How prosperity evolves

Innovation and culture come from crossfertilization of ideas, says Matt Ridley, biologist and author of The Rational Optimist: How Prosperity Evolves. He argues that this process can only help accelerate economic growth.

Why did you write the book?
I wanted to make the point that the world is getting better on all sorts of fronts: it’s richer, happier, healthier, freer, kinder, cleaner, more equal and less violent. We take these things for granted or ignore them, but we shouldn’t.

We’ve seen nothing yet in terms of the prosperity humans can achieve.

What’s driving these great advances?
Innovation is at the heart of this and it’s driven by free exchange. Go back 100,000 years to when trade started and you see that, through history, those people who swapped goods the most were generally better off.

There’s an inexorable, inevitable nature to this process. Prosperity clusters around places of free trade and deserts countries that stifle it.

How do evolutionary ideas relate to trade and innovation?

My idea of prosperity arising from “ideas having sex” is not a facetious analogy. Without sex, evolution couldn’t be cumulative because you wouldn’t inherit advantageous mutations. There’s a similar process in culture and trade, which are both Darwinian by nature. They enable you to draw on the inventiveness of every previous successful idea, making innovation cumulative.

What lessons should large companies take away from these insights?
That trade opportunities are getting bigger. There are increasing numbers of consumers in the world and more of them can afford products and services. The rise of the internet means a freer, faster exchange of ideas, which will accelerate the innovation rate. We’ve seen nothing yet in terms of the prosperity humans can achieve.

Nimbleness and serendipity is the secret of success in a world of constant change and the bigger companies that can cope with this tend to be more successful. An ecosystem permitting the free exchange of ideas is the hallmark of a good company such as Google, which behaves like a series of experiments.

Is evolving innovation an inevitable process?
It’s quite possible for this process to go into reverse. I see superstition and bureaucracy as possible barriers. At the end of the 12th century, a number of civilizations shut down prosperity by burning books, turning inward or rejecting new knowledge.

I find it depressing to say, “Let’s not try anything new.” Getting the zero sum (when a loss is offset by an equal gain) illusion out of people’s minds is also terribly important – there are ways of getting rich that allow other people to get rich too. It’s not forgone that we won’t mess up, but there is a tendency to assume things are about to get worse.

We should be radically reforming our economies to enable spectacular growth through tax cuts and innovation. It worked in Hong Kong and post-war Germany. In fact, the more radical free market options have always worked remarkably well.

Download the interview as pdfpdf1.04 MB

EY refers to one or more of the member firms of Ernst & Young Global Limited (EYG), a UK private company limited by guarantee. EYG is the principal governance entity of the global EY organization and does not provide any service to clients. Services are provided by EYG member firms. Each of EYG and its member firms is a separate legal entity and has no liability for another such entity's acts or omissions. Certain content on this site may have been prepared by one or more EYG member firms