From time to time, there are books that we need to read. Sometimes it is someone significant who gives us these books (as my Grandfather did for The Fountainhead, The Ugly American, and A Brief History of Time). Other times, it is when a book stands out to us when we happen to flick through a bookshop. The latter is the case here, with The Birth of Plenty.
William Bernstein explains how the prosperity of the modern world was created, and identifying four requirements for its continuance in the developed world and its foundation in the developing world:
- Property rights to offer the incentive to create,
- Scientific Rationalism so that we have the tools to innovate without fear of retribution for disruptive innovations,
- Capital markets to fuel the conversion of ideas into reality, and
- Efficient movement of ideas and goods.
Consider those parts of the world that are successful, and observe how these four factors are present. Contrast to the developing or impoverished and even starving parts of the world, where one or more of these are missing.
On Property Rights
Without reinforcement for desirable behaviours, organisms and complex systems will tend to chaotic wastefulness. Unpredictable rewards and punishments leaves us feeling helpless and activity pointless. When instrumentality is managed effectively, organisms are motivated towards desirable activities and actions; With the recognition and rewarding of efforts, with the belief that an individual should benefit from their efforts, efforts will be increased. Where pirates, foreign powers and governments are able to change the rules and ownership at a whim, individuals will not be motivated to produce the superordinary returns necessary for wealth and abundance.
On Scientific Rationalism
The Islamic world of the European dark ages flourished under an era of great thought and growth-focus, though this enlightenment disappeared when new interpretations of Islam were ceased and Orthodoxy enforced. Likewise, observe the Western Christian world – with its secular tolerance of ambiguity, uncertainty and debate – in contrast with the Eastern Christian or Orthodox world, so heavily focused upon conservativism and maintenance of tradition. Where free thinking is permitted and encouraged, great abundance may follow. Where aberrant behaviours and disruptive thinking are persecuted, poverty and tyranny remain. While adherents will tend to encourage a society based around strict obedience to their religious truths, without questioning in any way that underlying spiritual truth, such obedience impedes and inhibits development.
On Capital Markets
Ideas are powerful, yet need capital to drive them; Capital in terms of financial backing, and in terms of the human and intellectual resources that financial backing also facilitates. Clear thinking and a good understanding of the market enable us to increase the probability of success in our ventures. Access to capital on the basis of the merit of the idea promoted (rather than familiarity or proximity) maximises the value of that capital, increasing value throughout the system.
On the Free Movement of Ideas and Goods
At the dawn of the 19th century, nothing moved faster than horseback. At the dawn of the 21st century, we expect communication to be instantaneous around the world, travel faster than the speed of sound, and rely upon the internet to break down international legal and geographic barriers to allow for ever more fair valuations of work and utilization of capital.
If this is true, wealth is a choice, a choice bound by rules and principles. Should we not give the developing world the opportunity to profit from our experience… Not just to receive loans and food? Where lies the line between social engineering and being a good citizen of the world?
An idea, once thought, can never be un-thought.
What does this mean for you?