The Rational Optimist: How Prosperity Evolves (Book Review)

Pick your favorite scenario for what you think 2100 will look like:

A) Massive natural disasters will have annihilated most major cities. Pollution and toxic waste will have made much of the planet unlivable. Those humans who survived the Earth’s massive calamities will be living in small, sustainable communities, armed to protect themselves against outlaws.

B) We’ll be living miserable, overpopulated, filthy lives under global governmental tyranny. We’ll have to steal or eat squirrels to supplement our meager government rations. We’ll constantly be under surveillance, even in our private lives. We won’t be able to do anything with government permission. Global elites will have built cities apart from the world’s commoners.

C) The world will be more prosperous than ever before. We’ll have avoided massive global warming by uncovering new, sustainable energy sources. Most of us will live in megacities, but will still be able to visit forests, lakes, and other natural resources. We’ll be well-fed, clothed, and safe.

D) Zombies!

In his new book, The Rational Optimist: How Prosperity Evolves, Matt Ridley proves that we’re headed not for calamity or misery. Instead, we’re going to see something like option C. We’ll probably have more food, less disease, more income, a longer lifespan, and better lives in general.

What makes Ridley think that things are getting better? 100,000 years of human history, which he covers in his book. He uses patterns from that span of human existence to illustrate that our capacity to change and adapt will bring us successfully through whatever problems we face. These problems even include collective boogeymen like global warming, economic crashes, and deadly diseases.

Ridley’s Reality

Throughout the course of his 359-page book, Ridley tracks human evolution, from cavemen to the modern Homo Computus, to prove that the world has steadily improved over time for humans. There are two main reasons for this.

1) Trade is good.
Trade, which Ridley defines as the “market process of exchange and specialization,” is ancient. It’s inherently fair, in that it creates changes that benefit everyone.

Over the years, an increase in trade has led to an increase in innovation, improving the quality of life for everyone. Free trade inevitably creates mutual prosperity (protectionism does the opposite).

2) More specialization and exchange lead to prosperity.
Prosperity is “the increase in the amount of goods or services you can earn with the same amount of work.” Increasing specialization and more exchange are the root cause of innovation.

When exchange, invention, and specialization proliferate, a society “creates” time. As a result of this proliferation, modern people have specialized occupations, but consume hundreds of diverse things. This is the definition of a higher standard of living.

Much of The Rational Optimist comes back to these two main points. Ridley makes a slew of other, smaller points in the process, always using research and historical examples as proof. The following caught me eye:

• Commerce has helped make the “is as good a place for the average human being to live as it ever has been.” Capitalist success, in other words, leads to social improvements. Moreover, Ridley finds that “people get happier as they get richer.” Money does buy “general well-being.”

• Self-sufficiency leads to poverty. This is because bigger, more connected populations innovate more, while smaller, less connected populations tend to regress. Human beings depend on numbers, connections, and trade to succeed. So our nostalgia for farming and sustainability is just that–nostalgia. It doesn’t represent progress.

• City dwellers are better for the ecosystem. Cities house half the world’s people while using less than 3% of global land area. Country dwellers take up more space, use more energy, and impact the environment less.

• Fossil fuels like gas and coal, as well as the machines you use every day, have replaced human labor (slaves) over time. So, in a sense, they are your slaves.

• When the world started relying on fossil fuels for energy, economic growth became sustainable for the first time in history.

The Rational Optimist’s 10 rich chapters include innumerable examples from diverse fields, including anthropology, history, biology, economics, and even Hollywood movies. These examples, as well as Ridley’s own skill as a writer—and occasional cheekiness—make for an entertaining, if highly detailed, read.

Thoughts

The Rational Optimist has all of the elements of my favorite kind of book:

• The author uses studies, research, surveys, and solid evidence to make his claims.

• It covers business and the economy, but with emphasis on human behavior.

• It takes the long view of humanity, covering around 100,000 years, rather than elaborating on a fad or short period of time.

• It’s entertaining.

Perhaps most importantly, The Rational Optimist challenged me to see things in a new way. For example, Ridley makes the case that although global warming is happening, it’s completely hyped. The net harm from expected global warming will not be as big as the harm being done today by hunger, dirty water, indoor smoke, and malaria, according to Ridley. If the globe indeed warms as much as we expect it will, “it will be because more people are rich enough to afford to do something about it.”

Indeed, Ridley makes a number of points that would be considered biased towards economic conservatism, from an American viewpoint. He supports free trade and thinks all governments (he calls them monopolies) eventually mess up innovation. Yet innovation and open trade are necessary for a country to prosper, so it’s odd that smart people put too much faith in government for no good reason. He is pro-fossil fuel, pro-city, pro-genetically modified foods, and optimistic about humanity in general.

Yet instead of using rhetoric, he employs evidence and centuries of human history to make his points. This is precisely what makes The Rational Optimist so valuable.

Recommended for Some

I welcome new, intelligent perspectives on human life, so I happily devoured The Rational Optimist. Yet I could see Ridley, who isn’t shy about bashing leading thinkers (and especially environmentalist Paul Ehrlich) irking other readers. If you happen to be an extreme environmentalist/liberal/fan of organics, this book might tee you off, depending on how staunch your views are. Ditto if you want something quick and to-the-point, rather than long and detailed.

If you like seeing things debunked, however, pay attention to The Rational Optimist–you might like it. Same if you like reading about human history for hours, if you like having your viewpoints challenged, and if you enjoy laughing out loud on occasion while reading. This has been one of the best economics-related books I’ve read this year, so I do recommend it overall.

Disclosure: We received a free promotion copy of this book.

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Comments

  1. Frank Robinson's Gravatar Comment by Frank Robinson on August 26th, 2010 at 6:58 pm

    Ridley’s book celebrates the human achievement. To lament modernity, to deny that we’ve progressed, even to condemn what we’ve done, while romanticizing a supposedly halcyon past, is pitiably foolish. Ridley does a great job showing just what progress has achieved in quality of life for the average human. He and I share a profound reverence for the titanic human exertions standing behind this.
    Reading his book on an airplane — a half-day transcontinental trip that for our forebears was arduous, miserable, dangerous, and took months — made me marvel anew at the vast web of contributions by untold thousands of people across the globe and across centuries that made this possible. The same is true of even our simplest modern conveniences, to which most of us give scarcely a thought.
    
I have been following the reviews and blog commentaries on Ridley’s book. Most have been quite positive. The nastiest was by George Monbiot in Britain’s left-wing Guardian newspaper. One can of course quibble with details of Ridley’s analysis. But to dismiss his basic story, to actually condemn it as villainy, takes a really diseased cynicism, and blinding oneself to what is, well, blindingly obvious. It’s painful to observe. And it’s harmful, standing in the way of a better world (especially for the downtrodden, about whose plight such pundits constantly whine).

    
 Monbiot et al are intolerant guardians of a narrow orthodoxy. They portray Ridley’s book as fanatically pro-capitalist and anti-government. It is not, and only a fanatic would see it so. Their critiques reveal more about the critics than about the book.


    Bravo to Ridley for his breath of fresh air and clear thinking. That his message is widely labeled “radical” is ironic — the reaction really should be, “Duh! Tell us something we don’t know.” Yet Ridley is indeed telling us something that, sadly, most people don’t know.


    My own book, The Case for Rational Optimism (Transaction, Rutgers University, 2009), does make many points and arguments similar to Ridley’s, but is far broader in scope, covering not only such topics as the economy, war and peace, technology, democracy, etc., but also the evolutionary background and the philosophical and psychological issues involved with optimism versus pessimism. See http://www.fsrcoin.com/k.htm

  2. scott huxley's Gravatar Comment by scott huxley on August 30th, 2010 at 11:45 am

    It’s a very detailed book isn’t it? Certainly would serve as an excellent resource for anyone looking for detailed information on this subject.

    I think we can all be optimistic about our business ventures and economy. This book gives a great insight from one view about what that actually looks like.

  3. John Jones's Gravatar Comment by John Jones on August 30th, 2010 at 5:10 pm

    Bernanke likes to remind everyone that he is an expert on the great depression and knows how to prevent it from happening again in the US. Apparently he is also an expert on Japan and its struggle with chronic deflation following its housing bubble in the 1980’s. In fact Bernanke wrote an article in 2000 titled “Japanese Monetary Policy: A Case of Self-Induced Paralysis,” where he goes on to lecture BOJ officials about what they could and should have done differently in order to to avoid a deflationary outcome. He goes on to postulate that the BOJ was not trying hard enough to stimulate the economy and that 0% interest rates are just one tool to beat deflation. The Fed Chairmen even goes so far as to assert that he knows how to escape a liquidity trap caused by 0% interest rates. The reason I bring this up is because it gives people a good idea of what Bernanke’s next move may be. The US is dangerously close to falling into the dreaded “liquidity trap” as deflation takes hold and monetary policy loses its effectiveness.

    Here are some of his suggestions to the BOJ:
    http://blackswaninsights.blogspot.com/2010/08/bernanke-explains-how-to-escape.html

  4. Scott Huxley's Gravatar Comment by Scott Huxley on August 31st, 2010 at 5:20 am

    The US has many “famed” experts anyone remember Greenspan? It will take a lot more than just warm words from so-called financial guru’s to pull the economy around.

    The only way to beat the current economic downturn is with thorough risk assessment of the market. Now, what risk assessment that form takes is down to the individual. The economy will improve over time but it will take longer than most pundits are quoting right now.

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