What's so terrible about making money?
Luke Johnson | Monday, 26 May 2008
One thing that has always baffled me is why certain people hate capitalism so much. They really are missing something.
Ever since I was 18 and co-founded a business by accident, I knew that being an entrepreneur was the most fun you could have with your clothes on - it is the greatest adventure modern life has to offer. And if you're lucky and astute, you might even get rich in the process. Why is that so terrible? Yet all too often capitalism is blamed for many of the ills of modern life, from global warming to poverty.
I remain convinced that many intelligent, ambitious individuals would adopt a self-employed way of life if they could strip away all the cultural bias and realise that building a venture can be a creative, even an heroic, endeavour. In truth, becoming an entrepreneur is a vocation, like fine art or quantum physics or teaching. But intellectual snobbery, prejudice and the comfort blanket of big organisations means business frequently fails to win the moral arguments.
Plenty of opinion-formers in the media, academia and places like Brussels and Whitehall too often think the world is a zero-sum place: they believe that each commercial success is bought at the cost of someone else's failure. Anti-capitalists suggest that the solution to inequality is redistribution - which actually means levelling down. Churchill understood this when he said: "The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."
Central planners forget how the inventive instinct is stimulated and assume the worst of markets. Citizens start businesses and create new products and jobs because it gives them freedom in their lives. As Robert Ingersoll, the great American orator, said, "Commerce is the great civiliser. We exchange ideas when we exchange fabrics."
But the blinkered, often envious critics see the process as a vicious battle between capital and labour and too often believe that more laws, taxes and regulation are the only answer to the challenges of modern life.
Such intervention can carry a high price. The catastrophic unintended consequences of biofuel mania are a grim reminder of the harm such distortions can bring. Will the high-minded political classes admit the error of their ways and swiftly abandon the mad incentives that are contributing to food riots and encouraging deforestation? One of the wonderful things about markets is that they self-correct ruthlessly: companies that fail to serve the customer will be overwhelmed by rivals - and go bust - and see their assets reallocated. But governments move slowly, ideologues can be stubborn and damaging legislation can take years to rescind.
Most people focus on the risks of free enterprise and are scared to join the ranks of the self-made. Some have learned to play the system of government and institutions like a game, and enjoy power, pension and profit from their position in the state sector.
Why should they encourage choice and competition when they have such a safe haven as a bureaucrat, trade union official, academic, etc.?
Recently, this paper reported research carried out by The Prince's Trust, the UK charity, which showed that 73 per cent of young respondents felt schools and colleges promoted "safe" careers rather than the idea of start-ups. We should cajole educational establishments to inspire their students to get involved in the world of business.
Innovation and progress come from embracing markets and encouraging entrepreneurs. The world is more competitive than ever; we cannot rely on old industries and the state to maintain our standard of living.
Markets are naturally dynamic, whereas governments resist change and fresh thinking. According to the Global Entrepreneurship Monitor, overall early-stage entrepreneur activity in Britain involves about 5.6 per cent of the population, a much lower rate than in the US, Brazil or China.
A slowdown in the economy and rising unemployment might just stimulate more to start their own business as an alternative. This would be the silver lining of the credit crunch cloud.
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm. FT Syndication Service
Ever since I was 18 and co-founded a business by accident, I knew that being an entrepreneur was the most fun you could have with your clothes on - it is the greatest adventure modern life has to offer. And if you're lucky and astute, you might even get rich in the process. Why is that so terrible? Yet all too often capitalism is blamed for many of the ills of modern life, from global warming to poverty.
I remain convinced that many intelligent, ambitious individuals would adopt a self-employed way of life if they could strip away all the cultural bias and realise that building a venture can be a creative, even an heroic, endeavour. In truth, becoming an entrepreneur is a vocation, like fine art or quantum physics or teaching. But intellectual snobbery, prejudice and the comfort blanket of big organisations means business frequently fails to win the moral arguments.
Plenty of opinion-formers in the media, academia and places like Brussels and Whitehall too often think the world is a zero-sum place: they believe that each commercial success is bought at the cost of someone else's failure. Anti-capitalists suggest that the solution to inequality is redistribution - which actually means levelling down. Churchill understood this when he said: "The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."
Central planners forget how the inventive instinct is stimulated and assume the worst of markets. Citizens start businesses and create new products and jobs because it gives them freedom in their lives. As Robert Ingersoll, the great American orator, said, "Commerce is the great civiliser. We exchange ideas when we exchange fabrics."
But the blinkered, often envious critics see the process as a vicious battle between capital and labour and too often believe that more laws, taxes and regulation are the only answer to the challenges of modern life.
Such intervention can carry a high price. The catastrophic unintended consequences of biofuel mania are a grim reminder of the harm such distortions can bring. Will the high-minded political classes admit the error of their ways and swiftly abandon the mad incentives that are contributing to food riots and encouraging deforestation? One of the wonderful things about markets is that they self-correct ruthlessly: companies that fail to serve the customer will be overwhelmed by rivals - and go bust - and see their assets reallocated. But governments move slowly, ideologues can be stubborn and damaging legislation can take years to rescind.
Most people focus on the risks of free enterprise and are scared to join the ranks of the self-made. Some have learned to play the system of government and institutions like a game, and enjoy power, pension and profit from their position in the state sector.
Why should they encourage choice and competition when they have such a safe haven as a bureaucrat, trade union official, academic, etc.?
Recently, this paper reported research carried out by The Prince's Trust, the UK charity, which showed that 73 per cent of young respondents felt schools and colleges promoted "safe" careers rather than the idea of start-ups. We should cajole educational establishments to inspire their students to get involved in the world of business.
Innovation and progress come from embracing markets and encouraging entrepreneurs. The world is more competitive than ever; we cannot rely on old industries and the state to maintain our standard of living.
Markets are naturally dynamic, whereas governments resist change and fresh thinking. According to the Global Entrepreneurship Monitor, overall early-stage entrepreneur activity in Britain involves about 5.6 per cent of the population, a much lower rate than in the US, Brazil or China.
A slowdown in the economy and rising unemployment might just stimulate more to start their own business as an alternative. This would be the silver lining of the credit crunch cloud.
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm. FT Syndication Service