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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.

- Renegade economist
Kate Raworth is passionate about making economics fit for the 21st century. Full bio

Have you ever watched
a baby learning to crawl?
00:12
Because as any
parent knows, it's gripping.
00:16
First, they wriggle about on the floor,
00:19
usually backwards,
00:21
but then they drag themselves forwards,
00:22
and then they pull themselves up to stand,
00:24
and we all clap.
00:27
And that simple motion
of forwards and upwards,
00:29
it's the most basic direction
of progress we humans recognize.
00:33
We tell it in our story
of evolution as well,
00:38
from our lolloping ancestors
to Homo erectus, finally upright,
00:40
to Homo sapiens, depicted, always a man,
00:44
always mid-stride.
00:48
So no wonder we so readily believe
00:51
that economic progress
will take this very same shape,
00:54
this ever-rising line of growth.
00:57
It's time to think again,
01:02
to reimagine the shape of progress,
01:04
because today, we have economies
01:08
that need to grow,
whether or not they make us thrive,
01:11
and what we need,
especially in the richest countries,
01:16
are economies that make us thrive
01:20
whether or not they grow.
01:22
Yes, it's a little flippant word
01:24
hiding a profound shift in mindset,
01:27
but I believe this is the shift
we need to make
01:30
if we, humanity, are going to thrive
here together this century.
01:33
So where did this obsession
with growth come from?
01:38
Well, GDP, gross domestic product,
01:41
it's just the total cost
of goods and services
01:43
sold in an economy in a year.
01:46
It was invented in the 1930s,
01:48
but it very soon became
the overriding goal of policymaking,
01:50
so much so that even today,
in the richest of countries,
01:54
governments think that the solution
to their economic problems
01:57
lies in more growth.
02:00
Just how that happened
02:03
is best told through
the 1960 classic by W.W. Rostow.
02:05
I love it so much,
I have a first-edition copy.
02:10
"The Stages of Economic Growth:
A Non-Communist Manifesto."
02:16
(Laughter)
02:21
You can just smell the politics, huh?
02:23
And Rostow tells us that all economies
02:25
need to pass through
five stages of growth:
02:28
first, traditional society,
where a nation's output is limited
02:30
by its technology,
its institutions and mindset;
02:34
but then the preconditions for takeoff,
02:37
where we get the beginnings
of a banking industry,
02:39
the mechanization of work
02:42
and the belief that growth is necessary
for something beyond itself,
02:43
like national dignity
or a better life for the children;
02:47
then takeoff, where compound interest
is built into the economy's institutions
02:51
and growth becomes the normal condition;
02:57
fourth is the drive to maturity
where you can have any industry you want,
03:00
no matter your natural resource base;
03:03
and the fifth and final stage,
the age of high-mass consumption
03:05
where people can buy
all the consumer goods they want,
03:10
like bicycles and sewing machines --
03:12
this was 1960, remember.
03:14
Well, you can hear the implicit
airplane metaphor in this story,
03:17
but this plane is like no other,
03:23
because it can never be allowed to land.
03:27
Rostow left us flying
into the sunset of mass consumerism,
03:30
and he knew it.
03:35
As he wrote,
03:37
"And then the question beyond,
03:39
where history offers us only fragments.
03:43
What to do when the increase
in real income itself loses its charm?"
03:47
He asked that question,
but he never answered it, and here's why.
03:54
The year was 1960,
03:58
he was an advisor to the presidential
candidate John F. Kennedy,
03:59
who was running for election
on the promise of five-percent growth,
04:03
so Rostow's job was
to keep that plane flying,
04:07
not to ask if, how, or when
it could ever be allowed to land.
04:09
So here we are, flying into the sunset
of mass consumerism
04:16
over half a century on,
04:20
with economies that have come
to expect, demand and depend upon
04:22
unending growth,
04:27
because we're financially,
politically and socially addicted to it.
04:29
We're financially addicted to growth,
because today's financial system
04:34
is designed to pursue
the highest rate of monetary return,
04:38
putting publicly traded companies
under constant pressure
04:41
to deliver growing sales,
growing market share and growing profits,
04:45
and because banks create money
as debt bearing interest,
04:48
which must be repaid with more.
04:52
We're politically addicted to growth
04:54
because politicians
want to raise tax revenue
04:55
without raising taxes
04:58
and a growing GDP
seems a sure way to do that.
04:59
And no politician wants to lose
their place in the G-20 family photo.
05:02
(Laughter)
05:06
But if their economy stops growing
while the rest keep going,
05:07
well, they'll be booted out
by the next emerging powerhouse.
05:11
And we are socially addicted to growth,
05:14
because thanks to a century
of consumer propaganda,
05:16
which fascinatingly
was created by Edward Bernays,
05:20
the nephew of Sigmund Freud,
05:23
who realized that
his uncle's psychotherapy
05:26
could be turned into
very lucrative retail therapy
05:29
if we could be convinced
to believe that we transform ourselves
05:32
every time we buy something more.
05:37
None of these addictions
are insurmountable,
05:41
but they all deserve far more attention
than they currently get,
05:44
because look where this journey
has been taking us.
05:48
Global GDP is 10 times bigger
than it was in 1950
05:50
and that increase has brought
prosperity to billions of people,
05:55
but the global economy
has also become incredibly divisive,
05:59
with the vast share of returns to wealth
06:04
now accruing to a fraction
of the global one percent.
06:06
And the economy has become
incredibly degenerative,
06:10
rapidly destabilizing
this delicately balanced planet
06:14
on which all of our lives depend.
06:19
Our politicians know it, and so they offer
new destinations for growth.
06:22
You can have green growth,
inclusive growth,
06:26
smart, resilient, balanced growth.
06:28
Choose any future you want
so long as you choose growth.
06:30
I think it's time to choose
a higher ambition, a far bigger one,
06:35
because humanity's
21st century challenge is clear:
06:40
to meet the needs of all people
06:44
within the means of this
extraordinary, unique, living planet
06:47
so that we and the rest
of nature can thrive.
06:51
Progress on this goal isn't going
to be measured with the metric of money.
06:56
We need a dashboard of indicators.
06:59
And when I sat down to try and draw
a picture of what that might look like,
07:02
strange though this is going to sound,
07:06
it came out looking like a doughnut.
07:08
I know, I'm sorry,
07:12
but let me introduce you
to the one doughnut
07:13
that might actually turn out
to be good for us.
07:15
So imagine humanity's resource use
radiating out from the middle.
07:18
That hole in the middle is a place
07:21
where people are falling short
on life's essentials.
07:23
They don't have the food, health care,
education, political voice, housing
07:25
that every person needs
for a life of dignity and opportunity.
07:29
We want to get everybody out of the hole,
over the social foundation
07:33
and into that green doughnut itself.
07:36
But, and it's a big but,
07:39
we cannot let our collective resource use
overshoot that outer circle,
07:43
the ecological ceiling,
07:48
because there we put so much pressure
on this extraordinary planet
07:49
that we begin to kick it out of kilter.
07:53
We cause climate breakdown,
we acidify the oceans,
07:55
a hole in the ozone layer,
07:58
pushing ourselves
beyond the planetary boundaries
08:00
of the life-supporting systems
that have for the last 11,000 years
08:03
made earth such a benevolent
home to humanity.
08:08
So this double-sided challenge
to meet the needs of all
08:13
within the means of the planet,
08:15
it invites a new shape of progress,
08:17
no longer this ever-rising line of growth,
08:19
but a sweet spot for humanity,
08:22
thriving in dynamic balance
between the foundation and the ceiling.
08:25
And I was really struck
once I'd drawn this picture
08:30
to realize that the symbol of well-being
in many ancient cultures
08:32
reflects this very same sense
of dynamic balance,
08:37
from the Maori Takarangi
08:40
to the Taoist Yin Yang,
the Buddhist endless knot,
08:42
the Celtic double spiral.
08:44
So can we find this dynamic balance
in the 21st century?
08:47
Well, that's a key question,
08:52
because as these red wedges show,
right now we are far from balanced,
08:54
falling short and overshooting
at the same time.
08:58
Look in that hole, you can see that
millions or billions of people worldwide
09:02
still fall short
on their most basic of needs.
09:05
And yet, we've already overshot at least
four of these planetary boundaries,
09:09
risking irreversible impact
of climate breakdown
09:13
and ecosystem collapse.
09:17
This is the state of humanity
and our planetary home.
09:20
We, the people of the early 21st century,
09:24
this is our selfie.
09:28
No economist from last century
saw this picture,
09:31
so why would we imagine
that their theories
09:34
would be up for taking on its challenges?
09:36
We need ideas of our own,
09:38
because we are the first
generation to see this
09:39
and probably the last with a real chance
of turning this story around.
09:42
You see, 20th century economics assured us
that if growth creates inequality,
09:47
don't try to redistribute,
09:51
because more growth
will even things up again.
09:52
If growth creates pollution,
09:54
don't try to regulate, because more growth
will clean things up again.
09:56
Except, it turns out, it doesn't,
10:01
and it won't.
10:04
We need to create economies that tackle
this shortfall and overshoot together,
10:05
by design.
10:09
We need economies that are regenerative
and distributive by design.
10:11
You see, we've inherited
degenerative industries.
10:16
We take earth's materials,
make them into stuff we want,
10:18
use it for a while, often only once,
and then throw it away,
10:21
and that is pushing us
over planetary boundaries,
10:25
so we need to bend those arrows around,
10:28
create economies that work with and within
the cycles of the living world,
10:30
so that resources are never used up
but used again and again,
10:35
economies that run on sunlight,
10:38
where waste from one process
is food for the next.
10:40
And this kind of regenerative design
is popping up everywhere.
10:43
Over a hundred cities worldwide,
from Quito to Oslo,
10:47
from Harare to Hobart,
10:50
already generate more than 70 percent
of their electricity
10:52
from sun, wind and waves.
10:56
Cities like London, Glasgow, Amsterdam
are pioneering circular city design,
10:58
finding ways to turn the waste
from one urban process
11:03
into food for the next.
11:07
And from Tigray, Ethiopia
to Queensland, Australia,
11:08
farmers and foresters are regenerating
once-barren landscapes
11:13
so that it teems with life again.
11:17
But as well as being
regenerative by design,
11:20
our economies must be
distributive by design,
11:22
and we've got unprecedented
opportunities for making that happen,
11:26
because 20th-century
centralized technologies,
11:30
institutions,
11:33
concentrated wealth,
knowledge and power in few hands.
11:35
This century, we can design
our technologies and institutions
11:40
to distribute wealth, knowledge
and empowerment to many.
11:44
Instead of fossil fuel energy
and large-scale manufacturing,
11:48
we've got renewable energy networks,
digital platforms and 3D printing.
11:52
200 years of corporate control
of intellectual property is being upended
11:57
by the bottom-up, open-source,
peer-to-peer knowledge commons.
12:02
And corporations that still pursue
maximum rate of return
12:06
for their shareholders,
12:09
well they suddenly look rather out of date
12:12
next to social enterprises
that are designed to generate
12:14
multiple forms of value and share it
with those throughout their networks.
12:17
If we can harness today's technologies,
12:22
from AI to blockchain
12:25
to the Internet of Things
to material science,
12:27
if we can harness these
in service of distributive design,
12:30
we can ensure that health care, education,
finance, energy, political voice
12:34
reaches and empowers those people
who need it most.
12:39
You see, regenerative
and distributive design
12:43
create extraordinary opportunities
for the 21st-century economy.
12:46
So where does this leave
Rostow's airplane ride?
12:51
Well, for some it still carries
the hope of endless green growth,
12:54
the idea that thanks to dematerialization,
12:58
exponential GDP growth can go on forever
while resource use keeps falling.
13:01
But look at the data.
This is a flight of fancy.
13:06
Yes, we need to dematerialize
our economies,
13:10
but this dependency on unending growth
cannot be decoupled from resource use
13:13
on anything like the scale required
13:17
to bring us safely back
within planetary boundaries.
13:19
I know this way of thinking
about growth is unfamiliar,
13:24
because growth is good, no?
13:26
We want our children to grow,
our gardens to grow.
13:28
Yes, look to nature and growth
is a wonderful, healthy source of life.
13:31
It's a phase, but many economies
like Ethiopia and Nepal today
13:36
may be in that phase.
13:40
Their economies are growing
at seven percent a year.
13:41
But look again to nature,
13:45
because from your children's feet
to the Amazon forest,
13:47
nothing in nature grows forever.
13:51
Things grow, and they grow up
and they mature,
13:53
and it's only by doing so
13:56
that they can thrive for a very long time.
13:58
We already know this.
14:03
If I told you my friend went to the doctor
14:05
who told her she had a growth
14:08
that feels very different,
14:12
because we intuitively understand
that when something tries to grow forever
14:14
within a healthy, living, thriving system,
14:18
it's a threat to the health of the whole.
14:22
So why would we imagine that our economies
14:25
would be the one system
that could buck this trend
14:27
and succeed by growing forever?
14:30
We urgently need financial,
political and social innovations
14:33
that enable us to overcome
this structural dependency on growth,
14:38
so that we can instead
focus on thriving and balance
14:42
within the social and the ecological
boundaries of the doughnut.
14:48
And if the mere idea of boundaries
makes you feel, well, bounded,
14:53
think again.
14:59
Because the world's most ingenious people
15:00
turn boundaries into
the source of their creativity.
15:03
From Mozart on his five-octave piano
15:07
Jimi Hendrix on his six-string guitar,
15:10
Serena Williams on a tennis court,
15:13
it's boundaries
that unleash our potential.
15:16
And the doughnut's boundaries unleash
the potential for humanity to thrive
15:20
with boundless creativity,
participation, belonging and meaning.
15:25
It's going to take all the ingenuity
that we have got to get there,
15:32
so bring it on.
15:37
Thank you.
15:38
(Applause)
15:40

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About the speaker:

Kate Raworth - Renegade economist
Kate 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."

More profile about the speaker
Kate Raworth | Speaker | TED.com