Kate Raworth · Seven Ways to Think Like a 21st-Century Economist · 2017
Doughnut Economics
A complete visual reference to Kate Raworth's reinvention of economics for a full planet. Seven ways to swap the discredited pictures of the twentieth century for a new set fit for our century — anchored by one image: a doughnut marking the safe and just space where humanity can thrive, meeting the needs of all within the means of the living planet.
"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else."— John Maynard Keynes, 1936
Introduction · Who Wants to Be an Economist?
Section 01
Why We Must Redraw Economics
Economics is the mother tongue of public policy — yet the citizens of 2050 are being taught an economic mindset rooted in the textbooks of 1950, which are rooted in the theories of 1850.
"The word 'economics' was coined by the philosopher Xenophon… combining oikos, meaning household, with nomos, meaning rules or norms: the art of household management." Today we must manage a planetary household — and pay attention to the needs of all its inhabitants.
Raworth trained as an economist at Oxford, walked away "too embarrassed ever to call myself an economist," worked in Zanzibar and at the UN and Oxfam, then decided to "walk back towards it and flip it on its head." The move that changed everything: start not with economics' long-established theories, but with humanity's long-term goals — and ask which economic thinking would help us reach them. She drew those goals, and "ridiculous though it sounds, it came out looking like a doughnut."
The Power of Pictures
Whoever draws the diagram frames the debate
Our brains are wired for visuals: images take 150 milliseconds to recognise and go "directly into long-term memory," while "when text and image send conflicting messages, it is the visual message that most often wins." Copernicus knew a few concentric circles could "unravel church doctrine." So did Paul Samuelson, "the man who drew economics," whose 1948 textbook flooded the field with diagrams for the masses — relishing that "the first lick is the privileged one, impinging on the beginner's tabula rasa at its most impressionable state." If those inherited pictures are "out of date, blinkered, or downright wrong," then "if we want to rewrite economics, we need to redraw its pictures too."
"What Havoc a Few Concentric Circles Can Unleash"
Copernicus waited until his deathbed to publish this picture — a few concentric circles that "would unravel church doctrine, threaten to upend papal power, and transform humanity's understanding of… our place in the cosmos." The lesson for economics: "what we draw determines what we can and cannot see, what we notice and what we ignore, and so shapes all that follows."
Pre-analytic visionEvery analysis is preceded by "a pre-analytic cognitive act… ideological almost by definition," said Schumpeter — what others call worldview (Mannheim), paradigm (Kuhn), or frame (Goffman, Lakoff). "The map is not the territory" (Korzybski); "all models are wrong, but some are useful" (Box). The point is not to find the one true picture — there isn't one — but to realise you're holding a picture at all, and then to choose one that serves our context, values and aims. And, Lakoff warns, you can only debunk an old frame by offering a compelling new one: don't argue against "tax relief," offer "tax justice."
What follows are seven such new pictures — seven ways to think like a twenty-first-century economist. For each, Raworth reveals "the spurious image that has occupied our minds, how it came to be so powerful, and the damaging influence it has had" — then draws its replacement.
"This is a simple book for and about a complex world. It is a book for those who want to shape a better future… Now is a great moment for unlearning and relearning the fundamentals of economics."
Kate Raworth · Introduction
The Compass
Section 02
The Doughnut
A social foundation of well-being that no one should fall below, and an ecological ceiling of planetary pressure that we should not go beyond. Between the two lies a safe and just space for all.
The Doughnut is "a radically new compass for guiding humanity this century." Its inner ring — the social foundation sets out the twelve basics of life that no one should lack. Its outer ring — the ecological ceiling marks the nine planetary boundaries we must not overshoot. Between them lies the safe and just space: where we "meet the needs of all within the means of the planet."
The Doughnut · Humanity's 21st-Century Compass
"Between its social foundation of human well-being and ecological ceiling of planetary pressure lies the safe and just space for humanity." Today we transgress both rings at once: billions still fall short of life's essentials (coral wedges in the hole), while humanity's pressure overshoots at least four planetary boundaries (coral wedges beyond the ceiling). The twenty-first-century task is "to bring all of humanity into that safe and just space."
From Holocene to Anthropocene
The most hospitable home we've ever had — and how we left it
For the last ~12,000 years, Earth's climate has been "unusually stable" — the Holocene, the only known epoch "in which billions of human beings can thrive." It gave us agriculture and every great civilisation, and could have run another 50,000 years. But the Great Acceleration since 1950 — world population nearly trebled, real World GDP up sevenfold, freshwater use trebled, energy use up fourfold, fertiliser use up tenfold — has made humanity "a planetary-scale geological force," tipping us into the Anthropocene. The nine planetary boundaries (Rockström & Steffen, 2009) are the guard-rails of the Holocene we must not cross.
A new metaphor for progress"Onwards and upwards" has taken us into dangerous terrain. This century calls for a different shape of progress: coming into dynamic balance, eliminating shortfall and overshoot at once. It is a shift "from 'good is forward-and-up' to 'good is in-balance'" — from endless GDP growth to thriving in balance. Or, in words: human prosperity in a flourishing web of life. The Ancient Greeks said it in three: Pan metron ariston — "all things in good measure is best."
How far out of balance we areWe transgress both rings at once. Below the social foundation: one person in nine goes hungry, one in four lives on less than $3 a day, one in three has no toilet, one in eleven no safe water, one in six children aged 12–15 is out of school. Beyond the ecological ceiling: we have already crossed at least four planetary boundaries — climate change (CO₂ above 400ppm, past the 350 guard-rail), land conversion, nitrogen & phosphorus loading (double the safe level), and biodiversity loss (species dying out at least ten times faster than is safe; wild vertebrate numbers halved since 1970). "Billions of people still fall far short of their most basic needs, but we have already crossed into global ecological danger zones."
Can We Live in the Doughnut?
Five factors that decide
Whether humanity can move into the safe and just space turns on five levers. Population — stabilising fastest where deprivation ends (girls' education and women's empowerment, not famine, bring birth rates down). Distribution — the top 10% of emitters produce ~45% of emissions while the poorest half produce 13%; hunger could end with just a tenth of the food that is wasted. Aspiration — what we think a good life requires ("persuaded to spend money we don't have on things we don't need to make impressions that won't last on people we don't care about" — Tim Jackson). Technology — 60% of the 2030 city is yet to be built. Governance — from local to planetary. "Ours is the era of the planetary household — and the art of household management is needed more than ever."
Way ① · Change the Goal
Section 03
Change the Goal
For 70 years economics has been fixated on GDP. But GDP is "a cuckoo in the economic nest" — and it is time to evict it.
20th-century image
Ever-rising GDP
An exponential growth curve, forever "onwards and upwards" — a single narrow metric used to justify extreme inequality and ecological destruction.
21st-century image
The Doughnut
A compass pointing to the safe and just space. The goal: meeting the human rights of every person within the means of the living planet.
The Metaphor We Must Change
GDP fits our oldest metaphor for progress — "good is up, good is forward" (Lakoff & Johnson) — which is exactly why the cuckoo slipped so easily into the nest. This century needs a different shape of progress: not an ever-rising line, but thriving in balance, eliminating shortfall and overshoot at once.
Cuckoos lay their eggs in other birds' nests; the chick hatches early and shoves the rest out. "In the twentieth century, economics lost the desire to articulate its goals: in their absence, the economic nest got hijacked by the cuckoo goal of GDP growth." Founding thinkers from Xenophon to Adam Smith spoke openly of economics' purpose; but once political economy split into political philosophy and value-free "science," it left "a moral vacancy at the heart of public policymaking."
The Creator's Own Warning
Even Kuznets said GDP was never meant for this
Simon Kuznets devised national income accounting for the US Congress in the 1930s — then became one of its loudest critics: "the welfare of a nation can scarcely be inferred from a measure of national income." It counts goods and bads together, ignores who gets what, and measures throughput not wealth. His plea went unheeded: "goals for 'more' growth should specify more growth of what and for what." Donella Meadows put it more bluntly: "Growth is one of the stupidest purposes ever invented by any culture… we've got to have an enough."
Growth, decked out in adjectivesPoliticians sense we want more than growth but cannot find the words, so they qualify it: sustained (Merkel), balanced (Cameron), long-term, lasting (Obama), smart, sustainable, inclusive, resilient (Barroso), inclusive green (World Bank). "You choose — just so long as you choose growth." When a goal needs that many adjectives to seem legitimate, it's ready for booting from the nest. Sen & Stiglitz's verdict on our metrics: we are "like pilots trying to steer a course without a reliable compass."
How a wartime metric became a godGNP was born of crisis: it let Roosevelt track the New Deal and convert industry for war. Then it stuck. Okun's Law seemed to show 2% growth buying a 1% fall in unemployment; growth was sold as a cure-all — for public debt, national security, class struggle, and "tackling poverty without facing the politically charged issue of redistribution." Kennedy ran on a 5% growth pledge; the OECD made "the highest sustainable economic growth" its first aim. "Over half a century, GDP growth shifted from being a policy option to a political necessity" — to question it became "political suicide."
The Unsung Counter-Tradition
Economists who kept humanity in view
A long lineage refused the goalless drift. Sismondi (1819) made human welfare, not wealth, the goal. Ruskin thundered, "There is no wealth but life… that country is richest which nourishes the greatest number of noble and happy human beings" — words Gandhi took to a collective farm. Schumacher insisted "small is beautiful"; Max-Neef built development around fundamental human needs. And Amartya Sen won a Nobel arguing that the aim is "advancing the richness of human life, rather than the richness of the economy in which human beings live" — enlarging people's capabilities to be healthy, educated, empowered and creative. Dismissed for decades as merely "humanistic economics" (begging the question of what the rest of it was), their vision is now the Doughnut's foundation.
Way ② · See the Big Picture
Section 04
See the Big Picture
Mainstream economics draws the whole economy with one picture — the Circular Flow. It is time to draw it anew, embedded within society and within the living world.
20th-century image
The Circular Flow
Income cycling between households and firms "like water round plumbed pipes" (Samuelson). A self-contained market on a blank white background — no energy, no society, no planet.
21st-century image
The Embedded Economy
The economy nested within society, nested within the living world, powered by the sun — provisioned by four realms: household, market, commons and state.
The Embedded Economy · Nested in Society, Nested in Nature
"The most important assumptions of a model are… what's not in them" (Sterman). The Circular Flow left out the living world and society — so the neoliberal script could cast the market as efficient, the state incompetent, the commons tragic, and society "non-existent." The Embedded Economy puts them all back on stage.
The Cast
20th-century script
21st-century story
Earth
inexhaustible — take all you want
life-giving — respect its boundaries
Society
non-existent — ignore it
foundational — nurture its connections
Household
domestic — leave it to the women
core — value its contribution
Market
efficient — give it free rein
powerful — embed it wisely
Commons
tragic — sell them off
creative — unleash their potential
State
incompetent — don't let it meddle
essential — make it accountable
Finance
infallible — trust its ways
in service — make it serve society
Power
irrelevant — don't mention it
pervasive — check its abuse
The overlooked playersThe household runs the "core economy" of unpaid care — Adam Smith forgot to mention his mother, Margaret Douglas, who cooked his dinner ("how productive would your workforce be if it hadn't been toilet-trained?"). The commons are not doomed: Elinor Ostrom won a Nobel showing communities steward shared resources through clear rules — "the triumph of the commons." The state is the risk-taking innovator behind every smartphone: GPS, microchips, touchscreens and the Internet were all publicly funded (Mazzucato). And finance creates money from nothing — "the tail that wags the dog."
Who wrote the old scriptThe neoliberal cast wasn't an accident. In 1947 a "small laissez-faire band" — Hayek, Friedman, von Mises, Knight — gathered at Mont Pèlerin to draft "what they hoped would one day become the dominant economic story." Backed by business and billionaires, they built professorships and think tanks and took "the long view." Their big moment came in 1980 with Thatcher and Reagan, and "like the longest-running of Broadway shows, the neoliberal show has been playing ever since." Samuelson set the stage (the Circular Flow); the Mont Pelerin Society wrote the lines.
Recasting the Market, Commons and State
There is no such thing as the free market
"Whenever I hear someone praising the 'free market,' I beg them to take me there, because I've never seen it." Every market is shaped by laws, institutions and culture — "a market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them" (Ha-Joon Chang). So there is "no such thing as deregulation, only reregulation" that shifts who bears the risk. Embed the market wisely — "like fire, extremely efficient… but dangerous if it gets out of control." Meanwhile the collaborative commons are surging: Rifkin's convergence of digital networks, renewable energy and 3D printing drives the cost of one more unit toward zero — "the zero-marginal-cost revolution" — letting the commons complement, compete with, and even displace the market.
Way ③ · Nurture Human Nature
Section 05
Nurture Human Nature
We spent two centuries staring at the wrong self-portrait. Rational economic man is not who we are — and the portrait we paint of ourselves shapes who we become.
20th-century portrait
Rational Economic Man
Standing alone, money in hand, calculator in head, ego in heart, nature at his feet — self-interested, fixed in taste, insatiable. A portrait that hardened into a caricature, then a cartoon.
21st-century portrait
Social, Adaptable Humans
A "hologram of humanity, ever changing in the light" — community, sower-reaper, acrobat. Like the octopus: many roles, ever-shifting colour.
The Portrait We Painted · and the One We're Sketching
"We wasted two hundred years staring at the wrong portrait of ourselves: Homo economicus, that solitary figure poised with money in his hand, calculator in his head, nature at his feet, and an insatiable appetite in his heart." Time to redraw ourselves "as people who thrive by connecting with each other and with this living home of ours that is not ours alone."
Smith drew a rich, moral character; Mill pared him to "a being who desires to possess wealth"; Jevons made him calculate; Knight gave him "perfect knowledge and perfect foresight," turning the caricature into a cartoon that "treats other human beings as if they were slot machines." The danger: "our beliefs about human nature help shape human nature itself." Study economics and you give less to charity; at the Chicago options exchange, traders behaved as if the Black–Scholes formula were true — so it became true. Even swapping the word citizen for consumer shifts how we behave.
Five Shifts in the Self-Portrait
Who we actually are
1
From self-interested → socially reciprocating"The most cooperative species on the planet." Strong reciprocity: conditional cooperators who will punish free-riders even at a cost.
2
From fixed preferences → fluid valuesSchwartz's ten basic values live in us all; like muscles, whichever we engage grows stronger. Bernays knew it: sell values, not products.
3
From isolated → interdependentWe follow the herd; network effects can drown out any price signal. "Trickle-down behaviourism is very real" (Stiglitz).
4
From calculating → approximatingNot failed calculators but skilled heuristic-users — "fast and frugal" rules of thumb are "a triumph of evolution" (Gigerenzer).
5
From dominant → dependent"Plain member and citizen" of the living community, not its conqueror (Leopold). "What you call resources we call our relatives" (Chief Oren Lyons).
Shift ② in Depth · Schwartz's Value Circumplex
All ten values live in each of us, in differing degrees. "Just like muscles, the more often any one value is engaged, the stronger it becomes" — and engaging one activates its neighbours while suppressing its opposite. Bernays understood it a century ago: sell the deep value (cigarettes as women's "torches of freedom"), not the product. It is why the words a policy uses — or an advert triggers — can quietly reshape a whole society's motivations.
Markets & matches: handle with care"Setting a price is like striking a match" — it can ignite motivation, or burn down the moral ground it crosses. Titmuss found volunteers gave more and healthier blood for free than paid donors did. When an Israeli day-nursery fined late parents, lateness doubled — the fine erased the guilt, and "the temporary marketplace erased the social contract." "Beware before you strike a match or start a market: you never know what riches it may reduce to ashes." (Caveat: most of this evidence comes from WEIRD societies — Western, Educated, Industrialised, Rich, Democratic — just 12% of humanity.)
When cash crowds out the very thing you wantedThe evidence is a warning, not an anecdote. In Bogotá, cash transfers for school attendance raised attendance a little — but siblings of the paid children became more likely to drop out (girls by 10%), an effect stronger than the intended one. Dallas paid six-year-olds $2 a book and worried it would "corrupt the love of reading for its own sake." In Tanzanian villages, offering pay for communal tree-planting drew 20% fewer volunteers — and those paid felt dissatisfied, while unpaid neighbours felt proud. "Markets are not mere mechanisms; they embody certain values. And sometimes, market values crowd out nonmarket norms worth caring about" (Sandel). Even the word matters: label people "consumers" rather than "citizens" facing a shared drought, and they feel less responsibility and less trust.
Shift ④ in depth · heuristic, not hopelessBehavioural economists catalogue 160+ "cognitive biases" and prescribe nudges. But Gigerenzer flips it: our rules of thumb are "the underpinnings of our heuristics… a triumph of evolution." His three-question decision tree for triaging heart-attack risk out-predicts a medical computer that weighs 50 variables. So rather than only nudging people into acting wisely, nurture their judgement: "what we need is not just better technology, bigger bureaucracy and stricter laws… but risk-savvy citizens." The catch — heuristics work best in the world they evolved for, and climate change is "invisible, delayed, gradual and distant," exactly what they handle worst. The smart mix: risk-savvy heuristics and well-placed nudges.
The Ultimatum Game · reciprocity co-evolves with the economyTwo anonymous players split a windfall; if the responder rejects the proposer's offer, both get nothing. Pure self-interest predicts any offer is accepted — but people worldwide reject offers they think unfair, walking away with nothing "to punish others for their selfishness." And the norms vary tellingly with how a society provisions itself: North American students offer ~45%; the household-based Machiguenga of the Peruvian Amazon offer ~25% and accept almost anything; the whale-hunting Lamelara of Indonesia, who depend on sharing, offer ~60%. "People's sense of reciprocity co-evolves with their economy's structure."
Nudge, network & norm — cheaper than markets, and often betterBecause we're moved by far more than price, the twenty-first-century economist starts by asking what values, heuristics, norms and networks are already in play. A text-message reminder lifted medication adherence; green footprints painted toward the bins cut Copenhagen littering by 46%; "the Malala effect" raised girls' aspirations worldwide. In 50 Ugandan districts, simply rebuilding a sense of social contract — communities setting standards and monitoring their own clinics — cut under-five deaths by 33% "without fees, fines or a bigger budget." Connect with people's values and identity, Crompton and Kasser find, not their pocket and budget.
Way ④ · Get Savvy with Systems
Section 06
Get Savvy with Systems
Newton watched the apple fall and economics caught physics-envy. Had he watched it grow, we'd speak not of the market mechanism but of the market organism.
20th-century image
Supply & Demand Equilibrium
Marshall's criss-crossing scissors, pulling the market to a single point of rest — "the will is our pendulum." Neat, mechanical, and, at the level of the whole economy, provably impossible.
21st-century image
A Pair of Feedback Loops
The economy as a complex, adaptive, ever-evolving system — reinforcing and balancing loops, stocks, flows and delays, whose dance produces booms, busts and tipping points.
From Mechanical Equilibrium to Dynamic Complexity
General-equilibrium theory was quietly disproved in the 1970s (the Sonnenschein–Mantel–Debreu result) yet still dominated economics right up to 2008 — because, as Solow said, it is "neat, learnable… just technical enough to feel like 'science,'" and "practically guaranteed to give laissez-faire-type advice."
Finance
Stability breeds instability
Minsky's insight: good times breed confidence, confidence breeds risk, risk breeds the bubble — then the "Minsky moment." Models with no banks couldn't see 2008 coming; "the Queen asked, why did no one see it coming?"
Inequality
Success to the Successful
Reinforcing loops split near-identical people into rich and poor — as in Monopoly (originally Elizabeth Magie's anti-monopoly game) and the Sugarscape simulation, where tiny luck differences amplify into extreme divides.
Climate
The carbon bathtub
Sterman's tub: CO₂ pours in faster than it drains, so emissions must halve just to stop the level rising. Even MIT students got this wrong — "they think it's easier… than it is."
Method
Gardener, not engineer
Swap the spanner for secateurs. "Gardening is far from laissez-faire" — nurture, select, prune, and steward for resilience, self-organisation and healthy hierarchy. Watch for high leverage points; change the goal, not just the prices.
Complexity, learned the hard wayEven the master of mechanics was undone by it: Sir Isaac Newton sold his South Sea shares for a tidy profit in 1720, then — swept up in the mania — bought back in near the peak and lost his fortune. "I can calculate the movement of stars, but not the madness of men." Nearly three centuries later the Queen asked of the 2008 crash, "Why did no one see it coming?" — in part because the era's models contained no banks at all. As Steve Keen put it, "trying to analyse capitalism while leaving out banks, debt, and money is like trying to analyse birds while ignoring that they have wings." And inequality is no accident of merit: in the Sugarscape simulation, agents identical but for a lucky early break split into a tiny super-rich elite and a poor mass — "even small chance differences… rapidly amplify into big differences." Monopoly taught the same lesson; fittingly, it began as Elizabeth Magie's anti-monopoly protest game before Parker Brothers stripped it to the winner-takes-all rules.
The pivot to Ways ⑤ and ⑥Seen as a system, today's economy is caught in twin dynamics of deepening inequality and ecological degradation — the classic conditions of civilisational collapse. The generational reframe: "Today's economy is divisive and degenerative by default. Tomorrow's economy must be distributive and regenerative by design." Not divisive/degenerative fixed after the fact — but distributive and regenerative from the start.
The Realm Newton's Apple Missed
Organised complexity & emergence
Warren Weaver (1948) split science into problems of simplicity (a falling apple — Newton's laws), disordered complexity (gas molecules — statistics), and, in between, "problems of organised complexity" — many parts "interrelated in an organic whole." That middle realm, least understood, is where biology, ecology and economics all live. Its signature is emergence: watch a murmuration of starlings — tens of thousands each obeying the same simple rules produce "an astonishing swooping, pulsing mass." And once you see the economy as embedded and complex, the beloved notion of "externalities" collapses: "There are no side effects — just effects" (Sterman); calling a cost "external," said Herman Daly, means only "we have made no provision for it in our theories." The 1972 Limits to Growth World3 model warned where the business-as-usual path leads — and the global economy has been "closely tracking" it ever since.
Time for an Economist's OathEconomics guides "the management of nations and of our planetary household," yet — unlike medicine — has honed almost no ethics of its own. Four principles for the twenty-first-century economist: (1) act in service to human prosperity in a flourishing web of life; (2) respect the autonomy and consent of the communities you serve; (3) be prudential, minimising the risk of harm — especially to the most vulnerable — under uncertainty; (4) work with humility, making your models' assumptions and shortcomings transparent.
Way ⑤ · Design to Distribute
Section 07
Design to Distribute
"No pain, no gain" told us inequality must get worse before it gets better, and growth will even it up. It won't. Inequality is not an economic necessity — it is a design failure.
20th-century image
The Kuznets Curve
An inverted-U promising that inequality "has to get worse before it can get better." From Kuznets's own "95% speculation," it became a law used to justify concentrating wealth.
21st-century image
A Network of Flows
Structure the economy as a distributed network — many nodes, large and small, interconnected — so it disperses value as it is created, rather than concentrating it.
From the Rollercoaster to the Network
Time-series data debunked the curve — "the pattern is that there is no pattern." Piketty showed why: because returns to capital tend to outpace the economy (r > g), "capitalism automatically generates arbitrary and unsustainable inequalities." Nature's thriving networks balance efficiency with resilience through diversity and distribution — the template for a distributive economy.
Inequality isn't just unfair, it's corrosive: more unequal societies suffer more ill health, violence and distrust (The Spirit Level); "American democracy has been hacked, and the hack is campaign finance" (Al Gore); and the IMF finds inequality actually slows growth. The fix is to redistribute not just income but the sources of wealth themselves.
Five Sources of Wealth to Redistribute
Beyond redistributing income
1
Who owns the land?Henry George's land-value tax — "the equal right of all men to the use of land is as clear as their equal right to breathe the air." Land grabs vs Ostrom's self-governed commons.
2
Who makes the money?97% of money is created by banks as debt. Break the "monoculture of money" with complementary currencies — Bangla-Pesa in Mombasa, time-banking in St Gallen, blockchain microgrids.
3
Who owns the enterprise?End the workers-vs-owners divide: employee-owned firms and cooperatives (John Lewis, Mondragon). "Redesign the corporate charter and you've redesigned the DNA of business."
4
Who owns the robots?Automation's gains needn't concentrate: a "robot dividend" (à la the Alaska Permanent Fund). "When the state takes a risk, it deserves a return" (Mazzucato).
5
Who owns the ideas?The knowledge commons — free open-source design (from farm machinery to William Kamkwamba's windmill) — may be "one of the most transformative ways of redistributing wealth this century."
Redesigning money · from monoculture to ecosystemMoney is not a metal disc but "a social relationship: a promise to repay based on trust" — and its design has huge distributive consequences. Today 97% of UK money is created by commercial banks as interest-bearing debt, three-quarters of it (pre-2008) flowing into houses and stocks rather than productive enterprise, siphoning income to "the largest rentier sector of today's financialized economies." Alternatives abound: central-bank money with 100% reserves (backed by Fisher, Friedman, the IMF and Martin Wolf); "People's QE" and "Green QE" aimed at households and clean infrastructure rather than bank balance sheets; complementary currencies like Mombasa's Bangla-Pesa and St Gallen's care-time bank; and blockchain currencies powering peer-to-peer renewable-energy microgrids. Keynes dreamed of the "euthanasia of the rentier."
Who will own the robots?The digital revolution pulls two ways at once: near-zero-marginal-cost tools empower (every roof a power station, every maker a "prosumer"), while winner-takes-all network effects and automation concentrate — the "great decoupling" of soaring productivity from flat jobs, five million jobs forecast lost to automation, Foxconn building a "million-robot army." Distributive fixes: tax resource-use rather than labour (today the tax code favours buying machines over hiring people); skill people up where they beat robots — "creativity, empathy, insight and human contact"; and give everyone a stake in the technology itself through a "robot dividend," on the model of the Alaska Permanent Fund. "When the state takes a risk, it deserves a return" (Mazzucato).
The mindset shift"Don't wait for economic growth to reduce inequality — because it won't." Twenty-first-century economists build distributive flow into the structure of the economy from the get-go, harnessing market, commons and state alike, and working with bottom-up networks already driving the revolution in redistribution.
Distributive design in the wildThese aren't thought experiments. In the Bangladesh slum of Mombasa, the Bangla-Pesa complementary currency lets 200+ traders keep trading through cash droughts (its founder was first arrested, then supported). The UK's John Lewis Partnership is owned by its 90,000 staff; worldwide the 300 largest cooperatives turn over $2.2 trillion — "equivalent to the world's seventh-largest economy." The Alaska Permanent Fund pays every resident an annual oil dividend (over $2,000 in 2015) — a template for a "robot dividend." And 14-year-old William Kamkwamba, pulled from school in drought-struck Malawi, built a working windmill from a library book and a scrapyard — proof of what a global knowledge commons could unleash. "Redesign the corporate charter and you've redesigned the DNA of business."
Going globalThe world remains "more unequal than any single country within it." The traditional tool — overseas aid — is "a myopic failure": rich countries pledged 0.7% of income by 1980 and, 30+ years on, give under half that. Migrants' remittances now outstrip aid in many countries. Newly feasible options beckon: a basic income texted directly to the world's poorest via mobile banking (Kenya's M-PESA already carries 40% of GDP; GiveDirectly is piloting it for 10–15 years), a global wealth tax (1.5% on billionaires ≈ $74bn/yr — enough to school every child and deliver basic health in all low-income countries), and Commons Trusts stewarding Earth's shared systems. "So many once-unfeasible ideas — abolishing slavery, votes for women, ending apartheid — turn out to be inevitable."
Way ⑥ · Create to Regenerate
Section 08
Create to Regenerate
"Grow now, clean up later" told us pollution must rise before it falls. It's a mountain we cannot afford to climb — because we cannot survive its peak.
20th-century image
The Caterpillar
A linear industrial economy: take → make → use → lose. Degenerative by design, it "devours the sources of its own sustenance."
21st-century image
The Butterfly
A circular economy, regenerative by design: running on the sun, eradicating waste, cycling all materials through biological and technical nutrient loops.
From Linear Caterpillar to Circular Butterfly
Based on the Ellen MacArthur Foundation's butterfly. Materials are never "used up": biological nutrients cascade through the living world (coffee grounds → mushrooms → cattle feed → soil), while technical nutrients are repaired, reused and refurbished. More honestly a cyclical economy — no loop recaptures 100% — but powered by the sun, it turns throughflow into round-flow.
The Corporate To-Do List
Five stages from degenerative to regenerative
1. Do nothing (fines are a cost of business). 2. Do what pays (eco-efficiency that cuts costs or burnishes the brand — or, like VW's "defeat device," deceives). 3. Do our fair share (but "fair shares never add up," and slide into taking your share of the pollution "cake"). 4. Do no harm — "mission zero" (net-zero energy/water; but "being less bad is not being good," says McDonough — "it is being bad, just less so"). 5. Be generous — regenerative by design, giving back more than you take. Why simply take nothing when you could give something?
Nature as model, measure & mentorJanine Benyus's charge: "become full participants in every one of nature's cycles" — learn to "inhale" carbon into products and soils, then apply it to the phosphorus, nitrogen and water cycles too. Value lies not in throughflow but in "the regenerative power of life, powered by the sun." As Ruskin wrote in 1860 — poetic and prophetic — "There is no wealth but life."
Why the clean-up myth failsThe Environmental Kuznets Curve only ever measured local air and water — not CO₂, soil, or biodiversity. And it's "people power, not economic growth per se" (Torras & Boyce): environmental quality is higher where income is equal, literacy high, and rights respected. Rich countries look cleaner only because they've offshored their pollution: counting each nation's global material footprint, the US, UK, New Zealand and Australia all grew theirs by more than 30% from 1990–2007; Spain, Portugal and the Netherlands by over 50%. Not a rise and fall — "a disturbing rise and rise." Price tools (Germany's eco-tax cut fuel use 17% and made 250,000 jobs; tiered water pricing) help — but they are low-leverage; "far greater leverage comes from changing the paradigm."
Welcome to the generous cityRegeneration scales up from factory to city. Janine Benyus measures a city's native ecosystem — how fast the nearby forest or wetland harvests sunlight, stores rainwater, sequesters carbon, builds soil — then sets those rates as the new civic standard, challenging architects to build settlements "as generous as the wildland next door": rooftops that grow food and welcome wildlife, pavements that drink the storm. The circular "butterfly" is more honestly cyclical — Japan recycles 98% of its metal, but there's always an elusive last 2% — yet powered by the sun, every object becomes "a battery storing valuable materials and energy."
Way ⑦ · Be Agnostic about Growth
Section 09
Be Agnostic about Growth
One diagram is so dangerous it is never drawn: the long-term path of GDP. We have economies that need to grow, whether or not they make us thrive; we need economies that make us thrive, whether or not they grow.
20th-century image
The Exponential Curve
Ever-rising GDP, its leading tip left "hanging mid-air" — the "Medusa of economic theory," too dangerous to draw because it forces the question: what happens next?
21st-century image
The S-Curve (then the kite)
Growth as a phase that matures and levels — like a child's feet, a forest, all healthy living things. Then GDP bobs and dips like a kite-surfer riding wind and waves.
The Curve Economists Dare Not Draw — and Its Replacement
Classical economists knew growth must slow — Mill positively welcomed the "stationary state," with "as much scope as ever for all kinds of mental culture." Rostow's 1960 airplane, by contrast, never lands; his twenty-first-century update must add two missing chapters: "Preparation for Landing" and "Arrival."
The conundrum is stark: "No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one." Agnostic doesn't mean not measuring growth — it means "designing an economy that promotes human prosperity whether GDP is going up, down, or holding steady." The green-growth camp says growth is necessary so it must be possible (betting on "sufficient absolute decoupling" — needed at 8–10%/yr, achieved at 1–2%). The prepare-for-landing camp says it's no longer possible so cannot be necessary (Ayres & Warr: last century's growth was largely "cheap fossil fuels" — a gallon of oil ≈ 47 days of human labour). One UN adviser confided: "I don't know, no one does, but we have to say it is to keep everyone on board."
Financially addicted
To "gain" — money that "begets money… has no limits" (Marx, via Aristotle). Antidotes: enterprises that "behave like a tree" (bear fruit, stop growing); demurrage currency that "rots like potatoes."
Politically addicted
To revenue-without-taxes, fear of unemployment, and the G20 "family photo" of power. Antidotes: tax justice + wealth taxes, basic income + shorter working week, and new scoreboards (Human Development Index, C40 cities).
Socially addicted
To consumerism and to easing inequality's tensions — "growth is a substitute for equality" (Wallich). Antidote: rediscover sufficiency, and five well-being acts — connect, be active, take notice, learn, give.
Breaking the three addictionsPolitically, growth eases three fears: revenue-without-taxes (answer: tax justice, close the $18.5tn hidden in havens, tax wealth not income), the unemployment line (answer: basic income, and share the work — Keynes foresaw a 15-hour week; the New Economics Foundation proposes 21 hours), and losing your place in "the G20 family photo" of geopolitical power (answer: "start a new game" with better scoreboards — the Human Development Index, the Happy Planet Index, the C40 cities). Socially, we're hooked on consumerism ("publicity… proposes that we transform ourselves by buying something more" — Berger) and on growth as a salve for inequality — "Growth is a substitute for equality of income," admitted Fed governor Wallich; "so long as there is growth there is hope." But the nineteenth-century Cree brought fewer furs when offered higher prices — they practised sufficiency. Perhaps, as Mill hoped, once minds are "no longer engrossed in the art of getting on," they can turn to the art of living. Rostow's airplane needs two new chapters at last: Preparation for Landing, and Arrival.
Learning to land"Go slower by design, not disaster" (Peter Victor). In systems terms, transform the economy "from ever-growing on an unstable trajectory to ever-oscillating within a stable range" — weaken growth's reinforcing loops, strengthen the balancing ones, and change the goal. Strikingly, most policies that make an economy growth-agnostic are the very ones that make it distributive and regenerative too.
What Actually Drove the Growth
Solow's mystery residual was energy all along
When Robert Solow modelled US growth, capital-per-worker explained a mere 13%; the other 87% he chalked up to "technical change" — a residual his peers called "a measure of our ignorance." In 2009, Ayres and Warr rebuilt the model with a third factor — energy (more precisely exergy, the useful-work fraction) — and it explained the vast majority of growth. "The last two centuries of extraordinary economic growth are largely due to the availability of cheap fossil fuels." (The energy in a single gallon of oil ≈ 47 days of hard human labour — "billions of invisible slaves.") The implication is sobering: "future GDP growth is not only not guaranteed, it is more than likely to end within a few decades." Had Bill Phillips run his MONIAC off a pedalling student instead of a hidden electric pump, economists might never have overlooked energy's role.
The arrivals loungeWhat replaces the airplane that must never land? Raworth swaps the metaphor for kite-surfing: GDP "bobbing and dipping" as the surfer "continually adjusts — bending, dipping, twisting — to maintain that dynamic interplay of the wind and the waves." New financial designs could ease the descent: John Fullerton's Evergreen Direct Investing lets a mature enterprise "behave like a tree… bear fruit" instead of forever growing; Gesell's demurrage currency (praised by Keynes) would make money "rot like potatoes, rust like iron," replacing the search for gain with the search to maintain value in regenerative assets. Waiting in the arrivals lounge, Raworth imagines, are Keynes and Mill — ready at last to work on "the art of living."
Conclusion
Section 10
We Are All Economists Now
Ours is the first generation to properly understand the damage we are doing to our planetary household — and probably the last with the chance to do something transformative about it.
Doughnut Economics sets out an optimistic vision: a global economy that "creates a thriving balance thanks to its distributive and regenerative design." Getting there starts by recognising that every economy is embedded in society and in the living world; that household, commons, market and state all provision our needs and "work best when they work together"; that nurturing our reciprocal, other-regarding nature beats assuming the worst; and that once we accept the economy's complexity, we can steward it — turning divisive, degenerative economies into distributive, regenerative ones, agnostic about growth.
Storming the Citadels
Economics must join the troupe
The most exciting new thinking is coming from everywhere but economics departments — psychology, ecology, physics, history, Earth-system science. It's time for economics "to step back from soloing in the limelight and join the troupe instead. Less Lord of the Dance and more maypole dance." Keynes knew it: "the master-economist must be mathematician, historian, statesman, philosopher." The student movement Rethinking Economics is demanding exactly this — though, its co-founder Yuan Yang notes, the most prestigious universities resist hardest, fearing their league-table place. "We have to storm the citadels; we can't just build our camps outside."
Guard your slateTo every student — and to us all: "be watchful over the ideas that others try to sketch upon your mind. Look out for the words, be wary of the equations, but most of all pay attention to the pictures… they go in deep without your even realising it." And "don't let anyone make the extraordinary presumption that your tabula is rasa" — your slate has been etched since birth, in the core economy and in your dependence on the living world.
"'Be the change you want to see in the world' is Gandhi's most famous phrase. But… draw the change you want to see in the world too. It's easy to get started. Just pick up a pencil and draw."
Kate Raworth · We Are All Economists Now
Complete Reference
Section 11
The Complete Reference
The whole book in one view — the seven ways old-to-new, the Doughnut's two rings, and the reframes that hold it together.
Seven Ways
From (20th-century)
To (21st-century)
① Change the Goal
GDP growth
the Doughnut
② See the Big Picture
self-contained market
the embedded economy
③ Nurture Human Nature
rational economic man
social, adaptable humans
④ Get Savvy with Systems
mechanical equilibrium
dynamic complexity
⑤ Design to Distribute
"growth will even it up"
distributive by design
⑥ Create to Regenerate
"growth will clean it up"
regenerative by design
⑦ Be Agnostic about Growth
growth-addicted
growth-agnostic
Social Foundation · 12 dimensions
No one below
Food · water & sanitation · energy · education · healthcare · housing · income & work · peace & justice · political voice · social equity · gender equality · networks. Derived from the UN's Sustainable Development Goals; below the ring lies shortfall.
Ecological Ceiling · 9 boundaries
Nothing beyond
Climate change · ocean acidification · chemical pollution · nitrogen & phosphorus loading · freshwater withdrawals · land conversion · biodiversity loss · air pollution · ozone-layer depletion. Rockström & Steffen; we've transgressed at least four.
The Reframes That Hold It Together
In one breath
Start with humanity's goals, not economics' theories. The economy is embedded in society and the living world, powered by the sun. We are not rational economic man but social, reciprocating, interdependent humans. The economy is a complex adaptive system to be gardened, not a machine to be controlled. Inequality is a design failure, not a law — so design to distribute. Ecological degradation is degenerative design, not a phase — so create to regenerate. And progress is not "onward and upward" but thriving in balance: human prosperity in a flourishing web of life.
"We are far from the first to want to shape a better economic future — but we may be among the last with the chance to do so. It starts with a picture: a doughnut."