by Kate Raworth
Lietaer’s first move was to ask the residents of Rabot what they actually wanted. The resounding answer: little plots of land for growing food. So a five-hectare derelict factory site was soon converted into allotments available for rent, which was payable only in a new currency, Torekes, meaning ‘little towers’, named after the district’s ubiquitous tower blocks. And they can be earned by volunteering to collect litter, replant public gardens, and repair public buildings, or by using the car pool and switching to green electricity. Along with paying the allotment rent, Torekes can be spent on bus travel and cinema tickets, or used in local shops to buy fresh produce and energy-efficient light bulbs, so boosting their uptake. But their social value has reached even further. ‘When people see that immigrants, who tend to be blamed as polluters themselves, are helping to clean up the neighbourhood, then that is a positive signal to anyone,’ notes Guy Reynebeau, head of Health and Welfare in the district. ‘Such actions can’t be priced, not in Euros or Torekes.’54
Imagine taking this concept to the next level by integrating complementary currencies at the very design stage of a generous city. Just as blood flowing throughout the human body keeps all of its organs healthy, so complementary currencies could be designed to harness the flow of human activity in ways that keep the city’s infrastructure thriving. They could reward residents and enterprises for a wide range of regenerative behaviour – from collecting, sorting and recycling waste to maintaining the living walls of the city’s buildings – all the while encouraging the community to shop locally and travel publicly. Complementary currencies could, in effect, help a city’s inhabitants become full participants in nature’s cycles, just as Benyus envisages.
Bring on the partner state
The state’s role is key to ending the business-as-usual of degenerative economic design. And it has many ways to actively promote a regenerative alternative, including restructuring taxes and regulations, stepping up as a transformative investor, and empowering the dynamism of the commons.
Governments have historically opted to tax what they could, rather than what they should, and it shows. Tax windows and you’ll get dark houses, as Britain discovered in the eighteenth and nineteenth centuries; tax employees and you’ll head for a jobless economy, as many countries are discovering today. It is happening in part thanks to the twentieth century’s legacy of perverse tax policies, which charge firms for hiring humans (through payroll taxes), subsidise them for buying robots (through tax-deductible capital investments), and levy next to nothing on the use of land and non-renewable resources. In 2012, over 50% of tax revenue raised in the EU came from taxing labour; in the United States, the percentage was even higher.55 It’s no surprise that industry’s response has been to focus on increasing labour productivity – output per worker – by replacing as many workers as possible with automatons.
The long-advocated switch from taxing labour to taxing non-renewable resources can be boosted by subsidies for renewable energy and resource-efficient investments. Such measures would refocus industry’s attention away from raising labour productivity and towards raising resource productivity, dramatically reducing the use of new materials and creating jobs at the same time. Refurbishing buildings instead of demolishing them and building again from scratch, for example, typically generates more jobs, comparable energy consumption, and far less use of water and new materials.56 One recent European study of the effects of promoting a circular economy along with renewable energy and energy-efficiency measures estimated that together they would generate around 500,000 jobs in France, 400,000 in Spain, and 200,000 in the Netherlands.57
Taxes and subsidies can move markets, as we have seen, but the transformation from degenerative to regenerative industrial design needs to be backed by regulation too. At its most simple, it means phasing out the use of ‘red list’ chemicals and polluting production processes, while phasing in the use of life-friendly chemistry only, along with net-zero and net-positive industrial standards. The world’s most progressive enterprises are already aiming to perform to such standards: economy-wide regulations requiring regenerative design will ultimately help to move those ambitious business practices from being a rare exception to becoming the industry norm.
Moving markets clearly matters, but it is not enough, argues economist Mariana Mazzucato. This is especially true when it comes to the clean energy revolution, a crucial power source for the regenerative economy. ‘We cannot rely on the private sector to bring about the kind of radical reshaping of the economy that is required,’ Mazzucato explains. ‘Only the state can provide the kind of patient finance required to make a decisive shift.’58 The Chinese government clearly shares her view of the state’s role as a risk-taking partner: over the past decade it has invested billions of dollars in a portfolio of innovative renewable energy companies, supporting not just their research and development costs but demonstration and deployment too. At the same time, the Chinese Development Bank, along with state-owned utilities, is financing the world’s biggest deployment to date of wind and solar photovoltaic parks.59
If the state can be a transformative partner in creating a regenerative economy, where is this happening? To date, it is most visible in city-scale initiatives that are dotted across the globe. One such city is Oberlin, Ohio, located in America’s ‘rust belt’ of post-industrial decline. In 2009 the city administration teamed up with Oberlin College and the municipal light and power utilities with the goal of becoming one of America’s first ‘climate positive’ cities by sequestering more carbon dioxide than it produces. The initiative also aims to grow 70% of the city’s food locally, conserve 20,000 acres of urban green space, and revive local culture and community, creating much-needed enterprises and jobs to make it all possible. By 2015, college- and city-run buildings were powered by 90% renewable energy and a growing proportion of food for the city’s university, high schools, hospitals and government offices was sourced from local growers. Cultural life is reviving too, thanks to a new performing arts centre in the city’s Green Arts District, and environmental education is now built into the public school curriculum.60 ‘Our aim is full-spectrum sustainability,’ says David Orr, executive director of The Oberlin Project, explaining the systems thinking behind the project’s design. ‘We need to recalibrate prosperity with the way that ecosystems work and what they can actually regenerate.’61
The era of living metrics
The shift to regenerative economic design can be monitored only if it is backed up by metrics that reflect its mission. Monetary metrics alone will inevitably fall far short of reflecting the value created in a regenerative economy: financial income is just one narrow slice of what an economy generates when its aim is to promote human prosperity in a flourishing web of life. The monopoly of monetary metrics is over: it’s time for a panoply of living metrics. And instead of focusing on the throughflow of monetary value, as GDP was designed to do, the new metrics will monitor the many sources of wealth – human, social, ecological, cultural and physical – from which all value flows.
Living metrics are developing fast at many scales. Among cities, Oberlin is once again at the forefront. With its clear living purpose ‘to improve the resilience, prosperity and sustainability of our community’, the city has started to create the metrics it needs to monitor that goal. Oberlin’s Environmental Dashboard website was set up to educate, motivate and empower the city’s community in transforming its ecological impact. Public data displays in the city library, in public buildings, and online show in real time the city’s water use, electricity use, and the health of its river. One July evening, as I browsed the website from my UK home over 3,500 miles away, I could track minute-by-minute Oberlin’s local ecological flows: the real-time carbon emissions produced in the city per person that hour, the volume of drinking water used and of wastewater treated, and even the oxygen levels in nearby Plum Creek as the stream flowed past.62 Real-time data are a fun and engaging way to gain community interest but many of the deep
er insights come from monitoring their dynamic trends year on year.63 Given Oberlin’s ambitions, I’ll bet that, once the data become available, the city will expand its Environmental Dashboard beyond the local to show Oberlin’s global material footprint, and use it to monitor its ambitious longer-term goal of full-spectrum sustainability.
If Oberlin is a leader in living metrics for cities, what of living metrics for business? Fortunately, enterprises can now escape the narrow accounting tyranny of the financial rate of return by adopting a more diverse set of key performance indicators. Several leading initiatives – such as the Economy for the Common Good, B Corp’s Impact Reports, and the MultiCapital Scorecard – all offer businesses a matrix against which to score their sustainability.64 And since the matrices are openly and independently scored, the results can empower consumers and enable governments to proactively support regenerative enterprises by rewarding high scores with, say, lower taxes and preferential public procurement.
All of these business scorecards push corporate ambition in the right direction in terms of measuring what matters but they are largely still geared to achieving ‘zero impact’ – such as by giving companies a climate-impact score of 100% if they achieve net-zero carbon emissions. The next leap for such business metrics is to go beyond do-no-harm sustainability towards rewarding generous design. When the living metrics for business match the ambition of Janine Benyus’s Ecological Performance Standards for cities, then companies will ask themselves not simply ‘how we can do no harm’ but ‘how can our enterprise be as generative as a giant redwood forest?’ And with that leap of ambition – among businesses, among cities, and among nations – we will start to become not just harmless to nature’s cycles but helpful participants in their regeneration.
‘Somewhere over the rainbow, skies are blue,’ sang Dorothy in The Wizard of Oz. It’s a charming thought, and the perfect theme tune for the rainbow-shaped Environmental Kuznets Curve. Keep going, keep growing and, one day, the air will be clear, the rivers will be clean, and the desecration of the living world will cease. But evidence amassed over many years, in global data sets and in millions of people’s harsh experience, has made plain that growth doesn’t simply clean it up. If anything, it spreads it out: to date, as nations’ economies have got larger, so too have their global material footprints, ratcheting up the pressures of climate change, water scarcity, ocean acidification, biodiversity loss, and chemical pollution. We have inherited degenerative industrial economies: our task now is to transform them into ones that are regenerative by design. There’s no denying that it is an extraordinary challenge, but it’s one that is inspiring the next generation of smart engineers, architects, urban planners and designers. I wish I could track down Prakash because India, and the world, needs him to be on the team.
It is clearly time for economists to leave behind the foolhardy search for economic laws of motion. Instead, step up to the design table and take a seat alongside those innovative architects, industrial ecologists and product designers who are spearheading the regenerative design revolution. There is certainly an empty seat waiting, because the economist’s role here is key: to design the economic policies and institutional innovations – for enterprise and finance, for the commons and the state – that will unleash the extraordinary potential of the circular economy and regenerative design. And if it is accompanied by distributive design then we will indeed be heading towards the Doughnut’s safe and just space. But since the Doughnut is, itself, a global dashboard of living metrics, what does this imply for the future of that infamous indicator, GDP: going up, going down, or going agnostic?
7
BE AGNOSTIC ABOUT GROWTH
from growth addicted to growth agnostic
Once a year I teach a class that divides friends, confronts ideologies, and challenges us all to change our minds. I get to the seminar room early, pull the chairs out of their neat rows and split the seating into two long columns divided by an aisle, rather like the seats on an airplane. As the students start arriving, they are confronted by a single question on the screen: Is green growth possible? Yes / No. I ask them to take a seat in answer to that question: for Yes, sit in the column by the window; for No, sit in the column by the door. And standing in the aisle is not allowed.
Those hoping to work for the big consultancy firms upon graduation move swiftly to the Yes block, some practically hugging the windowsill. Others hover in the middle, slightly panicked by the sudden public decision, and then head for the No block, wary of the reaction it may draw. Once seated, they start pointing and gawping at each other across the aisle, shocked to see their close friends so far away, stunned by the gulf in their unvoiced opinions.
As these students quickly discover, our beliefs about economic growth are almost religious: personal in nature, political in consequence, privately held, and little discussed. So as our discussions get going, I invite them to consider what it would take for them to switch sides, reminding them – with help from the poet Taylor Mali – that, ‘changing your mind is one of the best ways of finding out whether or not you still have one’.1 After the mid-class break, I suggest that they literally take a seat on the opposite side of the aisle and lean as far as possible into understanding that other perspective.
I admit it, my question is unfair because it begs so many others: growth of what, for whom, for how long – and what exactly is ‘green’? Perhaps I force them to confront it anyway as a cathartic way to revisit my own struggles with the future of economic growth. Back in 2011 I was tasked by Oxfam to write a policy paper to help the organisation decide whether, in high-income countries, it should promote the concept of ‘green growth’, or side with those advocating ‘degrowth’. I jumped at the chance because it took me back to the heart of macroeconomic thinking. But my excitement soon turned to paralysis as I dug into the debate and found that while both sides had some strong arguments, both too quickly dismissed the opposition’s case, and neither had a singularly compelling answer. As I attempted to come up with a clear policy position for Oxfam despite my own deepening uncertainty, my stomach tied itself in knots and my throat became so tight that I could barely breathe. I had been immobilised by one of the most existential economic questions of our age. So I called my project manager and explained the situation. ‘OK,’ she said. ‘What do you need – two more weeks?’
What I needed was to stop trying to answer that question head-on. If the Greek hero Perseus had been my project manager, he would have warned me against the task in the first place: he knew never to look directly into the face of the monstrous Medusa because anyone doing so would simply be turned to stone. Instead, by catching her reflection in his polished shield, he managed to creep up on the Gorgon monster and deftly chop off her head. Perhaps there’s a lesson here for how to think best about the future of economic growth.
Back in Chapter 1 we booted the cuckoo goal of GDP growth out of the nest, but that doesn’t mean that it has simply flown from the story. Why? Here’s the conundrum:
No country has ever ended human deprivation without a growing economy.
And no country has ever ended ecological degradation with one.
If the twenty-first-century goal is to get into the Doughnut by ending deprivation and degradation at the same time, what are the implications for GDP growth? Contemplating this question takes us to a new level in rethinking growth. It is one thing to move beyond using GDP as the primary indicator of a nation’s economic success, but it is another thing altogether for that nation to overcome its financial, political and social addiction to GDP growth. This chapter takes on that challenge and makes the case for creating economies that are agnostic about growth. By agnostic I do not mean simply not caring whether GDP growth is coming or not, nor do I mean refusing to measure whether it is happening or not. I mean agnostic in the sense of designing an economy that promotes human prosperity whether GDP is going up, down, or holding steady.
Being agnostic may sound like a cop-out, an extreme cas
e of sitting on the fence, but read on because it has radical implications. The twentieth century bequeathed to us economies that need to grow, whether or not they make us thrive, and we are now living through the social and ecological fallout of that inheritance. Twenty-first-century economists, especially those in today’s high-income countries, now face a challenge that their predecessors did not have to contemplate: to create economies that make us thrive, whether or not they grow. As we will explore, becoming agnostic in this way calls for transforming the financial, political and social structures that have made our economies and societies come to expect, demand and depend upon growth.
Too dangerous to draw
If you find yourself in the company of economists and wishing for an ice-breaker, here’s a fun game you can play, and all you need is a piece of paper and a pencil. Simply ask an economist to draw for you a picture of the long-term path of economic growth. If you are wondering what shape they will sketch on the page, don’t rush to the textbooks to find out, because the answer isn’t there. It may sound extraordinary but, despite having adopted GDP growth as the de facto goal of economic policy, the textbooks never actually depict how it is expected to evolve over the long term. Yes, there may be graphs showing various economic cycles, ranging from the 7–10-year boom and bust of business cycles to the 50–60-year waves – known as Kondratieff waves – that are due to technological innovation. But it is rare indeed to come across a graph plotting several centuries of past GDP growth, let alone a diagram suggesting what might happen in centuries ahead.
