What does it mean for a country to have a healthy economy? What does a healthy economy even look like? Does it look like this? What about like this? Economist Kate Raworth shared a pretty interesting answer to this question on the TED Interview podcast. And it challenges an idea that most economists take for granted.
We live— particularly in the West, particularly in the last 150 years— in a society that has a very strong belief that growth is the sign of progress. And to a certain extent, it’s true. We love to see our kids grow. We love to see nature growing in spring. Growth is a wonderful, healthy phase of life.
But in our economies, it’s like we’ve turned to Peter Pan economics— the economy that never wanted to grow up. It wanted to grow and grow and grow forever. And it becomes this permanent phase.
But we already know, in our own bodies, in our own lives, that there’s another side to this metaphor of growth that we love so much. If I told you, my friend had gone to the doctor, and the doctor told her she had a growth, that already feels completely different. Because in the space of our own bodies, we know that when something tries to grow endlessly within this healthy, dynamic living whole, it is a threat to the health of the whole, and we do everything we can to stop it.
But when we step into our economies, for some reason, we think that endless growth is progress. And we are now running into severe problems because we are addicted to endless growth.
Simon Kuznets, he was asked in the 1930s by US Congress to come up, for the first time, with a single number to measure the output of the economy. America could say we produced so many tons of steel and so many bags of grain— but can we add it all together? So they commissioned him to do this and he said, “Yes, I can. I can add it all together in one number.” National income, what we now know as GDP— but he gave it with a caveat. He said the welfare of a nation can scarcely be known from this number, don’t mix it up with welfare, right? Because it tells us nothing about the unpaid caring work of parents, tells us nothing about the value that’s created in communities, because that’s not priced, and it’s a measure of the flow of economic value. It tells us nothing about the living world, the forests, the mines that get run down in order to create this value. But the convenience, the temptation, of this single number was so great that politicians sort of tucked it in their armpit and carried right on. And we ended up in a horse race of pursuing GDP growth.
The dream is that GDP can keep on increasing, we can have increasing financial returns, but that we can decouple from using Earth’s resources. We can use less carbon and less metals, and minerals and plastics, and we can use less of the Earth’s land surface, and separate these two: ever rising GDP and falling resource use. It’s a fabulous dream; would that it would be true.
We are at a time of climate emergency, of ecosystem collapse. We need to radically reduce our use of Earth’s resources, and we're nowhere close to that.
So I offer it as a compass for 21st century prosperity. And this compass, silly though it sounds, it looks like a doughnut with the hole in the middle.
So imagine from the center of it, humanity’s use of Earth’s resources radiating out from the middle of that picture. So in the hole, in the middle of the doughnut, that is the place where people don’t have enough resources to meet the essentials of life. It’s where people don’t have enough food or health care, or education or housing or gender equality or political voice or access to energy. And we want to leave nobody in that hole. We want to get everybody over a social foundation of well-being, so all people on this planet can lead lives of dignity and opportunity and community. And in low income countries, it absolutely makes sense, yes, let’s see the economy grow in ways that invest in health and education and transport for all. That was a very 20th century project. We're in the 21st century.
We have Earth system scientists who started looking at the impact we were having on the climate, and the loss of soils and acid rain, and the hole in the ozone layer, and the collapse of species. And they said, hang on. We’ve been ignoring our planet. In the growing to meet human needs, we have ignored the fact that we are deeply dependent on this delicately balanced living planet. It’s the only one we know of out there. And when we use Earth’s resources in such a way that we begin to push ourselves beyond the living capacities of this planet, we are literally undermining the life supporting systems on which we depend.
So, hang on, just as there’s an inner limit of resource use, and we call out poverty and deprivation, there’s an outer limit of humanity’s resource use. That’s ecological degradation. And we are breaking down this planet on which we depend. So there you get the doughnut, you get the inside, which is leave nobody behind in the hole. But don’t overshoot the outer ring either. And so the shape of progress is fundamentally changed. It’s no longer this ever rising line exponential growth, that we hear about in the financial news all the time. It’s balance.
To me, a source of real hope is that we deeply understand this at the level of our body. You go to the doctor, the doctor will say, have enough food, but not too much, enough water, oxygen, exercise, sleep, anything you like— have enough, but not too much. Our health lies in balance. And if we can take that metaphor from the human body to the planetary body, we give ourselves a cracking chance of understanding the deep interdependence of our world.
