What kinds of economic theories are there? And WHY ARE THEY ALL IN CIRCLES?
As a data visualization nerd, I look at infographics a LOT and lately I need them for my work.
I wondered – what graphics about economics could I share with you good people? My discovery – they are circular, especially the ones that want to unfuck the world and economics. Here’s an overview of some progressive economic theories and some darn good-lookin’ data viz. But first, four sentences of background.
Economics is simply the way resources that are limited in some way are managed: household economics, business economics, and political economics manage various kinds of capital, which is the means to get sh*t done and people fed. Economies are methods of managing said resources, and there’s a few basic ones: traditional/agrarian economies, command/centralized economies, market/self-organized economies, and mixed economies. But that’s just the start…
Debate over the setup of an economy is really a debate about power and control: first, who controls the allocation of resources and to what end? From a systems perspective, we also have to ask about the relationships and flow between these resources and mechanisms: how well does it work? In your tiny personal life slice of this, do you control your time, labor choices, and personal economy – and how well do the pieces play with each other?
It’s no secret to power players that the operational economics of extractive, globalized, corporate capitalism is increasing wealth inequality and wreaking wasteful havoc on our planet, as was the focus of the recent World Economic Forum at Davos. The question, of course, is what other system to enact, which we’ll explore below.
LINEAR vs CIRCULAR
This, the first stop in our little tour, compares the extractive economy I just described with an economy focused on managing resources to be re-used, and not thrown in the garbage like the cheap trash you bought on Amazon that it may be:
Circular Economies try to imagine economies where there’s a return of materials to production so as not to, like cut down every tree by next year to support our Ikea habits. There’s a movement called Right to Repair that advocates for electronics and cars in particular to be fixable, as if we were in some scifi world called last century where consumer goods didn’t have to be thrown in the garbage or taken to an expensive-ass specialist who orders proprietary parts as soon as they broke, which they will by design:
In case you’re wondering about the wording at the bottom of this image, a “negative externality” is where, say, a company strip mines a mountaintop and leaves it razed with chemicals leaching everywhere since there’s no “incentive” eg money to be made in cleaning up after yourself like every basic kindergartner has to in a profit-only economic model. If you ask me, the World Bank is quite possibly in the best global position to deal with these externalities – by fronting the cost for cleanup and then passing the cost along to the industries who create them. I’m sure they’ll pay you back!
Circular, Doughnut, and Restorative Economies
From circular economics, there’s more complex economies, like a Solidarity Economy, that we could enact. Rather than managing the stock and flow of just resources, we could also manage the same of social exchange, in particular re-thinking creation, production, and transfer:
Focusing on existing innovations like open-source, coops, community currencies and others that operate on a social level, lead us to ask how economics might be set up to serve people best.
So, as the Circular Economy is solving for resources, doughnut economics as envisioned by Kate Raworth is solving for people and the planet, (and is well worth exploring if you’re nerding out at this point).
In Raworth’s model, the management is at the level of interactions, not resources. She focuses on the “how well is it working” part of the analysis, and invites design of an economics that manages for production staying within an ecologically-defined ceiling as well as a socially-defined foundation.
This brings us to some other thinking, like “The Ex’Tax Project [… a] proposal by Eckart Wintzen to bring tax on resources up and tax on labour down, creating a proper incentive to use abundant materials instead of scarce ones”:
And, re-thinking of funding models – a source of capital flow in – for cultural and knowledge projects as well as new methods to more evenly distribute the resources that do exist. For an in-depth exploration, check out Simon de la Rouviere’s writeup on Glen Wyle’s Radical Markets ideas.
A just and regenerative economy is a designed process in FLOW y’all, and that flow is ROUND LIKE THE EARTH. I think I get it.
Hope you enjoyed the quick tour — let me know your thoughts on these economic models: what’s missing? What might still need to be considered? What would you try?