobart,
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already generate more than 70 percent
of their electricity
of their electricity
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from sun, wind and waves.
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Cities like London, Glasgow, Amsterdam
are pioneering circular city design,
are pioneering circular city design,
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finding ways to turn the waste
from one urban process
from one urban process
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into food for the next.
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And from Tigray, Ethiopia
to Queensland, Australia,
to Queensland, Australia,
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farmers and foresters are regenerating
once-barren landscapes
once-barren landscapes
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so that it teems with life again.
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But as well as being
regenerative by design,
regenerative by design,
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our economies must be
distributive by design,
distributive by design,
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and we've got unprecedented
opportunities for making that happen,
opportunities for making that happen,
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because 20th-century
centralized technologies,
centralized technologies,
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institutions,
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concentrated wealth,
knowledge and power in few hands.
knowledge and power in few hands.
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This century, we can design
our technologies and institutions
our technologies and institutions
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to distribute wealth, knowledge
and empowerment to many.
and empowerment to many.
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Instead of fossil fuel energy
and large-scale manufacturing,
and large-scale manufacturing,
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we've got renewable energy networks,
digital platforms and 3D printing.
digital platforms and 3D printing.
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200 years of corporate control
of intellectual property is being upended
of intellectual property is being upended
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by the bottom-up, open-source,
peer-to-peer knowledge commons.
peer-to-peer knowledge commons.
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And corporations that still pursue
maximum rate of return
maximum rate of return
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for their shareholders,
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well they suddenly look rather out of date
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next to social enterprises
that are designed to generate
that are designed to generate
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multiple forms of value and share it
with those throughout their networks.
with those throughout their networks.
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If we can harness today's technologies,
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from AI to blockchain
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to the Internet of Things
to material science,
to material science,
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if we can harness these
in service of distributive design,
in service of distributive design,
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we can ensure that health care, education,
finance, energy, political voice
finance, energy, political voice
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reaches and empowers those people
who need it most.
who need it most.
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You see, regenerative
and distributive design
and distributive design
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create extraordinary opportunities
for the 21st-century economy.
for the 21st-century economy.
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So where does this leave
Rostow's airplane ride?
Rostow's airplane ride?
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Well, for some it still carries
the hope of endless green growth,
the hope of endless green growth,
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the idea that thanks to dematerialization,
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exponential GDP growth can go on forever
while resource use keeps falling.
while resource use keeps falling.
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But look at the data.
This is a flight of fancy.
This is a flight of fancy.
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Yes, we need to dematerialize
our economies,
our economies,
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but this dependency on unending growth
cannot be decoupled from resource use
cannot be decoupled from resource use
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on anything like the scale required
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to bring us safely back
within planetary boundaries.
within planetary boundaries.
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I know this way of thinking
about growth is unfamiliar,
about growth is unfamiliar,
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because growth is good, no?
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We want our children to grow,
our gardens to grow.
our gardens to grow.
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Yes, look to nature and growth
is a wonderful, healthy source of life.
is a wonderful, healthy source of life.
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It's a phase, but many economies
like Ethiopia and Nepal today
like Ethiopia and Nepal today
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may be in that phase.
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Their economies are growing
at seven percent a year.
at seven percent a year.
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But look again to nature,
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because from your children's feet
to the Amazon forest,
to the Amazon forest,
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nothing in nature grows forever.
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Things grow, and they grow up
and they mature,
and they mature,
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and it's only by doing so
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that they can thrive for a very long time.
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We already know this.
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If I told you my friend went to the doctor
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who told her she had a growth
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that feels very different,
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because we intuitively understand
that when something tries to grow forever
that when something tries to grow forever
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within a healthy, living, thriving system,
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it's a threat to the health of the whole.
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So why would we imagine that our economies
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would be the one system
that could buck this trend
that could buck this trend
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and succeed by growing forever?
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We urgently need financial,
political and social innovations
political and social innovations
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that enable us to overcome
this structural dependency on growth,
this structural dependency on growth,
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so that we can instead
focus on thriving and balance
focus on thriving and balance
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within the social and the ecological
boundaries of the doughnut.
boundaries of the doughnut.
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And if the mere idea of boundaries
makes you feel, well, bounded,
makes you feel, well, bounded,
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think again.
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Because the world's most ingenious people
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turn boundaries into
the source of their creativity.
the source of their creativity.
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From Mozart on his five-octave piano
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Jimi Hendrix on his six-string guitar,
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Serena Williams on a tennis court,
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it's boundaries
that unleash our potential.
that unleash our potential.
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And the doughnut's boundaries unleash
the potential for humanity to thrive
the potential for humanity to thrive
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with boundless creativity,
participation, belonging and meaning.
participation, belonging and meaning.
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It's going to take all the ingenuity
that we have got to get there,
that we have got to get there,
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so bring it on.
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Thank you.
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(Applause)
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ABOUT THE SPEAKER
Kate Raworth - Renegade economistKate Raworth is passionate about making economics fit for the 21st century.
Why you should listen
Kate Raworth writes: "I am a renegade economist, dedicated to rewriting economics so that it's fit for tackling the 21st century's grand challenge of meeting the needs of all people within the means of the planet. After 20 years of wrestling with policies based on outdated economic theories -- via the villages of Zanzibar to the headquarters of the UN and on the campaigning frontlines of Oxfam -- I realized that if the economic conversations taking place in parliaments, in boardrooms and in the media worldwide are going to change, then the fundamental economic ideas taught in schools and universities have to be transformed, too.
"I wrote Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist to be the book that I wish I could have read when I was a frustrated and disillusioned economics student myself. And silly though it sounds, it all starts with a doughnut (yes, the kind with a hole in the middle), which acts as a compass for 21st-century prosperity, inviting us to rethink what the economy is, and is for, who we are, and what success looks like."
Kate Raworth | Speaker | TED.com