More on The Rational Optimist

One more thing about Matt Ridley's book, The Rational Optimist: Ridley also makes the point I make here that liberty and prosperity feed off of each other, that the more of one, the more of the other.  Ridley points out that the intelligentsia despise free markets and those who get rich as immoral, but trade, free markets and wealth-creation have done more to foster equanimity in class relations and world peace than anything else.

It is almost an axiom of modern debate that free exchange encourages and demands selfishness, whereas people were kinder and gentler before their lives were commercialized, that putting a price on everything has fragmented society and cheapened souls. Perhaps this lies behind the extraordinarily widespread view that commerce is immoral, lucre filthy and that modern people are good despite being enmeshed in markets rather than because of it. . . .

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But both the premise and the conclusion are wrong. The notion that the market is a necessary evil, which allows people to be wealthy enough to offset its corrosive drawbacks, is wide of the mark. In market societies, if you get a reputation for unfairness, people will not deal with you. In places where traditional, honour-based feudal societies gave way to commercial, prudence-based economies--say, Italy in 1400, Scotland in 1700, Japan in 1945--the effect is civilising, not coarsening. . . . Voltaire pointed out that people who would otherwise have tried to kill each other for worshipping the wrong god were civil when they met on the floor of the Exchange in London. David Hume thought commerce 'rather favourable to liberty, and has a natural tendency to preserve, if not produce a free government' and that 'nothing is more favourable to the rise of politeness and learning, than a number of neighbouring and independent states, connected together by commerce and policy.'

As Ridley concludes:

The lesson of the last two centuries is that liberty and welfare march hand in hand with prosperity and trade. Countries that lose their liberty to tyrants today, through military coups, are generally experiencing falling per capita income at an average rate of 1.4 percent at the time--just as it was falling per capita income that helped turn Russia, Germany and Japan into dictatorships between the two world wars. 

I'm Not Crazy

Most of the ideas I have expressed in this blog have been "original" in the sense that I thought of them, largely without doing a lot of research, but admittedly "unoriginal" in the sense that I knew that others must have already thought of them.  Even though these ideas are not original, I thought it important to remind ourselves of them, in a time when the fundamental principles that made America the freest and most prosperous country in the world are daily under attack.

Still, I thought, if the principles I enunciate are true they must have been announced by authoritative economists before now. As I said in my first substantive post, it must be an "iron law" of economics that "Every voluntary transaction between traders in a fair market provides to each trader more wealth after the transaction than he or she had before." But I couldn't find where that law had been stated, so I called it "Pammachius's Law." Unless I was crazy, though, it must really be someone else's law.

I'm glad to say, due to the helpful reference of a very good friend, I'm not crazy: I have found a book that makes many of the same points that I do, but citing the great economists as it goes. That book is The Rational Optimist: How Prosperity Evolves, by Matt Ridley.  Ridley makes several excellent points about how trade fundamentally shaped human evolution, that we are who we are because at some point humans  stopped trying to do everything for themselves--finding all their own food, making their own tools, building their own shelters, making their own clothes--and instead started to trade for these things, allowing them to exponentially increase their wealth, longevity, security, free time and intelligence.

In the course of making these points, however, Ridley reminds us of some fundamental economic truths.