ARTICLES
Chinese Journal of Population, Resources and Environment 2008 Vol. 6 No.4
9
Exploration on Relativity of Modern Economic Science:
Viewpoint Based on Sustainable Development
Liu Xuemin
College of Resources Science and Technology, Beijing Normal University, Beijing 100875, China
which are not the subject matter of economics. By contrast,
scarce goods are those that can be got only by paying. They
are economic goods and therefore the subject of econom-
ics. The economic system that economists have constructed
can be, on the basis of this classication, divided into two
basic units: rms and households. Firms supply the goods
and services. They are not only the suppliers of product
market, but also the demanders of resource market. On the
other hand, households are the demanders of the goods and
services produced, and the supplier of the labor, capital,
land and entrepreneurial ability on the resource market. The
operation regulation of this system is explained by Walras
theorem. From a macroeconomic point of view, GDP could
be calculated according to it, either through the expenditure
approach in the product market, or through the income ap-
proach in the resource market. Government departments’
economic activities and outward economic relations could
be added to this system as long as they are considered as
open ones.
This kind of strict economic theory constitutes the fun-
damental framework of modern economic analysis.
However, an economic system constructed in this way
is still too limited because it does not cover the life support
system, nor does it consider the ecosystem or nature that is
supportive to human economic activities. If this economic
system is thought to be big enough, then it means that a
“great economic system” (Fig. 1) is to be reconstructed, in
which case the inuential sphere of the primary economic
propositions and theorems will be conned.
Given this “great economic system”, the utilization of free
goods in economics should not be free. Clean air, environ-
ment, and so on were considered to be limitless. However,
because of human economic activities, these goods that were
thought to be free have become increasingly scarce, which
makes them an inevitable consideration during economic ac-
tivities, and hence the subject of economic analysis.
Abstract:
Modern economics is a market economic theory and a
necessary knowledge for people to understand market economy.
However, when modern economic science puts in a “great eco-
nomic system”, modern economic science seems to be little con-
vincing and even deviates from the science of sustainable develop-
ment. This shows that modern economic science has relativity, and
must be transformed by the idea of sustainable development.
Key words:
economic theories, “great economic system”, sustain-
able development
1 Introduction
Modern economics was once regarded as vulgar eco-
nomics and thus severely criticized in China. Later, with
further opening of people’s thoughts and the establishment
of the target of socialist market economic reform, modern
economics was found to be a very useful theory of market
economics which gives a theoretic summary of the experi-
ences from those developed market economic countries.
Modern economics therefore becomes a necessary knowl-
edge for people to understand market economy. In addition,
cost-benet analysis becomes the most common and con-
venient analytic method. Pareto efciency becomes a major
criterion to measure and judge social conditions. Some
people even get infatuated with modern economic science
as it has been applied everywhere.
However, this article argues that many sciences of mod-
ern economics, from a sustainable point of view, are rela-
tive. They are correct only under certain environment and
conditions.
2 Imperfection of economic system
Modern economics classies goods, when used to ana-
lyze economic problems, into free ones and scarce ones.
Free goods are those that can be acquired at the cost of zero,
Corresponding author: Liu Xuemin(liuxm@bnu.edu.cn)
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