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Ode to Homo economicus

Ode to Homo economicus
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First Published: Fri, Dec 10 2010. 07 13 PM IST

Positivist: Ridley is a former journalist with The Economist. John Watson
Positivist: Ridley is a former journalist with The Economist. John Watson
Updated: Fri, Dec 10 2010. 07 13 PM IST
The Rational Optimist | Matt Ridley
In September 2007, the financial institution Northern Rock experienced a bank run, the first time this had happened in Britain for over a century. When it was nationalized a few months later, the £25 billion (around Rs1.76 crore) bailout was the largest sum any government had ever given to a private company. The non-executive chairman, Matt Ridley, science writer and former editor of The Economist’s American edition, resigned shortly after.
It appears that he’s spent his time since writing a cheerful paean to free markets. After acclaimed works on sexuality and the human genome, among others, Ridley’s The Rational Optimist can be read as his most ambitious book. It’s also the most misguided.
Positivist: Ridley is a former journalist with The Economist. John Watson
The Rational Optimist is about “the rapid, continuous and incessant change that human society experiences”. The reason Homo sapiens progress in this manner, according to Ridley, is because of exchange: free trade, ideas, goods and services, leading to specialization and comparative advantage. In his overheated phrase, it’s all because “ideas start having sex with each other” that cultures progress and prosper.
Adam Smith, then, is the presiding deity of this enterprise, and Ridley takes us on a panoramic journey through human history to illustrate his thesis. Civilizations that have opened their doors to exchange have thrived; those that haven’t have regressed (come to think of it, it could well be the other way round: Trade as a consequence of a civilization’s rise and not a condition).
The problem with words such as “progress” and “betterment” is one of perspective. Certainly, there is now more prosperity than before, along with significant advances in healthcare and labour-saving amenities. It’s a fallacy, however, to imagine that because of this, human beings are moving towards some homogeneous, utopian goal, as critics of liberal humanism have pointed out. On this larger issue, Ridley is silent.
An unabashed proponent of increasing urbanization— because, he feels, it provides opportunity as well as frees up land for agriculture—he also doesn’t have much to say on matters such as population density and competition giving rise to alienation, stress, heart disease and other lifestyle ailments. He dismisses surveys that don’t find a correlation between wealth and happiness because of their margins of error, quoting others to suit his purpose. Such errors are, however, present in every study, making forecasting an inherently unstable exercise.
Ridley, of course, isn’t as naïve as to close his eyes to humanity’s problems, but asserts that “the population explosion is coming to a halt, that energy will not soon run out, that pollution, disease, hunger, war and poverty can all be expected to continue declining if human beings are not impeded from exchanging goods, services and ideas freely”. Africa too will shake off its problems with unimpeded trade.
He claims that global warming scaremongers are simply wrong, picking research to back his claims. Moreover, he says, we ought to embrace genetically modified (GM) foods because of their increased output. The rising cost of inputs—much of them monopolistic—doesn’t bother him. Fossil fuels too should be used as long as they last, as they enhance means of production, and before they run out, human ingenuity will find other sources of energy. This is nothing but conveniently shifting responsibility to coming generations.
The Rational Optimist: Fourth Estate, 438 pages, Rs399
History and economics apart, Ridley also makes use of biology. He writes of the prevalence of the hormone oxytocin in human brains that makes people more liable to trust and cooperation, jumping to the conclusion that “there is a direct link between commerce and virtue” (ah, that explains modern Russian capitalism). He recognizes that large corporations aren’t always motivated by the best of intentions—for example, Walmart—but affirms that their advantages always outweigh anything else. That ought to console sweatshop employees and local firms going out of business.
In essence, Ridley’s arguments are built on the foundation of the human being as Homo economicus, a creature inherently rational and inclined to maximize profit. In the real world, as we know, all of us act on compulsions other than those of the strictly pragmatic. Fundamentalism is one consequence. The nuclear arms race is another.
As John Gray writes in Straw Dogs, “the human animal will stay the same: a highly inventive species that is also one of the most predatory and destructive”. According to Gray, the good life then “means making full use of science and technology—without succumbing to the illusion that they can make us free, reasonable or even sane”.
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First Published: Fri, Dec 10 2010. 07 13 PM IST