The Rational Optimist: How Prosperity Evolves

by Matt Ridley

Nigeria, for example, scores so low on the rule of law, education and the probity of its public institutions that even its immense oil reserves have failed to enrich it.

So while it is true that institutional innovators in the public sphere are just as vital as technological innovators in the private, I suspect that specialisation is the key to both.

Just as becoming a specialist axe maker for the whole tribe gives you the time, the capital and the market to develop a new and better form of axe, so becoming the specialist bicycle racer enables you to make up rules about bicycle racing. Human history is driven by a co-evolution of rules and tools. The increasing specialisation of the human species, and the enlarging habit of exchange, are the root cause of innovation in both.

For Adam Smith capital is ‘as it were, a certain quantity of labour stocked and stored up to be employed, if necessary, upon some other occasion’.

you can store the labour of others for future use, then you can spare yourself the time and the energy of working for your own immediate needs, which means you can invest in something new that will bring even greater reward. Once capital had arrived on the scene, innovation could accelerate, because time and property could be invested in projects that initially generated no benefit.

In the conventional account it was agriculture that made capital possible by generating stored surpluses and stored surpluses could be used in trade. Before farming, nobody could hoard a surplus. There is some truth in this, but to some degree it gets the story the wrong way round. Agriculture was possible because of trade. Trade provided the incentive to specialise in farmed goods and to generate surplus food.

Agriculture started to appear independently in the Near East, the Andes, Mexico, China, the highlands of New Guinea, the Brazilian rainforest and the African Sahel – all within a few thousand years.

Yet farming was not an overnight transition. It was the culmination of a long, slow intensification of human diet that took tens of thousands of years.

In search of extra calories people gradually ‘moved down the trophic pyramid’ – i.e., became more vegetarian.

The inescapable conclusion is that the people of the Near East were no fools. They captured the benefits of cereals – milled and baked starch – long before they took on the hard graft of farming them. Why spend months tending your own field of corn, when you can spend hours harvesting a wild one?

Chickpeas may have been the first crop, then rye and einkorn wheat, though figs had probably been cultivated and dogs domesticated some millennia before.

The Fertile Crescent was probably the place where agriculture first took hold, and from there the habit gradually spread south to Egypt, west into Asia Minor and east to India, but farming was quickly invented in at least six other places in a short time, driven by the same ratchet of trade, population growth, stable climate and increasingly vegetarian intensification.

This phenomenal coincidence, as bizarre as finding that an aborigine, an Inuit, a Polynesian and a Scotsman all invented steam engines in the same decade of the eighteenth century without contact of any kind, is explained by the stabilising climate after the ice age ended. In the words of a recent paper, ‘agriculture was impossible during the last glacial, but compulsory in the Holocene’. It is no accident that modern Australia, with its unpredictable years of drought followed by years of wet, still looks a bit like that volatile glacial world. Australians were probably quite capable of farming: they knew how to grind grass seeds, burn the bush to improve kangaroo grazing and encourage favoured plants; and they certainly knew how to alter the flow of rivers to encourage and harvest eels. But they also knew, or found out the hard way, that farming does not work in a highly volatile climate.

One of the intriguing things about the first farming settlements is that they also seem to be trading towns

that one of the pressures to invent agriculture was to feed and profit from wealthy traders – to generate a surplus that could be exchanged for obsidian, shells or other more perishable goods. Trade came first.

Farming works precisely because it is embedded in trading networks.

One of the reasons that farming spreads so rapidly once it starts is that the first few crops are both more productive and more easily grown than later crops, so farmers are always happy to move on to virgin land. If you burn down a forest, you are left with a soft, friable soil seasoned with fertilising ash.

No wonder that shifting agriculture – slash and burn – remains so much more popular with many tribal people in forests to this day.

The hunter-gatherer market now became the herder-farmer market.

Hence, the invention of metal smelting was an almost inevitable consequence of the invention of agriculture

Almost by definition, the more wealthy somebody is, the more things he acquires from specialists.

The characteristic signature of prosperity is increasing specialisation. The characteristic signature of poverty is a return to self-sufficiency.

They also got a bad attack of inequality for the first time. Extant hunter-gatherers are remarkably egalitarian, a state of affairs dictated by their dependence on sharing each other’s hunting and gathering luck. (They sometimes need to enforce this equality with savage reprisals against people who get ideas above their stations.) A successful farmer, however, can soon afford to store some provisions with which to buy the labour of other less successful neighbours, and that makes him more successful still, until eventually – especially in an irrigated river valley, where he controls the water – he can become an emperor using servants and soldiers to impose his despotic whim upon subjects.

Worse still, as Friedrich Engels was the first to argue, agriculture may have worsened sexual inequality.

The truth is that both hunter-gathering and farming could produce affluence or misery depending on the abundance of food and the relative density of people.

‘Where there are no institutional restraints on such behaviour, systematic killing of unrelated individuals is so common among human beings that, awful though it is, it cannot be described as exceptional, pathological or disturbed.’

America’s horse population peaked at twenty-one million animals in 1915; at the time about one-third of all agricultural land was devoted to feeding them.

So the replacement of draught animals by machines released an enormous acreage of land to grow food for human consumption.

At the same time motorised transport was bringing land within reach of railheads. As late as 1920, over three million acres of good agricultural land in the American Midwest lay uncultivated because it was more than eighty miles from a railway, which meant a five-day trip b...

Taking all cereal crops together worldwide, in 2005 twice as much grain was produced from the same acreage as in 1968.

To put it another way, today people farm (i.e., plough, crop or graze) just 38 per cent of the land area of the earth, whereas with 1961 yields they would have to farm 82 per cent to feed today’s population. Intensification has saved 44 per cent of this planet for wilderness.

Human beings comprise about 0.5 per cent by weight of the animals on the planet. Yet they beg, borrow and steal for themselves roughly 23 per cent of the entire primary production of land plants (the number is much lower if the oceans are included). This number is known to ecologists as the HANPP – the ‘human appropriation of net primary productivity

Should the world decide to go organic – that is, should farming get its nitrogen from plants and fish rather than direct from the air using factories and fossil fuels – then many of the nine billion will starve and all rainforests will be cut down.

Organic farming is low-yield, whether you like it or not

With such help a particular organic plot can match non-organic yields, but only by using extra land elsewhere to grow the legumes and feed the cattle, effectively doubling the area under the plough.

intensively produced, and that means using fuel – in practice, a pound of organic lettuce, grown without synthetic fertilisers or pesticides in California, and containing eighty calories, requires 4,600 fossil-fuel calories to get it to a customer’s plate in a city restaurant: planting, weeding, harvesting, refrigerating, washing, processing and transporting all use fossil fuel. A conventional lettuce requires about 4,800 calories. The difference is trivial.

In the pursuit of quantity, science may have sacrificed nutritional quality of food.

Indeed, the twentieth-century drive to provide a growing population with an ever faster-growing supply of calories has succeeded so magnificently that the diseases caused by too much bland food are rampant: obesity, heart disease, diabetes, and perhaps depression.

Cities exist for trade.

They are places where people come to divide their labour, to specialise and exchange.

Just as agriculture appeared in six or seven parts of the world simultaneously, suggesting an evolutionary determinism, so the same is true, a few thousand years later, of cities. Large urban settlements, with communal buildings, monuments and shared infrastructure, start popping up after seven thousand years ago in several fertile river valleys.

The oldest cities were in southern Mesopotamia, in what is now Iraq. Their emergence signified that production was becoming more specialised, consumption more diversified.

Exchange and trade were well established traditions before the first city, and record keeping may have played a crucial role in allowing cities to emerge full of strangers who could trust each other in transactions.

Merchants and craftsmen make prosperity; chiefs, priests and thieves fritter it away.

The Indus people were good at transport: bullock carts may have been used here for the first time and plank-built sailing boats. Transport allowed extensive trade.

There can be little doubt that the great wealth of the Indus cities was generated by trade.

To argue, therefore, that emperors or agricultural surpluses made the urban revolution is to get it backwards. Intensification of trade came first.

The urban revolution was an extension of the division of labour.

Trade emerged from the interactions of individuals. It evolved. Nobody was in charge.

In these Bronze Age empires, commerce was the cause, not the symptom of prosperity. None the less, a free trade area lends itself easily to imperial domination. Soon, through tax, regulation and monopoly, the wealth generated by trade was being diverted into the luxury of the few and the oppression of the many.