The rational optimist

Predicting disaster has always sold well. But, over the last 10,000 years, things have usually turned out much better than expected.

In The Rational Optimist, Matt Ridley documents the relentless rise in human wellbeing, and identifies the factors that explain it. First and foremost is trade – the exchange of one valuable thing for another. Ridley argues that this uniquely human trait results in specialisation, cities, and the growth of compassion. Trade also allows innovations to be developed, copied, and combined in ways that have generally increased prosperity despite population growth and finite resources.

Ridley’s argument is that wealth is likely to lead to stable populations and increased environmental quality – provided that we put a proper value on finite resources. There are ever-present dangers: trade and innovation can be systemically stifled and governments can allow self-interested groups to extort the fruits of prosperity.

But the evidence in the book suggests we need vigilance, not hysteria. There were plenty of doomsday predictions in the early 1800s. But as Thomas Macaulay said at the time, “We cannot absolutely prove that those are in error who tell us that society has reached a turning point, that we have seen our best days. But so said all who came before us, and with just as much apparent reason”.

From the Grattan Institute's 2011 summer reading list for the Prime Minister.