56 June 7, 1999
THE THIRD CULTURE
TO GET RICH
A Talk by Jared Diamond
.....we can extract from
human history a couple of principles. First, the principle that really isolated
groups are at a disadvantage, because most groups get most of their ideas and
innovations from the outside. Second, I also derive the principle of intermediate
fragmentation: you don't want excessive unity and you don't want excessive fragmentation;
instead, you want your human society or business to be broken up into a number
of groups which compete with each other but which also maintain relatively free
communication with each other. And those I see as the overall principles of how
to organize a business and get rich.
Daniel C. Dennett
For several years, I have been posing the following
choice for my fellow philosophers: if Mephistopheles offered you the following
two options, which would you choose? .......
DOLLAR SCIENCE PRIZE
Mihalyi Csikszentmihalyi, Lawrence M. Krauss, Bart Kosko,
Clay Shirky, Delta Willis, David G. Myers, Judith Rich Harris, Robert Provine
(Csikszentmihalyi:) I'd give the prize to the discovery of the human analog to
what made it possible for single cells to coexist and collaborate in a multicellular
organism, or for what made it possible for termites and bees to treat the individual
as an extension of the colony but without compromising the uniqueness of
the single person.
(Krauss:) This is a uniformly bad idea. There are more than
enough prizes. They are all arbitrary to some degree, and the prize alone generates
(Harris:) The most serious problems that face us today are psychology
problems they have to do with the way the human mind works, and with the
ways in which different human minds work differently. The subject matter is complex
in itself and is made more difficult by the fog of emotion that surrounds it.
Psychology needs topnotch scientists. Psychology should have a major award to
recognize its topnotch scientists.
Daniel C. Dennett
In my book, The Third Culture
(1995), philosopher Daniel C. Dennett talks about his friend and colleague Nicholas
Humphrey, a research psychologist.
"Nick Humphrey is a great romantic scientist,"
Dan noted, "which sounds like a contradiction in terms, but it isn't....It's very
clear that for Nick the Shakespeare style of creativity is more enticing than
the Newton style, which is an unusual attitude in a scientist."
I suggested to Dan that "Would you rather be a Shakespeare or a Newton?" might
be an interesting feature for Edge's "World Question Center".
"But it's not the right question," said the feisty philosopher. Let me tell
you about 'Dennett's Deal.' " .....
Daniel C. Dennett
Nick Humphrey observed in 1987:
"In Two Cultures, C. P. Snow extolled the great discoveries of science
as "scientific Shakespeare," but in one way he was fundamentally mistaken. Shakespeare's
plays were Shakespeare's plays and no one else's; Scientific discoveries, by contrast,
belong ultimately to no one in particular." This may be an exaggeration,
but there's something to it. On the one hand, there is an individuality to the
contributions of great artists that seems to be not just rare in science, but
positively beside the point. The famous priority disputes in science, and the
races for one Nobel Prize clincher or another, are ferocious precisely because
somebody else could make exactly the contribution you were striving to make
and you won't get points for style if you come in second. These contests have
no parallel in the arts, where a different set of goals reigns. The contrast is
nicely illustrated by my own home field of philosophy, which uncomfortably straddles
the two cultures.
For several years, I have been posing the following choice
for my fellow philosophers: if Mephistopheles offered you the following two options,
which would you choose?
(A) solve a major philosophical problem so conclusively
that there is nothing left to say (thanks to you, part of the field closes down
forever, and you get a footnote in history) or
(B) write a book of such tantalizing
perplexity and controversy that it stays on the required reading list for centuries
Many philosophers reluctantly admit that they would have to go for
option (B). If they had to choose, they would rather be read than right. Like
composers, poets, novelists, and other creators in the arts, they tend to want
their work to be experienced, over and over, by millions (billions, if possible!).
But they are also tugged in the direction of the scientists' quest. After all,
philosophers are supposed to be trying to get at the truth.
aspire to reach large readerships, and to delight the readers they catch, and
the best write works of surpassing literary value. Darwin's books come to mind.
But the goal of getting it right, of persuading the readers of a discovered truth,
still comes first, as we can tell at a glance by comparing Darwin's The Voyage
Of The Beagle with Melville's Moby Dick. One can learn a great deal
about whales and whaling from Moby Dick, but Melville didn't write it to be an
artful and persuasive user-friendly compendium of whaling facts.
Bearing in mind the difference between the goals of science and the goals of art,
then, here is a question that appropriately parallels the teaser I ask my philosophical
colleagues. If Mephistopheles offered you the following two options, which would
(1) to win the race (and the accompanying Nobel Prize!) for pinning
down a discovery that became the basis for a huge expansion of scientific knowledge
but that, in retrospect, epitomized Humphrey's epithet, belonging to no one in
particular. (Crick and Watson come to mind, of course; there is scant doubt that
if they hadn't won the race when they did, Linus Pauling or somebody else would
soon have done so.)
(2) to propose a theory so original, so utterly unimagined
before your work, that your surname enters the languagebut your theory turns
out to be dead wrong, though it continues to generate centuries of arguably valuable
controversy (I think of Lamarckian theories of evolution, and Cartesian theories
of the mind. The jury is still out on Chomskian linguistics. It certainly passes
the originality test. Like the victory of the America in the race that gave the
America's Cup its name, there was no second anywhere in sight when Chomsky burst
on the scene.)
We honor scientists who are wrong in useful ways recall
Wolfgang Pauli's insult about the theorist who "isn't even wrong" but forced
to choose, would you trade being first and right for being original and provocative?
[Ed. Note: Responses are invited. JB]
DANIEL C. DENNETT, a philosopher,
is director of the Center for Cognitive Studies and Distinguished Arts and Sciences
Professor at Tufts University. He is the author of Darwin's Dangerous Idea,
Consciousness Explained, Kinds of Minds, and Brainchildren, and
coauthor (with Douglas Hofstadter) of The Mind's I.
MILLION DOLLAR SCIENCE PRIZE
Mihalyi Csikszentmihalyi, Lawrence M. Krauss,
Bart Kosko, Clay Shirky, Delta Willis, David G. Myers, Judith Rich Harris, Robert
I'd give the prize to
the discovery of the human analog to what made it possible for single cells to
coexist and collaborate in a multicellular organism, or for what made it possible
for termites and bees to treat the individual as an extension of the colony
but without compromising the uniqueness of the single person. There should be
a way to leverage the potentialities of the brain so that no one would think of
destroying another life unless all options are exhausted. Of course, there's always
the possibility that such an invention would spell the end of the race
but it would be worth to go down trying.
MIHALY CSIKSZENTMIHALYI is the Davidson
Professor of Management at the Claremont Graduate University, in Claremont, California.
He is author of Flow: The Psychology Of Optimal Experience; The Evolving Self:
A Psychology For The Third Millennium; Creativity; and Finding Flow.
This is a uniformly bad idea. There are more than enough prizes.
They are all arbitrary to some degree, and the prize alone generates nothing.
Witness the largest prize in the world right now: The Templeton Prize. It encourages
useless discussions about a silly topic. Fewer, rather than more prizes is a good
LAWRENCE M. KRAUSS, the Ambrose Swasey Professor of Physics and chairman
of the Physics Department of Case Western Reserve University, is the author of
The Fifth Essence, Fear Of Physics, The Physics Of Star Trek, and Beyond
I would give the prize to the first person
who produces any statement of fact that is accurate to at least one part in 10**20.
Roger Penrose has observed that to date our most accurate statement of fact concerns
the energy loss through gravitational waves of the Hulse-Taylor binary pulsar
PST 1913 + 16 (two neutron stars that orbit each other). It is accurate to one
part in 10**14. I have set the prize threshold at one part in 10**20 to account
for the 10**6 dollars at stake.
Such a prize would remind us that binary truth
is not a free good even if we have often and indeed habitually assumed so. We
can produce binary statements of math or logic at will: "1 + 1 = 2" and "blue
is blue" are two statements true 100%. But to show that the truth of a factual
statement like "e = m c**2" or "Grass is green" is 100% true would require that
we get the science right to not just a large number of decimal places but to infinitely
many decimal places. That is a task better left to God. Indeed a God might be
just such an entity that could draw perfect circles and produce binary statements
BART KOSKO is a professor of electrical engineering at the University
of Southern California. His most recent books are the novel Nanotime, the
textbook Fuzzy Engineering, and the nonfiction book The Fuzzy Future:
From Society And Science To Heaven In A Chip (forthcoming).
I would forgo having my name on the prize and would call it the "Award
for Post-Cartesian Understanding". The prize would be given in 2010 for the work
in that decade which does the most to advance our grasp of the relationship between
information and matter. So many of the most interesting problems of our era revolve
around the mysterious boundaries between the physical and conceptual worlds, so
the prize could go to a geneticist working on DNA as both a chemical and an informational
entity (e.g. George Williams), a cognitive neuroscientist working on the mind/brain
problem (e.g. Steven Pinker), a particle physicist working on the the informatics
of the sub-atomic realm (e.g Roger Penrose), or even the philoshpher who does
the most to suture up Descartes mind/body split (e.g Daniel C. Dennett).
SHIRKY (http://www.shirky.com/), is Professor, New Media Department of Film &
Media Hunter College.
My first choice is a prize for
the missing link, not simply because the search is so tedious and under-funded,
but to bring attention to the question: what separates humans from animals? Is
it the larger brain, in which case we might say the missing link has already been
found in the form of the proconsul skulls from the Miocene, or the much younger
apish skull found by Raymond Dart. Both were proclaimed missing links; there were
so many skulls held aloft for this distinction that there is John Reader's book
(now a fossil itself:) Missing Links. The tradition continues with recent
discoveries: leg bones from Kenya, indicating the upright gait, also used as a
definition for becoming human, long toe bones that could both walk upright and
grasp a branch, and now another skeleton from Ethiopia, half a million years younger
than Lucy, was found alongside stone tools, yet a third definition for human superiority.
I don't think humans should be separated from animals, except at certain restaurants,
and the choice could inspire greater public awareness of our superiority complex.
Now if the prize were a billion dollars, then I would go for the extraterrestrial
search, because it would give even greater perspective to the arbitrary measurements
of human intelligence; elephant and plenty of other species on earth are intelligent,
after all. It would also be fabulous to see the different design solutions and
adaptations on another planet; imagine a whole new world of plants, animals, and
we gotta think, insects! But the key to both my prizes is to inspire debate about
the dubious notions of human superiority. If we were half as smart as we thought
we were, we wouldn't diminish the odds for other forms of intelligence, and who
decides what is paranormal? If the rigors of science were applied equally to Area
51 as they should have been at the KBS site (a controversial fossil area in Kenya)
the dangers are not in delving but fearing, or predicting, what you might find.
Either prize would highlight what makes good science, and give a reality check
to the observers.
DELTA WILLIS is the author of The Hominid Gang: Behind
The Scenes In The Search For Human Origins, and The Sand Dollar & The Slide
Rule: Drawing Blueprints From Nature.
DAVID G. MYERS
is to award the million dollar prize, as Stewart Brand suggests, for a medical
advance that offers near-immortality. But considering the ecological consequences
of that . . . and recalling Tuck Everlasting's depiction of what discovering a
fountain of youth might mean . . . perhaps we should instead award it for what
the cold fusion hype hinted at: the discovery of a clean, limitless energy source.
If such a fantasy ever were to be realized, it should be, as your ground rules
state, simply and objectively verified.
DAVID G. MYERS is a social psychologist
at Michigan's Hope College. Among his dozen books are The Pursuit Of Happiness
And The American Paradox (forthcoming).
JUDITH RICH HARRIS
agree with Marc Hauser and Steve Pinker that the prize should be given in an area
or for a purpose that previously lacked such a prize. Big, prestigious prizes
already exist in physics, chemistry, math, economics, biology, and medicine. But
there is none in psychology, and there ought to be. It should be the equivalent
of a Nobel Prize, and (like the Nobel) should be given for an important achievement,
not (like the MacArthur awards or research grants, which are already given in
psychology) for potential achievement. Both theoretical and experimental work
should be eligible.
There is no way to avoid interpretation or value judgments
in awarding such a prize (or any prize), and that means I don't see any
way around it that mistakes will be made. People who have a talent for
impressing others or for gathering supporters or for doing work of a sort that
is currently in vogue are more likely to be recognized. That's the way it goes.
The ones who miss out will just have to console themselves with the thought that
someday people may say, "What? So-and-so never got The Prize? Amazing!"
dollars is plenty. The purpose of the award should be, not to change the prizewinner's
lifestyle, but to recognize the achievement. It's an honor, not an early-retirement
The most serious problems that face us today are psychology problems
they have to do with the way the human mind works, and with the ways in
which different human minds work differently. The subject matter is complex in
itself and is made more difficult by the fog of emotion that surrounds it. Psychology
needs topnotch scientists. Psychology should have a major award to recognize its
JUDITH RICH HARRIS (http://home.att.net/~xchar/tna/)
is a writer and developmental psychologist; co-author of The Child: A Contemporary
View Of Development; author of The Nurture Assumption; winner of the
1997 George A. Miller Award for an outstanding article in general psychology.
The Regeneration Prize: The regeneration of body parts of adult humans
would be one of the great achievements in medical history, ranking with the discovery
of antibiotics and anaesthesia. Although regeneration is often the stuff of science
fiction, actual feats of regeneration are found in the embryos of many species,
including humans. Adults of many species can also regrate body parts. For example,
amphibians can regrow missing limbs and goldfish can reform neural connections
between eye and brain. The regenerative capacity of adult humans is limited to
the more modest feats of wound healing and neuronal sprouting.
of understanding regeneration is great and requires an appreciation of both molecular
mechanisms and the complex cellular ecology from which springs much developmental
information. The difficulty of mastering both the molar and molecular is the main
reason for the gulf between classical experimental embryology that enjoyed its
golden age during the first half of this century andand its succesor, molecular
biology. The two biological approaches are now coming together with the promise
of great and immediate breakthroughs in developmental biology and medical science.
The recent discovery of stem cells is one exciting step in this direction.
Because of the complexity of the regeneration problem, there probably
not be a single, revolutionary breakthrough, but a series of incremental
contributions. Thus, the Regeneration Prize should be awarded periodically, perhaps
every two years, to the individual making the most important contribution during
that interval. Although a million dollar prize may not be extrodinary recognition
of a scientific achievement that may win the Nobel or have billion dollar proprietary
consequences, it would bring recognition of the problem of regeneration, attract
the best and brightest, and accelerate work on this great problem.
R. PROVINE is professor of psychology and neuroscience at the University of Maryland,
HOW TO GET RICH
A Talk by Jared Diamond
Jared Diamond was in New York
several weeks ago and we had an early dinner across the street from the Museum
of Natural History where he was scheduled to speak later in the evening. Jared
first visited the Museum in 1963, when he was 25 years old, preparing to go to
New Guinea on his first expedition to study New Guinea birds. Subsequently he
analyzed his bird collections in the museum where he is on the staff of the Museum's
Department of Ornithology in addition to his position at UCLA.
that "probably most lectures one hears at the museum are on fascinating but impractical
subjects: namely, they don't help you to get rich. This evening I plan to redress
the balance and talk about the natural history of becoming rich."
JARED DIAMOND, professor of physiology at UCLA Medical School, is the author
of Guns, Germs, and Steel: The Fates of Human Societies, which won the
Pulitzer Prize for general nonfiction in 1998 as well as Britain's 1998 Rhone-Poulenc
Science Book Prize. He is also the author of The Third Chimpanzee, winner
of the Los Angeles Times Book Award for the best science book of 1992 and
the 1992 Rhone-Poulenc Science Book Prize; and Why is Sex Fun?
TO GET RICH
A Talk by Jared Diamond
In Guns, Germs,
and Steel I asked why history has unfolded differently over the last 13,000
years in Eurasia, in the Americas, in sub-Saharan Africa, and in Aboriginal Australia,
with the result that within the last 500 years Europeans were the ones who conquered
Native Americans and Aboriginal Australians and sub-Saharan Africans, rather than
Most of that book, was concerned with comparing the peoples of
different continents, but I knew that I couldn't publish a book comparing the
histories of different continents and considering Eurasia as a unit without saying
something about the fascinating problem of the differences of history within Eurasia.
Why, within Eurasia, was it Europeans who conquered the world and colonized other
people, rather than the Chinese or the people of India or the Middle East? I devoted
seven pages to that subject at the end of Guns, Germs, and Steel, and I
think I arrived at the correct solution. Nevertheless, since the publication of
Guns, Germs, and Steel, I've received a lot of feedback, and the most interesting
feedback has been about the implications of that comparative analysis of the histories
of China, Europe, India, and the Middle East.
In particular, in addition to
the review of my book by Bill Gates, I've received a lot of correspondence from
economists and business people, who pointed out to me possible parallels between
the histories of entire human societies and histories of smaller groups. This
correspondence from economists and business people has to do with the following
big question: what is the best way to organize human groups and human organizations
and businesses so as to maximize productivity, creativity, innovation, and wealth?
Should your human group have a centralized direction, in the extreme having a
dictator, or should there be diffuse or even anarchical organization? Should your
collection of people be organized into a single group, or broken off into a number
of groups, or broken off into a lot of groups? Should you maintain open communication
between your groups, or erect walls between them, with groups working more secretly?
Should you erect protectionist tariff walls against the outside, or should you
expose your business or government to free competition?
These questions about
group organization arise at many different levels and for many types of groups.
They arise, of course, about the organization of entire governments or countries:
what is the best way to govern a country? Remember the classic arguments about
whether the best government is a benign dictatorship, or a federal system, or
an anarchical free-for-all. The same questions also rise about the organization
of different companies within the same industry. How can you account for the fact
that Microsoft has been so successful recently, and that IBM, which was formerly
successful, fell behind but then drastically changed its organization over the
last four years and improved its success? How can we explain the different successes
of what we call different industrial belts? When I was a boy growing up in Boston,
Route 128, the industrial belt around Boston, led the industrial world in scientific
creativity and imagination. But Route 128 has fallen behind, and now Silicon Valley
is the center of innovation. And the relations of businesses to each other in
Silicon Valley and Route 128 are very different, possibly resulting in those different
Of course there are also the famous differences between the productivities
of the economies of different countries: the differing national average productivities
of Japan and the United States and France and Germany. Actually, though, there
are differences between the productivities and wealths of different business sectors
within the same country. For example, the German metal-working industry has a
productivity rivaling that of the United States, so the Germans are certainly
capable of organizing industries well, but the German beer-brewing industry is
less than half as productive as the American beer-brewing industry. Or take Japan
we Americans are paranoid about the supposed efficiency of Japanese business,
and the fact is that the Japanese steel industry is 45% more productive than the
American steel industry. Why is it, then, that the Japanese food-producing industry
is less than 1/3 as productive and efficient as the American food-processing industry?
Still another example: in Korea, the steel industry is equal in efficiency to
American steel making, but all other Korean industries lag behind the United States.
What is it about the different organization of the German beer brewers and the
German metal workers, or the different organization of the Japanese food processors
and the Japanese car manufacturers, that accounts for the different productivities
of these sectors within a given country?
Obviously, the answers to these questions
about the different success of organizations partly depend upon idiosyncracies
of individuals. The success of Microsoft must have something to do with Bill Gates.
If an idiot were in command of Microsoft, then however superior Microsoft's organization,
Microsoft would be unlikely to be a successful business. But nevertheless one
can still ask , all other things being equal, or else in the long run, or else
on the average, what form of organization of human groups is best? I'm sure that
there are many of you here who are involved with businesses that would like to
know the answer to that question.
I propose to try to learn from human history.
Human history over the last 13,000 years comprises tens of thousands of different
experiments. Each human society represents a different natural experiment in organizing
human groups. Human societies have been organized very differently, and the outcomes
have been very different. Some societies have been much more productive and innovative
than others. What can we learn from these natural experiments of history that
will help us all get rich? I propose to go over two batches of natural experiments
that will give you insights into how to get rich.
The first batch of natural
experiments concerns understanding the effects of isolation and of group size
and of communication with other groups on the productivity of human societies.
Let's learn from the extreme examples of isolation of human societies. If isolation
has any effect on human societies, the places we're most likely to see that effect
are the histories of those two islands off southeastern Australia called Tasmania
and Flinders Island. They lie about 200 miles off the southeast coast of Australia
and are separated today from Australia by Bass Straits, but those straits are
relatively shallow, so their floor lay above sea level at glacial times of low
sea level up to about 10,000 years ago. The Bass Straits between Tasmania and
Australia were then dry land, and Tasmania was part of the Australian mainland,
just as Britain used to be part of the European mainland. When the glaciers melted,
sea level rose and cut off Tasmania from the Australian mainland. So when Tasmania
and Flinders were part of the Australian mainland, Australian Aborigines walked
down to Tasmania and Flinders from the mainland.
And then 10,000 years ago
the glaciers melted, sea level rose, and Tasmania became cut off from mainland
Australia by Bass Straits, which are really rough waters. In addition, the watercraft
of the Tasmanians were wash-through rafts that got waterlogged and sank after
about a dozen hours. The result was that the boats of the Tasmanians could not
reach Australia, and the boats of the mainland Aboriginal Australians could not
Thus, for the last 10,000 years the Tasmanians represented
a study of isolation unprecedented in human history except in science fiction
novels. Here were 4,000 Aboriginal Australians cut off on an island, and they
remained totally cut off from any other people in the world until the year 1642,
when Europeans "discovered" Tasmania. What happened during those 10,000 years
to that isolated 4,000-person society? And what about nearby Flinders Island,
which originally supported a population of 200 cut-off Aboriginal Australians?
what happened to that tiny isolated society of 200 people during those
When Europeans discovered Tasmania in the 17th century, it had
technologically the simplest, most "primitive" human society of any society in
the modern world. Native Tasmanians could not light a fire from scratch, they
did not have bone tools, they did not have multi-piece stone tools, they did not
have axes with handles, they did not have spear-throwers, they did not have boomerangs,
and they did not even know how to fish. What accounts for this extreme simplicity
of Tasmania society? Part of the explanation is that during the 10,000 years of
isolation, the Aboriginal Australians, who numbered about 250,000, were inventing
things that the isolated 4,000 Tasmanians were not inventing, such as boomerangs.
Incredibly, though, archeological investigations have shown one other thing: during
those 10,000 years of isolation, the Tasmanians actually lost some technologies
that they had carried from the Australian mainland to Tasmania. Notably, the Tasmanians
arrived in Tasmania with bone tools, and bone tools disappear from archeological
record about 3,000 years ago. That's incredible, because with bone tools you can
have needles, and with needles you can have warm clothing. Tasmania is at the
latitude of Vladivostok and Chicago: it's snowy in the winter, and yet the Tasmanians
went about either naked or just with a cape thrown over the shoulder.
we account for these cultural losses and non-inventions of Tasmanian society?
Flinders Island was even more extreme that tiny society of 200 people on
Flinders Island went extinct several millenia ago. Evidently, there is something
about a small, totally isolated human society that causes either very slow innovation
or else actual loss of existing inventions. That result applies not just to Tasmania
and Flinders, but to other very isolated human societies. There are other examples.
The Torres Strait islanders between Australia and New Guinea abandoned canoes.
Most Polynesian societies lost bows and arrows, and lost pottery. The Polar Eskimos
lost the kayak, Dorset Eskimos lost dogs and bow drills, and Japan lost guns.
To understand these losses in extreme isolation, the easiest case to understand
is Japan, because the loss of firearms in Japan was witnessed and described. It
took place in a literate society. Guns arrived in Japan around 1543 with two Portuguese
adventurers who stepped ashore, pulled out a gun, and shot a duck on the wings.
A Japanese nobleman happened to be there, was very impressed, bought these two
guns for $10,000, and had his sword-maker imitate them. Within a decade, Japan
had more guns per capita than any other country in the world, and by the year
1600 Japan had the best guns of any country in the world. And then, over the course
of the next century, Japan gradually abandoned guns.
What happened was that
the Samurai, the warrior class in Japan, had been used to fighting by standing
up in front of their armies and making a graceful speech, the other opposing Samurai
made an answering graceful speech, and then they had one-on-one combat. The Samurai
discovered that the peasants with their guns would shoot the Samurai while the
Samurai were making their graceful speeches. So the Samurai realized that guns
were a danger because they were such an equalizer. The Samurai first restricted
the licensing of gun factories to a hundred factories, and then they licensed
fewer factories, and then they said that only three factories could repair guns,
and then they said that those three factories could make only a hundred guns a
year, then ten guns a year, then three guns a year, until by the 1840s when Commodore
Perry came to Japan, Japan no longer had any guns. That represents the loss of
a very powerful technology.
This loss was possible only in Japan because of
its isolation; there were no other neighbors threatening Japan. When firearms
arrived in Europe, there were European princes who similarly banned firearms,
and there were European princes who banned printing, but you can guess what happened.
When a prince in the middle of Europe banned firearms, within a short time the
prince next door who did not ban firearms either walked in and conquered, or else
the prince who banned firearms quickly realized his or her mistake and reacquired
firearms from next door. The banning of the guns could work only in isolated Japan,
where there were no neighbors as a threat, and where there were no neighbors from
whom to reacquire the technology.
So these stories of isolated societies illustrate
two general principles about relations between human group size and innovation
or creativity. First, in any society except a totally isolated society, most innovations
come in from the outside, rather than being conceived within that society. And
secondly, any society undergoes local fads. By fads I mean a custom that does
not make economic sense. Societies either adopt practices that are not profitable
or for whatever reasons abandon practices that are profitable. But usually those
fads are reversed, as a result of the societies next door without the fads out-competing
the society with the fad, or else as a result of the society with the fad, like
those European princes who gave up the guns, realizing they're making a big mistake
and reacquiring the fad. In short, competition between human societies that are
in contact with each other is what drives the invention of new technology and
the continued availability of technology. Only in an isolated society, where there's
no competition and no source of reintroduction, can one of these fads result in
the permanent loss of a valuable technology. So that's one of the two sets of
lessons that I want to draw from history, about what happens in a really isolated
society and group.
The other lesson that I would like to draw from history
concerns what is called the optimal fragmentation principle. Namely, if you've
got a human group, whether the human group is the staff of this museum, or your
business, or the German beer industry, or Route 128, is that group best organized
as a single large unit, or is it best organized as a number of small units, or
is it best fragmented into a lot of small units? What's the most effective organization
of the groups?
I propose to get some empirical information about this question
by comparing the histories of China and Europe. Why is it that China in the Renaissance
fell behind Europe in technology? Often people assume that it has something to
do with the Confucian tradition in China supposedly making the Chinese ultra-conservative,
whereas the Judeo-Christian tradition in Europe supposedly stimulated science
and innovation. Well, first of all, just ask Galileo about the simulating effects
of the Judeo-Christian tradition on science. Then, secondly, just consider the
state of technology in medieval Confucian China. China led the world in innovation
and technology in the early Renaissance. Chinese inventions include canal lock
gates, cast iron, compasses, deep drilling, gun powder, kites, paper, porcelain,
printing, stern-post rudders, and wheelbarrows all of those innovations
are Chinese innovations. So the real question is, why did Renaissance China lose
its enormous technological lead to late-starter Europe?
We can get insight
by seeing why China lost its lead in ocean-going ships. As of the year 1400, China
had by far the best, the biggest, and the largest number of, ocean-going ships
in the world. Between 1405 and 1432 the Chinese sent 7 ocean-going fleets, the
so-called treasure fleets, out from China. Those fleets comprised hundreds of
ships; they had total crews of 20,000 men; each of those ships dwarfed the tiny
ships of Columbus; and those gigantic fleets sailed from China to Indonesia, to
India, to Arabia, to the east coast of Africa, and down the east coast of Africa.
It looked as if the Chinese were on the verge of rounding the Cape of Good Hope,
coming up the west side of Africa, and colonizing Europe.
Well, China's tremendous
fleets came to an end through a typical episode of isolationism, such as one finds
in the histories of many countries. There was a new emperor in China in 1432.
In China there had been a Navy faction and an anti-Navy faction. In 1432, with
the new emperor, the anti-Navy faction gained ascendancy. The new emperor decided
that spending all this money on ships is a waste of money. Okay, there's nothing
unusual about that in China; there was also isolationism in the United States
in the 1930's, and Britain did not want anything to do with electric lighting
until the 1920s. The difference, though, is that this abandoning of fleets in
China was final, because China was unified under one emperor. When that one emperor
gave the order to dismantle the shipyards and stop sending out the ships, that
order applied to all of China, and China's tradition of building ocean-going ships
was lost because of the decision by one person. China was a virtual gigantic island,
Now contrast that with what happened with ocean-going fleets
in Europe. Columbus was an Italian, and he wanted an ocean-going fleet to sail
across the Atlantic. Everybody in Italy considered this a stupid idea and wouldn't
support it. So Columbus went to the next country, France, where everybody considered
it a stupid idea and wouldn't support it. So Columbus went to Portugal, where
the king of Portugal considered it a stupid idea and wouldn't support it. So Columbus
went across the border to a duke of Spain who considered this stupid. And Columbus
then went to another duke of Spain who also considered it a waste of money. On
his sixth try Columbus went to the king and queen of Spain, who said this is stupid.
Finally, on the seventh try, Columbus went back to the king and queen of Spain,
who said, all right, you can have three ships, but they were small ships. Columbus
sailed across the Atlantic and, as we all know, discovered the New World, came
back, and brought the news to Europe. Cortez and Pizarro followed him and brought
back huge quantities of wealth. Within a short time, as a result of Columbus having
shown the way, 11 European countries jumped into the colonial game and got into
fierce competition with each other. The essence of these events is that Europe
was fragmented, so Columbus had many different chances.
Essentially the same
thing happened in China with clocks: one emperor's decision abolished clocks over
China. China was also on the verge of building powerful water-powered machinery
before the Industrial Revolution in Britain, but the emperor said "Stop," and
so that was the end of the water-powered machinery in China. In contrast, in Europe
there were princes who said no to electric lighting, or to printing, or to guns.
And, yes, in certain principalities for a while printing was suppressed. But because
Europe in the Renaissance was divided among 2,000 principalities, it was never
the case that there was one idiot in command of all Europe who could abolish a
whole technology. Inventors had lots of chances, there was always competition
between different states, and when one state tried something out that proved valuable,
the other states saw the opportunity and adopted it. So the real question is,
why was China chronically unified, and why was Europe chronically disunified?
Why is Europe disunified to this day?
The answer is geography. Just picture
a map of China and a map of Europe. China has a smooth coastline. Europe has an
indented coastline, and each big indentation is a peninsula that became an independent
country, independent ethnic group, and independent experiment in building a society:
notably, the Greek peninsula, Italy, the Iberian peninsula, Denmark, and Norway/Sweden.
Europe had two big islands that became important independent societies, Britain
and Ireland, while China had no island big enough to become an independent society
until the modern emergence of Taiwan. Europe is transected by mountain ranges
that split up Europe into different principalities: the Alps, the Pyrenees, Carpathians
China does not have mountain ranges that transect China. In Europe big
rivers flow radially the Rhine, the Rhone, the Danube, and the Elbe
and they don't unify Europe. In China the two big rivers flow parallel to each
other, are separated by low-lying land, and were quickly connected by canals.
For those geographic reasons, China was unified in 221 B.C. and has stayed unified
most of the time since then, whereas for geographic reasons Europe was never unified.
Augustus couldn't do it, Charlemagne couldn't do it, and Napoleon and Hitler couldn't
unify Europe. To this day, the Europe Union is having difficulties bringing any
unity to Europe.
So, the lesson I draw is that competition between entities
that have free communication between them spurred on Europe. In China one despot
could and did halt innovation in China. Instead, China's experience of technological
innovation came during the times when China's unity fell apart, or when China
was taken over temporarily by an outside invader.
You've seen that effect even
in modern times. Twenty years ago, a few idiots in control of the world's most
populous nation were able to shut down the educational system for one billion
people at the time of the Great Cultural Revolution, whereas it's impossible for
a few idiots to shut down the educational system of all of Europe. This suggests,
then, that Europe's fragmentation was a great advantage to Europe as far as technological
and scientific innovation is concerned. Does this mean that a high degree of fragmentation
is even better? Probably not. India was geographically even more fragmented than
Europe, but India was not technologically as innovative as Europe. And this suggests
that there is an optimal intermediate degree of fragmentation, that a too-unified
society is a disadvantage, and a too-fragmented society is also a disadvantage.
Instead, innovation proceeds most rapidly in a society with some intermediate
degree of fragmentation.
Okay, let's now start to apply all this to what we
should do if we want to try to go out and get rich. Let's apply this to some affluent
modern industries and companies. I'll give you two examples. The first example
concerns that image of productivity that we Americans have as we look toward Japan.
We fantasize that the industrial productivity of Japan and Germany is greater
than that of the United States. And that's not true. On the average, American
industrial productivity is higher than the industrial productivity of either Japan
or Germany. But that average figure conceals differences among the industries
of the same country, related to differences in organization and those differences
are very instructive. Let me give you two examples from case studies carried out
by the McKinsey Corporation, an economics study industry based in Washington.
These two examples involve the German beer industry and the Japanese food-processing
What about the German beer industry? Well, the Germans are very efficient
in some of their industries. The German metal-working industry and the German
steel industry are equal in productivity to those of the United States, but the
German beer-producing industry has a productivity only 43% that of the United
States. And it's not that the Germans make bad beer; the Germans make wonderful
beer. Whenever my wife and I go to Germany, we take along an extra suitcase specifically
for the purpose of filling it up with bottles of German beer, which we take back
and dole out to ourselves for the year after each of our trips to Germany. Why,
then, since the Germans make such great beer, and since their industrial organization
works so successfully for steel and metal, can't they achieve a successful industrial
organization for beer?
It turns out that the German beer industry suffers from
small-scale production. There are 1,000 little local beer companies in Germany,
shielded from competition with each other because each German brewery has virtually
a local monopoly, and shielded from competition with imports. The United States
has 67 major beer breweries, producing 23 billion liters of beer per year. Germany
has 1,000 major beer breweries, producing only half as much beer per year as the
United States. That's to say that the average brewery in the U.S. produces 31
times more beer than the average brewery in Germany.
That fact results from
German local tastes and German government policies. German beer drinkers are fiercely
loyal to their local brand of beer. And so there is no national brand of beer
in Germany, analogous to Budweiser or Miller or Coors in the United States. Instead,
most German beer is consumed within 30 miles of the place where it is brewed.
And any of you who have been in Germany know that Germans love their local beer
and loathe the beer that comes from next door. The result is that the German beer
industry cannot profit from economies of scale. In the beer industry, as in other
industries, production costs decrease greatly with size. The bigger the refrigerator
unit for making the beer, and the longer the bottle-filling line, the cheaper
is the cost of brewing beer. So these tiny German beer industries are relatively
inefficient. There's no competition; there are just 1,000 local monopolies.
That outcome, of Germans having their local beer loyalties, is reinforced by German
government law. The German government makes it hard for foreign beers to compete
on the German market. The German government has so-called beer purity laws. The
German government specifies exactly what can go into beer, and not surprisingly
what can go into beer is what German breweries put into beer, and it's not what
American, French, and Swedish breweries like to put into beer. So it's difficult
for foreign breweries to compete on the German beer market. The result is that
German beer is not exported very much. Any of you who like to buy Lowenbrau in
the U.S. should look at the label in the supermarket: your U.S.-bought Lowenbrau
is not brewed in Germany, it's brewed on license in the United States with American
productivity and American efficiencies of scale.
The same inefficiency turns
out to characterize some other German industries. The German soap industry and
the German consumer electronics industry are also inefficient; their companies
are not exposed to competition with each other, nor are they exposed to foreign
competition, and so they do not acquire the best practices of international industry.
But that disadvantage is not true for the German metal-producing industry or steel
industry. There, big German companies compete with each other and they compete
internationally, and therefore they are forced to acquire best international practices
There you have an example from the German beer industry
about the disadvantages of having lots of small groups that are secretive and
don't compete with each other. The other example that I want to tell you about
is the Japanese food-processing industry. I mentioned that we Americans are virtually
paranoid about the efficiency of the Japanese, and it's true for some Japanese
industries, but not for their food-processing industry. Japanese processed food
is produced with an efficiency 32% of American processed foods. There are 67,000
food processing companies in Japan; there are only 21,000 in the United States,
although the U.S. has double Japan's population, so the average food-processing
company in the United States is six times bigger than its Japanese counterpart.
What is the reason why the Japanese food-processing industry, like German beer
industries, consists of small companies with local monopolies?
It turns out
to be basically the same two reasons as with German beer: namely, local tastes
creating local monopolies, and government policies. The Japanese are fanatics
for fresh foods. Any of you who have been to Japan, as my wife and I were in October,
will remember what it says on Japanese containers. In the United States, when
you go to the supermarket, there's one date on the container, the date by which
you're supposed to throw away that bottle of milk. In Japan there are three dates
on the container: there's the date when the milk was manufactured, and there's
the date when the milk arrived at the supermarket, and then there's the date when
the milk should be thrown away, and these dates are in big letters; the Japanese
really care about the dates. So the result is that milk production in Japan always
starts at one minute past midnight, so that the milk that goes to market that
morning is today's milk. If milk had been produced at 11:59 p.m., the milk company
would have to stamp on its container that this milk was made yesterday, and no
Japanese person would buy it. The result is again that Japanese food-processing
industries enjoy local monopolies. Obviously, a milk producer up in Hokkaido,
northern Japan, is not going to be able to compete in Kyushu, in southern Japan,
with a Kyushu producer, because of the several days in transit from Hokkaido.
By the time a carton arrives in Kyushu, the people will read on the container
that this milk is three days old, and no Japanese person would buy it.
one thing that creates local monopolies for food production in Japan: Japanese
fanaticism about really fresh food. And the second thing is Japanese government
policy, which reinforces these local monopolies. The Japanese government obstructs
the import of foreign processed food by slapping on a ten-day quarantine. And
because the Japanese care about food that was produced that very day, naturally
by the time that American beef, chicken, or whatever arrives at the supermarket
and the date says ten days old, the Japanese are not very enthusiastic about buying
those American products. And there are other restrictions that the Japanese government
imposes on foreign imports.
The result is that Japanese food-processing industries
are not exposed to domestic competition, they're all local monopolies, they're
not exposed to foreign competition, and they don't learn the best methods in the
international trade for producing food. And the result is that, in Japan, Japanese
beef costs $200 a pound. My wife and I had heard about that before we went to
Japan, but what we did not realize until we were brought into a supermarket by
my wife's Japanese cousin is that chicken in Japan costs $25 a pound. The reason
the Japanese can get away with that is that Japanese chicken producers are not
exposed to competition with super-efficient American chicken producers.
all those features are not true for some other Japanese industries. The Japanese
steel industry, the Japanese metal industry, the Japanese car industry, their
car-part industry, and their electronic industries have productivities greater
than our American counterparts. But the Japanese soap industry, and the Japanese
beer industry, and the Japanese computer industry, like the Japanese food-processing
industry, are not exposed to competition, do not apply the best practices, and
so have ended up with productivities below those of corresponding industries in
the United States.
Now let's finally apply these lessons to comparing different
industries or industrial belts within the United States. I mentioned that when
I was growing up, Route 128 outside of Boston led the world in productivity for
an industrial belt, but Route 128 has now fallen behind Silicon Valley. Since
my book "Guns, Germs, and Steel" was published, I've spent a lot of time talking
with people from Silicon Valley and some from Route 128, and they tell me that
the corporate ethos in these two industrial belts is quite different. Silicon
Valley consists of lots of companies that are fiercely competitive with each other,
but nevertheless there's a lot of collaboration, and despite the competition there
is a free flow of ideas and a free flow of people and a free flow of information
between these companies that compete with each other. In contrast, I'm told that
the business of Route 128 are much more secretive, and insulated from each other
like Japanese milk-producing companies.
Or again, what about the contrast between
Microsoft and IBM? Again, since my book was published, I've acquired friends at
Microsoft, and I've learned about Microsoft's organization, which is quite distinctive.
Microsoft has lots of units, with free communication between units, and each of
those units may have five to ten people working in them, but the units are not
micro-managed, they are allowed a great deal of freedom in pursuing their own
ideas. That unusual organization at Microsoft, broken up in to a lot of semi-independent
units competing within the same company, contrasts with the organization at IBM,
which until four years ago had much more insulated groups. A month ago, when I
was talking in the industrial belt of North Carolina, the Raleigh-Durham area
industrial belt, I met someone who is on the board of directors of IBM, and that
person told me, Jared, what you say about IBM was quite true until four years
ago: IBM did have this secretive organization which resulted in IBM's loss of
competitive ability, but then IBM acquired a new CEO who changed things drastically,
and IBM now has a more Microsoft-like organization, and you can see it, I'm told,
in the improvement in IBM's innovativeness.
So what this suggests is that we
can extract from human history a couple of principles. First, the principle that
really isolated groups are at a disadvantage, because most groups get most of
their ideas and innovations from the outside. Second, I also derive the principle
of intermediate fragmentation: you don't want excessive unity and you don't want
excessive fragmentation; instead, you want your human society or business to be
broken up into a number of groups which compete with each other but which also
maintain relatively free communication with each other. And those I see as the
overall principles of how to organize a business and get rich.
But, let me
conclude by emphasizing some obvious restrictions. I'm sure all of you are already
thinking to yourselves, "But, but, but, he's forgot but but but...."
Yes, let's go back to those but-but-buts. One restriction is, I mentioned at the
beginning, "all other things being equal". Obviously the best organization is
not going to help with an idiot as a CEO, and the success of Microsoft certainly
depends, at least in part, on the unusual qualities of Bill Gates, as well as
on the unusual organization of Microsoft.
In addition, I've been talking about
conditions to maximize productivity and creativity and moneymaking ability. There
are other considerations in organized human groups, and there are conditions under
which productivity is not the thing you're most interested in. There are conditions
where more centralization may be appropriate. For example, during a war, you do
not want your air force, army, and navy to be fiercely competing with each other,
but instead you want during a war more centralized control than you do in peace
time. And there are also human groups for which productivity and differential
money-making ability are not the overriding consideration. I don't want you to
go home tonight and each of you to say to your spouse or significant other, "Darling,
I've just heard this guy Jared Diamond, who says that within human groups competition
is what spurs productivity and innovation, and so I think we need to follow his
advice in our household. For the next month let's see which of us earns a bigger
income, and at the end of the month the bigger income-producer will keep on with
the job, and the one of us who has lower income and is less efficient can turn
to scrubbing the floors and shopping at the supermarkets." That just illustrates:
there are other considerations in a marriage than optimizing productivity.
Again, I don't want you to go home to your several children, and say, "Sweetie-pies,
I heard this talk today by this guy Jared Diamond who enunciated some principles
that I think would be really good for rearing children. We're going to see what
your grades are at mid-term, and based on those grades, whichever one of you comes
closer to getting all A's, that one we will support to the hilt, private schools,
college, whatever you need, whereas those of you who get poor grades can start
jobs as a shoe-shine boy or girl" No! In a family, and in some other human
groups, productivity is not the appropriate consideration for judging the best
organization of the group.
Nevertheless there are some human groups where productivity
is indeed a significant consideration. And that certainly includes businesses,
industrial belts, and to a considerable degree, countries. In order to understand
how to organize these businesses, we could perform natural experiments. We could
set up, if we were rich enough, a hundred businesses, organized a hundred different
ways, see which businesses went bankrupt, and after 20 years figure that we now
have the correct industrial organization. But that's an inefficient way to do
it. We can instead learn from the comparative approach, by looking to natural
experiments of history. I hope that some of you will be able to apply these lessons
to acquiring the wealth that has so far eluded me.
Copyright ©1999 by Edge Foundation, Inc.