Can Brexit Be an Opportunity?
European Straits #8
Dear all,
Whatever the ups and downs, Brexit is approaching its inescapable outcome. Theresa May has once again delayed pulling the trigger on the procedure’s formal start. There are nonetheless clear signs of a mounting panic: unease within parliamentary ranks; the announcement by Nicola Sturgeon that Scotland will organize another referendum on its independence; excitement in France as the French government expects that the finance industry will cross the channel and settle in Paris, bringing with it wealth, clustering effects, and a recovered influence on the global stage.
We at TheFamily don’t want to downplay the importance of this chain of events. The referendum result was a disappointment, all the more so as it happened right after we opened our London office. Also, Brexit is a reminder that we’re currently going through yet another, dangerous ‘Great Transformation’: like happened a century ago, international institutions are unraveling at an accelerated pace—and the European Union is no exception. Like the gold standard in its time, the EU was designed to provide stability and security at the macroeconomic level. In that regard, much like the UK going off the gold standard in 1931, Brexit is only one more episode of an old economic order collapsing before our eyes.
Yet Brexit can also be seen as an opportunity, for Europe, for Britain...and for TheFamily. As member states drift apart, there will be demand for non-state entities capable of bridging the higher barriers and the many frictions opposing the exchange of goods, services, and ideas. In The Great Transformation, Karl Polanyi reminds us how peace was maintained in Europe in the 19th century thanks to the widespread power of haute finance. We obviously don’t think of reaching a level of power comparable to that of the Rothschild brothers when they operated their banking business in London, Paris, Frankfurt, Vienna and Naples. But we’re convinced that the financial sector, especially venture capital, has a role to play in unifying Europe in a time when feeble states retreat behind their borders.
In that more fragmented Europe, Britain certainly has its card to play. It used to be a thalassocracy, a seapower willing to compete on the global stage. From that glorious past, it inherits a culture that perfectly fits the current Entrepreneurial Age. What’s more, leading companies in the Entrepreneurial Age don’t emerge from entire countries, even less from continents, but rather from small and dense metropolitan ecosystems. It’s actually in post-Brexit London that new laws, regulations, and common practices could help turn a more entrepreneurial Britain into the leading entrepreneurial ecosystem in Europe. Finally, the English language provides Britain with an extraordinary opportunity to achieve strategic positioning on the international stage. We can already spot the emerging global thought leaders who have made London their base, at the crossroads of American and continental thinking.
Mariana Mazzucato, who’s launching a new (and promising) Institute for Innovation and Public Purpose at University College London, is a good example of that new breed of progressive global thinker. In a panel discussion in partnership with the Royal Society of Arts back in February, she pointed out the problem of not empowering the state as a player in the field of innovation. She was followed by Professor Carlota Perez, who shared a rare insight from her current work on why governments should impose ‘smart green growth’ as the new direction for innovation. Finally, Jeffrey Sachs of Columbia University stressed the goal that should be shared by all of us who have at heart the advancement of a more liberal agenda at a global scale: smart, fair, and sustainable growth. You can hear the podcast of the discussion by following that link.
I’ve completed a new chapter in my book HEDGE: A Liberal History of the Middle Class. Also, two more Scaling Strategies notes have been published recently:
Finally, you should read this piece by my Co-Founder & Partner Oussama Ammar: Have You No Sense of Decency? Stop investing public money in startups.
Warm regards,
Nicolas