Foreword
Following economic reform and liberalization，the establishment of a market economy in China has created much interest in understanding and mastering the principles of the operations of a modern market economy，and the study of modern economics has become very popular in China.For example，the China Center for Economic Research（CCER）at Peking University，of which I am the director，offers an undergraduate double degree in economics which admits 800 new students every year——a number equal to nearly one-third of all new undergraduate enrollment at Peking University.A new generation of Chinese economists is emerging.
Since Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations in 1776，sparking the development of economics as an independent social science separate from philosophy，numerous famous economists have sprung up and a large number of researchers have devoted their lives to economic research.Currently，the American Economic Review publishes as many as 2000 pages per year，with other 1000 plus articles appearing annually in various first-tier academic journals.In addition，various schools and theories are appearing and different theoretical perspectives are emerging.In particular，since the 1950s，mathematics，statistics and econometrics have become common techniques in theoretical modeling and empirical testing in economic research.As a result，general readers without solid mathematical training are unable to directly track the development of modern economics.
For many years I have wanted to write a concise book similar to Ai Siqi's Popular Philosophy to introduce the elementary propositions in modern economics in a lively style and through accessible examples，rather than complicated jargon and intricate mathematics，allowing readers to understand the basic ideas and analytic methods of modern economics.Further，the book would help readers understand the economic phenomena around them in their everyday lives.But，when I began to write，I found that this was much more easily said than done.Even writing a simple and understandable introduction for my own field——economic development——proved difficult.Given the added distraction of my administrative duties，I was never able to get very far，despite several attempts.Thus，when I first found Professor Partha Dasgupta's book，I immediately recognized the significance of his work.
Professor Partha Dasgupta has been my academic friend for years.We first met in October 1991.I had been invited to the International Economic Association Conference at Windsor，England，discussing the 1977Nobel Laureate James Meade's new book Agathotopia：The Economics of Partnership（Agathotopia means ‘good but not perfect’，while Utopia means ‘perfect but infeasible’）.Meade had sought a ‘third way’in his book，a road different from traditional capitalism or communism.In the words of Kenneth Arrow，the Nobel Prize laureate in 1972，it was a book that combines ‘idealism and compassion with hard-headed analysis.’During the conference，I commented on Professor Partha Dasgupta's paper entitled ‘Poverty，Resources and Fertility： The Household as a Reproductive Partnership’.Afterwards，both his paper and my comment were included in a volume entitled Alternatives to Capitalism：The Economics of Partnership，published by the International Economic Association in 1993.Since then we have seen each other in international academic activities，and our friendship has grown stronger.
Professor Partha Dasgupta was born in Dhaka（capital of Bangladesh now and at that time in India）and attended Cambridge after completing his undergraduate education at the University of Delhi in India.Professor Dasgupta received his PhD in Economics in 1968，and currently he is the Frank Ramsey Professor of Economics at the University of Cambridge and Fellow of St.John's College，Cambridge.
Professor Dasgupta is an internationally renowned economist，and he has received many honors for his contributions to welfare economics；development economics；technological change；population，environmental and resource economics and game theory.Professor Dasgupta is a Fellow of the British Academy，Fellow of the Third World Academy of Sciences，Member of the Pontifical Academy of Social Sciences，Foreign Associate of the US National Academy of Sciences，Foreign Honorary Member of the American Academy of Arts and Sciences，Foreign Member of the Royal Swedish Academy of Sciences，and he is a Past President of the Royal Economic Society and the European Economic Association.Professor Dasgupta was named Knight Bachelor by Queen Elizabeth II in 2002，won the 2002 Volvo Environment Prize and the 2004 Kenneth E.Boulding Memorial Award of the International Society for Ecological Economics，and received the John Kenneth Galbraith Award of the American Agricultural Economics Association in 2007.In a rare honor，in 2004 he was elected to the Royal Society，the oldest and most influential academy in the world.Fellows of the Royal Society include giants in the scientific history such as Isaac Newton，Charles Darwin，and Albert Einstein.Every year the Fellows elect 44new Fellows，and there are now 1，300in total.In the past the Fellows were from scientific and mathematical fields，and Professor Dasgupta is the first economist in the 350years of the Royal Society's history to be elected a Fellow.He is very likely to win the Nobel Prize in Economics for his remarkable contributions to environmental and resource economics.
Professor Dasgupta was born into an Indian family of economists in 1942.His father Amiya Dasgupta，who received his PhD at the London School of Economics in England，taught economics in India from 1926，and was respected as the father of modern economics and the ‘economists’economist'in India.He had numerous students，including Amartya Sen，the winner of the 1998Nobel Prize.Professor Dasgupta's father-in-law was the 1977 Nobel Prize laureate James Meade.However，Professor Dasgupta studied theoretical physics at the University of Delhi，and mathematics when he first arrived at Cambridge.He did not switch to economics until 1965.At that time，the 1996Nobel Prize winner Professor James Mirrlees received his PhD in Economics at the University of Cambridge and held the position of Lecturer at the department of economics.Professor Dasgupta asked Professor Mirrlees to be his supervisor，partly due to their common background in mathematics.Within three years，Professor Dasgupta completed three papers and received his PhD in 1968.
Like many other internationally renowned Indian economists，Professor Dasgupta's reputation as a theoretical economist rests on his strong mathematical training.However，his economic research is not purely theoretical，but explores the development of human society and human nature.Teaching at Stanford University from 1989to 1992he was jointly appointed as professor of economics and philosophy，and he also served as the Director of the Program in Ethics.
In 1995，the Oxford University Press launched a series of books，each giving a very short introduction to a particular field，and authors are well-known masters in academia.When Professor Dasgupta accepted the Press's invitation in 1999，he faced the same difficulty as I did in writing a Popular Economics. It took him a full seven years to finish writing the book.Through comparing the lives of two children，one living in Africa and the other in the United States，the book illuminates the economic influences of trust，households，communities，production organization，markets and government，and presents the achievements of economists from Adam Smith to the present day in the context of a key issue： what are the factors which determine whether a nation is rich or poor.From this examination，we learn that capital and natural resources，which are of public concern，are merely proximate causes in determining a nation's wealth.The fundamental factor is whether institutional arrangements are able to maximally motivate individuals to actively engage in working，learning，accumulation and innovation.
This book followed his masterpiece An Inquiry into Well-Being and Destitution，published in 1993，and added new theoretical developments in economics and his own newly updated understanding of Smith's Question.However，An Inquiry into Well-Being and Destitution runs to 661pages，with a reference section of 80pages.Professor Dasgupta dedicated An Inquiry into Well-Being and Destitution to his father，and wrote in the preface that the book was his response to the question his father initiated many years ago.The book attempts to convey to his father ‘This is what I think I know to be important，this is what I now believe，these are my values，this is how I think.’His father read several early chapters，and gave him some positive feedback.However，much to his regret An Inquiry into Well-Being and Destitution was not finished when his father died in 1992.
I learnt that Professor Dasgupta was working on this book when he gave the Yan Fu Memorial Lecture at CCER in September 2005.I received an English draft in 2006and immediately recognized its merit.He introduces the achievements economists have made in regard to Smith's Question in a concise and accessible way，using language with both a litterateur's elegance and a mathematician's accuracy.This is exactly what I wanted to write，but was unable to.I immediately suggested translating the book into Chinese，and promised to write a foreword for the Chinese edition.As the Chinese edition goes to press，I hope it will help readers understand how economists observe the world and analyze problems from a rational perspective，and realize that a primary factor in determining the wealth of a nation are its institutions，while the amount of capital and natural resources，rich or poor，are merely the reflection of a nation's wealth.
January 16，2008
At Langrun Garden