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Seminar: Matt Ridley: How Prosperity Evolves

We are very happy to have Matt Ridley here, to talk about what I think is the foundational issue in economics. The very first paragraph of the second chapter of Adam Smith's Wealth of Nations says that economic prosperity rests on the:

division of labour... not originally the effect of any human wisdom... [but] the necessary... consequence of a certain propensity in human nature... to truck, barter, and exchange one thing for another...

The fact that human group sociability and solidarity is based on exchange rather than, as with chimpanzees, grooming each other or, as with dogs--well, I don't think I should go there--has, Adam Smith thought, extraordinary consequences. I think Smith was right. So does Matt Ridley. He is here to tell us about them.

Guardian review of The Rational Optimist:

Then we modern humans arrived, and within 100,000 years or so not only devised fish hooks and farming, but steam engines, cellophane and one-click buying. What makes us so different? Why have we come so far so quickly when our hominid predecessors were stuck in a rut for thousands of generations? Matt Ridley has a simple answer. Trade. As he sees it, we owe the forward march of humankind to the benefits of barter. Homo erectus had a large brain and probably a rudimentary language. But they never saw the point of making things they could swap. Once we cottoned on to this trick, there was no stopping us. I am dexterous but weedy. You are strong but clumsy. I make the hooks and you catch the fish – and together we achieve something that neither of us could manage on our own.

Ridley makes a strong case for this thesis. He takes us from the hunter-gatherers who first ventured out of Africa up to the modern moguls of Silicon Valley, and shows how humanity has built innovation on innovation in its never-ending search for new gizmos that people will want to buy. From this perspective, specialisation is the essence of humanity, and self-sufficiency a misguided myth. If you really had to make everything yourself, you would be back in the stone age, scrabbling around with hand axes. Far better to work at one thing and let the market supply the rest...