1.1.3 Degenerative economies

Helpful prior learning and learning objectives

Helpful prior learning:

Learning objectives:

Before his death in 2017, Hans Rosling was an unusual superstar. A data analysis expert and health professor at Sweden's Karolinska Institute, Rosling told surprising stories using Lego bricks, Ikea boxes, and dynamic graphs of data.

Rosling argued that our views on the world are too negative. He used data on incomes, life expectancy, and other indicators to show how standards of living have improved over the last 200 years. The video below shows his entertaining approach and insights.

Rosling's analysis has critics. They note that while human living standards have improved, ecosystems suffer. Since the 1950s, a period known as the Great Acceleration, there has been explosive growth in the economy and human populations. Excessive use of energy and materials and waste production now threatens human development.

Critics also note that since the 1970s, economic inequality has increased. The world’s wealthiest people take far more than their fair share of natural resources and put disproportionately large amounts of waste back into nature. 

These problems are part of the metacrisis, complex, interconnected social and environmental challenges. These challenges come from degenerative economies, where humans take more from nature and each other than they give back, eroding life-supporting social and ecological connections.

What are degenerative economies?

Degenerative economic systems erode human and ecological relationships by being:

Linear economy

The economy is all the human-made systems that we use to transfer and transform energy and matter to meet our needs. Our current linear economies take energy and materials from nature, make products used to meet our needs, and then throw them away as waste back into nature (Figure 1).

Icons representing take, make, use and waste in the linear economy

Figure 1. Our current linear economy

This linear system is degenerative because it disrupts the ecosystems on which we depend. We use too much energy and matter to produce what we need and also produce many things that do not support human wellbeing. Then we dump our waste, much of it toxic, back into nature, further harming ecosystems (Figure 2). 

Plastic waste

Figure 2. Plastic waste from linear economies

(Credit: Bo Eide CC BY-NC-ND 2.0)

Extractive and divisive economy

Our economies are also extractive. They take too much from ecosystems and human communities without giving enough in return, weakening social systems. This behaviour contrasts with the mutualism and reciprocity needed for thriving ecosystems and social systems, discussed in Section 1.1.1.

Business leaders are often taught to maximise profits for a small group of owners or shareholders. Profit-maximisation is a core assumption in many economic models. In practice, this means using power to take as much money as possible from others:

This extractive economic behaviour, where economic value is taken from the many to enrich the few, worsens economic inequality.

Aside from extractive behaviour, economic inequality also increases from reinforcing feedback loops of wealth and income. Wealth is a stock, the total value of someone’s assets such as money, house, or investments. Income is a flow, the ongoing money earned from work or investments that enters a stock of wealth.

When wealth increases, people can use it to earn more income and further increase wealth (Figure 3). If you own an apartment, you can rent it to earn income, increasing wealth further.  On the other hand, people with low incomes and wealth may experience conditions that further reduce incomes and wealth. Low incomes limit access to education, healthcare and other necessities, reducing economic opportunity and worsening health, which negatively affects incomes and wealth. These reinforcing feedback loops worsen economic inequality.

Reinforcing feedback loop of wealth and income

Figure 3. Reinforcing feedback loop showing how changes in wealth lead to changes in income that reinforce the change to wealth

One consequence of this inequality is overconsumption by rich individuals and Global North countries, leading to excessive use of energy and material resources. These individuals and countries also produce most of the waste and historical carbon dioxide (CO2) emissions that remain in the atmosphere causing global warming. Meanwhile, those with lower incomes and Global South countries bear the negative consequences: vulnerable jobs, pollution and climate-related disasters.

Another consequence of economic inequality is weaker democracy. Rich individuals and businesses may use their power to influence political decisions for their own economic benefit, called political capture. This causes public discontent and protest (Figure 4) and strengthens support for radical politicians. Our current economic systems promote social division, instead of the social cohesion needed to address local and global challenges.

Photo of social protests in Chile, 2019

Figure 4. Social protests in Chile, 2019. 

(Credit: Carlos Figueroa CC BY-SA 4.0)

Endlessly, aimlessly growing economy

Degenerative economic systems also strive for endless economic growth, measured by gross domestic product (GDP). Gross domestic product is the total value of all final goods and services produced in an economy. 

Many governments aim to increase GDP, believing that growing economies lead to the ‘the good life’. However, any economic activity involving an exchange of money can be counted in GDP, no matter whether it has a positive or negative social or ecological impact. Spending on the military (Figure 5) raises GDP, but is unlikely to support human and ecological wellbeing. Meanwhile, unpaid economic activity, like household care and domestic work, is not usually recorded in GDP, but is essential for human thriving. WHAT our economies produce is more important than HOW MUCH we produce.

Soldiers and a military helicopter

Figure 5. Military spending increases GDP, but is unlikely to support human and ecological wellbeing

(Credit: Somchai Kongkamsri CC0)

Instead of economic growth, our economies should focus on human and ecological wellbeing.  As scientist Donella Meadows put it:

“If you define the goal of a society as GDP growth, that society will produce GDP. It will not produce welfare, equity, justice, or efficiency unless you [aim for those goals].”

“Growth is one of the stupidest purposes ever invented by any culture…. We should always ask ‘growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s the cost to the planet, and how much is enough?’”

Fortunately, we can do better. One option is a regenerative economy that is circular, distributive and caring, needs-based and sufficient.

Activity 1.1.3

Concept: Systems

Skills: Thinking skills (transfer)

Time: 30 minutes

Type: Individual, pairs and/or group

Option 1: Describing degenerative characteristics of industries

Use what you learned in this section about degenerative economies to consider the characteristics of one or more of the following industries might be considered degenerative. 

If you are stuck, you may wish to look up criticisms of these industries. Brainstorm ideas and discuss with a partner or as a class group.

What would have to change in these industries to make them less degenerative?

This question will help prepare you to consider what regenerative economies could look like.

Option 2: Exploring global economic inequality data

Data interpretation strategy (if you do not have one)

Ideas for longer activities, deeper engagement, and projects are listed in Subtopic 1.5 Taking action

Checking for understanding

Further exploration


The Donella Meadows Project. The Academy for Systems Change. (2021). https://donellameadows.org/ 

Ellen MacArthur Foundation. How to Build a Circular Economy. https://www.ellenmacarthurfoundation.org/

Gapminder. (n.d.). The Worldview Upgrader. https://upgrader.gapminder.org/.

Hasell, J. (2023) - “How has income inequality within countries evolved over the past century?” OurWorldInData. https://ourworldindata.org/how-has-income-inequality-within-countries-evolved-over-the-past-century'

Oxfam International. (2024). Inequality Inc. Executive Summary. https://oi-files-d8-prod.s3.eu-west-2.amazonaws.com/s3fs-public/2024-01/Davos%202024%20Executive%20Summary%20English.pdf.

Raworth, K. (2017). Doughnut economics: seven ways to think like a 21st century economist. London: Penguin Random House.

Reardon, J., Caporale, M. M. A., & Cato, M. S. (2018). Introducing a new economics: Pluralist, sustainable and Progressive. London: Pluto Press. 

Terminology (in order of appearance)

Link to Quizlet interactive flashcards and terminology games for Section 1.1.3 Degenerative economies

life expectancy: the average age that people in a particular population group will be when they die

indicator: a variable that measures a characteristic of a group of people or an ecosystem

ecosystem: the interaction of groups of organisms with each other and their physical environment

Great Acceleration: a period of dramatic increase in human economic activity and impact on the Earth's systems since the mid-20th century

economy: all the human-made systems that transfer and transform energy and matter to meet human needs

economic inequality: unequal distribution of income and opportunity between different groups in society

metacrisis: complex, interconnected social and environmental challenges

degenerative economy: an economic system that meets human needs in a way that degrades and destroys social and ecological systems

regenerative economy: an economic systems that meets human needs in a way that strengthens social and ecological systems

extractive: taking something from other humans or from nature without trying to replace it or avoid harm

transfer: to move something from one place to another

transform: a change in the state, energy or chemical nature of something

energy: the ability to do work or cause change

matter: anything that takes up space and has mass

linear economy: an economic system where resources are extracted to make products that eventually end up as waste

mutualism: a relationship between two species in which both species benefit

reciprocity: exchanging things and favours with others for mutual benefit

profits: total revenue from selling a product minus the total costs of producing that product (revenue-costs)

shareholder: a person or organisation that ownes a share, or portion, of a business

profit-maximisation: a business goal that seeks to maximise the difference between revenues earned from selling a product and the costs of production

power: the ability to influence events or the behaviour of other people

household: a system where people living together care for each other and do domestic work, often termed the 'core economy'

wage: payment for work

tax: payment from individuals or organisations to the government, used to provide public infrastructure and services

infrastructure: large scale physical systems that a society needs to function (roads, railways, electricity networks, etc)

reinforcing feedback: a situation where change in a system causes further changes that amplify the original change which can lead to tipping points in a system

wealth: the total value (stock) of someone’s assets such as money, house, or investments

income: the ongoing money earned (flow) from work or investments

stock: an accumulation of something, such as energy, matter, information, or money

asset: something that is useful and valuable

flow: movement of something such as energy, matter, information or money between stocks

Global North: a group of countries with high incomes and more industrialisation and service-based economies; these countries bear most responsibility for exceeding planetary boundaries

carbon dioxide (CO2): gas produced by burning carbon or organic compounds and through respiration, naturally present in the atmosphere and absorbed by plants in photosynthesis

global warming: the rise in the average temperature of Earth's air and oceans (due to human activities)

Global South: a group of countries with low-middle incomes and less industrialisation; most of the global population lives in these countries, but these countries bear little responsibility for exceeding planetary boundaries

political capture: when the government prioritises the interests of economically powerful groups over the general interests of the public

social cohesion: the extent to which people in society feel connected to one another and share common values

econmic growth: an increase in the total value of goods and services produced in a period of time

gross domestic product (GDP): the total value of all goods and services produced in an economy in a time period

the good life (buen vivir): a life that brings wellbeing, with all its possible meanings, to self and others

circular: having the form of a circle; in this course, closing the loop on linear economic systems

distributive: when something is shared widely or evenly among individuals

sufficient: when there is enough of something

gig economy: working conditions where there are short-term contracts or freelance work as opposed to permanent jobs