NSL Blog

Trust and the free exchange of ideas fuels sustainable economies

December 22, 2011

Michael Shermer writes

In his 1776 work An Inquiry into the Nature and Causes of the Wealth of Nations, Scottish moral philosopher Adam Smith identified the cause in a single variable: “the propensity to truck, barter, and exchange one thing for another.” Today we call this free trade or market capitalism, and since the recession it has become de rigueur to dis the system as corrupt, rotten or deeply flawed.

If we pull back and take a long-horizon perspective, however, the free exchange between people of goods, services and especially ideas leads to trust between strangers and prosperity for more people. Think of it as ideas having sex. That is what zoologist and science writer Matt Ridley calls it in his book The Rational Optimist: How Prosperity Evolves. Ridley is optimistic that “the world will pull out of the current crisis because of the way that markets in goods, services and ideas allow human beings to exchange and specialize honestly for the betterment of all.”

And Matt Ridley also argues that trade does something even more important than enrich our lives. It makes people behave more fairly. Reminds also of the book The Evolution of Cooperation (Something Howard Rheingold discusses). The Zeitgeist today being the creation of a more fluid and flexible legal framework called Open Source and Creative Commons. Shermer finishes up,

the authors conclude, trust and cooperation with strangers lowers transaction costs and generates greater prosperity for all involved, and thus concepts of fair trade emerged as part of a larger process of social evolution to maintain mutually beneficial exchanges even when the participants were not bound by kinship, status or other social ties.

Further reading on thinking about open innovation and participatory cultures