Matt Ridley, author of "Genome" and more recently "The Rational Optimist," gave Tuesday's annual Adam Smith Lecture before a packed audience at St Stephen's Club. His title, "Adam Darwin," explored similarities between the insights and observations of Charles Darwin with those of Adam Smith who had written a century earlier.

One similarity is that evolution works in nature by a selective death rate. It is not a random process which leads some to survive and others not. The ones that make it are those with some mutation which increases their survival chances, even by a small amount. Nature can build up incredibly complex mechanisms through a series of minute changes which do this.

Those who succeed in the market are often those with an innovation that brings them an advantage. It might be new technology of new methods of achieving better productivity. The firms that fail are again, not the result of a random process, but those which lack the crucial advantage that innovation has brought to others.

In the world of nature sex plays an important role in mixing up combinations of genes so that innovations occur more frequently than would otherwise be the case. In the world of human activity there is an equivalent in which ideas can intermingle and interact, producing new combinations and innovations. The more trade, exchange, and contact there is, the more there are likely to be new ideas to be tried out. As in nature, the ones that bring advantages survive at the expense of those which do not.

Ridley stressed the co-operative nature of trade and exchange. Human beings exchange things to the advantage of both, and do so uniquely among groups which have no kin or tribe relationship. We co-operate with strangers to mutual advantage, and this has led to the extraordinary achievements that humanity has made.

Ridley's speech was an intellectual tour de force, elegantly delivered, and a superb contribution to the Institute's lecture series. The lecture will be uploaded to Youtube and posted on the blog shortly.