GEF

Unit 7  |  The Economics of Sustainability 146 7.1  Dominant Global Economic Trends: Economic Growth The majority of the world population participates in some form of market capitalism , a system in which individuals and private companies own resources. Prices for goods and services are set by supply and demand, rather than by govern- ments. Central to the capitalist system is the free movement of financial capital to investments that provide the highest rate of return. Economic theory suggests an investor will always CAPITALISM An economic system that includes the private owner- ship of resources, prices for goods set by markets, and the free movement of finan- cial capital. FINANCIAL CAPITAL Money used by businesses and entrepreneurs in eco- nomic transactions. UNIT 7 SELF-ASSESSMENT Before beginning this unit, consider what you already know about sustainability by completing this self-assessment. For each statement below, rate your current level of confidence with understanding sustainability concepts. NOT CONFIDENT SOMEWHAT CONFIDENT CONFIDENT I can identify what GDP measures, and explain the limitations in using it to measure quality of life. ❍ ❍ ❍ I can describe how market capitalism works, and identify three types of market failure that are of concern to sustainability. ❍ ❍ ❍ I can compare and contrast the key ideas and beliefs of traditional market economics with ecological economics. ❍ ❍ ❍ I can describe how true cost accounting works, and explain the benefits of using it as a tool to examine our economic activity. ❍ ❍ ❍ I can identify at least two new approaches we need to take to sustainably manage the global economy. ❍ ❍ ❍