Books@DailyFinance: The World According to an Incurable Optimist

If you were to spot Matt Ridley's The Rational Optimist: How Prosperity Evolves (Harper, $26.99) on a bookstore shelf, you might imagine from the snappy title that it's one of the many recent volumes on behavioral economics -- or even a book of personal finance tips. And to be sure, his book does contain Freakonomics-like references to lab experiments involving chimps, and allusions to the oft-cited "prisoners' dilemma" research.

But Ridley's volume is something else again -- a big-idea book with sweeping theories about civilization somewhat in the mode of Jared Diamond's Guns, Germs, and Steel. Ridley's thesis: "The great headlong experiment of human economic 'progress' " is the result of the eons-old emergence of barter and exchange, which in turn allowed for the division of labor, specialization of work, innovation, and the evolution of our collective, cumulative intelligence.

Don't get the idea, though, that The Rational Optimist is a slog -- or a work to be gulped down quickly. Rather, it is a cleverly written, deeply researched effort meant to be savored slowly. My guess is that readers will find themselves often quoting its tasty bits of evidence, or even reading it aloud to others. Did you know that chickpeas may have been the first farm crop, cultivated some 11,000 years ago? Or that in early Mesopotamia, the word for accountant was the same as the word for high priest? (Casts new light on the expulsion of the money changers from the temple, doesn't it?) Or that ancient Rome's hegemony was the result not of military conquest but of trade, particularly with India, "the world's economic superpower"?

Ridley, who holds a doctorate in zoology from Oxford, is the former science editor of The Economist and the author of numerous books, including the best-seller Genome, and a biography of biologist and DNA co-discoverer Francis Crick. The Rational Optimist includes chapters on everything from the emergence of trust in human relations to the Green Revolution and the triumph of cities.

In Praise of Innovation and Competition

Trade is at the center of the book's action, and Ridley emerges as a free-trade fundamentalist: "There is not a single example of a country opening its borders to trade and ending up poorer," he writes, offering noticeably little sympathy to displaced European shoemakers or U.S. autoworkers. Too bad for such folks, but they are not, in his narrative, the great enemies of progress. Instead, he consistently shows the villains of history to be greedy, "rent-seeking" aristocrats and bureaucrats -- "elites who capture a greater and greater share of the society's income by interfering more and more in people's lives as they give themselves more and more rules to enforce."

He shows this dead-hand function stifling innovation in one empire after another, from Egypt through Greece and Rome and especially in the Ming dynasty in China. His heroes, on the other hand, include the ancient Phoenicians, whose seagoing entrepreneurship prompted "a burst of specialization all around the Mediterranean," in which various peoples discovered their respective competitive advantages.

Trade and markets are key to the optimism of the book's title. "The market process of exchange and specialization ... gives a vast reason for optimism about the future of the human race," he writes. One threat after another goes down to defeat in Ridley's pages: Malthusian overpopulation, inadequate production of food, Africa's stalled economic growth, even climate change.

Not every reader will find his wide-ranging arguments persuasive, of course. And there are problems with Ridley's historical pageant. For one thing, the author underplays the extent of past conflicts. Without denying that the Industrial Revolution entailed exploitation and poverty, he asserts that mid-19th century British laborers, much like the American, Taiwanese, and Chinese workers of later periods, "flocked to the factories from the farms" to escape the even more grinding toil and misery of rural life. Missing from this paean to free will is the element of coercion, including the falling prices for agricultural products that encouraged people to migrate. Ridley overemphasizes the carrot and averts his eyes from the stick.

The Libertarian's Lament

The author also gives little credit to the role of government. He asserts that the "tiny nation" of Britain, with its mere 8 million people in 1750, outperformed far more populous and productive lands thanks to the rare confluence of such advantages as sufficient capital, freedom, education, and culture. So what about the Royal Navy, which patrolled the sea, opened shuttered ports, eliminated the slave trade, and enforced free-trade imperialism? Ridley is simply not a fan of any government, and although he gives the state credit for some innovations -- nuclear weapons, the Internet -- he is more comfortable dwelling on its failed bets, such as interactive television.

That goes with the author's libertarian bent. The primary reason to be optimistic about the future, he says, is the way humanity's collective intelligence -- generally facilitated by market mechanisms, especially the exchange of ideas -- has overcome so many threats and obstacles over the years. In every age, Ridley believes, pessimists have dominated the public debate, and our era is no different. But humanity will overcome, he asserts, so long as ideas "continue to have sex with each other" -- i.e., intermingle and stimulate novel thinking. What's more, "economic evolution will raise the living standards of the twenty-first century to unimagined heights," he predicts.

In the era of the BP oil spill, big Toyota blunders, and Wall Street meltdowns, it's difficult to be quite as sanguine about a capitalistic future as Ridley is. Nevertheless, his book should seduce and charm thinking readers everywhere.


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