This book studies the dynamic implications of the links between the economy and its environment. In many disciplines, an examination of the relation between a referent system and the physical medium in which it exists – grows, stagnates, or contracts – would require no justification. In most anthropological models, for example, the environment is omnipresent. However, it is remarkable how unimportant the environment is in the eyes of most economists. The scarcity of resources, the raison d'être of the discipline, is founded on the limited supply of resources in a finite world. Yet in almost every formal model of the economic system, the environment has no meaningful role to play. This remains true despite the burgeoning literature on resource depletion and environmental pollution over the past two decades. These remain specialized and isolated branches of economics with little or no impact on the mainstream of economic theory, even though there is by now a popular awareness that there must eventually be an end to human rapacity and waste.

The essay has been written against the background of an assurgent economic liberalism that is carrying almost all before it. Cutting a swathe through a diverse literature on external effects, property rights, transaction costs, welfare, and growth, it has given rise to an environmental strategy called here the market solution. The three legs of this strategy are the sovereignty of the individual, the sanctity of private property, and the domination of the present.