AS we approach a new millennium, two magical realisations look set to nudge the future economic climate of Britain in the right direction. The first, and probably the most important, is a growing acceptance by society that making money and getting rich is OK. The second is both a relief and perhaps our saviour in the long term - recognition by the media that being online is advantageous. So the geeks were right all along. It has been some time coming, but we seem to have grasped that without wealth-generation we can do nothing, and if we are not online we will be out of the race.

But there is another realisation yet to come: the ability to accept and respond to continual change as the absolute essential for a vibrant economy. To slightly misquote Charles Darwin: "It is not the strongest or smartest who survive, but those most adaptable to change." The last time this happened was at the end of the Victorian era, when the telephone started to transform our ability to communicate and organise.

If I'm the only one with a mobile phone in a crowded room, the others feel under no pressure to buy one. But if I am the only one without, then the pressure is great. In general, the ratio does not have to be anything like this high, and around 30 per cent can tip the balance. This has in fact occurred with PCs, the Internet, and being online.

As far as I can see, economic theory has never created a premise that survived very long in its original form, and certainly all the theories of the past now look quaint. For example: the strong correlation between a nation's telephone density and GDP was a strong economic indicator for decades. The supposition that more telephone calls meant more wealth, or vice versa, was well-founded. Plotting telephone density with GDP in the 1970s was guaranteed to position a nation in the league of global productivity. Well, it doesn't hold any more, especially since the advent of mobile phones.

In this regard, the PC and the Internet have taken over, but better still, the number of new start-up companies has an even stronger correlation. As far as I can tell, the percentage of the population concerned with start-up businesses is around three in Britain, five in Israel, seven in Canada and nine in America. In each case, about 30 per cent of all new economic growth is generated by start-up activity, and most of those involved are under 45 years old.

Overall, Britain resides in the lower quartile of this league table with a discouraging tax system and an inadequate infrastructure that discourages the exploitation of our primary wealth generator: ideas. It is impossible to rent floor space by the hour, day, or week, and support services are sparse and expensive. Today we have a sub-critical scattering of start-ups operating at a subsistence level, and nothing remotely approaching the American model, where start-up incubators are being developed on a massive scale.

Unfortunately, we seem to have few people who recognise the need, a grudging delay in the acceptance that failure is OK, and taking risks deserves greater reward. As a matter of economic survival we have to fix all of this fast to ensure our future prosperity.

Peter Cochrane holds the Collier Chair for the Public Understanding of Science & Technology at the University of Bristol. His home page is:
http://cochrane.org.uk