The Rational Optimist (10 page)

Innovation networks

According to the anthropologist Joe Henrich, human beings learn skills from each other by copying prestigious individuals, and they innovate by making mistakes that are very occasionally improvements – that is how culture evolves. The bigger the connected population, the more skilled the teacher, and the bigger the probability of a productive mistake. Conversely, the smaller the connected population, the greater the steady deterioration of the skill as it was passed on. Because they depended on wild resources, hunter-gatherers could rarely live in bands larger than a few hundred and could never achieve modern population densities. This had an important consequence. It meant that there was a limit to what they could invent. A band of a hundred people cannot sustain more than a certain number of tools, for the simple reason that both the production and the consumption of tools require a minimum size of market. People will only learn a limited set of skills and if there are not enough experts to learn one rare skill from, they will lose that skill. A good idea, manifest in bone, stone or string, needs to be kept alive by numbers. Progress can easily falter and turn into regress.

Where modern hunter-gatherers have been deprived of access to a large population of trading partners – in sparsely populated Australia, especially Tasmania, and on the Andaman islands, for example – their technological virtuosity was stunted and barely progressed beyond those of Neanderthals. There was nothing special about the brains of the moderns; it was their trade networks that made the difference – their collective brains.

The most striking case of technological regress is Tasmania. Isolated on an island at the end of the world, a population of less than 5,000 hunter-gatherers divided into nine tribes did not just stagnate, or fail to progress. They fell steadily and gradually back into a simpler toolkit and lifestyle, purely because they lacked the numbers to sustain their existing technology. Human beings reached Tasmania at least 35,000 years ago while it was still connected to Australia. It remained connected – on and off – until about 10,000 years ago, when the rising seas filled the Bass Strait. Thereafter the Tasmanians were isolated. By the time Europeans first encountered Tasmanian natives, they found them not only to lack many of the skills and tools of their mainland cousins, but to lack many technologies that their own ancestors had once possessed. They had no bone tools of any kind, such as needles and awls, no cold-weather clothing, no fish hooks, no hafted tools, no barbed spears, no fish traps, no spear throwers, no boomerangs. A few of these had been invented on the mainland after the Tasmanians had been isolated from it – the boomerang, for instance – but most had been made and used by the very first Tasmanians. Steadily and inexorably, so the archaeological history tells, these tools and tricks were abandoned. Bone tools, for example, grew simpler and simpler until they were dropped altogether about 3,800 years ago. Without bone tools it became impossible to sew skins into clothes, so even in the bitter winter, the Tasmanians went nearly naked but for seal-fat grease smeared on their skin and wallaby pelts over their shoulders. The first Tasmanians caught and ate plenty of fish, but by the time of Western contact they not only ate no fish and had eaten none for 3,000 years, but they were disgusted to be offered it (though they happily ate shellfish).

The story is not quite that simple, because the Tasmanians did invent a few new things during their isolation. Around 4,000 years ago they came up with a horribly unreliable form of canoe-raft, made of bundles of rushes and either paddled by men or pushed by swimming women (!), which enabled them to reach offshore islets to harvest birds and seals. The raft would become waterlogged and disintegrate or sink after a few hours, so it was no good for re-establishing contact with the mainland. As far as innovation goes, it was so unsatisfactory that it almost counts as an exception to prove the rule. The women also learnt to dive up to twelve feet below the water to prise clams off the rocks with wooden wedges and to grab lobsters. This was dangerous and exhausting work, which they were very skilled at: the men did not take part. So it was not that there was no innovation; it was that regress overwhelmed progress.

The archaeologist who first described the Tasmanian regress, Rhys Jones, called it a case of the ‘slow strangulation of the mind’, which perhaps understandably enraged some of his academic colleagues. There was nothing wrong with individual Tasmanian brains; there was something wrong with their collective brains. Isolation – self-sufficiency – caused the shrivelling of their technology. Earlier I wrote that division of labour was made possible by technology. But it is more interesting than that. Technology was made possible by division of labour: market exchange calls forth innovation.

Now, at last, it becomes clear why the erectus hominids saw such slow technological progress. They, and their descendants the Neanderthals, lived without trade (recall how Neanderthal stone tools were sourced within an hour’s walk of their use). So in effect each erectus hominid tribe occupied a virtual Tasmania, cut off from the collective brain of the wider population. Tasmania is about the size of the Irish Republic. By the time Abel Tasman pitched up in 1642 it held probably about 4,000 hunter-gatherers divided into nine tribes, and they lived mainly off seals, seabirds and wallabies, which they killed with wooden clubs and spears. That means that there were only a few hundred young adults on the entire island who were learning new skills at any one time. If, as seems to be the case everywhere, culture works by faithful imitation with a bias towards imitating prestigious individuals (in other words, copy the expert, not the parent or the person closest to hand), then all it would take for certain skills to be lost would be a handful of unlucky accidents in which the most prestigious individual had forgotten or mislearned a crucial step or even gone to his grave without teaching an apprentice. Suppose, for example, that an abundance of seabirds led one group to eschew fishing for a number of years until the last maker of fishing tackle had died. Or that the best barbed-spear maker on the island fell off a cliff one day leaving no apprentice. His barbs went on being used for some years, but once they had all broken, suddenly there was nobody who could make them. Acquiring a skill costs a lot of time and effort; nobody could afford to learn barb-making from scratch. People concentrated on learning the skills that they could watch first-hand.

Bit by bit, Tasmanian technology simplified. The most difficult tools and complex skills were lost first, because they were the hardest to master without a master to learn from. Tools are in effect a measure of the extent of the division of labour and, as Adam Smith argued, the division of labour is limited by the extent of the market. The Tasmanian market was too small to sustain many specialised skills. Imagine if 4,000 people from your home town were plonked on an island and left in total isolation for ten millennia. How many skills and tools do you think they could preserve? Wireless telephony? Double-entry book-keeping? Suppose one of the people in your town was an accountant. He could teach double-entry book-keeping to a youth, but would the youth or the youth’s youth pass it on – for ever?

On other Australian islands much the same thing happened as on Tasmania. On Kangaroo Island and Flinders Island, human occupation petered out, probably by extinction, a few thousand years after isolation. Flinders is a fertile island that should be a paradise. But the hundred or so people it could support were far too small a human population to sustain the technology of hunter-gathering. The Tiwi people, isolated on two islands north of Darwin for 5,500 years, also reversed the ratchet of accumulating skills and slipped back to a simpler tool set. The Torres islanders lost the art of canoe making, causing the anthropologist W.H.R. Rivers to puzzle over the ‘disappearance of the useful arts’. It seems the hunter-gathering lifestyle was doomed if too isolated. The Australian mainland, by contrast, experienced steady technological progress. Where Tasmanian spears merely had fire-hardened wood points, on the mainland spears acquired detachable tips, stone barbs and ‘woomera’ spear throwers. It is no coincidence that the mainland had long-range trade, so that inventions and luxuries could be sourced from distant parts of the land. Shell beads had been moving long distances across Australia since at least 30,000 years ago. Pearl and baler shell pendants from the north coast moved through at least eight tribal areas to reach the far south more than a thousand miles from where they had been harvested, growing in sacredness as they went. ‘Pitchera’ – a tobacco-like plant – moved west from Queensland. The best stone axes travelled up to 500 miles from where they were mined.

In contrast to Tasmania, Tierra del Fuego – an island not much bigger than Tasmania, home to not many more people and generally rather colder and less hospitable – possessed a race of people who, when Charles Darwin met them in 1834, set bait for fish, nets for seals and snares for birds, used hooks and harpoons, bows and arrows, canoes and clothing – all made with specialised tools and skills. The difference is that the Fuegians were in fairly frequent contact with other people across the Strait of Magellan so that they could relearn lost skills or import new tools from time to time. All it took was an occasional incomer from the mainland to keep technology from regressing.

Networking in the near-east

The lesson is stark. Self-sufficiency was dead tens of thousand years ago. Even the relatively simple lifestyle of a hunter-gatherer cannot exist without a large population exchanging ideas and skills. The importance of this notion cannot be emphasised too strongly. The success of human beings depends crucially, but precariously, on numbers and connections. A few hundred people cannot sustain a sophisticated technology: trade is a vital part of the story.

Vast though it is, Australia itself may have suffered from this isolation effect. Recall that it was colonised 45,000 years ago by pioneering beachcombers spreading east from Africa along the shore of Asia. The vanguard of such a migration must have been small in number and must have travelled comparatively light. The chances are they had only a sample of the technology available to their relatives back at the Red Sea crossing. This may explain why Australian aboriginal technology, although it developed and elaborated steadily over the ensuing millennia, was lacking in so many features of the Old World – elastic weapons, for example, such as bows and catapults, were unknown, as were ovens. It was not that they were ‘primitive’ or that they had mentally regressed: it was that they had arrived with only a subset of technologies and did not have a dense enough population and therefore a large enough collective brain to develop them much further.

The ‘Tasmanian effect’ may also explain why technological progress had been so slow and erratic in Africa after 160,000 years ago. It explains the periodic bursts of modern tools found at South African sites like Pinnacle Point, Blombos Cave and Klasies River. Despite the invention of exchange, the continent was like a patchwork of virtual Tasmanias. As Steve Shennan and his colleagues have calculated, whenever the right combination of (say) seafood, freshwater and fertile savannahs produced local population explosions, technology would have grown sophisticated in proportion to the number of people networked by exchange to sustain and develop it – in proportion to the scale of the collective intelligence. But when a river dried up or deserts advanced and human populations collapsed or shrank, technology would simplify again. Human cultural progress is a collective enterprise and it needs a dense collective brain.

Thus the extraordinary change in technology and cultural tradition that seems to have flourished more than 30,000 years ago in western Asia and the Near East – the so-called Upper Palaeolithic Revolution – may be explained by a dense population. Fed by an increasingly intensive and vegetarian hunter-gathering lifestyle, and with close contact between tribes, the people of south-west Asia were in a position to accumulate more and more skills and technologies than any previous human populations. A large, interconnected population meant faster cumulative invention – a surprising truth even to this day, as Hong Kong and Manhattan islands demonstrate. As the economist Julian Simon put it, ‘population growth leading to diminishing returns is fiction; the induced increase in productivity is scientific fact’. And one of those inventions was farming, which is the subject of the next chapter.

It is right to end the hunter-gatherer chapter, though, by remembering what happened to the Tasmanians. In the early 1800s, white sealers began to arrive along the island’s coasts and it was not long before the Tasmanians were eagerly meeting the sealers to trade with them, proving that 10,000 years of limited exchange had done nothing to dampen their innate enthusiasm for barter. The sealers’ dogs were especially sought after, being deerhounds that could easily run down kangaroos. In exchange, sad to relate, Tasmanians sold women to the sealers as concubines. Once white farmers arrived, relations between the two peoples deteriorated and eventually the whites sent bounty hunters to kill the natives, then rounded up the survivors and exiled them to Flinders Island, where they eked out their last days in misery.

Money is not metal. It is trust inscribed.

N
IALL
F
ERGUSON
The Ascent of Money

There is a scene in the film
The Maltese Falcon
in which Humphrey Bogart is about to be given $1,000 by Sydney Greenstreet and will have to share some of it with Mary Astor. Greenstreet whispers to Bogart that he’d like to give him a word of advice: that he assumes that Bogart is going to give her some of the money, but that if he does not give her as much as she thinks she ought to have, he should be careful. The scene prefigures a game, invented by Werner Guth in the late 1970s and much loved by economists, called the Ultimatum Game, which opens a little window into the human spirit. The first player is given some money and told to divide it with the second player. The second player is told he can accept or refuse the offer, but not change it. If he accepts, he receives the money; if he refuses, neither he nor the first player gets a penny. The question is, how much money should the first player offer the second player? Rationally, he should tender almost nothing, and the second player should accept it, because however small the sum, refusal will only make the second player worse off than acceptance. But in practice, people usually offer close to half the money. Generosity seems to come naturally, or rather, ungenerous behaviour is irrationally foolish, because the second player will – and does – consider a derisory offer worth rejecting, if only to punish the selfishness of the first player.

The lesson of the ultimatum game and hundreds like it is that again and again people emerge from such experiments as nicer than you think. But the even more surprising lesson is that the more people are immersed in the collective brain of the modern commercial world, the more generous they are. As the economist Herb Gintis puts it, ‘societies that use markets extensively develop a culture of co-operation, fairness and respect for the individual’. His evidence comes from a fascinating study in which people in fifteen mostly small-scale tribal societies were enticed to play the Ultimatum Game. Those societies with the least experience of dealing with outsiders were the most hard-hearted, ungenerous and narrowly ‘rational’. Machiguenga slash-and-burn farmers from the Amazon most often offered just 15 per cent of the sum to their co-subjects, and in all but one cases, the second player accepted. Likewise, a Hadza hunter-gatherer from Tanzania usually makes a very small offer and experiences few rejections. On the other hand, players from those societies that are most integrated into modern markets, such as the Orma nomads of Kenya or the Achuar subsistence gardeners of Ecuador, will usually offer half the money just as a Western undergraduate would. The whale-hunting Lamalera of the island of Lembata in Indonesia, who need to coordinate large teams of strangers on hunts, offer on average 58 per cent – as if investing the windfall in acquiring new obligations. Much the same happens in two New Guinea tribes, the Au and Gnau, whose members often make ‘hyper-fair’ offers and yet see them rejected: in such cultures, gifts can be a burden to the receiver because they carry an obligation to reciprocate.

The lesson of this study is that, on the whole, having to deal with strangers teaches you to be polite to them, and that in order for such generosity to emerge, costly punishment of selfishness may be necessary. Rejecting the offer is costly for the second player, but he reckons it is worth it to teach the first player a lesson. The argument is not that exchange teaches people to be kind; it is that exchange teaches people to recognise their enlightened self-interest lies in seeking cooperation. Here, then, lies a clue to the unique human attribute of being able to deal with strangers, to extend the division of labour to include even your enemies.

Cooperation, exchange and specialisation within a family group are routine throughout the animal kingdom: among chimpanzees and dolphins, among wolves and lions, among individuals of almost any social species. A meerkat or a scrub jay trusts its relative on sentry duty to sound the alarm if an eagle appears and shares the duty. A worker ant divides labour with its queen, with soldiers and with its sisters in other castes of worker. All these societies are just large families. Collaboration between unrelated strangers seems to be a uniquely human achievement. In no other species can two individuals that have never before met exchange goods or services to the benefit of each other, as happens routinely each time you visit a shop or a restaurant or a website. Indeed, in other group-living species, such as ants or chimpanzees, the interactions between members of different groups are almost always violent. Yet human beings can treat strangers as honorary friends.

Taking the first step to proffer the hand of cooperation to a homicidal enemy must have been momentous and almost impossibly difficult, which is perhaps why it is such a rare trick in the animal kingdom. It took primatologists such as Sarah Hrdy and Frans de Waal to notice just how peculiar this is: how inconceivable it would be for an orderly queue of stranger chimpanzees to board an aeroplane, or sit down in a restaurant, without turning violently on each other. And generally speaking the more cooperative a species is within groups, the more hostility there is between groups. As a highly ‘groupish’ species ourselves, still given to mutual aid within groups and mutual violence between groups, it is an extraordinary thing that people can overcome their instincts enough to have social commerce with strangers.

I think the first overtures may have been ventured first by human females. After all, homicidal raids against neighbouring groups are – in human beings and in most other primates – conducted always by males. So encounters between strange females are not necessarily going to turn violent. Moreover, in all apes females are the sex that leaves the group into which they were born when they mate; in monkeys, curiously, it is males that leave. Assuming human beings follow the ape pattern – as they do to this day in most human societies – then women would have had close relations in other groups in the shape of their mothers, fathers and brothers with whom to build relation ships. There is even a curious, much later echo of such a femalecentred pattern in the trading patterns of south-east Asia before the arrival of Westerners. The traders of Malaysia, Indonesia and the Philippines were often women, who were taught to calculate and to account from an early age.

Again and again throughout history, trust has to start with relatives before it can be extended to strangers; sending relatives abroad as agents has a long history. The trading ports of Asia each had their own communities of Gujaratis, Fujianese, Persians, Armenians, Jews and Arabs, just as the ports of Europe had their separate communities of Genoese, Florentine, Dutch, English and Hanseatic merchants, keeping the trust within the family as their diasporas spread. The financing of Wellington’s armies in Spain in 1809–12 was made possible because the British government trusted a Jewish lender named Nathan Rothschild to trust his brothers on the continent to buy bullion with British paper.

Finding a trade buddy

In 2004, a series of volunteer undergraduates sat down at computer screens at George Mason University in Virginia to play games for money. In the game each person found himself in a virtual village with his own house and field in which he could produce and consume red and blue virtual ‘units’ during brief sessions of the game. In each case, he knew that the more he acquired and the closer he got to a certain ratio of blue and red units (e.g., 3:1) the more real money he went home with. But unknown to him, he was either an ‘odd’ player, who was programmed to be faster at making red units, or an ‘even’ player, faster at making blue units. On his screen each player could see what other players (two, four or eight in total) were up to and he could chat with them on-screen during each run and in the 100-second gaps between runs. On one run of the game, in session six, two players had the following exchange:

The purpose of the experiment, run by Bart Wilson, Vernon Smith and their colleagues, was of course to see if people discovered exchange and specialisation for themselves with no rules or instructions. In the game, specialising is risky because the pay-off for ending up with units of only one colour is zero, but specialisation with exchange allows three times the pay-off of self-sufficiency. Yet there were no clues that trading was even possible. Though some players remained stuck in low-yielding self-sufficiency, most eventually discovered gains from trade. ‘Prior to exchange,’ comment the experimenters, ‘near-autarky prevails, and once the “power of exchanging” is discovered, specialisation gradually evolves.’ Intriguingly, the players began by trading bilaterally and personally – that is, each player developed a trading relationship with another player and only later extended the invitation to others.

That trade began as a bilateral and personal affair seems plausible. In the nineteenth century among the Yir Yoront aborigines, in northern Australia, each man’s family camp had at least one highly valued stone axe. The axes all came from a quarry jealously guarded and systematically worked by the Kalkadoon tribe at Mount Isa, 400 miles to the south, far beyond the Yir Yoront lands, and they passed through the hands of many trading partners to reach the tribe. Each older man had a trading partner to the south whom he met once a year in the dry season at a ceremonial gathering. In exchange for a dozen sting-ray barbs, to be used as spear tips, he received an axe. In turn he had obtained some of the barbs from his other trading partner to the north – to whom he gave an axe in return. Another 150 miles to the south, the exchange rate was different: one axe for one barb. There were arbitrage profits all along the chain.

So perhaps the first steps to trade with strangers began as individual friendships. A woman could trust her daughter who had married into an allied band within the same tribal grouping. Then perhaps the woman’s husband could learn to trust his son-in-law. The alliance between the bands in the face of a common enemy allowed the barrier of suspicion to be breached long enough for one to discover that the other had a surplus of stone for making axes, or of sting-ray barbs for making spear tips. Gradually, step by step, the habit of trade began to grow alongside the habit of xenophobia, complicating the ambitions of men and women.

Most people assume that long-distance trade among strangers and the very concept of the market was a comparatively late development in human history, coming long after agriculture. But, as the Australian aborigines suggest, this is bunk. There is no known human tribe that does not trade. Western explorers, from Christopher Columbus to Captain Cook, ran into many confusions and misunderstandings when they made first contact with isolated peoples. But the principle of trading was not one of them, because the people they met in every case already had a notion of swapping things. Within hours or days of meeting a new tribe, every explorer is bartering. In 1834 in Tierra del Fuego a young naturalist named Charles Darwin came face to face with some hunter-gatherers: ‘Some of the Fuegians plainly showed that they had a fair notion of barter. I gave one man a large nail (a most valuable present) without making any signs for a return; but he immediately picked out two fish, and handed them up on the point of his spear.’ Darwin and his new friend needed no common language to understand the bargain they were agreeing. Likewise, New Guinea highlanders, when first contacted by Michael Leahy and his fellow prospectors in 1933, gave them bananas in exchange for cowrie shells. Pre-contact, the New Guineans had been trading stone axes over large distances for a very long time. In Australia, baler shells and stone axes had been crossing the entire continent by trade for untold generations. The people of the Pacific coast of North America were sending seashells hundreds of miles inland, and importing obsidian from even farther afield. In Europe and Asia in the Old Stone Age, amber, obsidian, flint and seashells were travelling farther than individual people could possibly have carried them. In Africa, obsidian, shells and ochre were being traded long distances by 100,000 years ago. Trade is prehistoric and ubiquitous.

Moreover, some ancient hunter-gatherer societies reached such a pitch of trade and prosperity as to live in dense, sophisticated hierarchical societies with much specialisation. Where the sea produced a rich bounty, it was possible to achieve a density of the kind that normally requires agriculture to support it – complete with chiefs, priests, merchants and conspicuous consumption. The Kwakiutl Americans, living off the salmon runs of the Pacific North West, had family property rights to streams and fishing spots, had enormous buildings richly decorated with sculptures and textiles, and engaged in bizarre rituals of conspicuous consumption such as the giving of rich copper gifts to each other, or the burning of candlefish oil, just for the prestige of being seen to be philanthropic. They also employed slaves. Yet they were strictly speaking hunter-gatherers. The Chumash of the Californian channel islands, well fed on sea food and seal meat, included specialist craftsmen who fashioned beads from abalone shells to use as currency in a sophisticated and long-range canoe trade. Trade with strangers, and the trust that underpins it, was a very early habit of modern human beings.