All across the world, a silence has descended: the tranquillity of shuttered plants, cancelled orders, idle machines, stationary vehicles. Unemployment mounts like a death toll. Bankruptcies climb inexorably. As if struck by plague, entrepreneurs everywhere have been gripped by an epic crisis of confidence. How are their animal spirits to be revived?

Unfortunately, there is a rising chorus that free enterprise is at the root of all our economic problems. Union leaders, leftwing politicians and activists are using the downturn to attack free markets and extend their socialist franchise. As ever, they want more regulation, more state intervention and higher taxes on the rich. But, just as protectionism in the 1930s helped turn a recession into the Depression, so adoption of these anti-business policies will ensure this downturn becomes a slump. My profound concern is that risk-takers are being assaulted on all sides: lack of credit, lack of demand and armies of anti-capitalists out to demonise the private sector.

In reality, the politicians gathering at this G20 meeting in London have limited power. The best thing they can do is get out of the way. They cannot create real jobs, invent new products or revive demand. They depend, as we all do, on the ingenuity and optimism of self-starters who build fresh companies and drive human progress. These initiators are needed more than ever: not just to stem the flood of job losses but also to generate taxes to pay all the bills being racked up by governments across the globe.

‘There must be a bonfire of laws that inhibit, restrict and burden new undertakings’

As John Maynard Keynes put it: “The thought of ultimate loss which overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death.” Right now, too many would-be pioneers are worrying about dangers and not rewards. Fear has overwhelmed greed: the adventurous are on the retreat. Until we reverse this psychology, we shall never recover our economic momentum.

So how will business rediscover the naive optimism that fires every start-up and commercial breakthrough? We are in a violent remaking of the world’s economies. Our faith in the future of capitalism and our trust in the systems that make it all function – markets, banks and suchlike – are being tested. The spontaneous urge to action that stimulates any recovery will be triggered if entrepreneurs are unshackled. Bad times can inspire invention but, for entrepreneurial talent to be unleashed, lawmakers must lend a hand.

Payroll taxes should be slashed – especially for new jobs. There must be a bonfire of laws that inhibit, restrict and burden new undertakings. Incentives must be put in place to discourage endless lending to, and investment in, property: instead, credit and tax breaks must be directed towards job creation in a massive way. Pension funds, insurance companies, banks and other institutions should be rewarded for backing companies that create jobs and penalised for investing in inanimate assets such as property, commodities and suchlike. Genuine wealth creation does not derive from speculating in real estate – it comes from advances in technology and production. All that spare manpower in the financial services sector should devote itself to building industrial banks that finance the real economy, not just trading bits of paper. They owe it to the rest of us taxpayers who are paying for their greed and stupidity. And not only might they feel better about themselves but they might even make a net profit and stay solvent without relying on government life support.

Do our political, business and banking leaders have the imagination and courage to take these essential steps? We shall see. I detect the early signs of a new work ethic among citizens. People are trying harder because they realise many of our previous comfortable assumptions have been misguided. There is a new pragmatism; but do the political elite sense this? To compete in a global economy, we must roll back high taxes, bureaucracy and heavy regulation, and direct funds away from the rentier classes towards productive purposes. Otherwise, we are doomed to declining living standards and relentless immiseration.

lukej@riskcapitalpartners.co.uk
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm