The Rational Optimist: How Prosperity Evolves

by Matt Ridley

So what might be the cause of these episodes of quite extraordinary downward shift in human fecundity? Top of the list of explanations, paradoxically, comes falling child mortality. The more babies are likely to die, the more their parents bear.

Another factor is wealth. Having more income means you can afford more babies, but it also means you can afford more luxuries to divert you from constant breeding.

Is it female emancipation? Certainly, the correlation between widespread female education and low birth rate is pretty tight, and the high fecundity of many Arab countries must in part reflect women’s relative lack of control over their own lives. Probably by far the best policy for reducing population is to encourage female education.

It is evolutionarily plausible that in the human species, females want to have relatively few children and give them high-quality upbringing, whereas males like to have lots of children and care less about the quality of their upbringing.

Is it urbanisation? Certainly, as people move from farms, where children can help in the fields, to cities where housing is expensive and jobs are outside the home, they find large families to be a drawback.

In other words, the best that can be said for sure about the demographic transition is that countries lower their birth rates as they grow healthier, wealthier, better educated, more urbanised and more emancipated.

‘There is no need to impose coercive population control measures; economic freedom actually generates a benign invisible hand of population control.’

So, all in all, the news on global population could hardly be better, though it would be nice if the improvements were coming faster. The explosions are petering out; and the declines are bottoming out. The more prosperous and free that people become, the more their birth rate settles at around two children per woman with no coercion necessary. Now, is that not good news?

It was fossil fuels that eventually made slavery – along with animal power, and wood, wind and water – uneconomic.

‘Capitalism exterminated slavery.’

The story of energy is simple. Once upon a time all work was done by people for themselves using their own muscles. Then there came a time when some people got other people to do the work for them, and the result was pyramids and leisure for a few, drudgery and exhaustion for the many. Then there was a gradual progression from one source of energy to another: human to animal to water to wind to fossil fuel. In each case, the amount of work one man could do for another was amplified by the animal or the machine.

The secret of the industrial revolution was shifting from current solar power to stored solar power.

Fossil fuels cannot explain the start of the industrial revolution. But they do explain why it did not end. Once fossil fuels joined in, economic growth truly took off, and became almost infinitely capable of bursting through the Malthusian ceiling and raising living standards.

Only then did growth become, in a word, sustainable. This leads to a shocking irony. I am about to argue that economic growth only became sustainable when it began to rely on non-renewable, non-green, non-clean power. Every economic boom in history, from Uruk onwards, had ended in bust because renewable sources of energy ran out: timber, cropland, pasture, labour, water, peat. All self-replenishing, but far too slowly, and easily exhausted by a swelling populace. Coal not only did not run out, no matter how much was used: it actually became cheaper and more abundant as time went by, in marked contrast to charcoal, which always grew more expensive once its use expanded beyond a certain point, for the simple reason that people had to go further in search of timber.

Non-renewable resources such as coal are sufficiently abundant to allow an expansion of both economic activity and population to the point where they can generate sustainable wealth for all the people of the planet without hitting a Malthusian ceiling, and can then hand the baton to some other form of energy.

The plain fact is that the mechanisation of production in the industrial revolution raised incomes across all classes.

‘Leisure has a real value even to very poor people.’

This was the position in which China found itself. In 1700 it had a vibrant textile industry, perhaps equally ripe for mechanisation, but it was a long way from coalfields, and its domestic iron industry was dependent entirely on charcoal, whose price was rising as forests retreated. Part of the problem was that Shanxi and Inner Mongolia, where the coal was, had been depopulated by barbarians and plague in the three centuries after 1100, so the country’s demographic and economic centre of gravity shifted south to the Yangtze valley. Because none of the coal reserves were close to navigable water, China’s iron industry gave up its early experiment with fossil fuel. The price of iron rose in China, discouraging inventors from using it for machinery. So industrial activity in China experienced diminishing returns and as the population grew, people had less and less incentive both to consume and to invent.

Cotton contributed thirty-four times as much as coal to productivity growth in industrialising Britain.

It was coal that gave the industrial revolution its surprising second wind, that kept the mills, forges and locomotives running, and that eventually fuelled the so-called second industrial revolution of the 1860s, when electricity, chemicals and telegraphs brought Europe unprecedented prosperity and global power.

Industrialisation became contagious: the increased productivity of cotton mills encouraged demand from the chemical industry, which invented chlorine for bleaching, and from the printing industry, which turned to drum printing to print coloured cloth. By cutting the price of cotton, it also released consumer expenditure for other goods, which stimulated other manufacturing inventions. And of course to make the new machines, it demanded high-quality iron, which was made possible by cheap coal.

Today most coal is used for generating electricity.

One recent study in the Philippines estimated that the average household derives $108 a month in benefits from connecting to the electricity grid – cheaper lighting ($37), cheaper radio and television ($19), more years in education ($20), time saving ($24) and business productivity ($8). Heck, it even affects the birth rate as television replaces procreation as an evening activity.

It made it possible for fewer people to supply more people with more goods and more services – in Adam Smith’s words, to make ‘a smaller quantity of labour produce a greater quantity of work’. There was a step change in the number of people that could be served or supplied by one person, a great leap in the specialisation of production and the diversification of consumption. Coal had made everybody into a little Louis XIV.

you can conclude that were it not for fossil fuels, 99 per cent of people would have to live in slavery for the rest to have a decent standard of living, as indeed they did in Bronze Age empires.

Coal has huge drawbacks – it emits carbon dioxide, radioactivity and mercury; but my point here is to note how it contributes to human prosperity as well. Coal makes the electricity that lights your house, spins your washing machine and smelts the aluminium from which your aeroplane was made; oil fuels the ships, trucks and planes that filled your supermarket and makes the plastic from which your children’s toys are made; gas heats your home, bakes your bread and makes the fertiliser that grows your food. These are your slaves.

Oil, coal and gas are finite. But between them they will last decades, perhaps centuries, and people will find alternatives long before they run out.

Fuel can be synthesised from water using any source of power, such as nuclear or solar. At the moment, it costs too much to do so, but as efficiency increases and oil prices rise, then the equation will look different.

To get an idea of just how landscape-eating the renewable alternatives are, consider that to supply just the current 300 million inhabitants of the United States with their current power demand of roughly 10,000 watts each (2,400 calories per second) would require: solar panels the size of Spain or wind farms the size of Kazakhstan or woodland the size of India and Pakistan or hayfields for horses the size of Russia and Canada combined or hydroelectric dams with catchments one-third larger than all the continents put together As it is, a clutch of coal and nuclear power stations and a handful of oil refineries and gas pipelines supply the 300 million Americans with nearly all their energy from an almost laughably small footprint

Today you do not have to use acres to grow your transport fuel (oil has replaced hay for horses), your heating fuel (natural gas for timber), your power (coal for water), or your lighting (nuclear and coal for beeswax and tallow). You still have to grow much of your clothing, although ‘fleeces’ now come from oil. More’s the pity: if cotton could be replaced by a synthetic substance of the same quality, the Aral Sea could be restored and parts of India and China given back to tigers. The one thing nobody has yet figured out how to make in factories using coal or oil is food – thank goodness – though even here natural gas provided the energy to fix about half the nitrogen atoms in your average meal.

In 2005, the world made roughly ten billion tonnes of ethanol, 45 per cent of it from Brazilian sugar cane and 45 per cent from American maize. Add in a billion tonnes of biodiesel made from European rape seed and the result is that roughly 5 per cent of the world’s crop land has been taken out of growing food and put into growing fuel (20 per cent in the United States). Together with drought in Australia and more meat eating in China, this was the key factor that helped push world food supply below world food demand in 2008 and cause food riots all over the world. Between 2004 and 2007 the world maize harvest increased by fifty-one million tonnes, but fifty million tonnes went into ethanol, leaving nothing to meet the increase of demand for all other uses of thirty-three million tonnes: hence the price rose. The poor, remember, spend 70 per cent of their incomes on food. In effect, American car drivers were taking carbohydrates out of the mouths of the poor to fill their tanks

Meanwhile, the environmental benefits of biofuels are not just illusory; they are negative. Fermenting carbohydrate is an inefficient business compared with burning hydrocarbon. Every acre of maize or sugar cane requires tractor fuel, fertilisers, pesticides, truck fuel and distillation fuel – all of which are fuel. So the question is: how much fuel does it take to grow fuel? Answer: about the same amount.

Using tractors to grow crops also releases nitrous oxide from soil, which is a stronger greenhouse gas with nearly 300 times the warming potential of carbon dioxide. And every increment in the price of grain that the biofuel industry causes means more pressure on rainforests, the destruction of which is the single most cost-effective way of adding carbon dioxide to the atmosphere.

the biofuel industry is not just bad for the economy. It is bad for the planet, too.

The chief reason it gained such a stranglehold on American politicians is because of the lobbying and political funding supplied by big companies.

But do not forget the single most important problem with biofuels, the one that makes them so capable of making environmental problems worse – they need land. A sustainable future for nine billion people on one planet is going to come from using as little land as possible for each of people’s needs. And if food yields from land continue to increase at the current rate, the current acreage of farmland will – just – feed the world in 2050, so the extra land for growing fuel will have to come from rainforests and other wild habitats.

Modern civilisation therefore gets more and more work out of each tonne of fossil fuel. This increasing efficiency would, you might think, gradually reduce the need to burn so much coal, oil and gas.

Energy efficiency has been rising for a very long time and so has energy consumption. This is known as the Jevons paradox

‘It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth. As a rule, new modes of economy will lead to an increase of consumption.’

There is no equilibrium in nature; there is only constant dynamism.

Innovation is like a bush fire that burns brightly for a short time, then dies down before flaring up somewhere else.

In the past, when societies gorged on innovation, they soon allowed their babies to grow too numerous for their land, reducing the leisure, wealth and market that inventors needed (in effect, the merchant’s sons became struggling peasants again). Or they allowed their bureaucrats to write too many rules, their chiefs to wage too many wars, or their priests to build too many monasteries (in effect, the merchants’ sons became soldiers, sybarites or monks). Or they sank into finance and became parasitic rentiers.

‘Prosperity and success led to the emergence of predators and parasites in various forms and guises who eventually slaughtered the geese that laid the golden eggs.’

Again and again, the flame of invention would splutter and die…only to flare up elsewhere. The good news is that there ...

No, the industrial revolution was not sparked by some deus ex machina of scientific inspiration. Later science did contribute to the gathering pace of invention and the line between discovery and invention became increasingly blurred as the nineteenth century wore on.

The inescapable fact is that most technological change comes from attempts to improve existing technology.

This is not to condemn science as useless. The seventeenth-century discoveries of gravity and the circulation of the blood were splendid additions to the sum of human knowledge. But they did less to raise standards of living than the cotton gin and the steam engine.

More specifically, the industrial revolution required long-term investment in capital equipment that could not easily be liquidated – factories and machines, for the most part.

These helped to give inventors the wherewithal to turn their ideas into products.

In an eerie repetition of the same pattern, Silicon Valley owes much of its explosion of novelty to its venture capitalists on Sandhill Road.