The Rational Optimist: How Prosperity Evolves

by Matt Ridley

Look again at the hand axe and the mouse. They are both ‘man-made’, but one was made by a single person, the other by hundreds of people, maybe even millions. That is what I mean by collective intelligence. No single person knows how to make a computer mouse. The person who assembled it in the factory did not know how to drill the oil well from which the plastic came, or vice versa. At some point, human intelligence became collective and cumulative in a way that happened to no other animal.

Richard Dawkins in 1976 coined the term ‘meme’ for a unit of cultural imitation. The economist Richard Nelson in the 1980s proposed that whole economies evolve by natural selection.

The answer, I believe, is that at some point in human history, ideas began to meet and mate, to have sex with each other.

And so it is with culture. If culture consisted simply of learning habits from others, it would soon stagnate. For culture to turn cumulative, ideas needed to meet and mate. The ‘cross-fertilisation of ideas’ is a cliché, but one with unintentional fecundity. ‘To create is to recombine’ said the molecular biologist François Jacob. Imagine if the man who invented the railway and the man who invented the locomotive could never meet or speak to each other, even through third parties. Paper and the printing press, the internet and the mobile phone, coal and turbines, copper and tin, the wheel and steel, software and hardware. I shall argue that there was a point in human prehistory when big-brained, cultural, learning people for the first time began to exchange things with each other, and that once they started doing so, culture suddenly became cumulative, and the great headlong experiment of human economic ‘progress’ began. Exchange is to cultural evolution as sex is to biological evolution.

Put it another way, an hour of work today earns you 300 days’ worth of reading light; an hour of work in 1800 earned you ten minutes of reading light.

This is what prosperity is: the increase in the amount of goods or services you can earn with the same amount of work. As late as the mid-1800s, a stagecoach journey from Paris to Bordeaux cost the equivalent of a clerk’s monthly wages; today the journey costs a day or so and is fifty times as fast. A half-gallon of milk cost the average American ten minutes of work in 1970, but only seven minutes in 1997. A three-minute phone call from New York to Los Angeles cost ninety hours of work at the average wage in 1910; today it costs less than two minutes. A kilowatt-hour of electricity cost an hour of work in 1900 and five minutes today. In the 1950s it took thirty minutes work to earn the price of a McDonald’s cheeseburger; today it takes three minutes.

Henry Ford got rich by making cars cheap. His first Model T sold for $825, unprecedentedly cheap at the time, and four years later he had cut the price to $575. It took about 4,700 hours of work to afford a Model T in 1908. It takes about 1,000 hours today to afford an ordinary car – though one that is brimming with features that Model Ts never had.

The price of computing power fell so fast in the last quarter of the twentieth century that the capacity of a tiny pocket calculator in 2000 would have cost you a lifetime’s wages in 1975. The price of a DVD player in Britain fell from £400 in 1999 to £40 just five years later, a decline that exactly matched the earlier one of the video recorder, but happened much faster.

If Cornelius Vanderbilt or Henry Ford not only moves you faster to where you want to go, but requires you to work fewer hours to earn the ticket price, then he has enriched you by granting you a dollop of free time.

children, not to settle for contentment: people are programmed to desire, not to appreciate.

Getting richer is not the only or even the best way of getting happier. Social and political liberation is far more effective, says the political scientist Ronald Ingleheart: the big gains in happiness come from living in a society that frees you to make choices about your lifestyle – about where to live, who to marry, how to express your sexuality and so on. It is the increase in free choice since 1981 that has been responsible for the increase in happiness recorded since then in forty-five out of fifty-two countries. Ruut Veenhoven finds that ‘the more individualized the nation, the more citizens enjoy their life.’

But there is nothing unnatural about this. In fact, it is a very typical human pattern. By the age of 15 chimpanzees have produced about 40 per cent and consumed about 40 per cent of the calories they will need during their entire lives. By the same age, human hunter-gatherers have consumed about 20 per cent of their lifetime calories, but produced just 4 per cent. More than any other animal, human beings borrow against their future capabilities by depending on others in their early years. A big reason for this is that hunter-gatherers have always specialised in foods that need extraction and processing – roots that need to be dug and cooked, clams that need to be opened, nuts that need to be cracked, carcasses that need to be butchered – whereas chimpanzees eat things that simply need to be found and gathered, like fruit or termites. Learning to do this extraction and processing takes time, practice and a big brain, but once a human being has learnt, he or she can produce a huge surplus of calories to share with the children. Intriguingly, this pattern of production over the lifespan in hunter-gatherers is more like the modern Western lifestyle than it is like the farming, feudal or early industrial lifestyles. That is to say, the notion of children taking twenty years even to start to bring in more than they consume, and then having forty years of very high productivity, is common to hunter-gatherers and modern societies, but was less true in the period in between, when ...

As long as new ideas can breed in this way, then human economic progress can continue. It may be only a year or two till world growth resumes after the current crisis, or it may for some countries be a lost decade. It may even be that parts of the world will be convulsed by a descent into autarky, authoritarianism and violence, as happened in the 1930s, and that a depression will cause a great war. But so long as somewhere somebody is incentivised to invent ways of serving others’ needs better, then the rational optimist must conclude that the betterment of human lives will eventually resume.

It comes from exchange and specialisation and from the resulting division of labour. A deer must gather its own food. A human being gets somebody else to do it for him, while he or she is doing something for them – and both win time that way.

If you wish to have even the most minimal improvement in your life – say metal tools, toothpaste or lighting – you are going to have to get some of your chores done by somebody else, because there just is not time to do them yourself. So one way to raise your standard of living would be to lower somebody else’s: buy a slave. That was indeed how people got rich for thousands of years.

As I write this, it is nine o’clock in the morning. In the two hours since I got out of bed I have showered in water heated by North Sea gas, shaved using an American razor running on electricity made from British coal, eaten a slice of bread made from French wheat, spread with New Zealand butter and Spanish marmalade, then brewed a cup of tea using leaves grown in Sri Lanka, dressed

myself in clothes of Indian cotton and Australian wool, with shoes of Chinese leather and Malaysian rubber, and read a newspaper made from Finnish wood pulp and Chinese ink. I am now sitting at a desk typing on a Thai plastic keyboard (which perhaps began life in an Arab oil well) in order to move electrons through a Korean silicon chip and some wires of Chilean copper to display text on a computer designed and manufactured by an American firm. I have consumed goods and services from dozens of countries already this morning. Actually, I am guessing at the nationalities of some of these items, because it is almost impossible to define some of them as coming from any country, so diverse are their sources.

My point is that you have far, far more than 498 servants at your immediate beck and call. Of course, unlike the Sun King’s servants, these people work for many other people too, but from your perspective what is the difference?

This is what I mean by the collective brain. As Friedrich Hayek first clearly saw, knowledge ‘never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess’.

That is what the word ‘job’ means: it refers to the simplified, singular production to which you devote your working hours. Even those who have several paying jobs – say, freelance short-story writer/neuroscientist, or computer executive/photographer – have only two or three different occupations

You are poor to the extent that you cannot afford to sell your time for sufficient price to buy the services you need, and rich to the extent that you can afford to buy not just the services you need but also those you crave.

They were just as wrong. There is no such thing as unproductive employment, so long as people are prepared to buy the service you are offering. Today, 1 per cent works in agriculture and 24 per cent in industry, leaving 75 per cent to offer movies, restaurant meals, insurance broking and aromatherapy.

They had a way of life that was sufficiently adaptable to work in almost any habitat or climate. Where every other species needed its niche, the hunter-gatherer could make a niche out of anything: seaside or desert, arctic or tropical, forest or steppe.

It was allegedly a young Chinese imperial concubine in 2600 bc who thought up the following recipe for rearranging beta pleated sheets of glycine-rich polypeptides into fine fabrics: take a moth caterpillar, feed it mulberry leaves for a month, let it spin a cocoon, heat it to kill it, put the cocoon in water to unstick the silk threads, carefully draw out the single kilometre-long thread from which the cocoon is made by reeling it on to a wheel, spin the thread and weave a fabric. Then dye, cut and sew, advertise and sell for cash. Rough guide on quantities: it takes about ten pounds of mulberry leaves to make 100 silkworm cocoons to make one necktie.

The cumulative accretion of knowledge by specialists that allows us each to consume more and more different things by each producing fewer and fewer is, I submit, the central story of humanity.

If prosperity is exchange and specialisation – more like the multiplication of labour than the division of labour – then when and how did that habit begin? Why is it such a peculiar attribute of the human species?

Bizarre as this may sound, in evolutionary terms it is quite normal. Most species do not change their habits during their few million years on earth or alter their lifestyle much in different parts of their range. Natural selection is a conservative force. It spends more of its time keeping species the same than changing them. Only towards the edge of its range, on an isolated island, or in a remote valley or on a lonely hill top, does natural selection occasionally cause part of a species to morph into something different. That different sport sometimes then spreads to conquer a broader ecological empire, perhaps even returning to replace the ancestral species – to topple the dynasty from which it sprang. There is constant ferment of change within the species’ genes as it adapts to its parasites and they to it. But there is little progressive alteration of the organism. Evolutionary change happens largely by the replacement of species by daughter species, not by the changing of habits in species. What is surprising about the human story is not the mind-bogglingly tedious stasis of the Acheulean hand axe, but that the stasis came to an end.

Think of it this way. You don’t expect to get better and better at walking in each successive generation – or breathing, or laughing, or chewing. For Palaeolithic hominids, hand-axe making was like walking, something you grew good at through practice and never thought about again. It was almost a bodily function. It was no doubt passed on partly by imitation and learning, but unlike modern cultural traditions it showed little regional and local variation.

The rich meat diet also enabled erectus hominids to grow a larger brain, an organ that burns energy at nine times the rate of the rest of the body. Meat enabled them to cut down on the huge gut that their ancestors had found necessary to digest raw vegetation and raw meat, and thus to grow a bigger brain instead.

As a result, whereas other primates have guts weighing four times their brains, the human brain weighs more than the human intestine. Cooking enabled hominids to trade gut size for brain size.

Then there appeared upon the earth a new kind of hominid, which refused to play by the rules. Without any changes in its body, and without any succession of species, it just kept changing its habits. For the first time its technology changed faster than its anatomy. This was an evolutionary novelty, and you are it. When this new animal appeared is hard to discern, and its entrance was low-key.

These shells were surely beads, probably worn on a string. Not only do they hint at a very modern attitude to personal ornament, symbolism or perhaps even money; they also speak eloquently of trade.

According to DNA scripture, it was then that one quite small group of people began to populate the entire African continent, starting either in East or South Africa and spreading north and rather more slowly west. Their genes, marked by the L3 mitochondrial type, suddenly expanded and displaced most others in Africa, except the ancestors of the Khoisan and pygmy people.

living in large social groups on a plentiful diet both encourages and allows brain growth. The second theory is that a fortuitous genetic mutation triggered a change in human behaviour by subtly altering the way human brains were built. This made people fully capable of imagination, planning, or some other higher function for the first time, which in turn gave them the capacity to make better tools and devise better ways of making a living.

For a while, it even looked as if two candidate mutations of the right age had appeared – in the gene called FOXP2, which is essential to speech and language in both people and songbirds. Adding these two mutations to mice does indeed seem to change the flexibility of wiring in their brain in a way that may be necessary for the rapid flicker of tongue and lung that is called speech, and perhaps coincidentally the mutations even change the way mice pups squeak without changing almost anything else about them. But recent evidence confirms that Neanderthals share the very same two mutations, which suggests that the common ancestor of Neanderthals and modern people, living about 400,000 years ago, may have already been using pretty sophisticated language. If language is the key to cultural evolution, and Neanderthals had language, then why did the Neanderthal toolkit show so little cultural change?

cooking selected mutations for smaller guts and mouths, rather than vice versa. At a later date, milk drinking selected for mutations for retaining lactose digestion into adulthood in people of western European and East African descent. The cultural horse comes before the genetic cart. The appeal to a genetic change driving evolution gets gene-culture co-evolution backwards: it is a top-down explanation for a bottom-up process. Besides,

As you can tell, I like neither theory. I am going to argue that the answer lies not in climate, nor genetics, nor in archaeology, nor even entirely in ‘culture’, but in economics. Human beings had started to do something to and with each other that in effect began to build a collective intelligence.

Exchange needed to be invented. It does not come naturally to most animals. There is strikingly little use of barter in any other animal species. There is sharing within families, and there is food-for-sex exchange in many animals including insects and apes, but there are no cases in which one animal gives an unrelated animal one thing in exchange for a different thing. ‘No man ever saw a dog make fair and deliberate exchange of a bone with another dog,’ said Adam Smith.

I need to digress here: bear with me. I am not talking about swapping favours – any old primate can do that. There is plenty of ‘reciprocity’ in monkeys and apes: you scratch my back and I scratch yours. Or, as Leda Cosmides and John Tooby put it, ‘One party helps another at one point in time, in order to increase the probability that when their situations are reversed at some (usually) unspecified time in the future, the act will be reciprocated.’ Such reciprocity is an important human social glue, a source of cooperation and a habit inherited from the animal past that undoubtedly prepared human beings for exchange. But it is not the same thing as exchange. Reciprocity means giving each other the same thing (usually) at different times. Exchange – call it barter or trade if you like – means giving each other different things (usually) at the same time: simultaneously swapping two different objects. In Adam Smith’s words, ‘Give me that which I want, and you shall have this which you want.’

‘If I make the clothes, you catch the food’ brings increasing returns. Indeed, it has the beautiful property that it does not even need to be fair. For barter to work, two individuals do not need to offer things of equal value.

as long as two people are living in different habitats, they will value what each other has more than what they have themselves, and trade will pay them both. And the more they trade, the more it will pay them to specialise.

Exchange is therefore a thing of explosive possibility, a thing that breeds, explodes, grows, auto-catalyses.

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.

Why did human beings acquire a taste for barter as other animals did not? Perhaps it has something to do with cooking. Richard Wrangham makes a persuasive case that control of fire had a far-reaching effect on human evolution. Beyond making it safe to live on

barbecuing are the two most masculine forms of cooking today.) On average, across the world, each sex contributes similar quantities of calories, though the pattern varies from tribe to tribe: in Inuits, for example, most food is obtained by men, whereas in the Kalahari Khoisan people, most is gathered by women. But – and here is the crucial point – throughout the human race, males and females specialise and then share food. In other words, cooking encourages specialisation by sex. The first and deepest division of labour is the sexual one.

Anthropologists used to argue that the sexual division of labour came about because of the long, helpless childhood of human beings.

that different sex roles started with food sharing millions of years ago.

The pattern of variation in the DNA of both mitochondrial and Y chromosomes in all people of non-African origin attests that some time around 65,000 years ago, or not much later, a group of people, numbering just a few hundred in all, left Africa. They probably crossed the narrow southern end of the Red Sea, a channel much narrower then than it is now. They then spread along the south coast of Arabia, hopping over a largely dry Persian Gulf, skirting round India and a then-connected Sri Lanka, moving gradually down through Burma, Malaya and along

Why was progress so agonisingly slow for so many millennia? The answer, I suspect, lies in the fissile nature of human culture. Human beings have a deep capacity for isolationism, for fragmenting into groups that diverge from each other. In New Guinea, for instance, there are more than 800 languages, some spoken in areas just a few miles across yet as unintelligible to those on either side as French and English.

Divisions of labour beyond the pair bond had probably been invented in the Upper Palaeolithic.