Ridley, Matt, The Rational Optimist: How Prosperity Evolves, Harper Collins, New York, 2010. 438 pp.
Matt Ridley is a well-known British science writer who, in recent years, has specialized in writing books for the general public on new research in biology … evolutionary biology, genomics, plus a biography of Francis Crick, co-discoverer of DNA.
For well over a decade I’ve enjoyed his books and been very impressed with the quality of his writing, so “on spec” I put a library hold on Ridley’s latest without paying much attention to what it was about. That decision turned out to be a wonderful piece of serendipity. I’ve been reading about European “trading republics” (ancient and modern) for a few years, and trying to assemble an amateur theory about how economic dynamism and technological innovation follow, or are reinforced by, republican values. Whether Athens, Rome, Venice, Genoa, Antwerp, Amsterdam, London, Liverpool, Glasgow, Boston, or New York and Montreal, trade under republican regimes creates massive relative wealth and huge leaps in human knowledge and standards of living.
Now Matt Ridley looks at the innate human capacity for “exchange” … and how that unique capacity affected the course of prehistory, the introduction of agriculture and “civilization,” and more latterly, the shape of the industrial revolution and the modern world. Underlying the politics of republicanism, and individual freedom, we can see the human appetite for exchange creates persistent economic advantage. Trade flows from comparative advantage, in the words of David Ricardo, and comparative advantage relentlessly rewards more specialized use of the natural environment … from the labor of humans carrying sea shells inland for trade 80,000 years ago, to the labor of domesticated horse and sheep and dogs largely for human benefit, to the use of vast quantities of ancient vegetable matter (in the form of petrochemicals), to extend the efforts of humans out of all proportion. Our species is most prosperous when most specialized, when most dependent on the differentiated talents of thousands of others. We now can live lives like the Sun King, without a retinue of thousands.
In this book I have tried to build on both Adam Smith and Charles Darwin: to interpret human society as the product of a long history of what the philosopher Dan Dennett calls ‘bubble-up’ evolution through natural selection among cultural rather than genetic variations, and as an emergent order generated by an invisible hand of individual transactions, not the product of a top-down determinism. I have tried to show that, just as sex made biological evolution cumulative, so exchange made cultural evolution cumulative and intelligence collective, and that there is therefore an inexorable tide in the affairs of men and women discernible beneath the chaos of their actions. A flood tide, not an ebb tide. p. 350
Table of Contents
Prologue: when ideas have sex 1
1 A better today: the unprecedented present 11
2 The collective brain: exchange and specialization after 200,000 years ago 47
3 The manufacture of virtue: barter, trust and rules after 50,000 years ago 85
4 The feeding of the nine billion: farming after 10,000 years ago 121
5 The triumph of cities: trade after 5,000 years ago 157
6 Escaping Malthus’s trap: population after 1200 191
7 The release of slaves: energy after 1700 213
8 The invention of invention: increasing returns after 1800 247
9 Turning points: pessimism after 1900 279
10 The two great pessimisms of today: Africa and climate after 2010 313
11 The catallaxy: rational optimism about 2010 349
Ridley introduces his book with a chapter or two on the prosperous lives that we all lead, rich and poor, relative to those of even a few decades past. That’s a useful corrective to the “Woe is Us” litany proclaimed by the Private Jets for Poverty brigade. Then the author introduces us to a recap of the most recent discoveries of hominid paleontology and the tenuous survival of our ancestors on the coastal margins of Africa. What surprises the modern reader, so used to rapid change, is the complete absence of cultural change through much of our origins. The stone handaxe, central human tool for hundreds of thousands of years, barely changes through that time. All the way down to the Neanderthals (~ 300,000-~20,000 BC), the pace of change in material culture is extremely slow and reflects virtually no resources outside a day’s walk from the owner’s camp site.
With the advent of homo sapiens sapiens however, we see the first signs of traded objects from outside the family group. Note that many species, including modern apes, “share” food or objects within their pack or troop. But none exchange different foods or tools, either amongst their own kin or with neighboring groups. Indeed, field observations in the last 20 years have revealed unremitting “tribal warfare” amongst chimpanzees. And a complete inability to swap “more of a less valued food” for “less of a more valued food.” Chimps can’t barter.
Starting with the “comparative advantage” of sexual division of labor in hunting/gathering humans, somewhere along the line, people overcame their violent distrust of the neighbors to conduct their first trade. Just as diversifying food acquisition between men and women gave an economic (and therefore selective) advantage, diversifying the acquisition of food, stone, and other necessary raw materials across geographies led to greater stability to human populations, generally. Ridley hypothesizes that it was trading networks, specialist skills, and diversifying toolkits for economic activity that gave our ancestors an advantage over the larger, stronger, Neanderthals. We had more options.
With the expansion of modern humans across the planet, suddenly the archeological record explodes with new varieties of tools, material remains, and economic strategies. The larger the pool of trading populations, the more intense the trading networks. Where humans lived in remote or marginal environments (the far North) or isolated conditions (Australia), the pace of change in material culture tended to be slower. Indeed, in some situations like Tasmania, tools and food-gathering skills dwindled or disappeared entirely. For small groups, without trade access to specialists, available tools like boats, or arrows, or nets, simply vanish from the archaeological record.
… Exchange is therefore a thing of explosive possibility, a thing that breeds, explodes, grows, auto-catalyses. It may have built upon an older animal instinct of reciprocity, and it may have been greatly and uniquely facilitated by language — I am not arguing that these were not vital ingredients of human nature that allowed the habit to get started. But I am saying that barter — the simultaneous exchange of different objects — was itself a human breakthrough, perhaps even the chief thing that led to the ecological dominance and burgeoning material prosperity of the species. Fundamentally, other animals do not do barter.
[…] I have a lot of trouble getting this point across to both economists and biologists. Economists see barter as just one example of a bigger human habit of general reciprocity. Biologists talk about the role that reciprocity played in social evolution, meaning ‘do unto others as they do unto you’. Neither seems to be interested in the distinction that I think is vital, so let me repeat it here once more: at some point, after millions of years of indulging in reciprocal back-scratching of gradually increasing intensity, one species, and one alone, stumbled upon an entirely different trick. Adam gave Oz an object in exchange for a different object. This is not the same as Adam scratching Oz’s back now and Oz scratching Adam’s back later, or Adam giving Oz some spare food now and Oz giving Adam some spare food tomorrow. The extraordinary promise of this event was that Adam potentially now had access to objects he did not know how to make or find; and so did Oz. And the more they did it, the more valuable it became. For whatever reason, no other animal species ever stumbled upon this trick — at least between unrelated individuals. p.58-59
Before we know it, Ridley is on to the next big event in human prehistory – agriculture. Instead of agriculture being a fortunate event, randomly and independently discovered around the world, Ridley believes that agriculture followed the creation of villages or sites built around regular and necessary trade routes. The option to harvest plant species was made possible by elaborate and growing interaction with other tribes who could provide hides or meat or fish or ornaments or stone tools. As a result, it’s less of a mystery why we see apparently independent discoveries of agriculture in the Middle East, China, Mesoamerica, and the Andes. Agriculture is a natural extension of economic diversification for peoples who already had plenty of options for successful sedentary life. Droughts might come and go but the foundation upon which agriculture might exist — the regional trade relations which ensured that predictable human barter would occur year over year — were firmly in place.
In subsequent chapters, Ridley turns to the development of cities and the zig-zag of cultural development as various chiefs and kings, priests and bureaucrats sought to turn the advantages of specialization and trade into a permanent sinecure for themselves. This is the stuff of early human history and less surprising to hear the author’s suppositions about the success of particular kingdoms and empires that encouraged, rather than suppressed, trade (and change).
Here, too, some past book reviews on chicagoboyz offer supplemental information for Ridley’s hypothesis. Firstly, Cochran & Harpending’s The 10,000 Year Explosion which discusses recent human physical evolution affecting the human ability to eat particular foods and survive particular environments. Secondly, Ward-Perkin’s The Fall of Rome and the End of Civilization for an unvarnished re-examination of the economic and trade collapse of the western Roman empire, matched with Heather’s Fall of the Roman Empire for further illustration.
As we reach the Middle Ages, a Europe ravaged by the Black Death was simultaneously visited by an unexpected burst of technical creativity — focused largely on new tools of quantification (Crosby’s The Measure of Reality – Quantification and Western Society 1250-1600). Ridley reviews the changes in trade and agriculture which were to keep European populations ahead of starvation, despite all predictions and expectation. That this period also saw the first expansion of the European population outside the continent on a global binge of trade is surely no mistake.
Here it was, in the great trading entrepots of 17th century Amsterdam and London, that the technology of exploration and trade was matched with new products, new ideas, and vast new sources of capital. I quibble with Ridley when he turns to the origins of the industrial revolution …
The perpetual innovation machine that drives the modern economy owes its existence not mainly to science (which is its beneficiary more than its benefactor); nor to money (which is not always a limiting factor); nor to patents (which often get in the way); nor to government (which is bad at innovation). It is not a top-down process at all. Instead, I’m going to try now to persuade you that one word will suffice to explain this conundrum: exchange. It is the ever-increasing exchange of ideas that causes the ever-increasing rate of innovation in the modern world. p.269
… following Professor Joel Mokyr, l think there was intellectual (even religious) fervour to match the literate entrepreneurial ambitions of the time. The process which Ridley describes by which 18th century England leveraged coal, water, and overseas trade to feed, clothe, and enrich itself is familiar. Little surprise, because I’ve been reviewing some of the same books that Ridley’s been reading: Pomeranz’s The Great Divergence: China, Europe, and the Making of the Modern World Economy and Mokyr’s The Gifts of Athena: Historical Origins of the Knowledge Economy, plus Professor Alan Macfarlane’s books on the global impact of Glass and Tea, and his work on Japanese agricultural involution and individualism, capitalism, and modernity.
While the 18th century provided the foundation of steam power … the 19th century saw a continuous chain of breakthroughs in metallurgy and an industrial chemistry revolution. The culmination was the development of the Haber-Bosch process which freed the world from dependence on manure to provide nitrogen for its domesticated plants. Nitrogen drawn from the atmosphere could be turned into food that would grow the human population from 1.75 billion in 1900 to 7 billion (a number we’ll see in the next year or two).
Ridley summarizes it as follows:
Around 10,000 years ago, the pace of the Species’ progress leapt suddenly ahead thanks to the suddenly greater stability of the climate, which allowed the species to co-opt other species and enable them to evolve into exchange-and-specialise partners, generating services for the Species in exchange for their needs. Now, thanks to farming, each individual had not only other members of the Species working for her (and vice versa), but members of other species as well, such as cows and corn. Around 200 years ago, the pace of change quickened again thanks to the Species’ new ability to recruit extinct species to its service as well, through the mining of fossil fuels and the releasing of their energy in ways that generated still more services. By now the Species was the dominant large animal on its planet and was suddenly experiencing rapidly rising living standards because of falling birth rates. Parasites plagued it still — starting wars, demanding obedience, building bureaucracies, committing frauds, preaching schisms — but the exchange and specialisation continued, and the collective intelligence of the Species reached unprecedented levels. By now almost the entire world was connected by a web so that ideas from everywhere could meet and mate. The pace of progress picked up once more. The future of the Species was bright, though it did not know it. p.352
The 20th century dawned, however, with a new wave of Malthusian pessimism. And here Ridley takes a detour from describing the “better and better” effects of exchange to consider the deepening intellectual pessimism of the last few centuries. These folks have plenty of earlier antecedents (Arthur Herman’s The Idea of Decline in Western History) . Ridley reviews the 19th century doom-sayers and then follows up by a careful look at the bugbears of the 20th century — cancer, nuclear Armageddon, famine, resource shortages (and the famous Simons-Ehrlich bet), clean air, genes [and genomics], plague). Are we really that imperiled? Are we worse off?
Most of the contrarian argument will be familiar to readers of this blog but it’s still an impressive assemblage of material when laid out as a “sociological pattern” rather than simply a “scare headline” from today’s paper. Here the author must really earn his spurs as a “rational optimist.” Ridley assembles the statistics and facts about how humanity has responded to each of the purported catastrophes which it faced. The people who’ve done yeoman’s work in this general area are the “methodological skeptics” — the publishers of Skeptical Inquirer and Skeptic magazine who keep the lid on the fantastical and the hyperbolic, much like a hotel maid service. Ridley’s efforts must therefore stand as an excellent summary but he’s not alone in his pessimism about the pessimism. Authors like Michael Shermer, for example, are always worth a read on such scientific or economic topics.
The media, the bureaucrats, the fund-raising scientists, and the eco-puritans all have a vested interest in kiting the latest scare into money, prestige, and power. The method by which they do so is now well-established. Too hot, too cold, too dirty, too clean, too many, too few, too smart, too dumb, too elite, too vulgar … there’s always some problem (some NEW URGENT problem) that must be ameliorated with other people’s money and other people’s time. Every problem’s insoluble without mobilizing every human on the planet. And inevitably, whether it’s acid rain or peak oil or DDT in Africa, human ingenuity and the passage of time ultimately make a mole hill out of a mountain of hot air. So another “hot air mountain” must then be summoned to satisfy institutional needs.
Having taken a new perspective on the archaeological research of the last 30 years, and reviewed the anxieties and nostrums of the last century to show why the human capacity for innovation and specialization has overcome insoluble problems, Ridley turns to the two 21st century Pessimisms which hold a fever grip on affluent minds. Africa and Climate Change. Things actually aren’t so bad! And Ridley wrote his chapter before the events of Climategate which showed how scientists were putting their thumb on the scales of scientific research and holding it there with third-rate computer programming and conveniently lost raw data. The capacity for “exchange” to nibble methodically and successfully against the malicious effects of African economics and atmospheric CO2 are everywhere in evidence.
Ridley wraps up his book with a final chapter that looks ahead to the year 2100 and instead of just extrapolating problems and limitations, he also extrapolates the solutions and trends predicted by increasing exchange. Why solve 21st century problems with 20th century resources and tools? Why make the (relatively) poor taxpayers of today solve the problems of the (relatively) rich occupants of the latter half of the 21st century? And what book on exchange would be complete without a reference to that recent denizen of rap videos and Amazon bestseller lists … Mr. Friedrich von Hayek and his term catallaxy — the science of exchange.
We’ve just begun to tap the distributed resources of eBay, and Amazon, and Youtube, and Google for swapping ideas, products, and services. Those early traders on the south side of the Mediterranean (circa 80,000 years BC) were just the start of something dramatic. Ridley makes the case that exchange will provide further unimaginable breakthroughs in technology and culture. In a further evidence of serendipity, my next full book review will be Free: The Future of a Radical Price by WIRED editor-in-chief, Chris Anderson. A profound shift in economic activity is occurring as computation, bandwidth, and data storage become so cheap that they are, to all intents and purposes, without cost … and can therefore be applied more widely in the service of exchange of products, services, and ideas. We are just beginning an entirely new phase of lateral exchange.
I have presented the case for sunny optimism. I have argued that now the world is networked, and ideas are having sex with each other more promiscuously than ever, the pace of innovation will redouble and economic evolution will raise the living standards of the twenty-first century to unimagined heights, helping even the poorest people of the world to afford to meet their desires as well as their needs. I have argued that although such optimism is distinctly unfashionable, history suggests it is actually a more realistic attitude than apocalyptic pessimism. ‘It is the long ascent of the past that gives the lie to our despair,’ said H.G. Wells p. 352
In this brief review, I’ve necessarily skipped the details of Ridley’s discussion of prehistory and history. Suffice it to say, readers of chicagoboyz could find The Rational Optimist a “gateway book” for all that we discuss on this blog. If you have an interest in the theoretical roots of economic activity and their impact on human origins and political structure, you’ll like this book. You may not come away an “optimist” but you’ll certainly have a lot more confidence in the capacity for free markets and free peoples to work their way out of trouble.
If you want to introduce the practical implications of Hayek’s insights on human exchange to friends or family, this is the perfect “beach book.” Drop it in the suitcase for vacation or send as a graduation gift for a clever high school or college student. The writing is polished. The pacing is excellent. The tone is meant for the general reader and the end notes have all the supplemental details that a CB reader might crave.
If you enjoyed the broad historical sweep and global vision of Jared Diamond’s Guns, Germs, and Steel: The Fate of Human Societies or Robert Wright’s Nonzero: The Logic of Human Destiny, Ridley’s latest book is highly recommended. While no doubt just an archaeological and scholarly “progress report,” it brings together a narrative that is very compelling.
And what better credential could this book have for chicagoboyz readers than a scathing review in the Guardian from Leftist biologist, Professor Steve Jones … damning the entire thesis by comparing Cuban and US life expectancy. It just doesn’t get sweeter than that. The pitfalls of “teleological thinking” are indeed many and varied, but they are part and parcel of the intellectual journey. Matt Ridley has given us plenty to think about, and plenty to be grateful for. And a fascinating read.
While the library’s copy of The Rational Optimist has now moved on to other readers, I’ll be buying a personal copy as “cheat sheet” for the research (circa 2008) on the history of human economic activity and the over-hyped crises du jour that plague our media. This book won’t be the final word on the subject for general readers, but it’s a very fine contribution to it.