The following is a lightly edited, slightly condensed transcript of the talk “Adam Darwin: Emergent Order in Biology and Economics,” presented by Matt Ridley at the Adam Smith Institute in 2012.

I’ve called my lecture “Adam Darwin” to stress how congruent the philosophies of Adam Smith and Charles Darwin are. The common theme, of course, is emergence — the idea that order and complexity can be bottom-up phenomena; both economies and ecosystems emerge. But my purpose really is to explore not just the history and evolution of this shared idea but its future: to show that in the age of the Internet, Adam-Darwinism is the key to understanding how the world will change.

The Common Ancestry of Evolution and Economics

Darwin’s debt to the political economists is considerable. He spent formative years in Edinburgh among the ghosts of Hume, Hutchinson, Ferguson, and Smith. When he was at Cambridge in 1829, he wrote, “My studies consist in Adam Smith and Locke.” At his grandfather Josiah Wedgwood’s house in Staffordshire, Darwin often met the lawyer and laissez-faire politician Sir James Mackintosh, whose daughter married Charles’s brother-in-law (and had an affair with his brother).
On the Beagle, he read the naturalist Henri Milne-Edwards, who took Adam Smith’s notion of the division of labor and applied it to the organs of the body. After seeing a Brazilian rainforest, Darwin promptly reapplied the same idea to the division of labor among specialized species in an ecosystem: “The advantage of diversification in the inhabitants of the same region is in fact the same as that of the physiological division of labor in the organs of the same individual body — subject so well elucidated by Milne-Edwards.”
Back in England in the 1830s, through his brother Erasmus, Darwin fell in with the radical feminist and novelist Harriet Martineau, who had shot to fame because of her series of short fictional books called Illustrations of Political Economy. These were intended to educate people in the ideas of Adam Smith, “whose excellence,” she once said, “is marvelous.” I believe it was probably at Martineau’s suggestion that, in October 1838, Darwin came to reread Malthus (a person with whom Martineau was on very close terms) and to have his famous insight that death must be a non-random and therefore selective force.
Parenthetically, it’s worth recalling the role of anti-slavery in bringing Martineau and Darwin together. Darwin’s grandfather Josiah Wedgwood was one of the leaders and organizers of the anti-slavery movement, a friend of Wilberforce, and the maker of the famous medallion “Am I not a man and a brother?” which was the emblem of the anti-slavery movement. Charles Darwin’s aunt Sara gave more money to the anti-slavery movement than any woman in Britain. Darwin had been horrified by what he called, “The heart-sickening atrocities of slavery in Brazil.” Abolition was almost the family business. Meanwhile, Harriet Martineau had just toured America speaking against slavery and had become so notorious that there were plans to lynch her in South Carolina.
Today, to a bien pensant intellectual, it might seem surprising to find such a left-wing cause alongside such a right-wing enthusiasm for markets, but it should not be. So long is the shadow cast by the top-down determinism of Karl Marx, with his proposal that the state should be the source of reform and welfare, that it’s often forgotten how radical the economic liberalism of the political economists seemed in the 1830s. In those days, to be suspicious of a strong state was to be left-wing (and, if you’ll forgive the pun, quite right, too).
Today, generally, Adam Smith is claimed by the right, Darwin by the left. In the American red states, where Smith’s emergent decentralized philosophy is all the rage, Darwin is often reviled for his contradiction of dirigiste creationism. In the average British university by contrast, you will find fervent believers in the emergent decentralized properties of genomes and ecosystems, who nonetheless demand dirigiste policy to bring order to the economy and society. Yet, if the market needs no central planner, why should life need an intelligent designer, or vice versa?
Ideas evolved by descent and modification just as species do, and the idea of emergence is no exception. Darwin at least partly got the idea from the political economists, who got it from the empirical philosophers. To put it crudely, Locke and Newton begat Hume and Voltaire, who begat Hutchinson and Smith, who begat Malthus and Ricardo, who begat Darwin and Wallace. Darwin’s central proposition was that faithful reproduction, occasional random variation, and selective survival, can be a surprisingly progressive and cumulative force. It can gradually build things of immense complexity. Indeed, it can make something far more complex than a conscious deliberate designer ever could. With apologies to William Paley and Richard Dawkins, it can make a watchmaker.
Each time a baby is conceived, 20,000 genes turn each other on and off, in a symphony of great precision, building a brain of 10 trillion synapses, each refined and remodeled by early and continuing experience. To posit an immense intelligence capable of comprehending such a scheme, rather than a historical emergent process, is merely to exacerbate the problem — who designed the designer?
Likewise, as Leonard Reed pointed out, each time that the pencil is purchased, tens of thousands of different people collaborate to supply the wood, the graphite, the knowledge, and the energy, without any one of them knowing how to make a pencil. Says Smith, if you like, “This came about by bottom-up emergence, not top-down dirigism.” In both cases, nobody’s in charge, and crucially, nobody needs to understand what’s being done.

Why Innovation Happens

So far, I’m treading a well trodden path in the steps of Herbert Spencer, Frederick Hayek, Karl Popper, and many others who’ve explored the parallels between evolutionary and economic theory. But the story has grown a lot more interesting in the last few years, I think, because of developments in field of cultural and technological evolution. Thanks especially to the work of three anthropologists — Rob Boyd, Pete Richardson, and Joe Henrich — we are beginning now to understand the extraordinary close parallels between how our bodies evolved and how our tools and rules evolve. Innovation is an evolutionary process. That’s not just a metaphor, it’s a precise description. I need you to re-examine a lot of your assumptions about how innovation happens to disenthrall yourself of what you already know.
First, innovation happens mainly by trial and error. It’s a tinkering process, and it usually starts with technology, not science, by the way, as Terrence Keeley has shown. The trial and error may happen between firms, between designs, between people, but it happens. If you look at the tail planes of early airplanes, there’s a lot of trial and error, there’s a lot of different designs being tried and eventually one is decided.

Innovation happens mainly by trial and error. It’s a tinkering process, and it usually starts with technology, not science.”
It may not be quite as random as in genetic mutation, but it turns out that that does not matter. Here’s the key paper by Henrich and the others, in which they make the point that even with semi-random mutation in culture, you actually can get selection happening very quickly. Using mathematical models, they make it clear that partial randomness is all that natural selection needs to start tinkering.
In his excellent book Adapt, Tim Harford runs through some fine examples, from the pacification of Iraq to the design of computer games, of how much better innovation works when we embrace rather than reject this — when we let lots of different versions bloom and pick the one that works. Harford’s thesis is that trial and error is a tremendously powerful process for solving problems in a complex world, while expert leadership is not. In other words, intelligent design is just as bad at explaining innovation as it is at explaining evolution. Discovery comes from pluralism and serendipity, not command and control.
The second point is that innovation is incremental and inexorable. We just don’t make revolutionary leaps in technology and/or culture. We make small adjustments to existing tools and rules. We discover and invent the “adjacent possible,” in Stewart Kauffman’s phrase. If a particular invention is not impossible, then it’s inevitable.
The consequence of this is that our technologies and our institutions show descent with modification, just like biological species. George Bassala first drew attention to the startling evolutionary pedigrees of our common technologies. Here’s one example of a technology family tree: the original paleolithic stone ax gives way to the polished neolithic stone ax, on which was designed the first copper ax, then early bronze axes, and then iron axes.
But third, as well as being incremental and inevitable, cultural evolution is inexorable. In 1965, the computer expert Gordon Moore, published his famous little graph showing that the number of component on a silicon chip, a measure of computing power, seemed to be doubling every year and a half. The technology guru Ray Kurzweil recently pointed out that a version of “Moore’s Law” has been true since the early years of the 20th century. And this is Kurzweil’s graph:

Before the integrated circuit even existed, previous technologies — electromechanical, relay, vacuum tube, and transistor — had all improved along the very same trajectory. The computing power that a thousand dollar buys has doubled every two years for a century. This law of accelerating returns appears to have marched imperturbably through the upheavals of the 20th century without breaking step. As Kurzweil points out, the reason for this predictability is that each technology is used to make the next. In other words, technology is driving its own progress by steadily expanding its own capacity to bring ideas together. We could not stop the march of technology even if we wanted to.
Kevin Kelly neatly captures this point in his book What Technology Wants. Kelly points out the many, many examples of simultaneous invention or discovery, and the bitter priority disputes which result, show that once an idea is ripe, it is inevitable. Darwin and Wallace were, of course, a classic example of that. Even relativity would not long have stayed unknown if Einstein had been run over by a tram. Lorentz was hot on the trail of the idea already. And this of course implies that inventors are dispensable. The phenomenon of convergent evolution, whereby different species end up looking remarkably alike is a consequence of this. And convergent evolution happens in culture and technology, too: the boomerang, for example, was invented in ancient Egypt and ancient Australia quite independently.
Human innovation shows all hallmarks of an evolutionary process: descent with modification, variation, selection, extinction and succession, competition, success and extinction, and replication of successful forms. Notice that the cultural evolution I’m describing is the very opposite, by the way, of “Social Darwinism,” the notion that we should order society so as to encourage biological evolution. Because bad ideas die in competition with good ones, people do not have to die. The more we allow our technologies and institutions to evolve, the more we can afford to keep the poor, the disabled, and the weak alive. Cultural evolution makes Social Darwinism less likely, not more. A country of grinding poverty and frequent warfare — 15th century England, say, or 21st century Congo — is far more Social Darwinist than a rich, consumer society.
When Ideas Have Sex
But there is one ingredient missing from this story so far, one topic that biologists have spent a lot of time thinking about but economists have not. That topic is sex. Sex is what makes evolution a cumulative force, what makes it creative rather than conservative. Without the swapping of genes between individuals, you cannot get good mutations except through inheritance.
Here’s an example: two mutations happen in an asexual species, they’re both good mutations, one green and one red. And because the green one is better than the red one, so the red one has to go extinct. But now look what happens in a sexual species, at one point an individual can inherit both the red one and the green one.

Sex enables you to draw upon mutations that happen anywhere in your species, and you don’t have to choose between them: you can get both. This is one reason that sex is so widespread in the animal and plant kingdoms, despite being a costly and inconvenient business compared with vegetative growth and cloning.
Even the exceptions turn out to prove the rule. Bdelloid Rotifers have not had sex for 18 million years, but they are diverse, complex, and well-adapted creatures. How do they manage to evolve without having sex? It turns out they have a method of gene swapping that is if anything superior to sex. It’s called “horizontal gene transfer” — basically they eat each other and borrow their genes.
My point is, that evolution really got going when it invented sex. What’s the equivalent therefore of sex in culture and technology? The answer is, of course, obvious to a student of Adam Smith: exchange, the habit of swapping one thing for another. Adam Smith, more than anybody else, spotted that exchange is uniquely a human characteristic. As he put it, “No man ever saw a dog make fair and deliberate exchange of a bone with another dog.”
And, you know what, he was right about this. I’ve been going around the world trying to persuade biologists that only human being indulge in exchange of objects and services between strangers, and with little success. They’re very resistant to this idea, but they just cannot come up with a good example to counter me. They tell me about symbiosis, in which two creatures work for each other, like a fungus and an algae in the form of a lichen, but that’s between species, not between members of a species. They tell me about social insects like ants, but that’s between relatives, not between strangers. They tell me about food for sex exchanges that certain insects and birds do, but that’s not between strangers, it’s within a mated pair. They tell me about reciprocity — “you scratch my back, I’ll scratch yours” — but that’s the swapping of the same favor different times, not the swapping of different favors at the same time.
I stand by my argument: only human beings routinely exchange things between strangers. Only in human beings does culture have sex. Only in human beings is culture, therefore, cumulative and progressive. Exchange was the key invention that led to the explosion of technology and economic progress in our species. Not language, tools, or self-awareness, or big brains. We had all those for hundreds of thousands of years and we remained rare and simple hunter-gatherers. It was when we invented exchange that the human revolution happened.

Only in human beings does culture have sex.”]
Exchange is crucial to innovation, and innovation accelerates in societies that open themselves up to internal and external exchange through trade and communication — Ancient Greece, Song China, Renaissance Italy, 16th century Holland, 19th century Britain — whereas innovation falters in countries that close themselves off from trade — Ming China, Nero’s India, Communist Albania, North Korea.
More ever, every innovation, as Brian Arthur has argued, is a combination of other innovations. As L.T.C. Rolt, the historian of engineering put it, “The motorcar looks as if it was sired by the bicycle out of the horse carriage.” My favorite example of this phenomenon is the pill camera, which takes a picture of your insides on the way through. It came about after a conversation between a gastroenterologist and a guided missile designer.
Adam Smith in other words, has the answer to an evolutionary puzzle: what caused the sudden emergence of behaviorally modern human beings in Africa in the past hundred thousand years or so? In that surprisingly anthropological first chapter of The Wealth of Nations, Smith saw so clearly that what was special about human beings was that they exchanged and specialized.
Neanderthals didn’t do this — they only ever used local materials. In this cave in Georgia, the Neanderthals used local stone for their tools. They never used tools from any distance away, from any Neanderthal sites. But when modern human beings move into this very same area, you find stone from many miles away being used to make the tools, as well as local stone. That means that moderns had access to ideas, as well as materials from far away. Just as sex gives a species access to innovations anywhere in its species, so exchange gives you access to innovation anywhere in your species.
When did it first happen? When was trade invented? At the moment, the oldest evidence is from about a 120,000 years ago. That’s when obsidian axes in Ethiopia and snail-shell beads in Algeria start traveling long distances. These beads are made from marine shells, but they’re found a hundred miles inland. And we know from modern Aborigines in Australia that long-distance movement of man-made objects happens by trade, not migration. So it’s not that people are walking all the way to the Mediterranean and picking up shells and walking all the way back again; they’re getting them hand-to-hand by trade.
Now that’s 120,000 years ago — ten times as old as agriculture — but I suspect it goes back further still. There’s a curious flowering of sophisticated tool kits in Africa around a 160,000 years ago, in a seashore dwelling population, as evidenced by excavations at a place called “Pinnacle Point.” It came and went, but careful modeling by some anthropologists at the University College London suggests that this might be a demographic phenomenon: a rich food supply led to a dense population, which led to a rich toolkit. But that’s only going to be true if there is exchange going on, if the ideas are having sex — dense populations of rabbits don’t get better tools. Once exchange and specialization are happening, cultural evolution accelerates if population density rises, and decelerates if it falls.
We can see this clearly from more recent archeology in a study by Melanie Klien and Rob Boyd. In the Pacific, in pre-Western contact times, the sophistication of fishing tackle depends on the amount of trading contact between islands. Isolated islands, control for island size, will have simpler fishing tackle than well-connected islands. And indeed, if you cut people off from exchange networks, human progress not only stalls, it can go backwards.

IFf you cut people off from exchange networks, human progress not only stalls, it can go backwards.”]
The best example of this is Tasmania, which became an island ten thousand years ago when sea levels rose. Not only did the Tasmanians not get innovations that happened after this time, such as the boomerang, they actually dis-invented many of their existing tools. They gave up making bone tools altogether, for example. As Joe Henrich has argued, the reason for this is that their population was too small to sustain the specialization needed to collaborate in the making of some of these tools. Their collective brain was not big enough — nothing to do with their individual brains, it’s the collective intelligence that counts.
As a control for this idea, notice that the same thing did not happen in Tierra Del Fuego. The Fuegan Indians continue to progress technologically. The reason for this is that the Magellan Strait is narrower than the Bass Strait, so trade continued and the Feugan Indians had access to a collective brain the size of South America. Whereas, as the Tasmanians had access to a collective brain only the size of Tasmania.

The Collectivism of Markets

Now for me one of the most fascinating implications of this understanding of the collective brain is just how touchy-feely liberal it is. I’m constantly being told that to believe in markets is to believe in selfishness and greed. Yet I think the very opposite is true. The more people are immersed in markets, the more they collaborate, the more they share, the more they work for each other. In a fascinating series of experiments, Joe Henrich and his colleagues showed that people who play ultimatum games — a game invented by economists to try and bring out selfishness and cooperation — play them more selfishly in more isolated and self-sufficient hunter-gatherer societies, and less so in more market-integrated societies.
History shows that market-oriented, bottom-up societies are kinder, gentler, less likely to go to war, more likely to look after their poor, more likely to patronize the arts, and more likely to look after the environment than societies run by the state. Hong Kong versus Mao’s China, 16th century Holland versus Louis the XIV’s France, 20th century America versus Stalin’s Russia, the ancient Greeks versus the ancient Egyptians, the Italian city-states versus the Italian papal-states, South Korea versus North Korea, even today’s American versus today’s France, and so on.
As Voltaire said, “Go into the London stock exchange and you will see representatives of all nations gathered there for the service of mankind. There the Jew, the Mohammedan, and the Christian deal with each other as if they were of the same religion, and give the name of infidel only to those who go bankrupt.”
As Deirdre McCloskey reminds us, we must not slip into apologizing for markets, for saying they are necessary despite their cruelties. We should embrace them precisely because they make people less selfish, and they make life more collective, less individualistic. The entire drift of human history has been to make us less self-sufficient and more dependent on others to provide what we consume and to consume what we provide. We’ve moved from consuming only as widely as we produce to being much more specialized as producers and much more diversified as consumers.
That’s the very source of prosperity and innovation. It’s time to reclaim the word “collectivism” from the statists on the left. The whole point of the market is that it does indeed “collectivize” society, but from the bottom-up, not the top-down. We surely know by now after endless experiments that a powerful state encourages selfishness.
Let me end with an optimistic note. If I’m right, that exchange is the source of innovation, then I believe that the invention of the Internet, with its capacity to enable ideas to have sex faster and more promiscuously than ever, must be raising the innovation rate. And since innovation creates prosperity by lowering the time it takes to fulfill needs, then the astonishingly rapid lifting of humanity out of poverty that has happened all over the world, particularly in the last 20 years, can surely only accelerate. Indeed, it is accelerating. Much of Africa is now enjoying Asian Tiger-style growth. Child mortality is plummeting at a rate of five percent a year in Africa. In Silicon Valley recently, Vivek Wadhwa showed me a $35 tablet computer that will shortly be selling in India. Think what will be invented when a billion Indians are online.
In terms of human prosperity, therefore, we ain’t seen nothing yet. And because prosperity is an emergent property, an inevitable side effect of human exchange, we could not stop it even if we wanted to. All we could do is divert it elsewhere on the planet (which is what we in Europe seem intent on doing). “Adam Darwin” did not invent emergence: his was an idea that emerged when it was ripe. And like so many good ideas, it was already being applied long before it was even understood. And so I give you Adam-Darwinism as the key to the future.