The Rational Optimist: How Prosperity Evolves (Harper, 2010) is a rare find for those who love markets, love history, and love reading. Few books you will ever read have the historical depth Matt Ridley provides while challenging your thinking. I am a lover of markets, but I find the perpetual pessimism often permeating amongst those of a like mind to be, well, unacceptable. What Ridley does in this 350-page beauty is explain why, and do so in such a manner that not a single stone is left unturned.
Fundamentally, Ridley argues that rational people, guided by the lessons of history, science, and culture, are optimistic people. Others have argued the same thing, but I doubt any of them presented their point with such an excessive arsenal of support.
He begins with the best work I have seen on the true delineation of the human species from the animal kingdom. He makes the insightful point that ours has been an evolution by natural selection—but not among genes as much as a selection among ideas. When “ideas began to meet and mate” the human race began an upward trajectory that it still has not come down from. The essence of the book, for Ridley, is 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.”
His first chapter enumerates powerful, irrefutable, and humbling ways in which today’s world is a better place to live for the average human being than it ever has been. You have to read it to appreciate the drama of a world population doubling in just 50 years, but with more goods and services available to that population than it has ever had. (I do wonder what the climatologists would say to the fact that a car emits less pollution today at full speed than a parked car did in 1970.) When we read of the lifestyle benefits enjoyed by those we all consider poor today, benefits 19th century tycoon Cornelius Vanderbilt never enjoyed, it puts the economic challenges we face in perspective. Ridley does not just make vanilla cultural and sociological statements of fact; he applies them to economic realities and controversies. For Ridley, the income gap is an “inevitable consequence of an expanding economy.” Indeed, he is right. And he is right that the “forces which at first make inequality self-accentuating thus later tend to diminish it.”
He also posits an intriguing definition of prosperity that warrants consideration: “The increase in the amount of goods and services you can earn with the same amount of work.” This section should be required reading for economics students—and professors—across the land. (I confess to being thrilled at his lambasting of those who favor perpetually rising housing prices via bizarre government manipulation—a short but precious anecdote in the early part of the book). The Rational Optimist provides a history of economic progress combined with a normative understanding of what ought to be in the economic realm. The mutually beneficial exchange that takes place between humans is not only further delineation between us and the animals, but it also is the basis for our advancement since the beginning of civilization. Ridley provides extraordinary support for his position on trust (a prerequisite for a happy and flourishing society), and he explains how trust and trade feed off of each other to generate genuine human progress.
What Ridley gets better than any author I have read, is that while certain “things” in an economy may be finite (a commodity’s supply, the lifeline of a patent, etc.), innovation is not. There is no limit to innovation in the world, and there is no diminishing return associated therewith. Innovation is the great refutation of pessimism.
Ridley is not just right to criticize pathological pessimism ideologically; the historical case is irrefutable, too. He knows that pathological pessimism nearly always carries an agenda:
“In my own adult lifetime, I have listened to implacable predictions of growing poverty, coming famines, expanding deserts, imminent plagues, impending water wars, inevitable oil exhaustion, mineral shortages, falling sperm counts, thinning ozone, acidifying rain, nuclear winters, mad-cow epidemics, Y2K computer bugs, killer bees, sex-change fish, global warming, ocean acidification, and even asteroid impacts that would presently bring this happy interlude to a terrible end. I cannot recall a time when one or other of these scares was not solemnly espoused by sober, distinguished and serious elites and hysterically echoed by the media. I cannot recall a time when I was not being urged by somebody that the world could only survive if it abandoned the foolish goal of economic growth.”
And so it always is: Pathological pessimists are not merely wrong because they are always wrong; they are always wrong because they propose solutions to fabricated problems that are far, far worse than the fabricated problems themselves.
I am a rational optimist, and I hope all readers of this book will be as well. As Ridley writes, “As long as somewhere somebody is incentivized to invent ways of serving others’ needs better, then the rational optimist must conclude that the betterment of human lives will eventually resume.” I am not interested in the biology of this as much as the spirituality, but I digress. Ridley offers an irrefutable case for optimism, and he does so on a moral plane: “It is precisely because there is still far more suffering and scarcity in the world than I or anybody else with a heart would wish that ambitious optimism is morally mandatory.”