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Skip to 0 minutes and 1 second Now here’s Kate Raworth, who’s the Senior Economist of the Oxford Environmental Change Institute. And she’s an expert on how economists think - on what we might call the economic mindset. Let’s hear what she has to say. So GDP was a concept first measured in the 1930s, in the US. And soon, once it could be measured for one year the total value of goods and services sold in the country– once it was measured for one year, and then the next, and the next. Suddenly you got a trend. And when it’s measured across countries, suddenly you’ve got a competition. So it soon became the politicians’ favourite metric for seeing whether the nation was growing and thriving.

Skip to 0 minutes and 40 seconds Became the de facto metric of success. And in 1960, an economist called WW Rostow wrote this book, The Stages of Economic Growth a Non-Communist Manifesto. You can smell the politics at the time. And in this book he said there are five stages of growth. The first stage– and it’s like an airplane flight. The first stage, is traditional society sitting still on the ground. Then there are preconditions for takeoff, where society is adjusted and altered. The structures of institutions is altered so that economy can start to grow. And then there’s take off, and it begins to grow. And he says the political, financial, and social structures are permanently altered so that growth becomes a normal condition.

Skip to 1 minute and 22 seconds Then it goes on a drive for maturity. And then in the last stage, is the era of high mass consumption. Well this is unlike any other plane ride, because apparently it’s never allowed to land. It’s just flying off into the sunset of mass consumerism. And Rostow was writing his book in 1960 when Kennedy was calling for 5% growth rate. So his political masters weren’t asking how to land the plane. They were asking how to make it fly even higher. But today, we’re on this un-landing plane. We can see the cost of endless growth in the way we’re pursuing it.

Skip to 1 minute and 55 seconds But be it climate change, be it social inequality So we need to ask ourselves whether this is a smart metaphor for economic progress in the future. And I think it’s not.

Skip to 2 minutes and 10 seconds So what did Kate tell us? Well she told us that somehow we’re on the airplane of GDP growth. We’ve taken off. We’re moving forward. But we haven’t yet worked out how we’re going to land. And so what are going to be the consequences of a permanent flight with apparently no resting place?

The plane of economic growth took off, but where will it land?

In this video, we hear from Kate Raworth - an economist who examines the economic mindset - for the first time in the course.

In her 2017 book ‘Doughnut Economics: Seven Ways to Think like a 21st Century Economist’, Kate examines some of the fundamental assumptions behind our economic thinking today, and assesses whether or not these are valid, considering their origin and the challenges we face in the 21st century.

The main idea to take away from this video is the fact that the architects of our economic model did not have a plan for the world as it is today. Their primary concern was for the plane of economic growth to keep going higher and higher, assuming that everything else would fall into place if you get the economics right. However, we now know that this assumes prosperity to be primarily material when this is not the case. It also fails to take into account natural limits - something we will explore in more details later.

What do you think?

Can the plane fly off forever “into the sunset of consumerism”, or do we need the plane to land?

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This video is from the free online course:

Global Prosperity Beyond GDP

UCL (University College London)