Fear and greed drive markets, it has been said for a long time. Neither are admirable states of mind, and it is no wonder that they give markets a bad name. There are other psychological dispositions at the heart of business and all management that are more relevant and commonplace. One of the most important is confidence.

Confidence is for managers and investors, while fear and greed are for speculators. What matters to most people trying to run businesses, non-profit making organisations or public bodies, is their degree of confidence that allows them take risks to shape the future rather than just cope with it as it comes.

We talk about business confidence and consumer confidence; confidence in government and confidence-building measures. I think all are related in creating an underlying disposition that for us, non-speculators, is a lot more powerful than fear and greed.

This is a particularly important time to think about confidence. Not just because the year turns, but also because the economy seems to have peaked in terms of growth. International markets are posing questions about an uninterrupted "onwards and upwards" movement.

In terms of public policy in the Republic, the solutions to yesterday's problems are now well embedded, by and large, and fortunately so. The Republic seems to be reaching the limits of what was possible within the previous arrangements and ideas - limits of employment, limits of transport, limits of house price increases, even.

I often wonder how business managers are influenced in their level of confidence by the mix of macroeconomic and microeconomic factors. Does the latest decision of the US Federal Reserve Board or the European Central Bank swing their confidence level significantly? Obviously interest rates are a key factor in assessing future prospects, but the euro exchange rate difficulties of the past two years have been a factor that has been managed and has not caused a significant lowering of business confidence.

We have reached the heady heights of 11 per cent gross domestic product growth twice in this boom, in 1997 and this year. Most forecasts are for a slowdown next year - 8.8 per cent, according to the Department of Finance, and gliding down to 6.3 per cent in 2002. This is called a slowdown, but what 8 or 6 per cent growth translates into is not a slow economy.

If business confidence is influenced by macro-economic forecasts, talk of a slowdown in this context is in danger of making people too cautious. Why? Because just as we never had an 11 per cent growth rate before the present boom, we have never experienced what it is like to come down from that to 5 or 6 per cent. In previous times, a 5 percentage point change in growth would have put us into negative growth, a recession.

People find it hard to relate to macro-economic statistics. We know that the last year is what 11 per cent feels like. The difference with a possible 8 per cent next year will not be hardship.

On a micro level, business confidence is now tinged with a caution arising from difficulties in finding and retaining people. The vulnerability of management in a sellers' market for labour is a new reality.

It is hard to know when a factor like the exchange rate or difficulties in hiring people is a challenge to be managed and which does not dent confidence, and when it begins to look more insurmountable and to undermine confidence.

It is hard to know what influences the ephemeral mood at any time, but confidence is about more than mood.

Confidence is surely about the way people as business managers, public policy makers and individuals face the future. It bespeaks a willingness to take risks and to work hard for an achievable, though by no means certain, outcome. It is about shaping and changing the world for something better, leading change rather than responding to, or resisting, change. Confidence is about a willingness to lead change through, with and for other people.

We say we are a confident people, now that we've left the tale of Irish woe behind. Yes, young people seem to have lots of confidence. I hope it is not mere cockiness. Such confidence would be no use in any sphere - business, policy, social or individual - if it were not applied in a systematic way towards the sustained task of implementing change for the better. Confidence is not fleeting or moody. Real confidence is, to my mind, grounded, resilient, applied and persuasive. It can point to earned results and further goals achievable.

There is no reason why Irish business and Irish public life cannot be, in that sense, really confident in the year ahead. We must hold our nerve, our poise and our confidence.

Oliver O'Connor is contributing editor at Finance and Finance Dublin. E-mail: ooconnor@indigo.ie