Economic theory and the global environment

Modern economic theory came to life in the middle of the twentieth century, providing the intellectual foundations for an unprecedented period of industrial expansion and globalization since World War II. Coupled with population growth, the successful trajectory of industrial society in the twentieth century led to a voracious use of natural resources and global environmental concerns in the twenty-first century. It is uncontested that, for the first time in recorded history, humans dominate the planet. We are changing the planet’s atmosphere, its bodies of water, and the complex web of species that makes life on earth. This radical change in circumstances led to rethinking of the foundations of human organization and, in particular, the industrial economy and the economic theory behind it. The rethinking is underway. Sustainable economics emerged in 1992 at the UN Earth Summit in Rio de Janeiro, anchored in the concept of BasicNeeds that was voted by 150 nations as a cornerstone of efforts to redefine economic development1. The formal theory of sustainable development was introduced in Chichilnisky (1997, 2000). In essence sustainable development seeks to meet the basic needs of the present without depriving the future from meeting its basic needs.