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A flourishing thought

A book that joins the dots between prosperity and free markets. Great research, outdated faith

books Updated: Feb 04, 2011 23:46 IST
Gautam Chikermane

The Rational Optimist
Matt Ridley
Fourth Estate
n R399 n pp 438

With evolution and genetics as his canvas and inter-disciplinary gleanings as his brush, Matt Ridley has earned the reputation of being a talented thinker and writer. With The Rational Optimist, I’d add one more star: brave. When the basis of free markets and capitalism is being questioned the world over, he takes us on a historical journey, and shows that with “everybody working for everybody else”, the collective brain of earth is set for even greater prosperity through free markets.

Ridley’s underlying argument: it’s not merely biological evolution but cultural evolution — a process by which “ideas begin to meet and mate” — that drives prosperity. Ridley’s arguments are powerful, wide and deep, challenging writers and researchers to explore diverse themes.

“India, under Jawaharlal Nehru, went for autarchy too, closing its borders to trade in the hope of sparking a boom in import substitution. It too found stagnation.” This is something we have seen clearly. But go further back. “In India in the 1930s, the British government imposed tariffs to protect wheat farmers, cotton manufacturers and sugar producers against cheap imports from Australia, Japan and Java.” When Japan, Germany, post-Mao China and India opened their doors, it resulted in “the world’s greatest economic boom”. Going forward, he says, trade could transform Africa.

Had this book been published in 2004, when everything economic was perfectly mapped with ‘free markets’, Ridley would have got a wider leash to swing his arguments. Unfortunately, the financial world changed after September 15, 2008, when Lehman Brothers crashed. With it, ‘free markets’ became a relic of the past. So, I am no longer so sure about the utility of unbridled free markets. Worse, it is difficult for the real economy to function freely when the financial economy is hijacked by powerful vested interests, which live out Darwin’s ‘survival of the fittest’ mantra. Ridley’s prosperity argument could continue to be controlled by the few, with most of us paying the price through our taxes. To change that, humans will have to take the next step in evolution. That step is not visible today — rational or irrational optimism notwithstanding.

Read the book for its fantastic research that spans history into a cohesive window to the world. But don’t get swayed by the argument — free markets have a long way to go before they become free for the rest of us.