Matt Ridley tells us that, when he was a student at Oxford (not all that long ago), the future was bleak. None of the bleak scenarios – nuclear winter, oil shortage, mass starvation – happened. In his lifetime, child mortality is down two thirds. Food production per capita is massively up despite a population doubling. How did we become the only species that is more prosperous as we become more populous?
We need ideas to meet, recombine and mate… and we need to understand how ideas have sex. How do we get from a prehistoric hand axe to a computer mouse – both are the same size, both designed to fit the human hand? The hand axe didn’t vary in design for 30,000 generations – tools changed slower than skeletons in that moment of human evolution. Computer mice go obsolete in a few years. The hand axe is made from one substance – the mouse is from different substances, different ideas – lasers, plastics, microcircutry – combined into a single entity.
The body is an accumulation of ideas as well – skin cells, liver cells, bones. They come together through sexual reproduction. Sex allows the individual to draw upon genetic innovations of the whole species, not just one’s own mutations.
Exchange serves this function in society. You can teach animals to do a bit of exchange, and some animals have reciprocity… but as Adam Smith observed, we’ve never seen dogs exchange bones in fair exchange. You can have culture in other species, but without exchange, they never expand, never grow culturally or become combinatorial.
David Ricardo explained comparative advantage in the 1800s – a skilled craftsman has benefits from trade, even with a less skilled craftsman, because it allows him to save time. Saving time is one definition of prosperity, and this sort of saving leads to specialization.
How long do you have to work to pay for an hour of reading light? It’s a fraction of a second these days. But in 1800, a candle cost 6 hours wages, putting it outside the reach of most people. The hand axe was created by an individual for his own labors. But the mouse was made my tens of thousands of people, once we consider the guy who made the coffee for the guy running the oil rig to make the plastic to make the mouse…
Louis XIV had hundreds of people sewing his clothes, getting him dressed, serving his food. But you can have hundreds of people at your beck and call by going to a restaurant and a clothing store.
Other species have division of labor – in bee colonies, bees take on different tasks. The queen is responsible, solely, for reproduction. As humans, he observes, this seems to be the one function we’re not willing to delegate… not even in England.
Specialization might have started with sexual division of labor. Looking at a hunter-gatherer community, he notes that a woman knows she can get protein by digging more roots and trading them with a man who’s hunted for a warthog. We don’t believe that Neanderthals do this – they probably had language, they were advanced in many ways, but there’s no evidence of division of labor. Neanderthal women appeared to hunt with men, and there appears there was no exchange between bands. We can distinguish neanderthal and human burial sites by the appearance of materials like obsidian, brought from places far away.
Trade is vastly older than farming – at least 100,000 years old. We see Nassarius sea shells brought many miles inland, perhaps as exchange for other materials. This suggests exchange of labor – we see groups who appeared to specialize in making certain types of tools and exchanging with neighbors for their own reasons.
If a group is cut off from others, the culture can regress. Tasmania is an example of this – the population of about 4000 wasn’t large enough to keep up skills like making stone tools after the island was separated from the mainland. How many of the things in your pocket could you make if you were relocated to a desert island?
Who knows how to make a computer mouse? Nobody. Literally, there’s no one in the world. The president of the company doesn’t know – he knows how to manage the company. The assembly line worker doesn’t know how to get the oil to make the plastic. Through exchange and specialization, we’ve created the ability to do things we don’t understand.
What’s relevant to a society is not IQ – how intelligent people are – it’s how well people communicate and share their ideas. That’s also why central planning doesn’t work – you can’t have a single individual or small team do the planning and gain the benefits from the diversity of ideas.
Going forward, we know terrible things will happen this century. But because we’ve got the ability for ideas to meet and mate like never before, because everyone, not just the elites, can share and exchange ideas, we know we will accelerate innovation.