This book is about how different they are from other animals. What is it about human beings that enables them to keep changing their lives in this tumultuous way? p2
There is a great deal of human life that does not change. p2
What is it that makes me so different? p3
It is my contention that in looking inside our heads, we would be looking in the wrong place to explain this extraordinary capacity for change in the species. It was not something that happened within a brain. It was something that happened between brains. It was a collective phenomenon. p4
Look again at the nad axe and mouse. They are both ‘man-made’, but one was made by a single person, the other by hundreds of people, maybe even millions. That is what I mean by collective intelligence. p5
Humanity is experiencing an extraordinary burst of evolutionary change, driven by good old-fashioned Darwinian natural selection. But it is selection among ideas, not among genes. p5
Yes, but why?… The answer, I believe, is that at some point in human history, ideas began to meet and mate, to have sex with each other. p6
Exchange is to cultural evolution as sex is to biological evolution. p7
I am a rational optimist: rational because I have arrived at optimism not through temperament or instinct, but by looking at the evidence. p10
1. A better today: the unprecedented present
Today, of Americans officially designated as ‘poor’, 99 percent have electricity, running water, flush toilets, and a refrigerator; 95 percent have a television, 88 percent a telephone, 71 percent a car and 70 percent air conditioning. Cornelius Vanderbilt had none of these. p17
the Flynn effect p19
The four most basic human needs–food, clothing, fuel and shelter–have grown markedly cheaper during the past two centuries. p20
In monetary terms, the same amount of artificial lighting cost 20,000 times as much in England in the year 1300 as it does today. p20
Time: that is the key. p22
This is what prosperity is: the increase in the amount of goods or services you can earn with the same amount of work. p22
Goverments prevent this by, first, using planning or zoning laws to restrict supply; second, using the tax system to encourage mortgage borrowing; and third, doing all they can to stop property prices falling after a bubble. The effect of these measures is to make life harder for those who do not yet have a house and massively reward those who do. p25
Rich people are happier than poor people; rich countries have happier people than poor countreis; and people get happier as they get richer. p26
…people are programmed to desire, not to appreciate. p27
It is the increase in free choice since 1981 that has been responsible for the increase in happiness. p28
More than any other animal, human beings borrow against their future capabilities by depending on others in their early years. p29
Imagine if you had to be completely self-sufficient. p33
The top four priorities would be food, fuel, clothing and shelter. p33
In exchange for some fraction of spending, each supplied me with some fraction of their work. p36
My point is that you have far, far more thatn 498 servants at your immediate beck and call. p37
So this is what poverty means. You are poor to the extent that you cannot afford to sell your time for sufficient price to buy the services you need, and rich to the extent that you can afford to buy not just services you need but also those you crave. p41
In truth, far from being unsustainable, the interdependence of the world through trade is the very thing that makes modern life as sustainable as it is. p42
Interdependence spreads risk. p42
2. The collective brain: exchange and specialization after 200,000 years ago
How could people have been so unimaginative, so slavish, as to make the same technology for so long? How could there have been so little innovation, regional variation, progress, or even regress? p49
Natural selection is a conservative force. It spends more of its time keeping species the same than changing them. p49
Biface axes were like external canine teeth. The rich meat diet also enabled erecus hominids to grow a larger brain, an organ that burns energy at nine times the rate of the rest of the body. Meat enabled them to cut down on the huge gut that their ancestors had found necessary to digest raw vegetation and raw meat, and thus grow the bigger brain instead. Fire and cooking in turn then released the brain to grow bigger still by making food more digestible with an even smaller gut–once cooked, starch gelatinises and protein denatures, releasing far more calories for less input of energy. As a result, whereas other primates have guts weighing four times their brains, the human brain weighs more than the human intestine. Cooking enabled hominids to trade gut size for brain size. p51
L3 mitochondrial type p54
The second theory is that a fortuitous genetic mutation triggered a change in human behaviour by subtly altering the way human brains were built. This made people fully capable of imagination, planning, or some other higher function for the first time, which in turn gave them the capacity to make better tools and devise better ways of making a living. p55
FOXP2 p55
I am going to argue that the answer lies not in climate, or genetics, nor in archaeology, not even entirely in ‘cultute’, but in economics. p56
They had stumbled on the [[Hayek]] called the catallaxy: the ever-expanding possibility generated by a growing division of labor. p56
Trade is often unequal, but still benefits both sides. This is a point that nearly everybodt seems to miss. p57
…other animals do not barter. p58
True barter requires that you give up something you value in exchange for something else you value slightly more. p59
My argument is that this habit of exchange, this apetite for barter, had somehow appeared in our African ancestors some time before 100,000 years ago. p60
…wild chimpanzees spend six hours or more each day just masticating their food. p60
…collecting different foods and sharing them is something no other species does. p64
It was in the early 1990s that the African-born zoologist Jonathan Kingdon first suggested that the black skin of many Afircans, Australians, and Melanesians and ’negrito’ Asians hinted at a maritime past… out of exposed reef or beach, or in a fishing canoe, maximum sunscreen is called for. p67
This is a striking contrast to Neanderthals, whose stone tools were virtually always made from raw materials available within an hour’s walk of where the tool was used. To me this is a vital clue to why the Neanderthals were still making hand axes, while their African-origin competitors were making ever more types of tool. Without trade, innovation just does not happen. Exchange is to technology as sex is to evolution. It stimulates novelty. The remarkable thing about moderns of west Asia is not so much the diversity of artefacts as the continual innovation. There is more invention between 80,000 and 20,000 years ago than there had been in the previous million. p71
Specialisation would therefore create and increase the opportunities for gains from trade. p74
[[David Ricardo]]’s law has been called the only proposition in the whoe of the social sciences that is both true and surprising. p75
It is rather baffling that we appear to be the only species that routinely exploits it. p75
What gave people the chance to exploit gains from trade, without waiting for Mother Nature’s tedious evolutionary crawl, was technology. p76
There was nothing special about the brains of the moderns; it was their trade network that made the difference–their collective brains. p78
There was nothing wrong with individual Tasmanian brains; there was something wrong with their collective brains. Isolation–self-sufficiency–caused the shrivelling of their technology. p79
If, as seems to be the case everywhere, culture works by faithful imitation with a bias towards imitating, prestigious individuals (in other words, copy the expert, not the parent or the person closest to hand), then all it would take for certain skills to be lost would be a handful of unlucky accidents in which the most prestigious individual had forgotten or mislearned a crucial step or even gone to his grave without teaching an apprentice. p80
All it took was the occasional imcomer from the mainland to keep technology from regressing. p82
A large, interconnected population meant faster cumulative invention. p83
3. The manufacture of virtue: barter, trust and rules after 50,000 years ago
The argument is not that exchange teaches people to be kind; it is that exchange teaches people to recognise their enlightened self-interest lies in seeking cooperation. p86
‘Prior to exchange,’ comment the experimenters, ’near-autarky prevails, and once the “power of exchanging” is discovered, specialisation gradually evolves.’ p90
There is no known human tribe that does not trade. p91
…squirting oxytocin up the noses of students will cause them to trust strangers with their money more readily than those who receive a placebo… p94
…oxytocin does not affect reciprocity, just the tendency to take a social risk, to go out on a limb. p95
As a broad generalisation, the more people trust each other in a society, the more prosperous that society is, and trust growth seems to precede income growth. p97
My point is simply this: with frequent setbacks, trust has gradually and progressively grown, spread and deepened during human history, because of exchange. Exchange breeds trust as much a svice versa. p100
The notion of synergy, of both sides benefiting, just does not seem to come naturally to people. p101
Unimaginable cruelty was commonplace in the precommercial world: execution was a spectator sport, mutilation a routine punishment, human sacrifice a futile tragedy and animal torture a popular entertainment. The nineteenth century, when industrial capitalism drew so many people into dependence on the market, was a time when slavery, child labour and pastimes like fox tossing and cock fighting becaome unacceptable. The late twentieth century, when life became still more commercialized, was a time when racism, sexism and child molesting because unacceptable. p104
There is a direct link between commerce and virture… This is the extraordinary feature of markets: just as they can turn many individually irrational individuals into a collectively rational outcome, so they can turn many individually selfish motives into a collectively kind result. p105
The lesson of the last two centuries is that liberty and welfare march hand in hand with prosperity and trade. p109
Like [[Milton Friedman]], I notice that ‘business corporations in general are not defenders of free enterprise. On the contrary, they are one of the chief sources of danger.’ p111
Half of the biggest American companies in 1980 have now disappeared by take-over or bankruptcy; half of today’s biggest companies did not even exist in 1980. p111
Like corrugated iron and container shipping, discount merchandising is among the most unsophisticated yet enriching innovations or the twentieth century. p113
Creative destruction, [[Joseph Schumpeter]] called it. His point was that there is just as much creation going on as destruction… p114
…firms are temporary aggregations of people to help them do their producing in such a was as to help others do their consuming. p115
The increasing specialisation of the human species, and the enlarging habit of exchange, are the root cause of innovation in both. p119
4. The feeding of the nine billion: farming after 10,000 years ago
That is the point of agriculture: it diverts the labour of other species to providing services for human beings. p122
Farming is an extension of specialisation and exchange to include other species. p123
For [[Adam Smith]] capital is ‘as it were, a certain quantity of labour stocked and stored up to be employed, if necessary, upon some other occasion.’ p123
If you can store the labour of others for future use, then you can spare yourself the time and energy of working for your own immediate needs, which means you can invest in something new that will bring even greater reward. Once capital had arrived on the scene, innovation could accelerate, because time and property could be invested in projects that initially generated no benefit. Few hunter-gatherers, for example, could ever afford the time off ‘work’ to build a furnace and slowly and laboriously smelt enough metal to make a copper axe: they would starve in the meantime–even if they could find a market for axes. p123
In the conventional account it was agriculture that made capital possible by generating stored surpluses and stored surpluses could be used in trade. Before farming, nobody could hoard a surplus. There is some truth in this, but to some degree it gets the story wrong way around. Agriculture was possible because of trade. Trade provided the incentive to specialise in farmed goods and to generate surplus food. p123
The probable cause of this hiatus was a cold snap, over a thousand years long, known as the ‘Younger Dryas’. The probable cause of the cold snap was the North Atlantic suddenly cooling either from the bursting of a series of vast ice dams on the North American continent, or from the sudden outflow of water from the Arctic Ocean. Once the cold snap had begun, not only was it colder and drier, but the weather fluctuated wildly from year to year, with changes up to seven degrees in a single decade. Unable to rely on local rainfall, or local summer ripening, the people could not sustain their intensive cereal-feeding lifestyle. p125
…farming does not work in a highly volatile climate. p127
One of the intriguing things about the first farming settlements is that they also seem to be trading towns. p127
Trade comes first, not last. Farming works precisely because it is embedded in trading networks. p128
Meanwhile, as farming replaces gathering, so herding replaced hunting. p130
The hunter-gatherer market now became the herder-farmer market. p131
But once agriculture has provided the capital, increased the density of people, and given them a good reason for chopping down trees, then there might be a market large enough to support a community of full-time copper smelters, so long as they can sell the copper to neighbouring tribes. p131
The characteristic signature of prosperity is increasing specialisation. The characteristic signature of poverty is a return to self-sufficiency. p133
I think people respond to incentives and always have done. People weigh costs and benefits and do what profits them. p133
The truth is that both hunter-gathering and farming could produce affluence or misery depending on the abundance of food and the relative density of people. p137
[[Norman Borlaug]]’s wheat–and dwarf rice varieties that followed–ushered in the Green Revolution, the extraordinary transformation of Asian agriculture in the 1970s that banished famine from almost the entire continent even as population was rapidly expanding. p143
In effect, Borlaug and is allies had unleashed the power of fertiliser, made with fossil fuels. Since 1900 the world has increased its population by 400 per cent; its cropland area by 30 per cent; its average yields by 400 per cent and its total crop harvest by 600 per cent. So per capita food production has risen by 50 per cent. Great news–thanks to fossil fuels. p143
Once again, the theme of specialised production/diversified consumption turns out to be the key to prosperity. p149
Organic farming is low-yield, whether you like it or not. The reason for this is simple chemistry. Since organic farming eschews all synthetic fertiliser, it exhaust mineral nutrients in the soil… p150
…pesticide use is falling fast wherever GM cotton is grown and no-till cultivation is enriching soil wherever herbicide-tolerant soybeans are grown. p155
5. The triumph of cities: trade after 5,000 years ago
Cities exist for trade. p158
Large urban settlements, with communal buildings, monuments and shared infrastructure, start popping up after seven thousand years ago in several fertile river valleys. p158
…they gathered as tightly together as possible to maximise information flow and minimise costs. p159
Transport allowed extensive trade. p162
Specialization raised the standard of living for both. p163
Trade, once more, was the flywheel of the innovation machine. p168
…[[David Hume]]: political fragmentation is often the friend, not the enemy, of economic advance, because of the stop which it gives ‘both to power and authority.’ p170
Empires, indeed governments generally, tend to be good things first and bad things the longer they last. First the improve society’s ability to flourish by providing central services and removing impediments to trade and specialization. p182
Because it is a monopoly, government brings inefficiency and stagnation to most things it runs… p182
The message form history is so blatantly obvious–that free trade causes mutual prosperity while protectionism causes poverty–that it seems incredible that anybody ever thinks otherwise. There is not a single example of a country opening its borders to trade and ending up poorer. p186
In 2008 for the first time more than half the people in the world lived in cities. That is not a bad thing. It is a measure of economic progress that more than half the population can leave subsistence and seek the possibilities of a life based on the collective brain instead. Two-thirds of economic growth happens in cities. p189
6. Escaping Malthus’s trap: population after 1200
The Malthusian crisis comes not as a result of population growth directly, but because of decreasing specialization. p193
Europe was, in Joel Mokyr’s words, ’the first society to build an economy on non-human power rather than on the backs of slaves and coolies.’ p197
They had perhaps carried down with them into the working classes many of the habits and customs ofthe rich: literacy, for example, numeracy and perhaips industriousness or financial prudence. p 201
What Europe achieved after 1750–uniquely, precariously, unexpectedly–was an increasing division of labour that meant that each person could produce more each year and therefore could consume more each year, which created the demand for still more production. Two things, says the historian Kenneth Pomeranzy, were vital to Europe’s achievement: coal and America. p201
There is no country in the world that has a higher birth rate than in had 1960…p205
Nearly half the world now has a fertility below 2.1. p205
…the entire world is experiencing tbe second half of a ‘demographic transition’ from high mortaility and high fertility to low mortality and low fertility. p206
…theb est that can be said for sure about the demographic transition is that countries lower their birth rates as they grow healthier, wealthier, better educated, more urbanized and more emancipated. p210
Human beings are a species that stps its own population expansion once the division of labour reaches the point at which individuals are all trading goods and services with each other, rather than trying to be self-sufficient.p211
7. The release of slaves: energy after 1700
It was fossil fuels that eventually made slavery–along with animal power, and wood, wind and water–uneconomic. p214
The secret ofthe industrial revolution was shifting from current solar power to stored solar power. p216
Coal not only did not run out, no matter how much was used: it actually became cheaper and more abundant as time went by… p216
…we can build a civilization in which everybody lives the life of the Sun King, because everybody is served by (and serves) a thousan servants, each of whose service is amplified by extraordinary amounts of inanimate energy and each whom is also living like the Sun King. p217
The burst of innovation which Britain experienced quite suddenly in the late 1700s was both the cause and consequence of mechanization, of the amplification of one person’s labour by machinery and fuel. p220
…when the Calico Act took effect, it became illegal to wear cotton of any kind, or even use it in home furnishings. p226
The capitalist achievement, reflected [[Joseph Schumpeter]] a century later, ‘does not typically consist of providing more silk stockings for queens but bringing them within reach of factory girls in return for steadily decreasing amounts of effort.’ p227
…it was the transition from an organic economy, which grew its own fuel, to a mineral economy, which mined it, that enabled Britain to escape stagnation. It was coal that gave the industrial revolution its surprising second wind, that kept the mills, forges and locomotives running, and that eventually fuelled the so-called second industrial revolution of the 1860s, when electricity, chemicals and telegraphs brought Europe unprecentented prosperity and global power. p231
The crucial thing about coal was that, unlike forests and streams, it did not experience diminishing returns and rising prices. p232
That was in essence why the second half of the industrial revolution made Britain rich. It made it possible for fewer people to supply more people with more goods and more services–in [[Adam Smith]]’s words, to make ‘a smaller quantity of labour produce a greater quantity of work.’ p236
Stanley Jevons, who put it thus: ‘It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth. As a rule, new modes of economy will lead to an increase of consumption.’ p245
8. The invention of invention: increasing returns after 1800
The most fundamental feature of the modern world since 1800…has been the continuing discovery of ‘increasing returns’ so rapid that they outpaced even the population explosion. p248
As [[Hayek]] argued, knowledge is dispersed throughout society, because each person ha a special perspective. Knowledge can never be gathered together in one place. It is collective, not individual. p250
Innovation is like a bush fire that burns brightly for a short time, then dies down before flaring up somewhere else. p251
Why must the torch be passed elsewhere at all?…the answer lies in two phenomena: institutions and population. In the past, when societies gorged on innovation, they soon allowed their babies to grow too numerous for their land, reducing the leisure, wealth and market that inventors needed (in effect, the merchant’s sons became struggling peasants again). Or they allowed their bureaucrats to write too many rules, their chiefs to wage too many wars, or their priests to build too many monastaries (in effect, the merchants’ sons became soldiers, sybarites or monks). Or they sank into finance and became parasitic renters. p252
Note that the greatest impact of an increasing-return wave comes long after the technology is first invented. It comes when the technology is democratised. p253
The story of the twentieth century was the story of giving everybody access to the privilges of the rich, both by making people richer and by making services cheaper. p253
[[Francis Bacon]] was the first to make the case that inventors are applying the work of discoverers, and that sciense is the father of invention. p255
Few of the inventions that made the industrial revolution owed anything to scientific theory. p255
Throughout the industrial revolution, scientists were the beneficiaries of new technology, much more than they were the benefactors. p256
The was to incentivise innovation…is to bring capital and talen together. p258
Though they may start out full of entrepreneurial zeal, once firms or bureaucracies grow large, they become risk-averse to the point of Luddism. p261
Money is certainly important in driving innovation, but it is by no means paramount. p262
Intellectual property is an important ingredient of innovation, when innovation is happening, but it does very little to explain why some times and places are more innovative than others. p267
It is the ever increasing exchange of ideas that causes the ever-increasing rate of innovation in the modern world. p269
Paul Romer has argued, human progress consists largely in accumulating recipes for rearranging atoms in ways that raise living standards. p269
Innovators are therefore in the business of sharing. p270
Ideas are having sex with other ideas from all over the planet with ever-increasing promiscuity. p270
…but not until Romer’s ’new growth theory’ in the 1990s was economics fully back in the real world: a world where perpetual innovation brings brief bursts of profit through temporary monopoly to whoever can commandeer demand for new products or services, and long bursts of growth to everybody else who eventually gets to share the spilled-over idea. p276
The wonderful thing about knowledge is that it is genuinely limitless. There is not even a theoretical possibility of exhausting the supply of ideas, discoveries and inventions. This is the biggest cause of all for my optimism. p276
9. Turning points: pessimism after 1900
The fashionable reason for pessimism changed, but the pessimism was constant. p281
The world will not continue as it is. That is the whole point of human progress, the whole message of cultural evolution, the whole import of dynamic change–the whole thrust of this book. The real danger comes from slowing down change. It is my position that the human race has become a collective problem solving machine and it solves problems by changing its ways. It does so through invention driven often by the market: scarcity. drives up price; that encourages the development of alternatives and of efficiencies. p281
10. The two great pessimisms of today: Africa and climate after 2010
They could find no evidence that aid resulted in growth in and countries. Ever. p317
But its biggest advantage is one that the rest of Africa could easily have shared: good institutions. In particular, Botswana turns out to have secure, enforceable property rights that are fairly widely distributed and fairly well respected. p321
Give local people the power to own, exploit and profit from natural resources in a sustainable way and they will usually preserve and cherish those resources. p324
Once two individuals find ways to divide labour between them, both are better off. p327
…all experts agree that the warming will happen disproportionately at night, in winter and in cold regions, so cold times and places will get less cold more than hot ones will get hotter. p330
In short, the extreme climate outcomes are so unlikely, and depend on so much wild assumptions, that they do not dent my optimism on jot. If there is a 99 per cent chance that the world’s poor can grow much richer for a century while still emitting carbon dioxide, then who am I to deny them that chance? After all, the richer they get the less weather dependent their economies will be and more affordable they will find adaptation to climate change. p333
11. The catallaxy: rational optimism about 2100
I have tried to show that, just as sex made biological evolution cumulative, so exchange made cultural evolution cumulative and intellegence collective, and that there is therefore an inexorable tide in the affairs of men and women discernible beneath the chaos of their actions. A flood tide, not an ebb tide. p350
Somewhere in Africa more than 100,00- years ago, a phenomon new to the planet was born. A Species began to add to its habits, generation by generation, without (much) changing its genes. What made this possible was exchange, the swapping of things and services between individuals. This gave the Species an external, collective intelligence far greater than anything it could hold in its admittedly capacious brain. Two individuals could each have two tools or two ideas while each knowing how to make only one. Ten individuals could know between them ten things, while each understanding one. In this way exchange encouraged specialization, which further increased the number of different habits the Species could have, while shrinking the number of things that each individual knew how to make. Consumption could grow more diversified, while production grew more specialized. At first, the progressive expansion of the Species’ culture was slow, because it was limited by the size of each connected population. Isolation on an island or devastation by a famine could reduce the population and so diminish its collective intelligence Bit by bit, however, the Species expanded both in numbers and in prosperity. The more habits it acquired, the more niches it could occupy and the more individuals it could support. The more individuals it could support, the more habits it could acquire. The more habits it acquired, the more niches it could create. p351
By far the most dangerous, and indeed unsustainable thing the human race could do to itself would be to turn off the innovation tao. Not inventing, and not adopting new ideas, can itself be both dangerous and immoral. p354
I forcast that the twenty-first century will show a continuing expansion of [[catallaxy]] – [[Hayek]]’s word for spontaneous order created by exchange and specialization. p355