The Rational Optimist: How Prosperity Evolves

by Matt Ridley

A little more than a thousand years after Oetzi died, and a short distance to the west in the Mitterberg region of what is now Austria, there were settlements inhabited by people who apparently did little else but mine and smelt copper from lodes in the nearby mountains.

Conventional wisdom has probably underestimated the extent of specialisation and trade in the Neolithic age. There is a tendency to think that everybody was a farmer. But in Oetzi’s world, there were farmers who grew einkorn and maybe farmers who grew grass for weaving into cloaks; coppersmiths who made axes and maybe bear hunters who made hats and shoes.

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

less need for exhausting, dangerous and often fruitless treks through the wilderness; work that the unfit and injured could still do; perhaps more spare time in which to invent civilisation. In the last third of the twentieth century, a prosperous yet nostalgic time, farming came to be reinterpreted as an invention born of desperation rather than inspiration, and perhaps even ‘the worst mistake in the history of the human race’.

Worse still, as Friedrich Engels was the first to argue, agriculture may have worsened sexual inequality. It is certainly painfully obvious that in many peasant farming communities, men make women do much of the hard work. In hunter-gathering, men have many tiresome sexist habits, but they do at least contribute. When the plough was invented around 6,000 years ago, men took over the work of driving the oxen that cultivated fields, because it required greater strength, but this only exacerbated inequality. Now women were treated increasingly as the chattels of men, loaded with bracelets and ankle rings to indicate their husband’s wealth. Now art became dominated by the symbols of male power and competition – arrows, axes and daggers. Now polygamy probably increased and the wealthiest men acquired harems and patriarchal status: at Branc in Slovakia, more women than men were buried with elaborate grave goods, indicating not that they were wealthy, so much as that their polygamous husbands were wealthy while other men languished in celibate poverty. In this way, polygamy enables poor women to share in prosperity more than poor men. It was an age of patriarchy.

‘the great Caucasian race will cease to be foremost in the world, and will be squeezed out of existence by races to whom wheaten bread is not the staff of life.’

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.

In 1920 plant breeders developed a vigorous and hardy new variety of wheat, ‘Marquis’, by crossing a Himalayan and an American plant, which could survive further north in Canada. So thanks to tractors, fertilisers and new varieties, by 1931, the year in which Crookes had chosen to place his potential future famine, the supply of wheat had so far exceeded the demand that the price of wheat had plummeted and wheat land was being turned over to pasture all over Europe.

In effect, Borlaug and his allies had unleashed the power of fertiliser, made with fossil fuels. Since 1900 the world has increased its population by 400 per cent; its cropland area by 30 per cent; its average yields by 400 per cent and its total crop harvest by 600 per cent. So per capita food production has risen by 50 per cent. Great news – thanks to fossil fuels.

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. Intensification is the best thing that ever happened – from the environmental perspective. There are now over two billion acres of ‘secondary’ tropical rainforest, regrowing after farmers left for the cities, and it is already almost as rich in biodiversity as primary forest. That is because of intensive farming and urbanisation.

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).

Even the confinement of chickens, pigs and cattle to indoor barns and batteries, though it troubles the consciences (mine included) of those who care for animal welfare, undoubtedly results in more meat produced from less feed with less pollution and less disease. When bird flu threatened, it was free-range flocks of chickens, not battery farms, that were at greatest risk.

more: we would need extra acres to grow the cows whose manure would fertilise our fields: more precisely, to replace all the industrial nitrogen fertiliser now applied would mean an extra seven billion cattle grazing an extra thirty billion acres of pasture. (You will often hear organic champions extol the virtues of both manure and vegetarianism: notice the contradiction.) But these calculations show that even without vegetarianism, there will be a growing surplus of farmland. So let’s do

When human beings were all still hunter-gatherers, each needed about a thousand hectares of land to support him or her. Now – thanks to farming, genetics, oil, machinery and trade – each needs little more than a thousand square metres, a tenth of a hectare. (Whether the oil will last long enough is a different subject and one I tackle later in the book: briefly my answer is that substitutes will be adopted if the price rises high enough.) That is possible only because each square metre is encouraged to grow whatever it is good at growing and global trade distributes the result to ensure that everybody gets a bit of everything. Once again, the theme of specialised production/ diversified consumption turns out to be the key to prosperity.

Organic farming is low-yield, whether you like it or not. The reason for this is simple chemistry. Since organic farming eschews all synthetic fertiliser, it exhausts the mineral nutrients in the soil – especially phosphorus and potassium, but eventually also sulphur, calcium and manganese. It gets round this problem by adding crushed rock or squashed fish to the soil. These have to be mined or netted. Its main problem, though, is nitrogen deficiency, which it can reverse by growing legumes (clover, alfalfa or beans), which fix nitrogen from the air, and either ploughing them into the soil or feeding them to cattle whose manure is then ploughed into the soil.

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. Yet when a technology came along that promised to make organic farming both competitive and efficient, the organic movement promptly rejected it.

Though some came to town with hope and ambition, and some with desperation and fear, almost all were drawn by the same aim: to take part in trade. Cities exist for trade. They are places where people come to divide their labour, to specialise and exchange. They grow when trade expands

Menes had unified the upper and lower valley and made himself the first pharaoh, the productive Egyptian economy found itself nationalised, monopolised, bureaucratised and eventually stifled by – in the words of two modern historians – the ‘leaden authoritarianism’ of its rulers.

To argue, therefore, that emperors or agricultural surpluses made the urban revolution is to get it backwards. Intensification of trade came first. Agricultural surpluses were summoned forth by trade, which offered farmers a way of turning their produce into valuable goods from elsewhere. Emperors, with their ziggurats and pyramids, were often made possible by trade. Throughout history, empires start as trade areas before they become the playthings of military plunderers from within or without. The urban revolution was an extension of the division of labour.

the second half of the twentieth century was always asking who is in charge, looking for who decided on a policy of trade. That is not how the world works. 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. By 1500 BC you could argue that the richest parts of the world had sunk into the stagnation of palace socialism as the activities of merchants were progressively nationalised.

Pythagoras probably got his theorem from a student of Thales the Milesian who learnt geometry on trade excursions to Egypt. We would never have heard of Pericles, Socrates or Aeschylus had there not been tens of thousands of slaves toiling underground at Laurion and tens of thousands of customers for Athenian goods all over the Mediterranean.

were remarkable scientific advances, not least the invention of zero and the decimal system and the accurate calculation of pi. Asoka’s empire disintegrated before it had become totalitarian, and its legacy was impressive: for the next few centuries the Indian subcontinent was both the most populous and the most prosperous part of the world, with a third of the world’s people and a third of the world’s GDP. It was without question the economic superpower of the day, dwarfing both China and Rome, and its capital city Pataliputra was the largest city in the world, famous for its gardens, luxuries and markets. Only later, under the Guptas, did the caste system ossify Indian commerce.

Moreover, Rome’s continuing prosperity once the republic became an empire may be down at least partly to the ‘discovery’ of India. Following Augustus’s absorption of Egypt, the Romans inherited the Egyptians’ trade with the East, and soon the Red Sea was alive with massive Roman cargo ships carrying tin, lead, silver, glass and wine – the latter soon becoming an exciting novelty in India.

Think about this from the consumer’s point of view. Nobody in China can blow glass; nobody in Europe can reel silk. Thanks to a middleman in India, however, the European can wear silk and the Chinese can use glass. The European may scoff at the ridiculous legend that this lovely cloth is made from the cocoons of caterpillars; and the Chinese may guffaw at the laughable fable that this transparent ceramic is made from sand. But both of them are better off and so is the Indian middleman. All three have acquired the labour of others. In Robert Wright’s terms, this is a non-zero transaction. The collective brain has expanded across the entire Indian Ocean and lifted the standard of living at both ends.

But meanwhile the torch passed east. As Europe sank back into self-sufficiency, Arabia was discovering gains from trade. The sudden emergence of an all-conquering prophet in the middle of a desert in the seventh century is rather baffling as the tale is usually told – one of religious inspiration and military leadership. What is missing from the story is the economic reason that Arabs were suddenly in a position to carry all before them. Thanks to a newly perfected technology, the camel, the people of the Arabian Peninsula found themselves well placed to profit from trade between East and West. The camel caravans of Arabia were the source of the wealth that carried Muhammad and his followers to power. The camel had been domesticated several thousand years earlier, but it was in the early centuries ad that it was at last made into a reliable beast of burden. It could carry far more than a donkey could, go to places a wheeled bullock cart could not, and because it could find its own forage en route, its fuel costs were essentially zero – like a sailing ship. For a while even the Byzantine sailing ships of the Red Sea, waiting for the right winds and running the gauntlet of increasingly numerous pirates, found themselves at a competitive disadvantage compared with ‘ships of the desert’.

It was a Pisan trader living in north Africa, Fibonacci, who brought Indian–Arabic decimals, fractions and the calculation of interest to Europe’s notice in his book Liber Abaci, published in 1202.

Empires, indeed governments generally, tend to be good things at first and bad things the longer they last.

The message from history is so blatantly obvious – that free trade causes mutual prosperity while protectionism causes poverty

The 1200s were the golden high-water mark of the Middle Ages. Courts were richly furnished; monasteries flourished; cathedrals rose towards the sky; troubadours strutted their stuff. Watermills, windmills, bridges and ports were built all over England. Fairs and markets proliferated and thrived: there was an unprecedented surge in commercial activity between 1150 and 1300. A good part of it was driven by the wool trade. As Flemish merchants sought out more and more English wool to supply the cloth makers of Flanders, so they provided livelihoods for ship owners, fullers and above all sheep farmers. The national sheep flock boomed to perhaps ten million animals, more than two sheep per person. The English had found a comparative advantage in their mild, wet, grass-growing climate – a gain from trade – supplying Europe’s fibre. Specialisation and exchange fuelled population growth.

The consequence of all this early and frequent marriage was fecundity. In the thirteenth century the population of England seems to have doubled, from over two million to something like five million people.

The crops rotted in the fields; some people were forced to eat their own seed corn. Mothers abandoned their babies. There were rumours of fresh corpses of criminals pulled from gallows for food. In the years that followed, with continuing poor harvests and unusually cold winters, a fatal murrain spread among hungry oxen, and that left some land unploughed, further exacerbating the food shortage. The population then stagnated for three decades until the Black Death arrived in the 1340s and caused a crash in human numbers. The plague returned in the 1360s, followed by more bad harvests and more plague outbreaks. By 1450, the population of England had been reduced to roughly where it had been in 1200.

There was a rash of financial innovation: bills of credit to solve the problem of how to pay for goods without transporting silver through bandit country, double-entry book-keeping, insurance. Italian bankers began to appear all across the continent, financing kings and their wars, sometimes at a profit, sometimes at a disastrous loss. The wealth that the Italian trading towns had generated soon found its way into scholarship, art or science, or in the case of Leonardo da Vinci, all three. Per capita income in England was probably higher in 1450 than it would be again before 1820.

plague and war once more reduced the European population: in 1692–4, perhaps 15 per cent of all French people starved to death. Unlike Mesopotamia, Egypt, India, Mexico, Peru, China and Rome, early modern Europe became capital-intensive, not labour-intensive.

They even gave up capital-intensive guns in favour of labour-intensive swords. A good Japanese sword had a blade of strong though soft steel, but with a brittle, hard edge made lethally sharp by incessant hammering.

Two things, says the historian Kenneth Pomeranz, were vital to Europe’s achievement: coal and America. The ultimate reason that the British economic take-off kept on going where the Chinese – or for that matter, the Dutch, Italian, Arab, Roman, Mauryan, Phoenician or Mesopotamian – did not was because the British escaped the Malthusian fate. The acres they needed to provide themselves with corn, cotton, sugar, tea and fuel just kept on materialising elsewhere. Here are Pomeranz’s numbers: in around 1830, Britain had seventeen million acres of arable land, twenty-five million acres of pastureland and less than two million acres of forest. But she consumed sugar from the West Indies equivalent (in calories) to the produce of at least another two million acres of wheat; timber from Canada equivalent to another one million acres of woodland, cotton from the Americas equivalent to the wool produced on an astonishing twenty-three million acres of pastureland, and coal from underground equivalent to fifteen million acres of forest. Without these vast ‘ghost acres’ Britain’s industrial revolution, which was only just starting to raise living standards in 1830, would have already shuddered to a halt for lack of calories, cotton or coal.

When Asia experienced a population boom in the early twentieth century, it had no such emigration safety valve. In fact, Western countries firmly and deliberately closed the door, terrified by the ‘yellow peril’ that might otherwise head their way. The result was a typical Malthusian increase in self-sufficiency. By 1950 China and India were bursting with the self-sufficient agrarian poor.

Yet the tragedy is that this top-down coercion was not only counter-productive; it was unnecessary. Birth rates were already falling rapidly in the 1970s all across the continent of Asia quite voluntarily. They fell just as far and just as fast without coercion. They continue to fall today. As soon as it felt prosperity from trade, Asia experienced precisely the same transition to lower birth rates that Europe had experienced before.

When the world population looked like it would hit fifteen billion by 2050 and keep on rising after that, there was a genuine risk of not feeding or watering that number comfortably, at least not while hanging on to any natural habitats. But now that even the United Nations’ best estimate is that world population will probably start falling once it peaks at 9.2 billion in 2075,

In technical jargon, the entire world is experiencing the second half of a ‘demographic transition’ from high mortality and high fertility to low mortality and low fertility.

The pattern is always the same: mortality falls first, causing a population boom, then a few decades later, fecundity falls quite suddenly and quite rapidly. It usually takes about fifteen years for birth rate to fall by 40 per cent.

The more babies are likely to die, the more their parents bear. Only when women think their children will survive do they plan and complete their families rather than just keep breeding. This remarkable fact seems to be very poorly known.

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.

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. Most cities are – and always have been – places where death rates exceed birth rates. Immigration sustains their numbers. Yet this cannot be the whole story: Nigeria is twice as urbanised and twice as fecund as Bangladesh.

demographic transition is that countries lower their birth rates as they grow healthier, wealthier, better educated, more urbanised and more emancipated.

What a happy conclusion. Human beings are a species that stops its own population expansions once the division of labour reaches the point at which individuals are all trading goods and services with each other, rather than trying to be self-sufficient.

that eventually made slavery – along with animal power, and wood, wind and water – uneconomic. Wilberforce’s ambition would have been harder to obtain without fossil fuels. ‘History supports this truth,’ writes the economist Don Boudreaux: ‘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 invention of dried-grass hay enabled northern Europeans to feed oxen through the winter. Slaves were replaced by beasts, more out of practicality than compassion one suspects. Oxen eat simpler food, complain less and are stronger than slaves.

The premise is false, of course, because it was the aura of the time and place that drew forth (and attracted from abroad – Brunel was French, Rumford American) such talent. For all their brilliance, there are Watts, Davys, Jenners and Youngs galore in every country at every time. But only rarely do sufficient capital, freedom, education, culture and opportunity come together in such a way as to draw them out. Two centuries later, somebody could paint a picture of the great men of Silicon Valley and posterity will stand amazed at the thought that giants like Gordon Moore and Robert Noyce, Steve Jobs and Sergey Brin, Stanley Boyer and Leroy Hood all lived at the same time and in the same place.