August 23rd, 2012
By Luke Johnson, Risk Capital Partners.
Those who doubt capitalism’s potential tend to see the worst in society.
A financial reporter recently explained to me why he enjoyed writing about entrepreneurs: “They’re so much more optimistic than all the cynical journalists I work with.” I know exactly what he means.
All human existence has been a struggle between those who believe in a bright future, and those who can see only decline. At present the pessimists might appear in the ascendancy. But history demonstrates irrefutably that in the longer run they are always wrong about the really big issues that matter most. Of course there are cycles but the relentless accumulation of knowledge means that progress is unstoppable. Yet the inclination towards apocalyptic visions persists.
Perhaps we should see pessimism as a sort of pathological condition. Like many diseases it can be contagious, and I suspect it often contributes to sicknesses such as clinical depression. Yet bad news, gloomy headlines and miserable predictions usually dominate mainstream communications. Scientific advances and globalisation seem to encourage doom-laden imaginings – environmental collapse, overpopulation, global warming, resource exhaustion, pandemics, terrorism, nuclear disaster and – most recently – the eurozone crisis. I suppose such fears reflect instincts that emerged to protect us against predators and starvation. Now they induce pointless anxiety and paralysis.
By contrast, two weeks ago I enjoyed the Founders Forum, an annual boost of positive thinking as powerful as a huge jolt of adrenalin. Roughly 300 entrepreneurs gathered to talk about cutting-edge technology, the agony and the ecstasy of building a start-up, and the wonders of free enterprise.
The place bursts with confidence. I invariably leave with an overwhelming sense that mankind’s ingenuity can solve any challenge, if sufficient brainpower and the right incentives are applied. The occasion was all about invention and action, unlike political conferences, which tend to be dominated by complaint, dispute and an obsession with legislation.
I find that those who doubt capitalism’s potential tend to see the worst in society. They disregard improvements and focus on downsides rather than possibilities. Their belief in redistribution and central planning reveals an urge to stifle opportunity and a mistrust of individual empowerment. The liberal left’s dominance of certain media outlets emboldens their negative outlook. They revel in national setbacks because such events confirm their prejudices. Yet they also embrace an ideology of utopian nonsense, fantasising that our chief motivation is a mass desire for equality.
We take for granted the countless incremental developments which make life safer, longer, healthier and generally more enjoyable. We see greater productivity, new medicines and materials and brilliant machines invented quietly every week. These innovations are the products of the private sector and free markets. Meanwhile, bitter old academics and hacks predict that we are facing a depression like the 1930s, more riots and intergenerational warfare. One new volume by a pair of professional defeatists is laughably titled Going South: Why Britain Will Have a Third World Economy By 2014.
Confidence is a self-fulfilling emotion. We all know winners who have achieved much through willpower, meritocracy and practice rather than innate talent or advantages of birth. Everyone respects a leader who thrives under fire, cheerleading and encouraging even in the darkest moments. Entrepreneurs learn to inspire because they have stared failure in the face and know it to be, as Rudyard Kipling said, an “imposter”. They have realised first-hand that free enterprise is the best system for advancing human welfare and freedom. Of course it proceeds through cyclical episodes of creative destruction, but these stimulate further gains over time.
My suggested solutions are straightforward: ignore the delusional prophets of doom; laugh; reinvent; exercise; treasure friendships; keep learning; surround yourself with younger people; and pursue whatever creative endeavours are available. Those with a positive outlook make the best companions and tend to do well in life. I recommend their company rather than listening to the exaggerated paranoia of the media misanthropes.
(This article first appeared in the Financial Times and is used here with permission from the author.)
Luke Johnson founded Risk Capital Partners in 2001 with Ben Redmond. He studied medicine at Oxford and subsequently joined investment bank Kleinwort Benson as an analyst. In 1992 he organised the acquisition of PizzaExpress and floated the business on the stock market at 40p. He was Chairman of this business until 1999, at which time the share price was over 800p and the business had a market capitalisation of over £500 million.
Luke is involved with all Risk Capital Partners’ portfolio companies. He recently stepped down as Chairman of Channel 4 Television Corporation, having held the position for six years. Luke writes a weekly column for the Financial Times on entrepreneurship and is Chairman of the Royal Society of the Arts.