The Rational Optimist: a review

Just finished this book by Matt Ridley. If nothing else, it is a thought-provoking work. Some of the thoughts it has provoked in this reader are summarised below— mostly in short note, off-the-top-of-my-head form.

Firstly, it succeeds. If the aim is to make people feel a little better about the future of mankind and the planet, it’s hard to close the final page without feeling exactly that. It’s a beguiling narrative, well-argued and well-referenced (I somehow suspect he’s unlikely to be flat-out wrong on any significant point of fact, although how selective he is in his use of evidence is another question… and one I will have to leave hanging, like most readers I lack the time to trawl through notes and references). It’s possible to disagree on some aspects of his arguments on some topics while remaining well disposed to the main thrust of the book: that despite the prevailing gloom of the pessimists, “it’s-a not so bad” after all.

It’s a fusion of what essentially seems to be the neoclassical vision of economics (though importantly, it acknowledges the dynamic rather than steady state ‘equilibrium’ nature of markets) with Darwinian natural selection. The natural selection here is operating in the realm of ideas (ie Richard Dawkin’s memes). Overall though there seems to be more economics than anthropology or biology here. Which is a shame, because the early chapters, with a more ‘biological’ take on the evolutionary advantages of specialisation and exchange, are the strongest. The importance of specialisation and exchange— the “specialisation of production and the diversification of consumption”— is a recurrent theme, as are the importance of innovation, the ‘bottom-up’ emergence of institutions and Schumpeter’s “creative destruction”. Adam Smith, Hayek and of course Darwin, make repeated appearances.

While accepting the general idea that things probably aren’t as bad as we think, I do have several quibbles— some small, and one or two biggies.

  • Failure to demonstrate causality. A couple of examples: exchange may have preceded agriculture (apparently this is an important point) but did one really lead to the other, or was there a more profound underlying shift in early human cognition that enabled both developments to occur at about the same time? Did Diocletian’s bureaucracy contribute to eventual fall of Roman Empire, as Matt Ridley asserts, or did it delay an inevitable collapse that actually had other causes (see Homer-Dixon)?
  • Nothing in here that really resolves any of the usual contradictions/inconsistencies that seem to be rife in economic thinking; markets requiring strong institutions which require stability which often requires strong governments which become monopolies which aren’t good for markets etc etc
  • Selective use of sources; suspect some of this in the climate change chapter (maybe betraying my own preconceptions here).
  • Northern Rock. Is it unfair to raise this? (Matt Ridley was a non-executive chairman of the first UK bank to have a run in 150 years). Categorically  no, this a huge issue when the book is so emphatic in it’s promotion of the ‘everything’s going to be fine’ mentality which was characteristic of nearly all politicians and economists pre-2007 (wrt the global financial system).  This is briefly alluded to at the start of the book, at which point Ridley admits that Northern Rock’s collapse made him mistrustful of markets in capital and assets, while markets in goods and services remain hunky-dory. He supports this by quoting some interesting research by Vernon Smith that suggests that markets in goods and services for immediate consumption are the ones that work well  [this supports a suspicion I took away from the few introductory economics lectures I’ve attended: that the price mechanism works great for the illustrative chocolate bars used as examples in introductory economics lectures, but is an imperfect tool for almost everything else]. Well, yes. It’s all very well quoting such research retrospectively, but I seem to remember lots of talk about how innovative capital and asset markets were; certainly very complex and specialised. Like many in the UK, I still feel angry about the banking crisis, and the lack of foresight and political leadership (admittedly without really understanding how it all came about and how similar situations can be avoided in the future). But dammit, there were warning signs, there was greed and lack of caution, and I’m not sure Matt Ridley’s book really helps us distinguish why those in charge were irrationally optimistic back then when it came to the global financial system, but are rationally optimistic now when applying similar arguments to future human and planetary health. In short, it opens up a gaping credibility gap that colours everything else in the book.
  • False dichotomy. Why can’t the water level in the glass be 50%? In other words, I’m not sure how helpful it is to talk in terms of blanket optimism or pessimism when considering big global issues, when it’s usually possible to use value-neutral terminology, and— based on our assessment of the evidence— perhaps be optimistic about some aspects of global problems at some scales, and pessimistic about others at different spatial or timescales. I’m not sure why this book is encouraging us to pin our colours so firmly to the optimism mast, when the world is clearly more nuanced.  At one point Ridley makes a passing dig at the precautionary principle, but this woolly rule of thumb cuts both ways: there’s an extensive passage describing the madness of growing biofuels in terms of consequences for human food supply and ecosystems (with which I am in complete agreement), but surely a precautionary approach to a ‘switch to biofuels’ policy would be a good thing here?

‘Father of the Green Revolution’ Norman Borlaug was motivated by experiences of starvation in the US midwest during the Great Depression, which made him keenly aware of the knife edge between prosperity and starvation. His Ridley-esque innovations—high-yield crop strains and other intensive agricultural methods— likely staved off massive famine in the developing world. I wonder: had he read a 1930s version of The Rational Optimist and taken the underlying message to heart (admittedly unlikely, given his background), would he have spent the rest of his life striving quite so hard against hunger? In short, it’s the complacency of Matt Ridley’s philosophy, rather than the underlying truth of some of the concepts (sure, ideas evolve) that’s my main bone of contention with this book.

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