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The Rational Optimist
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The Rational Optimist (2010) (edit title/settings)

How Prosperity Evolves

by Matt Ridley (Author) (edit contributors)

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Life is getting better—and at an accelerating rate. Food availability, income, and life span are up; disease, child mortality, and violence are down — all across the globe. Though the world is far from perfect, necessities and luxuries alike are getting cheaper; population growth is slowing;... read more

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In this book Ridley challenges notions most environmentalists take as fact. He argues that the less independent and less self-sufficient we become and the more we rely on others (people, companies, nations) for our needs, the better off we (humans, plants, animals, land, ecosystems) all are,... read more (warning: may contain spoilers)

In this book Ridley challenges notions most environmentalists take as fact. He argues that the less independent and less self-sufficient we become and the more we rely on others (people, companies, nations) for our needs, the better off we (humans, plants, animals, land, ecosystems) all are, and will be, forever. He says we are living better, living longer, and the planet is healthier because of our interdependence.

Arguing that life is improving, for us and earth’s biomes, is a tough sell. I know this from experience. Last April, I wrote a post for my Timberati blog (Timberati.com) about what has happened in the forty years since the first Earth Day; how we now have less pollution, more food, and fewer people in abject poverty. The post has a poll about whether the reader was now more optimistic, more pessimistic, or ambivalent about the future. Overwhelmingly, people were (and apparently are) pessimistic about the future of the earth. Mind you, this is a tiny sample and completely non-scientific, still I suspect it is pretty close to representative of the population. A 2010 CBS News poll reveals 57% of Americans believe the world’s environment will deteriorate further in a generation.

The reason circumstances have improved for us and our world is that we’ve moved from being hunter-gatherers needing lots of land, to being specialists needing much less land. And the big reason for this specialization was the invention of exchanging one thing for a different thing. No other animal on earth trades one thing for something else and trading certainly does not happen outside of the group. Trade is quite different from reciprocity, which is “you scratch my back, then I’ll scratch your back.” Trade involves things that are different. And trade has allowed all who do it to specialize and be better off.

Trading meant that we no longer had to be good at a lot of skills; we only needed to do one thing. Of course, by doing only one thing we need to rely on others to do those other things. Ridley argues that self sufficiency is poverty and that interdependence is a good thing. “In truth, far from being unsustainable, the interdependence of the world through trade is the very thing that makes modern life as sustainable as it is...suppose your local wheat farmer tells you that last year’s rains means he will have to cut his flour delivery in half. You will have to go hungry.” Instead, you benefit from a global marketplace, “in which somebody somewhere has something to sell you so there are rarely shortages, only modest price fluctuations.”

Because he is a libertarian, Ridley is predisposed to look favorably on commerce. He believes in small government and free markets of goods and services with few rules. Critics pounce on this and point out when he was non-executive chairman of Northern Rock, his bank’s policies of high risk lending and high risk borrowing contributed to the economic bubble that caused the major recession that much of the world is still dealing with. It’s a fair point: How can he be a rational optimist if he participated in, what in hindsight was, irrational exuberance?

In his defense, Ridley points to a study he learned of following Northern Rock Bank debacle. The study by Vernon Smith shows that markets for goods and services that are consumed immediately (the markets “from haircuts to hamburgers”) work quite well and it’s hard to design them that they don’t deliver efficiently; “while markets in assets are so prone to bubbles and crashes that it is hard to design them so they work at all.” Wild “speculation and herd exuberance” cause asset markets to fluctuate wildly.

I found Ridley’s ideas and arguments compelling. Trade and commerce makes everyone richer, as long as someone is willing to pay for a service there is no such thing as unproductive work, and that in a generation we will be richer still and the earth in better shape. “The rational optimist invites you to stand back and look at your species differently, to see the grand enterprise of humanity that has progressed--with frequent setbacks--for 100,000 years. And then, when you have seen that, consider whether the enterprise is finished or if, as the optimist claims, it still has centuries and millennia to run.”

I dare you to be rationally optimistic.

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First Sentence edit see section history

On my desk as I write sit two artefacts of roughly the same size and shape: one is a cordless computer mouse; the other a hand axe from the Middle Stone Age, half a million years old.

Table of Contents edit see section history

Prologue: when ideas have sex

1 A better today: the unprecedented past
2 The collective brain: exchange and specialization after 200,000 years ago
3 The manufacture of virtue: barter, trust and rules after 50,000 years ago
4 The feeding of nine billion: farming after 10,000 years ago
5 The triumph of cities: trade after 5,000 years ago
6 Escaping Malthus's trap: population after 1200
7 The release of slaves: energy after 1700
8 The invention of invention: increasing returns after 1800
9 Turning points: pessimism after 1900
10 The two great pessimisms of today: Africa and climate after 2010
11 The catallaxy: rational optimism about 2100

Acknowledgements
Notes and references
Index

Authors & Contributors edit see section history

  1. Matt Ridley (Author)

First Edition edit see section history

Original Language: English
Publisher: Harper
Country: USA
Publication Date: May 18, 2010
ISBN: 9780061452055
Page Count: 448

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