How Capitalism Actually Makes Us Nicer

Wisdoms from The Rational Optimist by Matt Ridley

I’m listening to Matt Ridley’s The Rational Optimist on my commute to work at the moment. Like other great books, it makes profound arguments which change the way that you think. This is my favourite thing about reading.

Below I try to distil just one of his ideas, so that you too might have your perception honed, even if just a little.

It’s all about capitalism, and why it really ain’t all that bad after all. If you enjoy the post, please leave a comment and subscribe!

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Capitalism. That word alone probably conjures up images of Gordon Gekko types declaring “greed is good” or cutthroat CEOs counting cash on yachts. I get it. The modern narrative surrounding capitalism isn’t exactly full of warm fuzzies. More often than not, it’s framed as a system that breeds selfishness, inequality, and people who'd step over their own grandma for a quick buck. But what if I told you that, far from turning us into cold-hearted profit machines, capitalism might actually make us... nicer?

Yep, I said it. Capitalism, the system we love to hate, could be the very thing encouraging cooperation, trust, and dare I say, even kindness. So let’s flip the script for a moment and explore why capitalism might just be the reason we’re all holding the door open for each other (while buying things from strangers online at the same time).

Trade: The Friendly Face of Capitalism

The first thing we need to talk about is trade. In its simplest form, trade is just people exchanging stuff. It’s like a bartering system but with fewer chickens and more iPhones. Here’s the kicker: in a capitalist system, trade is voluntary. No one’s forcing you to hand over your coffee money or sell your crocheted cat sweaters online. You do it because both sides expect to come out better off.

Matt Ridley, in The Rational Optimist, spells this out in a way that makes perfect sense. He says, “Exchange is a peaceful, cooperative act. The habit of exchange leads to the habit of cooperation, trust, and kindness.” 

Think about it: if you want to trade with someone, you can’t exactly go around kicking them in the shins. You’ve got to be nice, or at least civil, to get the goods.

History backs this up too. Societies that embraced trade didn’t just grow richer, they got along better. Take the Silk Road, for example. Instead of battling it out for control over land or resources, merchants traded across continents, learning from one another, respecting cultural differences, and building ties. 

So trade — the very heart of capitalism — isn’t just about making a buck. It’s about finding common ground and cooperating.

You Don’t Fight With Your Customers

Ridley has another gem of a point: “You don’t kill people you trade with.” Now, I’m not saying capitalism has single-handedly wiped out violence, but it has made peaceful cooperation a whole lot more attractive than war. Why? Because people who are busy trading with each other have more to gain from keeping things calm and friendly than they do from launching into battle.

In a capitalist system, where businesses rely on stable relationships with their customers, suppliers, and employees, there’s no room for torching the village. Who's going to buy your stuff if they’re too busy defending themselves from an attack? The more intertwined our economic relationships get, the more incentives we have to play nice.

Sure, history has plenty of dark chapters, but there’s a reason why modern trade-centric societies are generally more peaceful than those in the past that relied on raiding and plundering. Let’s face it: raiding doesn’t exactly do wonders for your Google reviews.

You can’t escape…. (credit: cartoonstock.com)

Trust Is the Real Currency

Here’s something else that capitalism gets right: it makes trust and reputation matter. If you want to succeed in business (or life), you can’t be a jerk all the time. No one wants to trade with someone who lies, cheats, or constantly pulls a disappearing act. In capitalism, your reputation is like currency. A good one opens doors; a bad one slams them shut.

It’s precisely the reason that a tube of Colgate will always be filled with toothpaste, and not watery goo.

The same for a piece of KFC chicken which will always be cooked through properly, and not raw.

And the same reason that a packet of Doritos will be filled with chips, and not thin air – wait.

Ridley puts it well when he says, “Prosperity through commerce and trade encourages people to be nice to one another because their wealth depends on reputation, trust, and cooperation.”

In other words, if you’re going to make it, you need people to like you, or at the very least, trust that you’ll deliver the goods. Being kind, reliable, and trustworthy doesn’t just feel good; it’s good for business.

Take a moment to think about any company that treats its customers or employees badly. Chances are they don’t last long, because in a marketplace full of choices, people are going to pick the ones who treat them well.

 Competition Makes Us Better—Not Meaner

Okay, but what about competition? Doesn’t capitalism’s obsession with competition make people more ruthless and cutthroat? Well, not really. While competition can get intense, it often pushes people and businesses to up their game—not by being cruel, but by being better at what they do.

When businesses compete, they don’t win by scamming people or stepping on their toes (not in the long run, anyway). They win by innovating, improving, and making sure their customers are happy. It’s the reason we have such amazing products and services today—people pushing each other to be the best. And that doesn’t happen in a dog-eat-dog world. It happens in one where cooperation and positive relationships matter.

Changing the Way We Think About Capitalism

It’s easy to view capitalism as this cold, heartless machine that pumps out billionaires while leaving everyone else in the dust. But the reality is far more nuanced. At its core, capitalism is built on voluntary cooperation, trust, and mutual benefit. It’s a system where you succeed by working with others, not against them. Far from making us meaner, capitalism encourages us to be kinder and more cooperative.

So the next time you see a deal go down—whether it’s a coffee purchase or a big business merger—remember that what you’re witnessing is more than just commerce. It’s cooperation, trust, and a little bit of kindness, all wrapped up in a capitalist bow.