Chapter overview

This chapter starts with a discussion of economic thought in antiquity, including not only the use of the term economics, but also many important economic ideas that were coined at that time. We then discuss how markets and agriculture were understood and regulated in the preclassical idea of economics. From the perspective of the human–environment complementarity, economic transactions can be thought of as a transfer of ownership of parts of the material–biophysical–technological environment among human systems. There are properties or estates that are owned by individuals, groups, families, organizations (e.g. companies or cooperatives), communities, nations or other human systems. These properties serve to maintain productivity, and are of interest to other human agents.

We discuss origins of the thinking about exchange, selling, and trading. Trade emerged in societies in which not everybody is a “jack of all trades.” Sometimes specialized techniques, tools or scarce materials had to be acquired or bought from outside the family, reminding us how access to certain natural resources is essential.

After dealing with economic thought in the agrarian society, in which land played a key role, the journey through economics in this book then passes through the entrance door into modern economics, which is Adam Smith’s magnum opus on An Inquiry into the Nature and Causes of the Wealth of Nations (when the resource is fixed in absolute size but extraction costs rise with the rate of extraction; Smith, 1776/1961). We discuss Thomas R. Malthus’ theory on the shortage of natural resources and Ricardo’s land rent theory. We see how labor, land, and capital become fundamentals of economics and learn how Marx considered negative collaterals of the industrial society. We can then see how marginal-utility theory and modern concepts such as willingness-to-pay entered neoclassical economics and how welfare theory and the accounting of external effects and environmental damage became parts of economics.