Why Optimism Seems so Irrational — Steven Horwitz

Free Enterprise Zone, The Freeman, Steven Horwitz

Over the last several weeks my columns have made a variety of arguments about why the world is a much better place than it used to be and why we should be optimistic about the future.  In last week’s column I mentioned Matt Ridley’s new book, The Rational Optimist, which I heartily recommend as an antidote to the gloom and doom about the future of humanity that is omnipresent in the media and the schools.

Ridley’s book is best read as a history of human progress in which the key vehicle is exchange.  In a metaphor that he uses a number of times, he points out that exchange enables “ideas to have sex,” which in turn produces new ideas and innovations.  The book takes the reader through human history from the origins of exchange up through medieval times, the Industrial Revolution, and the twentieth century.  Along the way, Ridley not only demonstrates the progress we’ve made, often by engaging in the sorts of comparisons about the average person’s life that I have made in recent columns, but also shows that doom-and-gloomers have always been with us and that they have almost always been wrong.

Even though they have track records worse than most economists, consistently and spectacularly wrong predictors of doom such as Paul Ehrlich are still taken seriously.  People seem all too ready to snap up the the latest book or article predicting the next disaster.  This brings a second meaning to Ridley’s title: It’s not just that one can make a rational case for optimism; it’s also that doggedly believing each and every prediction of catastrophe is utterly irrational, given both the evidence and the failed predictions of years past.

So why then do so many people continue to buy into the pessimistic view of the future?  I suspect there are multiple reasons, but I’ll focus on one set here.

No explanation of why human beings understand the world as we do can afford to ignore the effects of evolution on our psychological and cognitive make-up.  For the vast majority of our biological history we lived in a world that was constantly throwing up large challenges to our survival.  I’m not just thinking of a bad harvest six thousand years ago. I have in mind our pre-human ancestors who faced predators everywhere and whose survival was a day-to-day if not an hour-to-hour challenge.  With survival so precarious it would make sense that we evolved to be much more concerned about possible negative outcomes than positive ones.

Such worlds were indeed largely zero-sum if not negative-sum games –  interactions where wealth is only redistributed, or in the case of negative-sum games, lost.  Consider Paleolithic man: Anything his clan was able to acquire was likely at the expense of other clans, making interaction zero-sum.  And if acquisition required violence, interactions were negative.

That history is built into the very structures of our brains and how we understand the world.  The idea that exchange is positive-sum and that an entire social world can be built around beneficial unintended consequences runs against the grain of long-evolved cognitive processes.

Distrust of Markets

To see this, think about how many people today still find strange the idea that people who get rich in free markets do so by benefiting others rather than by exploiting them.  Or consider the popular opposition to international trade, which is often based on the idea that another country’s gain is our loss.   Opposition to immigration is often, in the words of South Park, about how “they took our jobs!,” as if there were a fixed number of jobs to be “distributed.”  Zero-sum thinking is widespread and often underlies the irrational pessimist’s perspective.

When we also consider that most apparent threats can be framed concretely and that the response is often something we have not yet identified, we see another cognitive bias at work.  For example, we know now that fiber optics was a solution to the shortage of copper in the 1960s, but people at the time could not see that and ultimately had to have what we might call a “rational faith” that a substitute would be found.  We might well be in the same position with oil.  But having that “rational faith” that something as yet unknown will solve the concrete problem in front of us runs against those same cognitive patterns, even though there is massive historical evidence that solutions will emerge.

I have no great wisdom on how we overcome these cognitive biases, other than to say people like Matt Ridley need to keep writing books like The Rational Optimist, and classical liberals need to keep recommending that others confront the historical facts that Ridley and others, like Julian Simon and Deirdre McCloskey, put out there.  Rationality is on the side of the optimists, but pushing back against eons of evolution is a difficult task.

The Freeman Contributing editor, Steven Horwitz, is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.See All Posts by This Author.

Copyright © 2010 Foundation for Economic Education.Used with permission.