Arguably the best book ever written on the power of entrepreneurial capitalism - The Rational Optimist by Matt Ridley - should be required reading by anyone interested in protecting and defending the free enterprise way of life.
In an awe-inspiring tour de force of exposition, Mr. Ridley takes the reader all the way back through human economic history.
Back to the 1st entrepreneurs who discovered fire and the copper axe, through the Phoenicians, through the great trading cultures of India and China before their long (and government induced) sleeps, through the age of the Medici and the early Dutch wellsprings of modern trade, through the 19th Century Industrial Revolution in England and Scotland, to the American Century and the dawns of the computer, information, and communication ages.
And from this tale of human history, Ridley makes the overwhelming case that the 2 key drivers of human prosperity since time immemorial have been innovation and trade.
Building on the seminal work of Clayton Christensen in the Innovator’s Dilemma, Ridley describes the innovation process and its economic value-add in very prosaic terms.
He points to innovations like Amazon’s ongoing transformation of the ecommerce experience – none of which would be considered breakthrough technology, but which in their aggregate have brought unprecedented consumer productivity gains.
And to eBay, whose core innovation was NOT the idea of online auctions as much as it was that a robust exchange of buyers and sellers could be attracted via pay-per-click advertising.
Ridley’s point is that the innovation that creates wealth - versus innovation that looks good on an academic’s or a politician’s whiteboard - is simply the abiding power of Adam Smith’s invisible hand made real.
Namely individuals and small teams tweaking the way things are done only so slightly for one purpose and one purpose only – to make a buck. Or a yuan. Or a rupee. Or a few pesos.
And because now for the first time in human history, there are billions of people thinking and working and collaborating in real time toward this basic human desire, the result is more prosperity for more human beings than at any time ever.
AND MUCH more excitingly, now that all of this entrepreneurship and innovation can be shared worldwide in an instant at the click of a button, the statistical odds are overwhelmingly in favor of everything just getting better!
As in more prosperity, better education, more safety from premature death and disease, and yes even more happiness.
For all of us, for our children, and our grandchildren.
As Mr. Ridley points out, most of our grandparents had standards of living not much greater than that of Zambians today. And by corollary, if current trends continue, the grandchildren of today's Zambians will have standard of living's equal to those of ours today.
And as for our grandchildren, well they will live in a world, like our grandparents before us, that we can only dream of.
And as Mr. Ridley proves conclusively in this wonderful book, for all of this it is the entrepreneurs and the innovators that we have to thank.
So if you are serious about participating in the great 21st Century boom, read Mr. Ridley’s book.
And thank your local, neighborhood entrepreneur. For it is he and she that are driving it.
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