Daddy, where does innovation come from?

Plenty of folk have been linking to this excerpt from Matt Ridley’s new book The Rational Optimist, and with good reason – it’s a provocative piece that plays to advocates (and opponents) of free trade, open exchange, copyright reform and much more. The basic thesis? The one persistent factor that has encouraged innovation and new ideas is the freedom to pass them around and build upon them.

You should read the whole thing, as Ridley takes down in turn the usual answers offered to the question of innovation’s source – science, capital, IP, government. But here’s some stirring stuff from the conclusion:

We may soon be living in a post-capitalist, post-corporate world where individuals are free to come together in temporary aggregations to share, collaborate, and innovate, and where websites enable people to find employers, employees, customers, and clients anywhere in the world. This is also, as the evolutionary psychologist Geoffrey Miller reminds us, a world that will put “infinite production ability in the service of infinite human lust, gluttony, sloth, wrath, greed, envy, and pride.” But that is roughly what the elite said about cars, cotton factories, and (I’m guessing) wheat and hand axes too.

Were it not for this inexhaustible river of invention and discovery irrigating the fragile crop of human welfare, living standards would stagnate. Even with population tamed, fossil energy tapped, and trade free, the human race could quickly discover the limits to growth without new knowledge. Trade would sort out who was best at making what; exchange could spread the division of labor to best effect, and fuel could amplify the efforts of every factory hand, but eventually there would be a slowing of growth. A menacing equilibrium would loom.

In that sense, Ricardo and Mill were right. But so long as it can hop from country to country and from industry to industry, discovery is a fast-breeder chain reaction; innovation is a feedback loop; invention is a self-fulfilling prophecy. Equilibrium and stagnation are not only avoidable in a free-exchanging world. They are impossible.

What are your thoughts – is Ridley on to something here, or just grandstanding to libertarians, valleygeeks and copyleftists?

It’s clear that Ridley feels economic equilibrium is something to be feared, and on that point I’m not entirely sure I’m in agreement with him… chasing after perpetual growth has been a pretty messy business in the long term, after all. But I can’t fault his thoughts about innovation. I wonder if it would be possible to entirely disconnect innovation from a money economy? Impossible right now, sure, but in a hypothetical post-scarcity future it might just fly.

5 thoughts on “Daddy, where does innovation come from?”

  1. I just bought this book, but haven’t read it yet.

    Based on this I would say he is off on the post-capitalist/post-corporate world. Right now those corporations have a ton of power and will not go quietly.

    I do agree with him in fearing economic equilibrium, and I do think it is impossible in a changing world. Yes, the current growth model is flawed, but that doesn’t mean another type of growth model can’t work and fix those flaws.

  2. Swap out “menacing equilibrium” for “menacing sustainability”. Amazing what a little diction can do.

    While I agree that innovation is generally a good thing, there’s an underlying assumption there, that the rising tide of innovation necessarily raises all boats. Let’s not forget that the entire world could be fed and housed many times over if the wealth was evenly distributed, instead of being stripped and sucked up into the seventh mansions and Caiman junkets of the banksters and other ultra-rich. Since the 80’s, despite the “accelerating rate of technological development” we’ve been seeing living standards of middle and lower classes actually going down, no generous irrigation of the general welfare.

    Innovation is great, but daisy chaining Boogie Woogie Elmo’s to play Tetris for teh lolz in your basement is not gonna do the heavy lifting.

  3. Ridley’s key theme is the salience of trade — commerce — exchange — in propelling progress. The great point (which too many fail to grasp) is that trade makes both sides better off. Ridley draws an analogy to the biological exchange of information, i.e., sex, which propels evolution. Trade, he writes, is akin to ideas having sex with each other.

    Ridley’s book celebrates the human achievement. To lament modernity, to deny that we’ve progressed, even to condemn what we’ve done, while romanticizing a supposedly halcyon past, is pitiably foolish. Ridley does a great job showing just what progress has achieved in quality of life for the average human. He and I share a profound reverence for the titanic human exertions standing behind this.
    Reading his book on an airplane — a half-day transcontinental trip that for our forebears was arduous, miserable, dangerous, and took months — made me marvel anew at the vast web of contributions by untold thousands of people across the globe and across centuries that made this possible. The same is true of even our simplest modern conveniences, to which most of us give scarcely a thought.
I have been following the reviews and blog commentaries on Ridley’s book. Most have been quite positive. The nastiest was by George Monbiot in Britain’s left-wing Guardian newspaper. One can of course quibble with details of Ridley’s analysis. But to dismiss his basic story, to actually condemn it as villainy, takes a really diseased cynicism, and blinding oneself to what is, well, blindingly obvious. It’s painful to observe. And it’s harmful, standing in the way of a better world (especially for the downtrodden, about whose plight such pundits constantly whine).

 Monbiot et al are intolerant guardians of a narrow orthodoxy. They portray Ridley’s book as fanatically pro-capitalist and anti-government. It is not, and only a fanatic would see it so. Their critiques reveal more about the critics than about the book.

    Bravo to Ridley for his breath of fresh air and clear thinking. That his message is widely labeled “radical” is ironic — the reaction really should be, “Duh! Tell us something we don’t know.” Yet Ridley is indeed telling us something that, sadly, most people don’t know.

    My own book, The Case for Rational Optimism (Transaction, Rutgers University, 2009), does make many points and arguments similar to Ridley’s, but is far broader in scope, covering not only such topics as the economy, war and peace, technology, democracy, etc., but also the evolutionary background and the philosophical and psychological issues involved with optimism versus pessimism. See

  4. Trade and exchange of ideas have increased the average living standards of the human species over the past half-million years. Sure, that’s a reasonable, obvious, even old-hat point.

    But free markets and ‘idea sex’ alone is not a panacea as Ridley seems to suggest. It has to be tempered by prudential regulation and supervision, as prophet of the 2008 meltdown, Nouriel “Dr. Realist” Roubini explains. Ridley of all people should know, given his previous job.

    Interestingly, Ridley was the chairman of UK bank Northern Rock which went belly-up in 2007, became the first bank in the country to suffer a bank run since 1878, and which got a bailout from the government to the tune of 27 billion pounds.

    Optimistic Rationalizer?

  5. Ridley would be careful to speculate about evolution without solid reasoning, and so would Monbiot, both being zoologists.

    I still have to get my hand on this book though.

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