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Monday, August 22, 2016

Progress Does Not Depend on Geniuses

The advance of humanity depends on each and every one of us.

My last column on why more people is good for the planet and not bad stirred up a whole bunch of commentary. One point I made there needs some clarification.

Having more people means we are able to specialize more finely.

A few people have interpreted my argument about the benefits of population growth as suggesting that more people means it’s more likely that we will give birth to more Einsteins, or Edisons, or Fords, or Steve Jobs and thereby get more progress and economic growth. It’s possible that more people might produce more geniuses, but it need not do so in order for population growth to create progress.

Progress does not depend on geniuses. It depends on each and every one of us.

Material progress is a consequence of the extension of what Ludwig von Mises called “social cooperation.” Social cooperation arises from the fact that “work performed under the division of labor is more productive than isolated work.” When humans specialize in particular tasks they do relatively best and then trade what they create (but do not need themselves) with others for what those people produce best, we are more productive.

This idea of specialization by “comparative advantage” means that each of us has something we can do at low cost compared to others and that thereby adds our productivity to the larger social division of labor and creates progress. Each person, and each new person, adds to progress, no matter how productive they are in absolute terms.

The Common Good

The benefits of that productivity accrue to everyone, not just the most skilled. Even those of modest ability benefit from having access to the higher productivity of others through market exchange. As Mises wrote: “Collaboration of the more talented, more able, and more industrious with the less talented, less able, and less industrious results in benefits for both.”

Having more people means we are able to specialize more finely and take advantage of the gains that come from being very good at one specific thing. Having more people also means that we have the larger markets necessary to support a finer division of labor.

For example, large cities can support a wide range of ethnic cuisines because there are both people who can specialize in producing such food and because there are enough people who are demanding it. One cannot usually find, say, Ethiopian cuisine in small rural towns for those same reasons.

Gains from Trade

Population growth is desirable not just because it creates more people but because it creates more different people.

It is not the genius who moves us forward, but the gains from specialization and exchange via the division of labor. Progress is not about great leaps forward, but the consistent small advances that come from more people engaging in ever finer degrees of specialization and making more things available for trade; it’s about having the market institutions necessary to facilitate such trade and the private property it depends on.

Once economic growth begins and the division of labor deepens, population growth is desirable not just because it creates more people but because it creates more different people. F. A. Hayek argued in The Fatal Conceit that such progress makes human labor less homogenous and therefore “an increase of population may now, because of further differentiation, make still further increases of population possible, and for indefinite periods population increase may be both self-accelerating and a pre-requisite for any advance in both material and…spiritual civilization.”

In other words, Hayek says, “It is, then, not simply more men, but more different men, which brings an increase in productivity. Men have become powerful because they have become so different: new possibilities of specialization – depending not so much on any increase in individual intelligence but on growing differentiation of individuals – provide the basis for a more successful use of the earth’s resources.”

Put Diversity to Work

Human population growth is desirable because it enables us to put human diversity to work in the service of human progress. As Rabbi Lord Jonathan Sacks has written: “It is through exchange that difference becomes a blessing, not a curse.” More people means more different people. More different people means more specialization. More specialization means more productivity.

In a free society, that productivity is translated into human progress through exchange in the marketplace. Indeed, difference and diversity become a blessing not a curse, as markets enable us to cooperate across our differences. Those who appreciate free markets and the liberal order should celebrate diversity much more often than many of them do.

And the more of us there are, and the more diverse we are, the more benefits we will share.

Certainly geniuses help us along the path of progress. However what made human cooperation and progress possible was the recognition of the benefits of the division of labor and specialization by comparative advantage.

Fully reaping those benefits requires the institutions of a liberal society. Under such institutions, increases in population enable us to expand that division of labor, enhance our productivity, deepen the cooperative bonds that come from exchange, and provide material progress for everyone.

This is not because larger populations have more Einsteins and Fords, but because they have more John Smiths and Jane Does of every race or nationality or skill level or set of experiences imaginable. In the liberal society, each and every one of us contributes to progress through our participation in the market. Each and every one of us is both the source and beneficiary of that progress. And the more of us there are, and the more diverse we are, the more benefits we will share.

  • Steven Horwitz was the Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University, where he was also Director of the Institute for the Study of Political Economy. He is the author of Austrian Economics: An Introduction.