A Healthy Economy Should be Designed to Thrive, Not Grow

Rostow tells us that all economies need to pass through five stages of growth: first, traditional society, where a nation’s output is limited by its technology, its institutions and mindset; but then the preconditions for takeoff, where we get the beginnings of a banking industry, the mechanization of work and the belief that growth is necessary for something beyond itself, like national dignity or a better life for the children; then takeoff, where compound interest is built into the economy’s institutions and growth becomes the normal condition; fourth is the drive to maturity where you can have any industry you want, no matter your natural resource base; and the fifth and final stage, the age of high-mass consumption where people can buy all the consumer goods they want.
Well, you can hear the implicit airplane metaphor in this story, but this plane is like no other, because it can never be allowed to land. Rostow left us flying into the sunset of mass consumerism, and he knew it.

The Doughnut of social and planetary boundaries

Humanity’s 21st century challenge is to meet the needs of all within the means of the planet. In other words, to ensure that no one falls short on life’s essentials (from food and housing to healthcare and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend – such as a stable climate, fertile soils, and a protective ozone layer. The Doughnut of social and planetary boundaries is a playfully serious approach to framing that challenge, and it acts as a compass for human progress this century.

The environmental ceiling consists of nine planetary boundaries, as set out by Rockstrom et al, beyond which lie unacceptable environmental degradation and potential tipping points in Earth systems. The twelve dimensions of the social foundation are derived from internationally agreed minimum social standards, as identified by the world’s governments in the Sustainable Development Goals in 2015. Between social and planetary boundaries lies an environmentally safe and socially just space in which humanity can thrive.

So can we find this dynamic balance in the 21st century? Well, that’s a key question, because as these red wedges show, right now we are far from balanced, falling short and overshooting at the same time. Look in that hole, you can see that millions or billions of people worldwide still fall short on their most basic of needs. And yet, we’ve already overshot at least four of these planetary boundaries, risking irreversible impact of climate breakdown and ecosystem collapse. This is the state of humanity and our planetary home. We, the people of the early 21st century, this is our selfie.
No economist from last century saw this picture, so why would we imagine that their theories would be up for taking on its challenges? We need ideas of our own, because we are the first generation to see this and probably the last with a real chance of turning this story around. You see, 20th century economics assured us that if growth creates inequality, don’t try to redistribute, because more growth will even things up again. If growth creates pollution, don’t try to regulate, because more growth will clean things up again.
Except, it turns out, it doesn’t, and it won’t. We need to create economies that tackle this shortfall and overshoot together, by design. We need economies that are regenerative and distributive by design. You see, we’ve inherited degenerative industries. We take earth’s materials, make them into stuff we want, use it for a while, often only once, and then throw it away, and that is pushing us over planetary boundaries, so we need to bend those arrows around, create economies that work with and within the cycles of the living world, so that resources are never used up but used again and again, economies that run on sunlight, where waste from one process is food for the next.