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The More Things Exchange

"Barter was the trick that changed the world," Matt Ridley writes.

By From the April 2011 issue

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The Rational Optimist: How Prosperity Evolves
By Matt Ridley
(Harper, 438 pages, $26.99)

Those of us who are interested in evolution have often wondered, while pondering the theory of Darwinian natural selection, how it happened that mankind evolved rather gradually over hundreds of thousands of years and then, about 50,000 years ago (extremely recently in the long history of organic life), suddenly began a process of continuous innovation that changed humans from wandering groups of primitive Stone Age creatures to the technologically endowed, complex, urban types that we see today.

The changes in our way of life over the last 50 or so millennia cannot be explained by biological, genetic evolution alone, because the genetic process of natural selection operates only over longer periods of time. The changes that have produced our complex and technologically sophisticated society are the result of what we can call "cultural evolution," which involves a process of selection among ideas, not among genes.

What explains mankind's relatively recent cultural explosion? To find the answer, see Matt Ridley's very readable and persuasive book, The Rational Optimist: How Prosperity Evolves. Ridley's theory is not entirely novel. He gives appropriate credit to Frederic Hayek, who wrote in 1960 that social evolution involves "selection by imitation of successful institutions and habits." Ridley brings historical depth and analytical precision to Hayek's insight. He concludes that, some time around 100,000 years ago, humans began to exchange things with each other, that "once they started doing so, culture suddenly became cumulative," and what we call "progress" began. "Barter," says Ridley, "was the trick that changed the world."

By exchanging ideas as well as things, humans discovered the division of labor (that is, the specialization of efforts and talents). The ability to specialize through exchange gave man the capacity to continuously improve his condition and, indeed, to dominate the earth. Ridley is not just another observer of culture, but is a trained biologist and well-known writer on evolution and other scientific topics, who expertly traces this history of exchange and specialization and the resulting increase in human prosperity. The story, for Ridley, is an optimistic one. Today, "the vast majority 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 than their ancestors have ever been." This is probably true (with the possible exception of entertainment), although there are some aspects of our civilization that might be listed on the pessimistic side of the ledger -- a point to which we will return.

Ridley shows, with detailed examples from millennia of development, how exchange leads to specialization, to expertise, to technological innovation, and then to increasingly complex and sophisticated trade. The pattern continues today. In the terms defined by Adam Smith and David Ricardo, it is the story of free trade and comparative advantage. It is also the basis of human freedom and prosperity. "The lesson of the last two centuries is that liberty and welfare march hand in hand with prosperity and trade." The free market has a liberating effect and is the key to prosperity for those who allow it to operate.

In a sample of 127 countries, Ridley notes, the 63 with the most economic freedom had more than four times the income per capita and nearly twice the growth rate of the countries with less economic freedom. The successful countries are those that have institutions, such as rules protecting private property, that make successful commerce possible.

Ridley notes that trade flourishes in eras of political fragmentation, such as the age of the Greek city-states between 600 and 300 BC and the towns of northern Italy during the Renaissance. The rise of strong centralized government is usually a threat to commerce. "Because it is a monopoly, government brings inefficiency and stagnation to most things it runs.…" All too frequently, the activities of merchants have been appropriated by rulers, leading to "societies of rigid dirigisme, extravagant bureaucracy and feeble individual rights, stifling technological innovation, crowding out social innovation and punishing creativity."

WHILE THE VALUE of economic liberty and the dangers of big government are well known to readers of this magazine, Ridley's book provides persuasive evidentiary support, with numerous examples and observations.

Ridley concludes on an optimistic note, celebrating "the flames of free thought and reason," which he anticipates will bring more liberty and prosperity to the world.

I would have liked to have seen Ridley address more specifically some of the arguments for pessimism that could be advanced. The 20th century bore witness to some of history's most bloody and tragic events. Today, the civilized world is threatened by a seemingly unstoppable wave of terrorism by bloodthirsty fanatics, while those nations formerly known as the "Great Powers" are gradually sinking into a state of genteel decline, hedonism, apathy, and dependence on government. Ridley also might have devoted a little more space to tracing the benefits of the rule of law, which is a necessary condition of commercial enterprise.

But no author can cover everything. The Rational Optimist is an intelligent and interesting guide to mankind's cultural evolution and technological innovation. This is sufficient reason for us to be grateful for this very impressive book. 

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About the Author

Joseph F. Johnston Jr. is an attorney in Washington, D.C.