geert lovink on 10 Oct 2000 13:05:27 -0000

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Re: <nettime> What ever happened to the New Economy?

Michael Goldhaber wrote:

> The question remains whether the
> "new economy"  that might emerge with the Internet is really the dot-com
> economy, as pundits think in what are basically old-economy terms

Interesting change of perspective, Michael. Let's presume that the New
Economy, as we would like to see, is Internet and technology driven, not
dictated by financial markets and its venture capital avantgarde. Is there
such a thing as a US-economy which is not money driven? How naieve, how
utopian should one be to believe so? I think we should. I also think that
the dotcom.mania was all about short term profit of a small and smart elite
who tapped into "funny money" at the right time and place, without a
longterm, sustainable idea. I can hear these people denaying this. Why then
has so much of the investment disappeared into (old) media advertisement
instead of software development? I think it is so silly to waste money on tv
ads. If there is a market out there, on the Net, then it has to be created
on the Net itself, with all the tools the Net has on offer.

I think the "New Economy" is a very particular ideology, with a very precise
agenda, operational throughout the late nineties which got into a crisis in
the mid of 2000 and is now about to disappear. The Long Boom, for example,
existed, in the heads of the three authors who wrote the book with the
similar title. It existed for a certain group within the US-American
society. The long term changes Schwartz a.o. point at are open doors. I find
it cute and amazing that so many of these free
market techno evangelists believe in seamless growth. No feedback loops, no
set backs, no market movement, just childish linear growth models. Much of
the New Economy ideology is based on simplistic exponential growth
predictions. The reason for this, I think, is that we are dealing here a
believe system, a set of ideas which have to be sold by consultants, book
authors, etc. It is not in their (objective) interest to preach a down turn.
Yes, they will say it's a rocky road. But always, at the end of the business
story, there is the vision of the Big Award. This mechanism has corrupted
economic reporting to such an extend that it is almost impossible to read
the mainstream press. One really has to read Fast Company, Business 2.0, Red
Herring and all the others (including The Economist and BusinessWeek) as if
they were the Russian communist daily newpaper Pravda in the sixties and
seventies. Who are today's Kremlin Watchers?

> the latter, the possible Internet recession, while likely
> to be painful for many, may offer space for the truly new economy to
> grow even faster.

Grow yes, but perhaps this might be growth outside of the (speculative)
money economy. What is a "growth" which does not generate cash flow? There
is something wrong about the growth paradigm altogether. Internet might grow
over the next decades, but that might in the demographic sectors of society
which have lots of pocket money to spend. In part that's the reason behind
the current e-commerce crisis. Growth is stagnating there because the
newbies are kids and seniors, not the affluent innercity dwellers.

> (Disclaimer: like most other people, I would be hurt financially
> if these predictions are correct.)

Lucky net critics like me, I wouldn't. I think a crisis would create lots of
possibilities for those who are now operating on the Net on the fringes of
the libertarian startup-IPO-B2B-e-commerce  trajectory.

For the rest I agree with your analysis of a possible global economic
recession. The crisis could also be analysed in less in less dramatic terms.
There have been recent recession, in each decade at least one, which did not
result into a world war, nor were they solved with neo-Keynesian economic
policies. The coming "internet crisis" might as be a soft and smooth one. I
am not talking here alone the lines of Greenspan's idea of the "soft
landing". That's a much too rosy picture. We could as well think that
perhaps other sectors of the economy might become the next motor of economic
development, not technology. There is this underlying naive idea that
technology will always grow in the same pace, and that we will all be very
impressed by tech innovating, until the end of time. Perhaps one day, sooner
than later, technological growth will be as normal as the sun, the rain or
snow. It comes up and goes down. I really hope that the current marriage
between technology and the financial markets will break up soon. We would
all benefit from a quick and painless divorce. Unless
one believed in the pyramid scheme of stock options. Too bad for them.

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