The Rational Optimist: How Prosperity Evolves

by Matt Ridley

Exchange is to cultural evolution as sex is to biological evolution.

markets in goods and services for immediate consumption – haircuts and hamburgers – work so well that it is hard to design them so they fail to deliver efficiency and innovation; while markets in assets are so automatically prone to bubbles and crashes that it is hard to design them so they work at all.

I am a rational optimist: rational, because I have arrived at optimism not through temperament or instinct, but by looking at the evidence.

Economists call this the ‘hedonic treadmill’; the rest of us call it ‘keeping up with the Joneses’.

Besides, a million years of natural selection shaped human nature to be ambitious to rear successful children, not to settle for contentment: people are programmed to desire, not to appreciate.

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,

In 1900, the average American spent $76 of every $100 on food, clothing and shelter. Today he spends $37.

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 the diagnostic feature of modern life, the very definition of a high standard of living: diverse consumption, simplified production. Make one thing, use lots.

So this is what poverty means. 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.

Two economists recently concluded, after studying the issue, that the entire concept of food miles is ‘a profoundly flawed sustainability indicator’. Getting food from the farmer to the shop causes just 4 per cent of all its lifetime emissions.

Instead, you benefit from a global laptop and wheat market in which somebody somewhere has something to sell you so there are rarely shortages, only modest price fluctuations.

human beings evolved to strive to signal social status and sexual worth. What this implies is that far from being merely materialist, human consumption is already driven by a sort of pseudo-spiritualism that seeks love, heroism and admiration.

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.

Cooking enabled hominids to trade gut size for brain size.

sexual division of labour came about because of the long, helpless childhood of human beings. Because women could not abandon their babies, they could not hunt game, so they stayed near the home and gathered and cooked food of the kind that was compatible with caring for children.

Without trade, innovation just does not happen. Exchange is to technology as sex is to evolution. It stimulates novelty.

The extraordinary thing about exchange is that it breeds: the more of it you do, the more of it you can do. And it calls forth innovation.

human beings learn skills from each other by copying prestigious individuals, and they innovate by making mistakes that are very occasionally improvements – that is how culture evolves.

Technology was made possible by division of labour: market exchange calls forth innovation.

The Tasmanian market was too small to sustain many specialised skills. Imagine if 4,000 people from your home town were plonked on an island and left in total isolation for ten millennia. How many skills and tools do you think they could preserve?

oxytocin does not affect reciprocity, just the tendency to take a social risk, to go out on a limb.

Human beings are capable of empathy, and are discerning trusters. Is that it, then? That human beings can build complicated societies and experience prosperity is down to the fact that they have a biological instinct that encourages cooperation? If only it were that simple.

As a broad generalisation, the more people trust each other in a society, the more prosperous that society is, and trust growth seems to precede income growth.

Random violence makes the news precisely because it is so rare; routine kindness does not make the news precisely because it is so commonplace.

This is the extraordinary feature of markets: just as they can turn many individually irrational individuals into a collectively rational outcome, so they can turn many individually selfish motives into a collectively kind result.

The working poor give a much higher proportion of their income to good causes than the rich do, and crucially they give three times as much as people on welfare do. As Michael Shermer comments, ‘Poverty is not a barrier to charity, but welfare is.’

Innovation, whether in the form of new technology or new ways of organising the world, can destroy as well as create.

In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.

firms are temporary aggregations of people to help them do their producing in such a way as to help others do their consuming.

But for anybody who thinks great art and great philosophy have nothing to do with commerce, let him visit Athens and Baghdad to ask how Aristotle and al-Khwarizmi had the leisure time to philosophise.

‘Rich countries,’ concluded the Bank, ‘are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity.’

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

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

The pessimists, led by Mark Cohen and Marshall Sahlins, argued that farming was a back-breaking treadmill that brought a monotonous diet deficient in nutrients to a people plagued by pollution, squalor, infectious diseases and early death. More people could now live upon the land, but with unchecked fertility, they would have to work harder. More babies were born, but more people died young. Whereas extant hunter-gatherers such as the Dobe !Kung seemed to have ample leisure and to live in ‘the original affluent society’ (Sahlins’s phrase), limiting their reproduction and so preventing

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.

Pre-emptively raiding your neighbours lest they raid you is routine human behaviour. As Paul Seabright has written: ‘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.’

This actually gives great cause for optimism, because it implies that intensifying agriculture throughout Africa and central Asia could feed more people and still support more other species, too.

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.

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.

That technology was genetic modification, which was first invented in the mid-1980s as a kinder, gentler alternative to ‘mutation breeding’ using gamma rays and carcinogenic chemicals. Did you know that this was the way many crops were produced over the last half-century? That much pasta comes from an irradiated variety of durum wheat? That most Asian pears are grown on irradiated grafts? Or that Golden Promise, a variety of barley especially popular with organic brewers, was first created in an atomic reactor in Britain in the 1950s by massive mutation of its genes followed by selection?

Yet, though this was an officially organic product, biologically integrated into the plant, and obviously better for the environment, organic high priests rejected the technology.

One estimate puts the amount of pesticide not used because of genetic modification at over 200 million kilograms of active ingredients and climbing.

‘I’m so tired of people who wouldn’t visit a doctor who used a stethoscope instead of an MRI demanding that farmers like me use 1930s technology to raise food,’ writes the Missouri farmer Blake Hurst

Of course, almost by definition, all crop plants are ‘genetically modified’. They are monstrous mutants capable of yielding unnaturally large, free-threshing seeds or heavy, sweet fruit and dependent on human intervention to survive.

‘Europeans are imposing the richest of tastes on the poorest of people.’

‘blanket opposition to all GM foods is a luxury that only pampered Westerners can afford.’

Or as the Kenyan scientist Florence Wambugu puts it, ‘You people in the developed world are certainly free to debate the merits of geneticall...

Cities exist for trade. They are places where people come to divide their labour, to specialise and exchange. They grow when trade expands – Hong Kong’s population grew by thirty times in the twentieth century

Since people have generally done more dying than procreating when in cities, big cities have always depended on rural immigrants to sustain their numbers.