I once took down a video by the management guru Tom Peters. In the film, Mr Peters regaled his audience with tales of companies that had innovated, delighted customers and reinvented themselves. Voice rising, face glistening, he exhorted his audience to do it too, rousing them to a whooping, hands-aloft ovation.

Our projectionist extracted the video from the machine and handed it back to me. “Goes on a bit, doesn’t he?” he said. I relayed the remark to my colleagues. “Makes you proud to be British,” one said.

It is easy to laugh, but hasn’t America’s unembarrassed enthusiasm been responsible for its business dominance? Aren’t Microsoft, Apple and Google the result of people stilling all doubts to turn their ideas into world-leading companies? As Robert Reich, former US labour secretary, observed: “American optimism carries over into our economy, which is one reason why we’ve always been a nation of inventors and tinkerers, of innovators and experimenters.”

That sunniness has to be good for business, doesn’t it? No, says Barbara Ehrenreich, the US writer, in her book Smile or Die: How Positive Thinking Fooled America and the World.

Ms Ehrenreich has plenty to say about business, but what exhausted her patience with positive thinking was breast cancer. As she researched her options after her diagnosis, she was startled by how cheery everyone was. The treatment might be disfiguring and literally nauseating, but there were upsides. “In the lore of the disease – shared with me by oncology nurses as well as by survivors – chemotherapy smoothes and tightens the skin and helps you lose weight, and, when your hair comes back it will be fuller, softer.”

Besides, there were medical reasons to stay cheerful: it raised your chance of staying alive. In one study, 60 per cent of survivors attributed their recovery to a positive attitude. Ms Ehrenreich, a PhD in cell biology, evaluated this claim and found it bogus. A study which concluded that patients in support groups lived longer could not be replicated. Your attitude made no difference.

This fluent, furious section is the book’s best. Switching to the allegedly dolorous effect of positive thinking on business, Ms Ehrenreich is less convincing. She reminds us that business has not always been linked to optimism. Max Weber traced capitalism’s roots to Protestantism, which required hard work and deferred gratification.

That changed with the rise of service businesses, which demanded constant growth in customer desires and employees who could meet them. Hence the need for the ever-present smile, the positive attitude and the corporate dislike of moaning. Ms Ehrenreich recounts the rise of the motivational speaker, the team-building exercises and the dismissal of staff for showing insufficient enthusiasm.

This positive thinking contained the seeds of meltdown. The Robert Reich quote above has a second part: “Optimism also explains why we save so little and spend so much.” America’s financial wizards believed that, however much people borrowed, the market would take care of itself. “What was market fundamentalism other than runaway positive thinking?” Ms Ehrenreich asks.

Well, you can be a positive thinker without it. The recent speech by Jeffrey Immelt, General Electric’s chief executive, about how government money could help lead America to a clean-energy future, was a rejection of market fundamentalism, but it still contained homilies about the US being a “country where no one’s dreams are too big”.

Ms Ehrenreich advocates a “vigilant realism”, one that analyses dangers, rather than dismissing them as unimportant “compared with one’s internal state or attitude or mood”. With the US financial system and much of its car industry surviving thanks to taxpayer largesse, who can argue with that? As she says, companies could have done with “the financial officer who keeps worrying about the bank’s subprime mortgage exposure or the auto executive who questions the company’s overinvestment in SUVs and trucks”.

But who does it better? For all of China’s power, it still does not have a single world-class innovative company.

Yes, there are lessons to learn about evaluating risk. But you can be paralysed by risk too. Any innovation is a leap of faith, a belief that the risk is worth running. Americans have been good at that. I wouldn’t count them out yet, or their positive thinking.

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Resources:

Skapinker, Michael. “Positive Thinking is Still Key to Prosperity.” Ft.com. Financial Times, 18 Jan. 2010. Web. 18 Jan. 2010. <http://www.ft.com/cms/s/0/d9deafc4-0461-11df-8603-00144feabdc0.html>.