ABSTRACT
Economics began as a discipline of moral philosophy concerned with using natural resources to produce and allocate goods and services for the common good. This chapter looks at how the real economy differs from the idealized economy of neoclassical economic theory. It considers how the globalization of trade exacerbates the degradation of the environment and the depletion of natural resources. The chapter suggests revisions to economic theory and practice that may make our global economy environmentally sustainable and more just. Modern economics began in 1776 with the publication of The Wealth of Nations by the Scottish moral philosopher Adam Smith. He argued that free trade would foster civil and political freedom, and that laws encouraging the pursuit of individual self-interest would result in the greater good. In the last half of the twentieth century international institutions were created by the most powerful national governments to promote human welfare through economic development.
