In many ways economics is a historical science. Economists rely on historical data for the formulation of predictive models. Therefore, economics is a science of precedence.

One of the most pertinent critiques against the modern practice of economics has been its failure to account for externalities in calculating productivity and output. When a country like China calculates GDP, for example, they are not taking into account that in the future their health care costs will escalate dramatically because of massive increases in air and water pollution. Nor do the econometric models account for the depletion of non-renewable, or slowly renewed, resources like soil and forest timber.

In this regard, we have reached the point of no-return. For economic models to be realist predictors of a country’s economic development, they must start taking into account these externalities. For this reason, economists must pave a new way forward, rethinking their science, and rebuilding their models; they will be able to rely less and less on historical data for developing realistic development policies.

Take, for instance, the “Asian Tiger” economies. These societies combined intensive manufacturing development with a heavy reliance on exports and a rapacious consumer culture in the United States. Throw into the mix an over-eager debt acquisition mechanism on the part of Americans, and BAM: economic development.

Now, however, economists will soon be forced to confront realities that they are unaccustomed to dealing with: the total depletion of deep sea fisheries, an escalating global water crisis, and the uncomfortable twin realities of global warming and unstable energy networks. As a result, economic development in underdeveloped societies will be development without precedent. Looking towards unsustainable historical precedents will only exacerbate our pending resource crisis.

Looming in the background are many difficult questions: Have we set the bar in the wrong dimension? Is our concept of wealth constrained by unsustainable historical precedents and an image of wealth based on American consumer culture?