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The economics of hope:
Trust, trade and human progress
A proposal for a book
By Matt Ridley
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``On what principle is it that, when we see nothing but improvement behind us, we are to
expect nothing but deterioration before us?’’ Thomas Babington Macaulay, 1830
Synopsis
In ten thousand years the human race has expanded from less than ten million to nearly
ten billion people. Some of those ten billion live in misery and want even worse than the
worst experienced in the stone age. But the vast majority do not: probably 99% of people
are much better fed, much better sheltered, much better entertained, much better
protected against disease and much more likely to live to old age. The availability of
almost everything a person could want or need has been going rapidly upwards for 200
years and erratically upwards for 10,000 years before that: calories, vitamins, clean water,
machines, privacy, means of travelling faster than you can run, ways of communicating
over longer distances than you can shout.
There are exceptions, where things are getting worse on average. There is less emptiness,
more of some forms of pollution, more terrorism, more obesity, perhaps more
unhappiness (but then, as any Buddhist would tell you, happiness is relative, not absolute,
so it’s bound to recede forever into the distance). And there are plenty of people who tell
us that the good times are all coming to a disastrous end some day soon, that we are like
the man falling past the second floor of the skyscraper who says `So far, so good!’ I think
they are wrong and future material progress for all is not only possible but likely.
In this book I want to ask how it can be that we six billion are, on average, far more
prosperous than people have ever been before. I think I have a surprising and universal
answer, namely that prosperity consists of having access to the effort and ingenuity of
others through trade, trust and technology – and that progress consists of increasing that
access. It’s not so much the division of labour; it’s the multiplication of talent.
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This notion explains more than purely economic facts. Power is the confiscation of
others’ efforts. Politics is the diversion or monopolisation of their efforts. Property is the
purchase of their efforts. Energy, in the form of oil or electricity, is the amplification of
effort. Technology is the capture and embodiment of a craftsman’s effort in machines,
bringing together the talents of people across centuries and countries. Trade is the about
the exchange of effort – bringing together to best advantage the fruits of different
people’s talents across the globe.
Progress in short IS the multiplication of talent. And here lies a central paradox. As
consumers, we have become more and more diversified people: we experience more and
more activities and use more and more things. The richer you get, the less restricted your
consumption. But to achieve that, we have to become more and more specialised as
producers. An airline pilot or an insurance salesman produces only one thing; but
consumes many.
This is not of course an entirely new idea. The Anglo-Irish economist Sir William Petty
first spotted the importance of the division of labour in Cromwell’s time, and Adam
Smith brilliantly developed the notion a century later. David Ricardo, Emil Durkheim,
Karl Marx and many others added to the thought. The central role of mutually beneficial
exchange was explored by Robert Wright, in `Non-Zero’, and myself in `The Origins of
Virtue’. But never till now has anybody tried to make the case that all human progress
can be seen through the lens of this idea, and exploring how far it will take us to
understanding the human enterprise.
I am not a trained economist but then I was not a trained geneticist either when I wrote
`Genome’. In 20 years as a reporter and as a columnist, I frequently wrote about
economic issues and today, as non-executive chairman of a mortgage bank, I grapple
daily with issues of markets, interest rates, credit and growth. I know enough formal
economics to understand what the experts mean; but I am sufficiently outside the subject
to see the forest for the trees. As with all my books, the writing will be an exploration,
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and will take me to ideas I do not yet see. When writing a book, I do not know exactly
where it will lead.
In three of my previous books (`The Red Queen’, `The Origins of Virtue’ and `Nature via
Nurture’) I have explored how far human behaviour is the expression of an invariant,
innate nature. Yet, though in some ways we are condemned to repeat the attitudes and
aspirations of our ancestors, life is dramatically different for each new generation. This
book starts where the others leave off. It tries to explain why human beings, uniquely
among animals, steadily improve the conditions of their lives, generation by generation.
It is about the things that do change, and why they change: how a fixed human nature
cumulatively and progressively alters and is altered by the world in which it is expressed.
The book will go back into the distant stone-age past and forward to the latest
neuroscientific future in search of explanations of the human capacity to progress. It will
be 80,000 – 100,000 words long and will take two years to research and write, to be
delivered in early 2009.
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Contents
Chapter 1 Are we really better off?
Chapter 2 The first division of labour
Chapter 3 Trade: the exchange of effort
Chapter 4 Technology: the amplification of effort
Chapter 5 Social technologies and trust
Chapter 6 The taming of religion and violence
Chapter 7 Sensibility and Nostalgia
Chapter 8 Environmental progress
Chapter 9 The future
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Chapter 1 Are we really better off?
It appears that material prosperity is greater today than at any time. Even allowing for the
millions who live in abject poverty, disease and want, this generation of human beings
has access to more calories, watts, gigabytes, megahertz, miles per gallon, dollars,
vitamins, medicines, machines, shoes, singers, soap operas, sexual partners and anything
else one can covet.
That fact is a source of almost universal disgust among the intelligentsia, who, steeped in
the puritan traditions of Christianity and filled with the evolved instinct of jealousy,
despise material wealth. Their claim is that affluence has come at a profound spiritual
cost. They may be right: my aim is not to moralise, at least not yet. My aim is to explain
this fact of increasing material wealth.
Of course, a modern dollar buys less than it did, so perhaps our greater prosperity is an
illusion caused by inflation. But for most things that is irrelevant. Take Thomas
Babington – Lord – Macaulay, the historian who 160 years ago in 1845 celebrated the
progress that had happened in the preceding 160 years and boasted of the wealth and
comforts of his own age while lambasting those who looked back to an illusory golden
past. Macaulay was – once he rebuilt the fortunes of his family by taking a lucrative
position in India – rich by the standards of the day. He had footmen at his beck and call.
Compare him to the average citizen of Britain today, say a woman working in a banking
call centre on £15,000 a year. She is, in relative terms, immeasurably poorer than he was.
Where he was among the richest of the rich in what was then one of the world’s richest
cities, she is now on the median income. She has no servants, where he had scores. She
lives in a modest house, where he lived in a mansion. She uses public transport where he
had a coach and four at his beck and call.
And yet consider this. She may have no servants, but she can go to an Indian restaurant
and have an excellent meal cooked for her by a very good cook. She employs no tailor,
but she can easily afford excellent cotton clothes made up for her in a Vietnamese
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factory. She has no coach, but she can buy a ticket which will summon the services of a
skilled pilot of a budget airline to fly her for a week in Spain. She has no pocket borough,
but she employs the operators of a gas rig in the North Sea to bring her comparatively
cheap central heating. She has no wick-trimming footman, but her light switch gives her
the instant and brilliant produce of hard-working people at a distant power station. She
has no runner to send messages, but she has a mobile phone instead, designed by
anonymous genii in distant lands and using a network maintained by diligent experts. She
has no retained apothecary, but her dentist uses local anaesthetic and durable amalgam
invented by some scientist. She does not hear unreliable gossip in the tavern about the
disappearance of Franklin, but at the flick of a switch she can get a television newsreader
to tell her about a film star’s divorce in California.
The point is that she is richer than he was, not because she has more money, or more
property, or more resources, but because she has more services. Despite having no
servants, she has more people working for her. She does not employ them directly, and
she shares them with many others, but they work for her as surely as Macaulay’s butler
did for him. It is as if she employs these people directly.
And she employs not only the newsreader and oil-rig worker; she employs people long
dead or thousands of miles away: John Logie Baird and Alexander Graham Bell and Sir
Tim Berners Lee and Thomas Crapper and Jonas Salk and myriad assorted other
inventors. She gets the benefit of their labours, too, whether they are dead or alive. Their
labour has been embodied in their inventions to continue serving her indefinitely.
It is the simple proposition of this book that wealth is getting other people to work for
you and progress is expanding the number of them.
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Chapter 2 The first division of labour
In the evolution of life, too, progress depends on multiplying the access of individual
units to each others’ talents. Lichens are joint ventures between structural fungi and
photosynthesising algae. Indeed, all animals and plants are collaborative ventures
between oxygen-using bacteria called mitochondria and larger cells. You can make a case
that evolutionary `progress’ – the invention, for example, of multi-cellular forms, the
emergence of bigger brains in social animals – consists of new steps in dividing labour
and exchanging talent.
Ants are probably the most spectacular example of divided labour among individuals of a
species – workers, soldiers and queens, though genetically very similar, come to look
completely different. The immense success of the ants has much to do with this
invention, a neat parallel with human industry. But even ants have a very limited range of
castes. Note, by the way, that human beings have never divided reproductive labour as
ants do. Even in Britain, we do not expect Queen Elizabeth to do our breeding for us.
In human beings, the oldest division of labour of all is probably the sexual one. Mammals
divide reproductive skills between the sexes, almost by definition. Females gestate and
lactate, while males…don’t. Sometimes the bargain is relatively egalitarian: in pygmy
marmosets, the male looks after the baby all day while the female forages to get enough
calories to feed the baby with milk at night.
A million years ago our ancestors were just typical animals in every sense. They
occupied an ecological niche, killing, scavenging or gathering rodents, antelope calves,
fruits and tubers; living in wide home ranges on grassy plains or wooded lake shores;
breeding at a certain age, one young at a time, maturing slowly. I can’t know the details
for sure and nor can anybody, but from around this time onwards they had one thing
going for them that nearby baboons and warthogs did not: a rudimentary division of
labour between the sexes.
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Males had started pursuing and eating meat much more than females. This is highly
unusual among animals, but it is by no means unknown. It is generally explained by
something called a niche-separation hypothesis. If males eat different things from
females, they compete less with them and both sexes benefit. New Zealand’s extinct huia
bird had this strategy, with the male and female even having different shaped beaks.
You can see this niche-separation today in many modern women’s much lesser
fascination with meat. You can also see it in the fact that among hunter-gatherers it is an
almost inviolable rule that men hunt and women gather. But the hunter-gatherers also
show something different: at some point male and female began sharing their food. Now
no longer was the different foraging strategy a matter of niche separation. It was a
multiplication of talent. Men brought scarce, unreliable and valuable protein to the feast;
women supplied regular, staple carbohydrate. Each was better off for the other’s
contribution. Men probably could not afford to spend days on a hunting expedition that
might be fruitless unless they knew that women could feed them if they failed. Women
could not rear big-brained babies on roots and seeds unless they knew that men were
bringing protein. It’s a classic gain from trade, a non-zero sum, and it was the first. By
becoming more specialised in their production, each sex became more diversified in its
consumption.
The invention of the sexual division of labour benefited both genders. It made the species
more competitive and allowed it to occupy new niches and habitats. According to one
recent study, it almost certainly was not shared by the Neanderthals and thus helps to
explain their displacement by African immigrants.
But it was only the first division of labour.
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Chapter 3 Trade: the exchange of effort
The next step in human progress was to multiply access to the talents of other individuals
and groups. The evidence suggests that specialisation in human skills came very early.
By 30,000 years ago people were talented specialists: some were good hunters, some
good makers of tools and some good leaders. To get to this point, people had had to
accept sharing arrangements. Two commodities in particular may have encouraged
sharing: big game and fire. A dead mammoth, or a good fire, is not worth keeping to
yourself. You can share it at little cost.
Agriculture brought a new dilemma, the so-called `husbandry problem’. To rear a goat or
a wheat plant, keeping it safe and healthy, takes much time and work. To go out and kill a
wild goat, or harvest a wild wheat plant, takes just a few hours. So why waste time on the
former activity? Some believe that the invention of agriculture was not progress, but
regress, a desperate response to near starvation: although populations increased, health
declined. But it was made possible by further specialisation. The farmer growing wheat
could trade his surplus grain for a hunter’s meat.
By the time William Petty coined the phrase `the division of labour’ in the seventeenth
century – after watching the efficient Dutch shipmakers building a ship in modules that
were then assembled – specialisation was a central fact of economic life. So ancient is
this peculiar human trait that it has left its mark on our psyches. From about the age of
ten, children start to identify their own and each other’s particular skills and to reinforce
them by doing much more of what they are good at, and much less of what they are bad
at.
Trade is uniquely human. For most other features of human existence, there is at least a
rudimentary animal analogue. Dolphins have language, crows make tools, chimpanzees
have cultural traditions, elephants have a sense of self, bower birds make art. But for
trade there is nothing: in no other species does one group of animals generate a surplus of
some good and swap it for another group’s surplus of a different good.
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And trade is, without doubt, the source of most human prosperity. It enables people to
have things they cannot grow or produce at their home, but far more than that, it allows
specialisation, division of labour and almost incredibly greater productivity for those at
both ends of each trade.
How ancient is trade? Burial goods from 30,000 years ago show items of jewellery, made
from sea shells, travelling long distances inland. Obsidian glass blades and yellow ochre
body paint were moving long distances perhaps ten times as long ago as that. Australian
aborigines, when still hunter-gatherers, were trading extensively.
The experimental study of trade has only just begun. This chapter will recount the first
faltering attempts by Vernon Smith and his colleagues to recreate in a game on a
computer network the problems that face international traders, revealing just how the
psychology of the trader develops.
It was traders who built the prosperity on which empires were built: the Phoenicians first
straddled the Mediterranean. The Hansa merchants united Northern Europe. The Fujian
Chinese knitted together east Asia. The Gujarati Indians made the Indian Ocean one. In
China, in India, the British empire, even in Inca Peru, it was trade that came first and that
generated the surpluses for kings and tyrants to confiscate. The great leaps of progress
and civilisation were made by traders. The Phoenicians, the Mayans, the Greeks, the
Chinese, the Florentines, Venetians and Genoans, the Dutch, the British and the
Americans all built empires from trade networks rather than vice versa. Concentrated
imperial wealth and military power – in ancient Egypt, classical Rome, Inca Peru,
imperial Spain or modern Baghdad – depends entirely on monopolising or taxing the
gains from trade. Political power is essentially parasitic on trade.
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Chapter 4 Technology: the amplification of effort
Human beings are condemned to rebuild their natures in every generation. But each
generation grows up amid quite new technology. Born in 1750 and you would probably
never travel faster than the speed of a galloping horse, and nor would your letters; born
fifty years later and you would happily find yourself going like the wind in trains, and
getting messages by telegraph almost instantaneously. When I was born the idea of
sending a letter from a blackberry while sitting in a train was unimaginable and
unimagined (seers of the 1950s expected transport, not communication to innovate fast).
Why does progress in technology result in progress in prosperity? There is of course
nothing valuable about the machines themselves. A spinning jenny is not an asset except
in what it can do – enable a man to make more cloth, sell it and live off the proceeds. But
even that has it backwards. It is not the producer that counts, but the consumer. The
person who buys a cloth made by a machine has been served more cheaply. It is his wellbeing that has been increased. Technology serves progress to the extent that it allows
people to draw on the services of others.
The most obvious examples are in the field of energy. The discovery of fire, of coal, of
oil, of nuclear power and the invention of steam engines, turbines, electricity are useful
precisely because they amplify the effort that people can draw upon. (So did the
domestication of horses and oxen.) Technology is progress to the extent that it amplifies
the amount of work a person can call upon.
Innovation in technology is crucial to progress. In the 1200s, for example, medieval
Christendom enjoyed unprecedented peace, prosperity and – for abbots and lords –
growing wealth. But because there was virtually no innovation, especially in agriculture,
the average peasant ended the century poorer than his grandfather – thanks to deflation,
another word for regress. Innovation, in a world where most people mistrust change, is a
tender plant that withers easily. Philosophers like to think they create it, technology being
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a spin-off from scientific discovery. But this is only occasionally the case. Discovery
usually follows invention rather than the other way around. And there is only one reliable
engine of invention: competition. All forms of monopoly suppress innovation; all forms
of competition encourage it. That is why governments did not invent mobile phones, but
firms did. That is why unified, bureaucratised Ming China fell suddenly behind
fragmented Renaissance Europe, where cities and states competed for the talents of
inventors. The great boon of the free market is not that it drives down costs, though it
often does, but that it drives up the rate of innovation. Innovation comes from people
tinkering with their tools and their services to gain incremental gains over each other.
Does new technology drive new prosperity? Was the growth of recent decades down to
the computer, the mobile phone and the internet, as the growth of the 1820s was down to
weaving and spinning machines, or the growth of the 1920s was down to cars and
production lines? In a sense yes, but not in the determinist way that `endogenous theory’
would have you believe. Possessing a gadget does not make you richer and producing
one certainly does not. Using a gadget does not automatically make you richer either.
Only using that gadget to draw upon the services offered by other people does. Once
again progress is down to getting access to others’ efforts. The consumer, not the
producer, is who counts. That is why the internet is only as good as the things you can do
with it. What is valuable is not the network and the processors, but the work that has gone
into Google, Wikipedia, Amazon, Ebay and their ilk: the incredible shrinkage of time and
effort it now takes to check a fact, track down a friend, order a CD, book a ticket or find a
provider of an obscure good. The services you can draw on, not the money you use to
buy them, are your wealth.
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Chapter 5 Social technologies and trust
So where and how do trade, technology and exchange deliver their magic? There is
nothing inevitable about it. Countries, regions and whole empires have stagnated or even
rotted as trade has failed to flourish. The standard of living in the Mediterranean region
probably regressed between 1500 BC and 500 BC and in China between 1500 AD and
1980. The spectacular surges in prosperity on which progress depends happen all too
rarely and in unexpected places. There is no particular correlation with political regime.
Some democracies like America experience rapid progress; others like Haiti don’t.
Communism in North Korea kills prosperity; slightly relaxed in Vietnam it delivers
excellent material improvement. Autocrats like Mao are disastrous; others like Peter the
Great may not be so bad.
Nor is access to resources much use: countries like Congo or Russia with ample metals,
oil or diamonds often suffer from the corruption and stagnation that goes by the name of
the `curse of resources’. Even the industrious Netherlands was sunk into lethargy by an
abundance of North Sea Gas in the 1980s. Britain is sometimes said to have built its
nineteenth century prosperity on coal, but France, Germany and China had just as much
coal. It was the means of expanding trade they lacked.
No, the thing that defines a nation’s capacity for progress is much more intangible. It is
the building of institutions that foster human exchange – markets, firms, clubs and coffee
houses; the rule of law, secure property rights, sound money; credit. Why do these `social
technologies’ matter so much? Because they create trust and with trust people begin to
take risks and venture enterprises. The cost of credit, for example, is directly related to
the degree of trust. Credit borrows the cost of today’s investment from the wealthy future.
Trust is the central psychological ingredient of progress. Merchants in a market must trust
each other to deliver deals. Traders must risk their money on trust. From a Hanseatic
merchant to a modern bond dealer, there is an extraordinary need for and reliance upon
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trust. The great success of the Fujian Chinese in the East Indies, the Jews in medieval
Europe and the Parsis in India came from their networks of trust within kith and kin. A
Fujian trader could carry the risks of sending a cargo home was because he (often she)
was sending it to family relatives he could trust.
Trust builds slowly and incrementally within a merchant society; it cannot be created in
an instant. But once created it spills over into civic virtue generally. That is why it is
merchant societies, in Greek city states, Italian Renaissance republics or Manhattan
skyscrapers who have pioneered the development of art, of thought and of charity.
You can measure trust and test it. International surveys reveal how some countries have it
more than others. The frequency with which a wallet left in the street will be returned to
its owner is symptomatic of a society’s level of trust. Trust is like money: you must
invest it to grow it. Societies that have been devastated by war but are left with good
levels of trust will soon recover; others that are luxuriating in sudden prosperity but lack
trust will soon stagnate.
Indeed, it is now possible not just to study trust inside the brain, but to induce it, too. In a
remarkable series of experiments, people like Paul Zak and Ernst Fehr have shown that
they can make people more trustworthy in computer games, by squirting puffs of the
brain hormone oxytocin up their noses. Oxytocin is the hormone that causes a ewe to
build a bond with her lamb, or causes a monogamous prairie vole to become mentally
addicted to her mate. It is also the hormone that enables people to build bonds with
strangers.
So what is it that triggers the release of oxytocin inside a person’s brain? This chapter
will explore the latest research, as yet unpublished. The author will himself attempt to
alter his behaviour using oxytocin.
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Chapter 6 The Taming of Religion and Violence
If I am right and trade, technology and trust lie at the heart of human progress, why do so
many people spend so little of their time admiring commerce? That is to say, why have
most of the world’s idealists been set on either religious or political careers? And why is
the universal view of trade, shared equally by a modern socialist anticapitalist and a
Victorian earl, so dismissive of trade? Why is the intelligentsia so virulently anticonsumerist?
Exchange is usually a mere footnote in the telling of history. You can tell the story of,
say, the sixteenth century while barely mentioning trade – you would mention people like
Luther and Charles V; even if you did mention Cortez and Vasco da Gama it would be
their vicious conquering, not their legacy of trade, that caught your attention. Drake the
pirate outshines every London merchant of his time.
The truth is that trade just is not good box office, at least not alongside burnt heretics and
besieged cities. To this day, even modern business news consists mainly of boardroom
battles, corporate crimes or tales of heroic leadership.
This is partly because the instinct to exchange is such a recent feature of human life that
it often struggles to be heard among the older instincts of ambition, violence, treachery
and superstition. So every time we get the progress engine turning, some fool hijacks its
output to pursue political ambitions. The Phoenicians and Greeks unite the Mediterranean
with trade only to have their efforts subsumed within the empires of Carthage and Rome,
so that we read about Hannibal and Scipio rather than the merchants that made their feats
possible. The pre-Ming Chinese created a ferment of invention and exchange only to
enrich an emperor who preferred to retreat into bureaucracy and luxury. Clive of India
embodied, in his career, the very problem: sent to trade with Madrassi merchants, he
ended up conquering and exacting tributes from Bengali princes instead.
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Of course, in a society divided into specialist producers exchanging their products, there
is a place for warriors and priests. Fighting and praying are themselves farmed out to
specialists, just as weaving and tanning are. A society that neglects to provide its defence
will be conquered. But it is quite wrong to see either violence or religion as playing any
role in progress. Even the old Max Weber notion of the `Protestant work ethic’, which
saw the Reformation as preparing the way for the Industrial Revolution, reads history
backwards. It was the invention of, especially, printing that made the Reformation
possible. (The notion that progress only reached benighted savages because of military
conquest or religious missions will be easily despatched.)
None the less, history suggests that we have grown gradually better at solving the
problem of human violence by handing a monopoly on violence to a government and
tying it down with constitutional strings to prevent it using that violence against any but
the criminal. The beast of human violence, thus tamed, becomes ever more implicit – the
blue light on a policeman’s car is all you need to see to know who has a monopoly of
force. The trouble is, the beast keeps escaping, to invade Poland, launch a cultural
revolution, or crash an airliner into a building.
Religion, likewise, can be domesticated. In this case, it is a matter of gradually taking its
grip off the windpipe of commerce – abolish its monasteries, nationalise its tithes – and
then gradually redirecting its efforts into charity. All religions have made astonishing
progress over the millennia, from blood-letting cults to conscientious philanthropies, and
– violent reformations and vengeful ayatollahs notwithstanding – the three great
monotheisms have done so in remarkable parallel. Progress indeed.
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Chapter 7 Sensibility and Nostalgia
Religious progress reminds us that progress is not just an economic phenomenon. As well
as becoming wealthier, we are also becoming nicer. Why so? The intelligentsia would
have us believe that the more time we spend in markets and the richer we grow, the
coarser and more selfish our morals become. The evidence suggests otherwise. Not only
have people become steadily less tolerant of cruelty and injustice as their prosperity has
grown, but they have done so most rapidly in the most capitalist, market dominated
societies.
Progress in sensibility is superficially surprising since human nature is plainly a universal
fact owing much to inherited instinct. Generation after generation people are born with
the same tendencies, from hunger and thirst to ambition, sexual jealousy and parental
affection. The romantic idea shared by Rousseau, Hobbes and most monotheists that we
laboriously invented our morals has long since been exploded. But if so, how does
sensibility progress? How is it possible for one generation to be intolerant of the casual
cruelties of its predecessors?
Romans enjoyed the torture of wild beasts in the forum. Under the Tudors, vagabonds
were ordered by law to be branded, forced into slavery and hanged if disobedient.
Georgians sugared their coffee with the produce of slaves. Victorians sent the indigent
poor to workhouses. In the 1920s casual racism and anti-Semitism were quite acceptable.
Corporal punishment was normal for children when I was young. How many of the
things we take for granted today will be considered disgraceful a century hence?
Already a concern for the planet has become a universal virtue in the capitalist rich
countries, something unimaginable even a generation ago. Environmental sensibility is
the latest step in this inevitable progress from cruelty and intolerance to intolerance of
cruelty. Even economists have recently rediscovered that people are motivated by softer
incentives than merely profit or self interest. Businesses, rapidly learning to boast of their
fine carbon footprints, are making the same discovery.
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Whence comes this progress in sensibility? A clue lies buried in the environmental
debate. Last Valentine’s Day, I ordered flowers for my wife. This was, presumably, a
planetary sin: the flowers had been flown from either a fossil-heated greenhouse in
Holland or from a farm in Kenya’s Rift Valley in a fossil-powered jet. Either way, the
carbon footprint of my little romantic gesture was awful. Yet ironically, the people who
would criticise such wasteful luxuries are the very same ones who would accuse
economics of being a heartless science concerned only with utility maximisation and not
recognising the softer motives of life. In other words, just as economics is discovering its
softer side, environmentalism is discovering puritan utility. In this paradox lies the
solution to progress in sensibility. My wife did not need flowers. The further people
progress from need and from desperation, the more their exchanging will take the form of
luxury. And concern for child chimney sweeps, or for the climate, are themselves
luxuries unaffordable before.
So if the past was nastier why are we so nostalgic? Much of the environmental movement
taps into the feeling that there was a golden age, when we all lived in flower-strewn
meadows, rather than concrete streets, and woke to larks not sirens. In practice, life in
even the poshest iron-age settlement was dominated not just by toil, hunger, smoke, lice,
mud, sewage and toothache, but by the threat of violence, too. Nostalgia is progress’s
implacable enemy, and pessimism’s eager ally.
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Chapter 8 Environmental Optimism
Human progress since the stone age has resulted in ever greater average wealth, despite
more and more people using the same small planet. Surely this must cease? Surely we
will run out of room, or resources, or luck, soon?
Not necessarily. Environmental constraints keep appearing, but expanding human
knowledge keeps making them go away. As Julian Simon spotted, resources can
substitute for each other and are limited by human ingenuity In 1900 we were going to
run out of land to grow food on, but tractors (which don’t need feeding from fields as
horses do) and fertilisers solved that problem so we ended the twentieth century
comfortably feeding five times as many people as nearly starved in 1900. Then in the
1960s we worried that population growth would accelerate indefinitely, but lowered
infant mortality paradoxically lowered the birth rate and we will reach 2050 with a stable
world population for the first time in 50,000 years. In the 1970s, we thought we would
soon run out of oil, or copper, but the fears proved groundless: ingenuity will keep
uncovering new resources till the price chokes off demand and alternatives replace them.
In the 1980s we worried about acid rain killing forests, but sulphur trading soon
evaporated the problem. In the 1990s it was the ozone layer.
Now it is global warming, a problem with plenty of potential solutions, from reforestation
and carbon capture to nuclear power, though none of them are painless. The special
feature this time is massively political: how to internalise the costs of global warming to
every nation so that the magic of exchange and innovation can get to work on it, rather
than blunder into a future where everybody waits for another to solve the problem and
nobody does. But the idea that we cannot harness the ingenuity of the market, backed by
the immense wealth that even the pessimists admit is inexorably coming our
grandchildren’s way, to defeating a human-induced two degrees of warming – this idea
beggars belief. The next century of progress almost certainly includes continuing a steady
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shift from burnt carbon to burnt hydrogen as our main source of energy, and it includes
unimaginable new wealth to spend on mitigating carbon emissions.
All too often environmental problems are presented as insuperable. The truth is, progress
can solve them and in solving them can make a better world not just for us but for
wilderness and the planet, too. Imagine, for instance, that you could suddenly travel back
1,000 years. The land then grew everything you needed. Not just your food, but your
fertiliser (legumes), your fuel (wood), your clothing (wool and flax), your transport
(horses), your lighting (tallow candles), your building and roofing (wood and thatch),
your medicines (herbs). Even your power came from dispersed sources across the land –
water mills and wind mills. Only your metal tools came from point sources.
The story of the past thousand years has been how much LESS land-hungry all of those
things have become – how concentrated. A car factory released a million acres of oats
and hay. A coal mine substituted for ten thousand acres of forest. A synthetic fleece
started life in an oil well, whereas a wool jumper needed half an acre of land.
Food farming is going the same way. Consider this statistic, calculated by the economist
Indur Goklany. If we were to feed the world’s current population of 6.5 billion as
generously as we do now, using the yields of 1961, we would need to cultivate 82% of
the world’s land surface area. At the moment we cultivate 38%. The intensification of
agriculture has therefore not only saved untold numbers of human beings from starvation,
it has also saved the rain forest, the desert, the wetlands and the tundras of the world.
The worship of self sufficiency is therefore terribly misguided. Wealth is the opposite of
self sufficiency: to get a Kansas farmer to supply you with the wherewithal for a loaf of
bread whenever you need it, or a Vietnamese factory worker to sew your shirt for you -that is wealth. It is service from multiplied talent, not property or money. It is also vital
for the planet that we don’t seek self sufficiency: if 6.5 billion people went back to
nature, nature would be devastated.
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Chapter 9 The future
In a modern economy, nobody seems to be making anything. Two centuries ago, most
people were growing wheat, tending cattle, milling grain, forging horseshoes, weaving
cloth or supplying some similarly obvious necessities. A century ago, they were also
building railways, manning ships and digging coal. The switch from the farm to the
factory was well under way, but it was not difficult to see where prosperity originated:
people went to work to supply the needs of others. Today, however, most of us will know
hardly anybody who does anything useful. Who’s doing the work?
The truth is that there is nothing special about growing food or digging coal. Both are
simply means to the end of getting others to serve you. Wealth is calling on the efforts
and talents and knowledge of others, especially if those efforts are amplified by
mechanical and electrical ingenuity. An economy works just as well if all the food and
coal come from somewhere else and people are grooming each other’s poodles, or ogling
each other’s websites. What adds value is not some material, hard, utilitarian stuff – and
certainly not money – but the services of others, efficiently supplied.
And therein lies the paradox. It is the free-marketeer, praising the credit-derivatives trader
and the poodle groomer, who has managed at last to free economics from physiocratic
materialism. It is the anticapitalist, anti-globalising green who is still stuck in puritanical
worship of utility.
Global warming is only the latest excuse for pessimism, but pessimism about the future is
everywhere and always has been. The future was always going to be terrible and has
always proved wonderful. Why will it be different this time?
In 1845, when Thomas Babington Macaulay wrote his famous passage on life in London
in 1685, 160 years before, he also hazarded wildly optimistic predictions of life in the
twentieth century. Now, 160 years later, his prognostications seem laughably cautious
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(medical discoveries may add `several more years’ to life expectancy!). But his
observations about people’s implacable nostalgia reverberate with truth:
``It is now the fashion to place the golden age of England in times when noblemen were
destitute of comforts the want of which would be intolerable to a modern footman, when
farmers and shopkeepers breakfasted on loaves the very sight of which would raise a riot
in a modern workhouse, when to have a clean shirt once a week was a privilege reserved
for the higher class of gentry, when men died faster in the purest country air than they
now die in the most pestilential lanes of our towns, and when men died faster in the lanes
of our towns than they now die on the coast of Guiana.
We too shall, in our turn, be outstripped, and in our turn be envied. It may well be, in the
twentieth century, that the peasant of Dorsetshire may think himself miserably paid with
twenty shillings a week; that the carpenter at Greenwich may receive ten shillings a day;
that labouring men may be as little used to dine without meat as they now are to eat rye
bread; that sanitary police and medical discoveries may have added several more years
to the average length of human life; that numerous comforts and luxuries which are now
unknown, or confined to a few, may be within the reach of every diligent and thrifty
working man.
And yet it may then be the mode to assert that the increase of wealth and the progress of
science have benefited the few at the expense of the many, and to talk of the reign of
Queen Victoria as the time when England was truly merry England, when all classes
were bound together by brotherly sympathy, when the rich did not grind the faces of the
poor, and when the poor did not envy the splendour of the rich.’’
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About the author
Matt Ridley is the author of six highly acclaimed books, including the cult favourite `The
Red Queen’, the controversial `The Origins of Virtue’, the enormous best-seller
`Genome’ and the prize-winning `Nature via Nurture’. His most recent book was a
biography of the scientist Francis Crick. His books are published in 26 languages and
have been short-listed for six literary awards.
Ridley has always combined his writing with work in the business world and in 2004 he
was elected part-time chairman of Britain’s seventh largest bank, Northern Rock plc. He
has long wished to bring his writing talent to bear on his everyday experience of
economic and commercial life as he has done on the life sciences. In `The Economics of
Hope’ he realises this dream and articulates for the first time his original ideas about
economic progress.
Comments on Ridley’s previous books
The Red Queen
A bold and fascinating book' – Edward Chancellor
'A terrific book to have a damn good argument with' – Marek Kohn
'Displays a dazzling knowledge of the habits of insects, fish, bird and mammals' –
Anthony Daniels
'A vivid introduction to the most exciting of thinking available on the evolution of sex' –
Robert Trivers
The Origins of Virtue
'Dashing, apophthegmatic, ingenious in argument and beautifully constructed'—Galen
Strawson
'Enthralling and provocative'— Penelope Lively
'It has done it brilliantly' – A.S.Byatt
'Bracing, informative, amusing and infuriating by turns' – Maggie Gee
'I was enthralled by it all' – Ruth Rendell
Genome
'A lucid and exhilarating romp through our 23 human chromosomes' – James Watson
'The 23 chapters brim with Ridley’s customary stylish wit and cool insouciance' –
Richard Dawkins
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'As elegant, as unpatronising and lucid as a layman could desire' – Miranda Seymour
'An altogether spellbinding read' – Sarah Blaffer Hrdy
Nature via Nurture
'Written with insight, wisdom, and style throughout' – Steven Pinker
'Bracingly intelligent, lucid, balanced—witty, too' – Oliver Sacks
'Sets the modern terms for an ancient debate' – Ian McEwan
'Profoundly intelligent and persuasive' – John Cornwell
'Ridley’s enthusiasm for his subject is contagious' – Los Angeles Times
Francis Crick
`This is a wonderful book--deeply substantive, lucid, trenchant, and witty. It tells the
biggest story in modern biology.’ — David Quammen
`Ridley’s thoughtful book aims less to unearth new facts than to highlight undervalued
ones. He has found some new material...’ — The New York Times
end