ABSTRACT

This chapter outlines the intellectual history of the effort to build economics starting from the rational individual. The goal is to give a fair and balanced view of the dominant perspective in modern Western economics, to explain some of its results and conclusions, and to question why it has achieved such wide acceptance and power in the world. The chapter contains some discussion of the internal criticism of Western economics by people seeking to qualify, modify, or improve its approach. But the more fundamental challenge is posed by possibility of building economics on some other foundation than individual rational behavior, and these alternatives are treated. Modern economics is conventionally divided into two parts: microeconomics and macroeconomics. Macroeconomics looks at whole economic systems-conventionally the nation-state, but more recently the world economy. Microeconomists are concerned with the internal mechanics of the little boxes that the macroeconomists create in their models and with the operations of the markets that link the boxes together.