In his 1776 work An Inquiry into the Nature and Causes of the Wealth of Nations, Scottish moral philosopher Adam Smith identified the cause in a single variable: “the propensity to truck, barter, and exchange one thing for another.” Today we call this free trade or market capitalism, and since the recession it has become de rigueur to dis the system as corrupt, rotten or deeply flawed.
If we pull back and take a long-horizon perspective, however, the free exchange between people of goods, services and especially ideas leads to trust between strangers and prosperity for more people. Think of it as ideas having sex. That is what zoologist and science writer Matt Ridley calls it in his book The Rational Optimist: How Prosperity Evolves (HarperCollins, 2010). Ridley is optimistic that “the world will pull out of the current crisis because of the way that markets in goods, services and ideas allow human beings to exchange and specialize honestly for the betterment of all.”
Sex evolved because the benefit of the diversity created through the intermixture of genomes outweighed the costs of engaging in it, and so we enjoy exchanging our genes with one another, and life is all the richer for it. Likewise ideas. “Exchange is to cultural evolution as sex is to biological evolution,” Ridley writes, and “the more human beings diversified as consumers and specialized as producers, and the more they then exchanged, the better off they have been, are and will be. And the good news is that there is no inevitable end to this process. The more people are drawn into the global division of labour, the more people can specialize and exchange, the wealthier we will all be.”
In the teeth of the recession and the reality of more than a billion impoverished people in developing countries today, this thesis sounds ripe for skepticism, indeed almost blindly Pollyannaish. But Ridley systematically builds a case through copious data and countless studies that “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. 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: years of lifespan, mouthfuls of clean water, lungfuls of clean air, hours of privacy, means of traveling faster than you can run, ways of communicating farther than you can shout,” and with more access to “calories, watts, lumen-hours, square feet, gigabytes, megahertz, light-years, nanometers, bushels per acre, miles per gallon, food miles, air miles, and of course dollars than any that went before.”
Trade does something even more important than enrich our lives. It makes people behave more fairly. In a March 18 article in Science entitled “Markets, Religion, Community Size, and the Evolution of Fairness and Punishment,” University of British Columbia psychologist Joseph Henrich and his colleagues engaged nearly 2,700 people in 15 small communities around the world in two-player exchange games in which one subject is given a sum of money (the equivalent of a day’s pay) and allowed to keep or share some or all of it with another person. You would think that most people would just keep all of the money, but in fact the scientists discovered that members of hunter-gatherer communities shared about 25 percent, whereas members of societies who regularly engage in trade gave away about 50 percent. Although religion was a modest factor in making people more generous, the strongest predictor was “market integration,” defined as “the percentage of a household’s total calories that were purchased from the market, as opposed to homegrown, hunted, or fished.” Why? Because, the authors conclude, trust and cooperation with strangers lowers transaction costs and generates greater prosperity for all involved, and thus concepts of fair trade emerged as part of a larger process of social evolution to maintain mutually beneficial exchanges even when the participants were not bound by kinship, status or other social ties.
See what we're tweeting about
12 Comments
Add Commentlungfuls of clean air? mouthfuls of clean water? I'm not sure where he's getting that from. Our air is polluted, our water is contaminated and dwindling. To me it sounds like he is celebrating the failure of the biological checks and balances that keep cells from proliferating. Market economies have allowed humanity to drain the planet of its natural resources, turn lush lands into desert, wipe out as many species of some of the world's greatest natural disasters, and alter the climate. I certainly agree that humanity has benefitted in the short term. Our numbers are high, and there is a great number of people living in the closest we will ever get to paradise, certainly not all but many. But at what cost? Unconstrained growth, conspicuous consumption, the inability of the host to withstand and contain the continuous assault; these are the traits of cancer not of a healthy organism. So, it is true that humanity is currently burning very brightly as a result of market economies, but what do they say about the candle that burns twice as bright...?
Reply | Report Abuse | Link to this#edit: wipe out as many species <as> some of the world's greatest natural disasters
Reply | Report Abuse | Link to thisExcellent counterpoint; both sides are well taken and both true from their perspectives. We've evolved cultural systems and cooperation largely based on transaction exchange: money. This is the common denominator representing "value" to most people and cultures in the world. But money is an invented paradigm and therefore leaves itself open as a tool of manipulation by those who control it. This is where the education of self-in-world comes in. Public (general) education is based on production-line industrial age thinking. We are so far beyond that now yet there is nothing in place to encourage moving beyond this linear thinking (which was quite appropriate for its time)--except perhaps the non-linear connectivity of mass communication and information now available to the majority of humanity. Human beings are both creatures of habit and perpetual innovators: holding these diametrically opposed tendencies in balance is the trick. Self interest at the expense of the whole has seen its day; if we are to survive we must sacrifice a bit of "having more" and remember that we will only survive as one species in which more egalitarian access to the goods brings more minds and ideas to the table.
Reply | Report Abuse | Link to thisRobert,
Reply | Report Abuse | Link to thisOur air, water and land are in better shape than they were decades ago - at least in countries which have mostly free markets. Where government control replaces the free market (think China) the same cannot be said. The planet has not been drained of resources. Prices (a measure of supply) have fallen in real terms for most commodities over the past decades as well. Your post reminds me of the doom and gloom that was preached in the 1970's. If those had come true there would be widespread famine, no more oil and gas and the planet would be uninhabitable.
"Today we call this free trade or market capitalism, and since the recession it has become de rigueur to dis the system as corrupt, rotten or deeply flawed."
Reply | Report Abuse | Link to thisYou're correct in that captialism is not the problem. Whether capitalism, communism, or socialism, they are all based on the same corrupt, rotten, deeply flawed economic system which purports debt to hold value: Our entire money supply is the Principal of various loans, and the Interest on those loans is never added to the money supply -- but is demanded from it.
Any ideology which allows for currency as Loans with non-existant Interest charged from us all will result in bankruptcy, poverty, and foreclosure as a mathematical certainty.
World population approaching 7 billion, and accelerating; do these people really believe there is no limit to the number of people the planet can support? Dream on, and I've got a bridge I'd like to sell them.
Reply | Report Abuse | Link to this"In other words, our ancestors had sex with people they knew, but their ideas had sex with strangers, and this form of trade led to trust and prosperity."
Reply | Report Abuse | Link to thisI'm fairly certain that our ancestors exchanged more than ideas with people of other cultures. Or to be blunt that they (sometimes) had sex with strangers.
Reply | Report Abuse | Link to thisCapitalism is the most evil economic system that has ever existed on this planet. Capitalism is too stressful. Capitalism rewards greed. Capitalism discourages sharing and cooperation. Capitalism pays people according to how much and what they produce. This is not fair to those who cannot produce under that type of stress or cannot produce enough to earn what they need. Capitalism also produces what makes the most profit instead of what is needed the most. I consider anything competitive immoral. Its main objective is to make the largest possible profit. It requires competition, while the Bible tells us to work together. The pace is way too fast. You are paid according to how much and what you produce. I cannot produce anything under those conditions. I use Capitalism because I have no other choice, and that bothers me very much. Perhaps that is one reason why I have much trouble sleeping some nights. I believe Capitalism is the most immoral economic system on the planet. I believe the best economic system would be such that people produced what they could and took what they needed. Capitalism forces businesses to keep trade secrets, while the Bible tells people to share what they have with others. Businesses hire scientists who must promise not to reveal any information they learn, calling those things trade secrets. People must realize that much more can be learned if nobody cares who got the credit and who discovered it first. If people shared their information, more might be discovered, but a business that shares its information will have a competitive disadvantage. Capitalism provides the need for cutthroat competition, which provides too much stress. Some businesses cut corners, put people in danger, and damage the environment. It forces people to work too hard to produce more stuff and wear themselves out. Capitalism did bring the most prosperity, but I still consider it evil. I know Communism was the closest to what the Bible described about work, but almost nobody worked under it. Perhaps Socialism would work.
@bauserman1, i see your point as far as trade secrets stalling progress, at least as far as patents are concerned. but your conclusion makes me wonder if you read what madmac said before you:
Reply | Report Abuse | Link to this"Whether capitalism, communism, or socialism, they are all based on the same corrupt, rotten, deeply flawed economic system which purports debt to hold value: Our entire money supply is the Principal of various loans, and the Interest on those loans is never added to the money supply -- but is demanded from it."
I recently purchased and read Matt Ridley's book, and would like to draw attention to the very serious issue with this authors use of sources. I have paid particular attention to the claims Dr. Ridley makes in relation to climate change. In particular I note the following the following four claims that need clarification on the part of the books author.
Reply | Report Abuse | Link to thisClaim 1: Mann Hockey stick is broken
The footnote listed on page 415 that discusses “previous warm episodes” such as the "medieval warming period" (MWP) is used to buttress his points on page 334> However, when one reads the footnote we see the following written by Ridley:
“The famous hockey stick seemed to prove that the Medieval Warm Period never happened has since been comprehensively discredited. It relied far too heavily on two sets of samples from bristlecone pine trees and Siberian larch trees that have since been shown to be highly unreliable; it spliced together proxies and real thermometer data in a selective way, obscuring the fact that the proxies did mirror modern temperatures, and it used statistical techniques that made a hockey stick out of red noise..”
Dr. Ridley, the hockey stick is not "broken". This is a claim made by the "climate change sceptics" that has been refuted many, many times.
Indeed, your supporting materials for this are taken from Steve McIntyre's blog Climate Audit and from Loehle's paper which stops measuring temperatures at 1935, well before the known post-war rise in temperatures. Additional studies and research have confirmed the Mann hockey stick. Dr. Ridley makes use of several papers from Energy & Environment, a journal of dubious quality, to support his arguments.
Claim 2: Polar bear populations are growing
On pages 338-339 Dr. Ridley makes the following claim:
“The polar bear, still thriving today (eleven of the thirteen populations are growing or steady), may contract its range further north, but it already adapts to ice-free summer months in Hudson’s bay by fasting on land till the sea re-freezes…”
Dr. Ridley, the US Geological Survey has recently noted that:
“The U.S. Geological Survey predicts two-thirds of the world’s polar bears will disappear by 2050, based on moderate projections for the shrinking of summer sea ice caused by global warming. The bears would disappear from Europe, Asia, and Alaska, and be depleted from the Arctic archipelago of Canada and areas off the northern Greenland coast. By 2080, they would disappear from Greenland entirely and from the northern Canadian coast, leaving only dwindling numbers in the interior Arctic archipelago.”
(See Arctic Climate Impact Assessment (2004). Impact of a Warming Arctic: Arctic Impact Climate Assessment. Cambridge: Cambridge University Press. ISBN 0 521 61778 2. OCLC 56942125.)
I note that the population of polar bears declined by 22% between 1987 and 2004 (see "Effects of earlier sea ice breakup on survival and population size of polar bears in western Hudson Bay". Journal of Wildlife Management (Bethesda: The Wildlife Society) 71 (8): pp. 2673–2683)
Claim 3: Ocean acidification is a "back-up plan" devised by environmental pressure groups
Dr.Ridley makes the following claim:
"Ocean acidification looks suspiciously like a back-up plan by the environmental pressure groups in case the climate fails to warm: another try at condemning fossil fuels..." page. 340
Ocean acidification is a well studied phenomena and of genuine concern. I am not sure how Dr. Ridley has come to the conclusion that this is a suspicious plan unless one has a conspiratorial world view. I would direct Dr. Ridley's attention to the following paper: Paleo-perspectives on ocean acidification, Trends in Ecology & Evolution, Volume 25, Issue 6, 332-344, 30 March 2010.
The abstract notes: "The anthropogenic rise in atmospheric CO2 is driving fundamental and unprecedented changes in the chemistry of the oceans. This has led to changes in the physiology of a wide variety of marine organisms and, consequently, the ecology of the ocean. This review explores recent advances in our understanding of ocean acidification with a particular emphasis on past changes to ocean chemistry and what they can tell us about present and future changes. We argue that ocean conditions are already more extreme than those experienced by marine organisms and ecosystems for millions of years, emphasising the urgent need to adopt policies that drastically reduce CO2 emissions."
Claim 4: no species extinction due to climate change
Dr. Ridley also makes the following claim:
"...so far, despite two bursts of twentieth-century warming, not a single species has unambiguously been shown to succumb to global climate trends" page.338
I would draw Dr. Ridley's attention the following research: Erosion of Lizard Diversity by Climate Change and Altered Thermal Niches, Science 14 May 2010, Vol 328 no.5980 pp.894-899
The authors of the paper note in the abstract: "It is predicted that climate change will cause species extinctions and distributional shifts in coming decades, but data to validate these predictions are relatively scarce. Here, we compare recent and historical surveys for 48 Mexican lizard species at 200 sites. Since 1975, 12% of local populations have gone extinct. We verified physiological models of extinction risk with observed local extinctions and extended projections worldwide. Since 1975, we estimate that 4% of local populations have gone extinct worldwide, but by 2080 local extinctions are projected to reach 39% worldwide, and species extinctions may reach 20%. Global extinction projections were validated with local extinctions observed from 1975 to 2009 for regional biotas on four other continents, suggesting that lizards have already crossed a threshold for extinctions caused by climate change."
I believe the peer reviewed literature is clear on the issue Dr. Ridley.
Conclusion
I strongly urge people to fact check Dr.Ridley's work, as I believe I have found substantial errors in the use of his sources.
A review of his notes for Chapter 10 shows a very restrictive use of source: material from"Watts up with that?", The Cato Institute, Climate Resistance.org, Climate Audit.org, the disputed work of Bjorn Lomborg's "Cool it!" and many other sources of dubious quality.
I ask that Dr. Ridley clarify his statement that the "hockey stick is broken"; that the "polar bear populations are growing"; that the average temperature during the MWP was global, and not located to the Northern Hemisphere as the peer reviewed literature indicates; and finally "ocean acidification" is not a plot by environmentalists.
I would also ask the books reviewer, Michael Shermer to revisit the issue of Ridley's use of sources. I would also urge the editors of Scientific American examine the specific claims made by Dr. Ridley, especially those made in relation to climate science.
I'm confused. The Clean Air Act, the Clean Water Act and the EPA in general have had only negligible effects on our air and water, so the credit should go to free trade, instead?
Reply | Report Abuse | Link to thisShould credit for the repair of the "ozone hole" also go to free markets?
On Clam 4, you first say "The authors of the paper note in the abstract: 'It is predicted that climate change will cause species extinctions and distributional shifts in coming decades, but data to validate these predictions are relatively scarce.'"
Reply | Report Abuse | Link to thisThen you conclude "I believe the peer reviewed literature is clear on the issue Dr. Ridley."
Far from it. As the paper author just noted, such data is "relatively scarce". Not only that, but even the paper that you cite is based on models. This is hardly conclusive evidence.