The environment, on the eve of a new century, has become a major theme for reflection and action in both developed and developing countries. Economists and economic theory have until recently neglected the environment and have implicitly assumed that nature offers unlimited space for expansion and an inexhaustible supply of resources. Among natural resources, economists have always distinguished between those whose supply is in no way related to human labor and which are therefore common property, such as air and water, and those whose effective supply depends on labor and for which the appropriation can be private, such as the products of the soil and subsoil. The founders of the discipline of economics defined economic goods as those resulting from the application of labor to nature and which formally belong to a specific individual or group. It has become increasingly clear, however, that economic activity can reduce the effective availability of resources not considered "economic." The growing scarcity of these common goods may then induce their privatization. The inability of economic science to conceive of the exhaustibility of natural resources or the possibility of their permanent reduction in quality through human activity reflects the specific historic and philosophic context of the development of economics as a science. England in the late 18th and 19th centuries, where economics largely originated, was a colonial power able to expand outward in its quest for resources. Industrial requirements for nonrenewable resources remained relatively limited in the early years of industrialization. Most significantly, the growing technological capability was accompanied by a new belief that human beings could be in control of nature. A critique of economic theory from an environmental perspective must therefore begin with a critique of its philosophical assumptions. A new vision of interaction between the economy and nature must be developed which acknowledges the economic character of nature and the necessity of preserving both the products of the subsoil and common goods that are not manmade. The impossibility of indefinite expansion of the western economic model or of its extension to the majority of the world not currently industrialized require reflection on the conditions of emergence of an alternative model based on recognition of the finite character of space and resources and of the need for a more equitable distribution of activity and consumption. Economics is not able to suggest such a model, but can contribute conceptual tools that will be necessary for assessing social and private costs of resource allocation. Market forces and price mechanisms are not able spontaneously to effect a more economic use of exhaustible resources and common goods, or to reduce pollution.