7 Ways to Think Like a 21st Century Economist
“Economics is broken. It has failed to predict, let alone to prevent, financial crises that have shaken the foundations of our societies. Its outdated theories have permitted a world in which extreme poverty persists while the wealth of the super-rich grows year on year. And its blind spots have led to policies that are degrading the living world on a scale that threatens all our futures.”
This challenge appears on the flyleaf of Kate Raworth’s book, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, and she begins her story with her student days, when she went to Oxford University to study PPE (Politics, Philosophy and Economics) in the expectation that this would provide a basis for understanding how to act well in the world. But, although she gained a first class degree, she was deeply disappointed with what she was taught.
She found that economics was based on a caricature of humanity. A caricature that bore little resemblance to the socially adaptable humans with whom we all live. Economists had adopted a pitifully restricted view, consisting of collections of lone individuals, each called “Rational Economic Man.” A man with a money bag in his hand a calculator in his brain, and an omniscient view of something called “The Market”. A market that was supposed to be unaffected by the fear and greed of his fellows. An isolated individual without connections or obligations to family, to place or to culture, whose only motivation is supposed to be rational self-interest. A competitive being, without regard for any harm his actions would do to fellow humans. All this says more about the nature of economists than it does about all other humans.
She also found that economists in the late 19th century, at a time when Newtonian science was held in high regard, set out to formulate their concepts to look like those of classical physics. They adopted this unsuitable methodology for describing the interdependent complexity of life, in order to gain a certain “scientific” respectability. They also increasingly restricted their sphere of discourse to factors which could be measured by money, ignoring factors which are essential to life, but for which no one pays in our society, such as the sun’s energy, family love and caregiving, compassion, charitable work and other voluntary effort (such as Wikipedia and Linux are now), or the absorption and regeneration of waste by the planet.
Finally she found that economists labored under the assumption that growth is essential for prosperity, a very questionable goal on our finite globe. But a goal which is accepted and advocated by academics, politicians and the media the world over.
Economic theory is centuries out of date and that’s a disaster for tackling the 21st century’s challenges of climate change, poverty, and extreme inequality. Kate Raworth flips economic thinking on its head to give a crash course in alternative economics, explaining in three minutes what they’ll never teach you in three years of a degree. Find out why it’s time to get into the doughnut…
A leading economist documents the trend of income inequality through history, stressing that the way an economy functions is directly related to a power structure that is determined and maintained by the few who hold the wealth.
A New Approach to Growth, Development, and Social Progress
Joseph E. Stiglitz
A Nobel economist and a leading finance expert posit the view that learning is more important to growth and development than the accumulation of capital. The traditional view of an inherently efficient free market, and of government regulation as the major source of economic difficulty, impedes the raising of a society’s standard of living by discouraging the production and dissemination of knowledge.
Creating the Next Industrial Revolution
Paul Hawken, Amory Lovins & L. Hunter Lovins
A new definition of capitalism that fully values natural and human resources may hold the keys to a sustainable future.
In the series
- Debt, Trust and the Functions of Money
- Power, Money and Stability
- Substitute Moneys and Cryptocurrencies
- Risk, Gambling, and Financialization
- Forgiveness of Debt and the Creation of Money
- Capital in the Twenty First Century
- Global Poverty Today
- Multilateral and Bilateral Aid
- The World of the Poor
- The Business of Changing the World
- Creating a Learning Society