Cultivate your animal spirits — and be kind to yourself!
After a lost decade, the Finnish economy is finally gaining momentum. Cost competitiveness is improving, which supports exports. The investment appetite has been invigorated at last, which in turn lays a foundation for the future growth potential of the economy. Employment has also improved somewhat, even if challenges remain to be solved in the functioning of the labour market.
Political risks are strongly present now. What seemed to be the unquestioned cornerstone of the Western world, namely liberal capitalism, is under attack. The force hammering the economic world order and the political landscape, as we know them, is economic nationalism. Some of the old sources of stability in the world economy have turned into drivers of volatility instead, it now seems. Add technological change to this puzzling landscape of contradictory forces and things get even more confusing! What might have looked like a clear map at one point now seems more like a messy tangle.
We need open markets — that is for sure. Global trade is not a zero-sum game. Free trade, free markets, private enterprise and competition lead to the efficient allocation of resources. And to maximal total welfare. While globalization has opened up possibilities, many have also seen their relative positions deteriorate. The Nordic way of dealing with globalization — namely free markets and collective risk sharing — now seems more relevant than ever.
We need some new ingredients in the economy
We used to ride on a comparative advance. The story of Finland is tightly linked to free trade and high value creation. One might call it a success story or a survival recipe. Finland is a small country and a small economy. To succeed in competition, we learned to ride on a comparative advantage and embrace globalization. This also makes our economy vulnerable of course.
Now the economy is finally growing, and new possibilities are opening up. The production structure is evolving, giving rise to new ideas, new networks and value chains and killing off some of the old ones. Improving cost competitiveness is a necessary but not a sufficient step. We also need more investments in human capital, research and development.
In this time of uncertainty…
You should cultivate your animal spirits! Success lies in entrepreneurship and more risk taking in the economy. We need courage, spirit and bold, daring individuals. This is exactly what you are doing at Aalto Executive. There is, however, much more at play. At the core of success lies not only your ability to find and rely on your animal spirits, but also your own resilience as an entrepreneur and creative actor in the long run. And your ability to work with others.
The most important resources in your venture are you and the people you work with. When you develop as a leader and entrepreneur — when you and your company grow — it is vital to care for your own resources and those of your people. Competitiveness challenges you — you should be kind to yourself and to your future self. This is rational human investment behaviour in the long run also in a volatile environment.
* The term ‘’animal spirits’’ was first introduced by J.M. Keynes in The General Theory of Employment, Interest and Money (1936). It is used to refer human emotions, instinct and trust in economic behaviour.