Prompted by a parent who read one of my recent letters, I am reading a book currently by the science writer Matt Ridley called The Rational Optimist. In it, he makes a strong argument against the prevailing pessimism of our times, explaining that we are now wealthier, healthier, happier, kinder, cleaner, more peaceful, more equal and longer lived than any other generation ever. It is a truly compelling read – and I recommend it, especially to any budding economists and philosophers amongst you, but also simply to anybody who wishes to read a realistically uplifting outlook on the world more generally.
Ridley explains that humans have become so successful because they have outshone all other species on the planet on a couple of key and related themes – the first is that humans have found a way to divide up labour in order to help one another, and that, because of this, untold wealth, in the form of freedom of time, has accrued.
To give an example of what he means by this, imagine a hunter-gatherer’s day 15,000 years ago. In order to live, that man would have to make his own spear, find his own prey, hunt it down, skin it, make a fire and eat it – and that took time, a whole day in fact, every single day of his life. If you wanted to eat, you had to do all the work for that food acquisition yourself. Nowadays, if you want a beef steak, you can use the money you have made in about 10 minutes of your own work, to simply go and buy one from Sainsbury’s; or better still, spend half an hour’s pay to pop to the pub to be served one. At that pub, hundreds of people will have done the work for you – a tree-feller will have chopped some wood, for a carpenter to make the table you eat off, for a truck driver to deliver it to the pub; a farmer will have reared a cow, for an abattoir to slaughter it, for a butcher to sell it, for a cook to cook it. You get the drift – there are a lot of people, many more than I have mentioned in fact, who have worked for you to get that £15 steak on your plate that night. Similarly, you, as, say, a truck driver yourself, may have played your part in getting beef to thousands of other restaurants for thousands of people to eat steak all over the country. You will have been working, therefore, for everybody else. Where the hunter-gatherer has to do it all on his own, human division of labour over the years into ever smaller chunks has made us time and money rich – richer, by a long way, than ever before. Sure, there are still parts of the planet which do not share in any way like the same way as others; Ridley is persuasive, however, in the assertion that it is in fact better for everyone. And his ‘rational optimism’ suggests that this will continue to happen, as we continue to find out what humans need, and find ever more interesting ways to divide that labour. He uses the example of his buying a fishing rod holder for his car recently. There is no way that any market for such an obscure object could have been imagined before the internet – but somebody saw a market, made it, and, using Amazon, or such like, can now sell it. This is an endless piece of good news!
The second key theme is exchange or trade. Humans are good at exchanging things with people they have never met. To do this, they have had to learn to trust one another. I thought I would relay to you a short extract today, where Ridley argues that society is also an awful lot more trustworthy than the doom mongers would have you believe.
One of the miraculous things about modern society is that you can both trust and be trusted by a shopkeeper you do not know. The shopkeeper has to place trust in your ability to pay by credit card – and that he will indeed get that money from the credit card company. And he does. And, as Ridley says, when I go into a well-known supermarket and pick up a tube of toothpaste, I do not need to open the package and squirt a little toothpaste on to my finger to test that the tube is not filled with water; I do not even need to know that the shop is subject to laws that would prosecute it for selling false goods. All I need to know is that this big retailing company, and the company that made the toothpaste, are both keen to keep me coming back year after year, that the shadow of reputational risk hangs over this simple transaction. There is, he says, a vast history behind the trustworthiness of a tube of toothpaste. He goes on to remind us that when eBay was set up, everybody thought it was a mad idea – how could you possibly trust a complete stranger in an exchange of goods you have not seen for money they do not know about. Well, through their useful way of rating trust via both buyer and seller, by 2001, only 0.01 percent of all transactions on the site were fraud attempts.
In 1912, JP Morgan, the founder of a great banking empire, said that “Trust matters before money or anything else. Money cannot buy it, because a man I do not trust could not get money from me for all the bonds in Christendom”. And today, Google’s code of conduct echoes this. It states that “Trust is the foundation upon which our prosperity rests. If people trust each other well, then mutual service can evolve with low transactional friction; if they do not, then prosperity will seep away.”
So I hope that prompts a bit of thought for the day ahead. If it prompts you to have a look at the book, in a search for hope and good cheer (apparently Boris Johnson called it “a triumphant blast on the vuvuzela of common sense – which may worry you!), then by all means do seek out Matt Ridley’s The Rational Optimist.