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The Economist - Free exchange How does today’s tech boom compare with the dotcom era? Tech stocks are reliving the heady days of the 1990s

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The Economist - Free exchange How does today’s tech boom compare with the dotcom era? Tech stocks are reliving the heady days of the 1990s. Productivity looks wildly different Sep 19th 2020 In troubled times people take comfort in the familiar. Covid-19 has upended many things, but tech-stock prices have proved impressively invulnerable. The Nasdaq, a tech-heavy stock index, has leapt by 25% since the beginning of 2020, taking its total rise over the past decade to over 400%. Were it not for a handful of tech giants like Apple and Microsoft, the S&P 500, another share-price index, would be down so far this year. Not since the boom of the late 1990s have technology firms inspired such exuberant trading. For punters the comparison should be a sobering one; after a peak in March 2000 the Nasdaq crashed, eventually losing 73% of its value. But the economic differences between the two eras should be more unsettling than any market similarities. The two booms do share features beyond their stock-price trajectories. Both were sustained by inflows of new money. In the late 1990s discount brokerages and online-trading platforms drew in amateur punters looking to profit off the seemingly one-way market. Today, an army of small-timers trade shares and derivatives on new platforms like Robinhood. In the 1990s raging bulls justified high prices by declaring the dawn of a new economy, built on more powerful computers, fancy software and the internet. Today’s optimists cite the potential of everything from cloud computing and artificial intelligence to electric vehicles and blockchain. At first glance the economic performance seems similar too. In the late 1990s the unemployment rate fell to 4% and pay soared. On the eve of the pandemic, America’s jobless rate stood at a half-century low and wage growth, after a dismal decade, had accelerated to its best pace since 2008. According to figures published by the Census Bureau on September 15th, real median household income grew by a very healthy 6.8% in 2019. Yet in critical ways the two episodes look profoundly different. As the 1990s dawned economists were hunting in vain for the efficiency-enhancing effects of new technology. Robert Solow, a Nobel prize-winning economist, quipped in 1987 that “you can see the computer age everywhere but in the productivity statistics.” By mid-decade that was no longer the case. Output per hour worked in America rose by more than 3% a year in 19982000, a feat the economy had not pulled off since the early 1970s. Growth in total factor productivity (a measure of the efficiency with which capital and labour are used, often treated as a proxy for technological progress) rose by about 2% a year from 1995 to 2004, according to Robert Gordon of Northwestern University. That was a sharp pickup from the average pace of 0.5% in 1973-95, and nearly matched the rate achieved during the heady growth years of 1947-73. Productivity in the 2010s, by contrast, looks pitiful. Annual growth in labour productivity has not risen above 2% since 2010. Growth in total factor productivity, according to data gathered by John Fernald of the Federal Reserve Bank of San Francisco, has been more dismal than ever: just 0.3% on average from 2004 to 2019. If you take the 2010s alone, the average falls to just 0.1%. Strong labour productivity growth in the 1990s enabled wages to rise without squeezing corporate profits. While the dotcom boom is often remembered for the enormous valuations achieved by profitless upstarts with no clear path into the black, after-tax corporate profits during the decade rose from 4.7% of GDP in 1990 to 6.7% in 1997, before closing the decade at 5.6%. Corporate profits actually declined as a share of GDP during the 2010s, albeit from a much higher level than that prevailing in the 1990s: from 10.4% in 2010 to 9.0% in 2019. More telling, however, is the way in which firms responded to profit opportunities during the two decades. Investment in computer equipment, software and R&D leapt during the 1990s, by 1.5 percentage points of GDP over the decade. In the 2010s, despite the much higher level of profits, investment rose by just 0.7 percentage points of GDP. The exuberance that powered soaring stock prices in the late 1990s, if in some cases irrational, occurred alongside tech-powered structural change. The uptick in productivity was at first driven by advances in computer-making. As prices tumbled and capabilities soared, other firms began investing in new equipment. Productivity gains began to spread across the economy, helping firms streamline manufacturing and transforming critical industries. These persisted, and even accelerated, for some years after the market crashed. Though many dotcom darlings disappeared, the digital infrastructure built during the boom remained. So did a number of firms that came in time to dominate the corporate landscape. In March 2001 The Economist grimly assessed the prospects of Amazon, a struggling retailer that had lost 90% of its market value in the crash, noting that “even if such companies survive, they are unlikely to resemble the businesses they once were.” (Holding Amazon through the crash proved a smart bet; its stock now trades at about $3,100, up a tad from under $10 in 2001.) Only nineties kids will remember productivity Some of today’s high-flyers will in time prove to be good investments. Optimism about the real economy requires a bit more faith. There are grounds for hope. Some economists reckon that hard-to-measure “intangible” investment—such as time spent re-engineering business processes—takes up a growing share of firms’ energies. If so, both investment figures and future economic prospects could be undersold. Both output per hour and total factor productivity accelerated in 2019. Though it remained well short of the 1990s, this uptick might presage an economic transformation in the making. And the Covid-19 pandemic has imposed constraints on business activity, which might in turn accelerate tech-driven restructuring. The possibility has probably contributed to the surge in tech stock prices since March. For now, technology valuations are based, to a far greater degree than in the 1990s, on what could be rather than what is. Invest accordingly. ECON7200 – Semester 1, 2021 Individual Project Deadline: Sunday 09 May 2020 16:00 Write an essay between 800 and 1200 words (excluding references), consisting of three tasks: 1. Read and summarize the article in Quarterly Journal of Speech, “Rhetoric, risk, and markets: The dot-com bubble,” (published in 2010 by Goodnight and Green) (in approximately 200 words). 2. Explain what behavioral economics is and discuss its role (in comparison to the efficient market hypothesis) in explaining the events of the dot-com bubble (in approximately 300 to 500 words). 3. Recently, there has been an ongoing boom in many technology companies’ share prices, despite the current pandemic (see two attached articles from Financial Times and The Economist). In your opinion, will this be another dot-com bubble and crash? Discuss using behavioral economics and/or efficient market hypothesis (in approximately 300 to 500 words). Criteria and Marking: The total mark for this assignment is 30, which consists of the following criteria: ? ? ? Article summary (4 marks) Explain behavioral economics and discuss the dot-com bubble (8 marks) Compare the two booms (8 marks) ? ? ? Writing Quality (5 marks) Presentation (2 marks) Reference (3 marks) In the Writing Quality criterion, your writing style, essay flow and grammar/spelling will be examined. The Presentation criterion includes various details such as document format, identification and compliance of word limit. In addition, there are some general points to consider: ? ? ? ? ? ? ? ? Your essay must have a cover page detailing your ID and word count. Remember to give a total word count (excluding references) on the cover page. You cannot use any bullet points in explanation or summary. Any reference style is allowed, but it must be consistent (i.e. same style throughout the essay). You cannot cite Wikipedia or Investopedia. If graphs/figures are used, remember to quote the source. Use academic writing style and not creative writing style. Do not plagiarize! It will be dealt with very seriously in UQ and is simply not worth trying. Submission: Each student should submit a Word or PDF file through the Turnitin link on the Blackboard course website. Submission through email will not be accepted. All submissions will be run through the Turnitin anti-plagiarism software. Quarterly Journal of Speech ISSN: 0033-5630 (Print) 1479-5779 (Online) Journal homepage: https://www.tandfonline.com/loi/rqjs20 Rhetoric, Risk, and Markets: The Dot-Com Bubble G. Thomas Goodnight & Sandy Green To cite this article: G. Thomas Goodnight & Sandy Green (2010) Rhetoric, Risk, and Markets: The Dot-Com Bubble, Quarterly Journal of Speech, 96:2, 115-140, DOI: 10.1080/00335631003796669 To link to this article: https://doi.org/10.1080/00335631003796669 Published online: 16 Jun 2010. Submit your article to this journal Article views: 4445 View related articles Citing articles: 11 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=rqjs20 Quarterly Journal of Speech Vol. 96, No. 2, May 2010, pp. 115140 Rhetoric, Risk, and Markets: The Dot-Com Bubble G. Thomas Goodnight & Sandy Green Post-conventional economic theories are assembled to inquire into the contingent, mimetic, symbolic, and material spirals unfolding the dot-com bubble, 19922002. The new technologies bubble is reconstructed as a rhetorical movement across the practices of the hybrid market-industry risk culture of communications. The legacies of the bubble task economic criticism with developing critical capacity sufficient to address attentiondriven economies of worth. Keywords: Mimesis; Bubbles; Rhetoric of Economics; Attention Economy; Economic Criticism In seventeenth-century Vienna, tulips were a rare, beautiful, and exotic species imported from Turkey. Collection, cultivation, and display soon captured the eye of the visiting Dutch who started a flourishing trade back home. Sellers began to buy this year’s bulbs dear in anticipation of next year’s even higher prices. The imagination of profits blossomed. The futures market flourished on the Amsterdam exchange and in towns across the Netherlands. ‘‘A golden bait hung temptingly out before the people,’’ Charles Mackay wrote in 1841, so ‘‘nobles, citizens, farmers, mechanics, seamen, footmen, maid-servants, even chimney-sweeps and old clothes women, dabbled in tulips.’’1 New investors were encouraged to get in and go deeper by ‘‘stockjobbers’’ who let loans and wrote contracts. Prices soared. Fortunes were made. Eventually, ‘‘[i]t was seen that somebody must lose fearfully in the end. As the conviction spread, prices fell, and never rose again.’’ Those who got out early ‘‘hid their wealth,’’ and a ‘‘language of complaint and reproach’’ ensued.2 G. Thomas Goodnight is Professor at USC’s Annenberg School of Communication. He wishes to thank the Obermann Center for Advanced Studies, University of Iowa, and the Huntington Library for support. Sandy Edward Green, Jr. is Assistant Professor of management at the Marshall School, University of Southern California. He wishes to thank the University of Southern California Center for Interdisciplinary Research for support. Correspondence to: G. Thomas Goodnight, Annenberg School of Communication, 3592 Watt Way, Los Angeles, CA 90089-0281, USA. Email: gtg@usc.edu. ISSN 0033-5630 (print)/ISSN 1479-5779 (online) # 2010 National Communication Association DOI: 10.1080/00335631003796669 116 G. T. Goodnight & S. Green Stories of tulipmania ‘‘have been circulated for nearly 400 years.’’3 So have accounts of the Mississippi Bubble (17191720) and the South Sea Bubble (1720), events that according to Peter Garber ‘‘are still treated in modern literature as outbursts of irrationality.’’4 Even though the science of economics has advanced, markets world-wide appear no less susceptible to bubbles, defined as extreme price deviation away from fundamentals that are constituted by ‘‘economic factors such as cash flows and discount rates that together determine the price of any asset.’’5 In the twentieth century, ‘‘financial markets have witnessed manias’’ in ‘‘the Florida land boom, conglomerate and war companies, the great crash of 1929, the NiftyFifty, oil, gold bullion, Japan, junk bonds, biotech, and of course the Internet.’’6 Indeed, ‘‘the 20th century has seen more financial bubbles than any other previous centuries,’’ the largest of which was the Internet boom.7 ‘‘In the two-year period from early 1998 through February 2000, the Internet sector earned over 1000 percent returns on its public equity.’’ By the end of 2000, ‘‘these returns had completely disappeared.’’8 This study examines the dot-com bubble, 19922002, as a rhetorical movement.9 We follow Deirdre McCloskey’s ‘‘task of an economic criticism,’’ which is the appreciation of ‘‘how the arguments sought to convince the reader,’’ and thus assemble ‘‘the speech by which people construct their stories of the cost and benefit’’ in anticipation of and response to market changes.10 We adopt Mitchel Abolafia and Martin Kilduff ’s premise that bubbles are not mere explosions of irrationality, but are events generated by the inter-influencing ‘‘strategic actions of buyers, sellers, bankers, and government agencies.’’11 Economic actors interweave discursive and material practices, thereby shaping and becoming shaped by a mimetic spiral. Paul Ricoeur holds such a spiral to be a condition where time is articulated through narrative, but the narrative conditions the times.12 A rhetorical study of economic activity would appear to reinforce the popular view that bubbles are a case of mass euphoria. Experts who understand markets as efficient mediators of private preference would agree. After all, homo economicus is ‘‘a purely rational being motivated by self-interest.’’13 So, price movements ‘‘away from fundamental values are rather rare and . . . if they occur . . . are often quickly corrected.’’14 Stock prices are said to reflect all available information because market players are motivated to adjust quickly to news, those who mis-guess consistently do not stay around for long, and arbitragers correct any sustained discrepancy between asset value and price.15 The powerful Efficient Market Hypothesis (EMH) predicts that economic behavior will result in ‘‘a market where, given the available information, actual prices at every point in time represent very good estimates of intrinsic value.’’16 Bubbles are regarded as but temporary departures from rational norms awaiting correction. This theory has difficulty explaining why bubbles are initiated and sustained, grow to such enormous size, become repeated within a generation, and have expanded with substantial global scope and frequency. The Dot-Com Bubble 117 Bubble Worlds All bubbles spread out in broad counternarratives to the EMH when investors appear to switch from imitating standard, rational, probability-based models of valuation to copying arguably novel ventures with enticing uncertainties. New institutional theory, behavioral economics, and performative economics offer strategies to explain such departures from rational grounding*respectively as the social, behavioral, or reflexive trajectories of a rhetorical movement. In what follows, we build from and extend these post-conventional economic theories to inquire into the articulation of market-industry practices as they fuel and are energized by the explosive rise of new communications technologies in the United States. Thus, the contingent, mimetic, symbolic, and material trajectories unfolding the dot-com bubble are reconstructed as transformations of a blended risk culture.17 New institutional theory connects imitation to the adoption and sustaining of market practices that assure survival.18 Markets comprise activities where pursuit of self-interest is moderated by actors who prefer maintaining reliable and productive relationships of exchange with one another over time to the uncertain outcomes of relentlessly maximizing profit.19 Such markets develop historically with much variation among fields. These institutions are reality-constructing processes comprised of ‘‘microlevel routines, rules, and scripts that guide the actions of individuals and groups; mesolevel organizations and occupations, industries, and local identities and regimes; and macrolevel norms, values, expectations, and codified patterns of meaning and interpretation.’’20 At each level, stability is supported by ‘‘mimetic isomorphism’’: participants imitate successes, thereby institutionalizing standards and adapting innovations across a field into reasonable practices.21 As ‘‘an institutional specific cultural system for generating and measuring value,’’ market practices are held to evolve incrementally over time.22 The social codes of practice enable communication through ‘‘a complex network of signals that economic agents send to each other.’’23 The practices embody and are guided by ‘‘institutional logics’’ that standardize rules, norms, and strategies suited to ‘‘calculative’’ knowledge, itself a state-of-the art practice.24 During times of stability, the reliability of models, the continuity of past into present, and the process of learning and refinement become taken for granted as legitimate practices, successful operations, and prudent norms. New institutional theory explains well homogeneity in the stable constructions of market practices through imitation.25 It has had less success in accounting for why institutional logics are subject to change, much less widespread disruptions and departures.26 New institutional theory opens space to explain bubbles or heterogeneous departures from market equilibrium as the result of widespread copying of popular but bad investment decisions.27 Yet, why investors step aside suddenly from legitimate institutional rules and promote controversial change remains uncertain.28 Behavioral economics attempts to fill this space by linking imitation to the spread of irrationality. The self-reproducing qualities of markets are found in ‘‘structures among specific cliques of firms and other actors who evolve roles from observations 118 G. T. Goodnight & S. Green of each other’s behavior.’’29 As Robert Shiller and colleagues maintain, stock prices remain open ‘‘to purely social movements because there is no accepted theory by which to understand the worth of stocks and no clearly predictable consequences to changing one’s investments.’’30 Bubbles are thus described as a special case of ‘‘contagion’’ that changes the ordinary rules for evaluating risk and information.31 Behavioral economists make much of the psycho-emotional distance between rational models and individual risk taking.32 In assessing risk under normal conditions, investors prefer to avoid loss before making gain.33 A bubble reverses this preference. New presumptions regarding risk appear to pour across investment communities. Information cascades occur among peers who selectively share news. These investors ‘‘ignore their private information or preference and ‘follow the crowd’ by imitating recent actions’’ of those who have achieved successes.34 Institutional and behavioral theorists agree that under some conditions, it might be reasonable to imitate those who appear to be better informed, but bubbles are induced when investors flow in great numbers to support popular enterprises in spite of the difference of private information.35 These contagious moments are attributed to ‘‘herd behavior,’’ a nineteenth-century theory that explains the abandonment of constraints due to the irrationality of crowds.36 Bubbles are the result of populations observing and imitating successful buying and selling. Of course, market participants do not literally ‘‘observe behavior’’ but frame it in similar or in different but convergent ways. Whereas institutionalists fail to provide effective explanations of changes in market logics, behaviorists explain such changes but at the expense of homogenizing market motivations while asserting the ‘‘fads’’ of rule-changing enthusiasms as infectious.37 Such inquiry takes us back to the traditional, rational-irrational dichotomy. Performance scholarship better addresses how ‘‘logics’’ of investment that are deemed irrational and crowd driven in retrospect structure what appear to be compelling reasons at the time. Performative economics emphasizes the role of market participants in the reflexive production of imitation. The reflexive play of markets is where participants persuade themselves through adopting theories that construct and move prices and value. A leading exponent, Michael Callon, holds that the economy ‘‘is embedded not in society but in economics.’’38 Market participants do not initially price assets according to what economic models would predict, but learn to price assets ‘‘as economists suggested homo æconomicus should.’’39 Investors participate in the reflexive production of markets because buyers and sellers use the models that shape the prices that embody those very values. George Soros observes, ‘‘[R]eality helps shape the participants’ thinking and the participants’ thinking helps shape reality in an unending process.’’40 Recently, performative economics has taken a linguistic turn. Edward LiPuma and Benjamin Lee find market performances constituting ‘‘cultures of circulation,’’ which are ‘‘[p]roduced by their self-reflexive objectification.’’ A performative sign, they maintain, is ‘‘a special, creative type of indexical icon: a self-reflexive use of reference that, in creating a representation of an ongoing act, also enacts it.’’41 Michael Kaplan pursues the self-announcing symbolic inducements as a ‘‘rhetoric of speculation’’ The Dot-Com Bubble 119 where speech acts ‘‘simulating’’ value and economic worth vary undecidedly between ‘‘constative and performative’’ interpretations.42 Reports, projections, or estimates, for example, generate response both as indexes of probable value and as markers generating momentum. Iconic reflexivity characterizes economic discourse. When bubbles proceed, the reflexive construction of markets is both amplified and put to the test. The language of value conditions bubbles in unpredictable ways because at times ‘‘every strategy promotes a higher-order counter-strategy.’’43 Thus, a bubble renders markets vivid as ‘‘a vast macroeconomic and financial experiment.’’44 At such times, investors escape disciplined terms of risk and embrace ambiguous symbols of fortune; thus questions of competence multiply and challenges to sustainability arise. Whether for social, psychological, or get-rich-quick reasons, investors must choose to go with or against the flow*to find in bubble-like moments whether ‘‘this time things are different’’ or if ‘‘it’s just another Ponzi scheme.’’ John Waggoner reminds us that ‘‘[t]here’s no magic indicator that flashes bright red when a reasonable investment trend suddenly becomes unreasonable.’’45 Reflexivity constitutes powerful pulls to bet on or against the crowd, but over time, value does not escape wholly temporal questions of comparative, substantive worth of changes in cultural practices securing or embracing risks. Economic criticism initially reconstructs the interlocking trajectories constituting a bubble across episodes of initiation, momentum, crash, and recovery.46 Each moment of the mimetic spiral entwines institutional, behavioral, and performative strategies, discussed above, into the contingencies of address. As strategies are imitated, they shape into interlocking symbolic and material trajectories, shifting risks and uncertainties across episodes of valuation. Specifically, the institutional pull of bubbles generates contestation of legitimacy when participants question how*and if*to return to recognized practices or extend novel opportunities.47 The behavioral trajectory unfolds interpretive urgencies, when uncertainties arise as to whether*and what*games, really, are*or will remain*in play and by whom. Market performance calls attention to the reflexive claims of iconic associations, when system signals split, multiply, and render symbolic and material connections self-confirming, unstable, or conflicted. The entwinement of these rhetorical trajectories of the private sphere with state interventions into an economic sector generates a bubble that alters the symbolic and material practices of a risk culture. After reconstruction, criticism moves to appraise the ongoing legacies of a bubble that influence practices of risk-taking and uncertainty within and across markets as well as wider worlds. Such appraisal is based on the premise that human cultures identify and produce hazards for the purposes of maintaining order and managing danger.48 Thomas Farrell finds that the practices that address such contingencies to be constituted both as normative ‘‘internal standards of excellence’’ and historical, material modes of production.49 Luc Boltanski and Laurent The?venot contextualize the grounds for practice as civic, market, industrial, domestic, inspirational, and fame-driven worlds that are funded by ‘‘economies of worth’’*independent, heuristic registers of justification and critique that identify, arrange, criticize, and proscribe value. These worlds cooperate and compete discursively and materially as 120 G. T. Goodnight & S. Green they merge into complex, tensed relationships that normalize the risks of practices. In the case of the dot-com bubble, the blended risk culture of bridged industrial-market worlds constituting the communications sector were altered through a rhetorical movement with enormous consequences.50 A blended risk culture sustaining, adjusting, or revolutionizing practices of any particular economic sector is influenced by state interventions. Many twentiethcentury new technology bubbles have been state-propelled, private-public collaborations. In the dot-com case, while the market spiraled through legitimation controversy, cascade momentum, and reflexive turns, the federal government enacted fiscal, regulatory, and monetary policies to spur on*even as its powers became knotted up within*a new technologies revolution. In the end, we assess the outcomes of the dot-com bubble, as its entangling trajectories continue to transform a fin de sie?cle communications industry into the risks and uncertainties of a twentyfirst century digital age. We turn now to mimesis as the cultural birthing field of the spiral. Mimesis ‘‘Mimesis’’ is a richly contested term of the rhetorical tradition. Initially associated with ritual, classical world discussions of mimesis were at the center of the paedia: a long-tailing, generative dispute over logos. Democritus preferred a naturalist interpretation linking success in the industrial arts to observing the processes of nature.51 Xenophon’s Socrates similarly advised those wishing success to watch ‘‘a clever man of business’’ and to imitate the industrious, not the careless.52 The Sophists exploited the common sense link between virtue and success by creating dazzling appearances, persuading through an ‘‘imitation of sensuous reality’’ that displayed ‘‘the beauty of shapes.’’53 Plato addressed such appearances critically by observing that audiences who attend to imitations (doxa) are misled because they merely repeat what is commonly said rather than abstract the knowledge (episteme) necessary to secure truth. Plato also held that expertly informed models could be deployed beneficially, however, for purposes of lending the public appropriate paradigms for conduct.54 Aristotle converted Platonic dualism into the dynamics of teleological development, treating imitation as a uniquely human feature, refined through the work of skilled practices that turn useful representations of nature or human life into productive activity. Accordingly, the practical and fine arts craft representations of the real for purposes of the cognitive appreciation and development of the audience.55 In contrast, Isocrates extended mimesis to cultural performances that constantly put the reputation of the speaker/writer in the enactment of address at risk.56 In sum, when deployed rhetorically, mimetic influence may cultivate ritualistic participation, call out common sense observation, affirm virtuous conduct as the link to just reward, distill desire through moments of compelling display, oppose dialectically shared opinion and refined knowledge, authorize expert models, justify actions that The Dot-Com Bubble 121 fulfill situated best practices for a recognized craft, and engage or extend mediablended, reputation-risking cultural performances. Modern approaches add strategies of innovation, struggle, and change. Gabriel Tarde held ‘‘invention and imitation’’ to be ‘‘elementary social acts.’’57 From this perspective, broad-scale social change takes place because of the resemblances between an innovation and an institutional space. Tarde’s views have been extended by Elihu Katz and others to account for social, participatory construction of disseminated messages.58 Rene? Girard reminds us that the process can induce competition as well as co-operation through an ‘‘acquisitive mimesis’’ that characterizes ‘‘violent’’ strategies to make one’s own models more successful at the expense of others, who serve as scapegoats.59 Reflective achievement may restrain such destructive desires by redirection toward ‘‘cultural stabilizations’’ transforming ‘‘mimetic rivalry,’’ possibly into more peaceful competition.60 Social ‘‘contagion’’ generates movement, either way.61 Mimetic activity was identified as a feature of language by social theorists such as Walter Benjamin, who, in critiquing the ugly sweep of National Socialism, posited a ‘‘mimetic faculty [which] is mutable, altering to accommodate new conditions.’’ At any moment, he observed, ‘‘the mimetic element in language can, like a flame, manifest itself . . . like a flash similarity appears’’ in words or sentences that become the bearer of resemblances. The flash of re-cognition is accelerated by the ‘‘rapidity of writing and reading that heightens the fusion of the semiotic and the mimetic in the sphere of language.’’62 Jacques Derrida both extended and radicalized Benjamin’s insight by holding that mimesis is not grounded by an original but is constituted in ‘‘networks of differences without identities of their own.’’63 Jean Baudrillard flattens social change but moves mimesis from the periphery of social science by exposing contemporary culture as ubiquitous simulacra that pleasurably motivate the busy postmodern copying of copies copied.64 When deployed rhetorically, modern and postmodern mimetic strategies may be argued into movement in a variety of ways: as institutional legitimacy, social innovation, generative dissemination, competitive rivalry, scapegoat sacrifice, a flaring of terms, networked resemblances, or selforganizing cultural play. After an extensive historical review, Gunter Gebauer and Christoph Wulf note, ‘‘Mimesis . . . has prompted theorization in every epoch since its initial formulation.’’65 As an essentially contested move, imitation poses central but always controversial questions for rhetorical production.66 Whether enacted within reigning or novel models, strategies of imitation characteristically are as much a bone of contention as a step toward consensus. Quintilian observed the paradox driving the figure’s generative life: ‘‘For the models which we select for imitation have a genuine and natural force, whereas all imitation is artificial and modeled to a purpose which was not that of the original orator.’’67 Mathew Potolsky elaborates the point: ‘‘Mimesis is always double, at once good and bad, natural and unnatural, necessary and dispensable.’’68 From a rhetorical vantage, mimesis is strategic (contending and contesting) imitation. When mimetic strategies constituting the assembly of legitimate institutional reasons, powerful behavioral frames, and persuasive discursive terms for 122 G. T. Goodnight & S. Green balancing risk and uncertainty in a market at equilibrium are disturbed, the rhetorical resources available to use will be joined in controversy.69 We turn to reconstruct the interlocking mimetic trajectories of a new technologies economic bubble. The Dot-Com Bubble Beginnings. Economic bubbles appear when credit is abundant and an economy is doing well, as evident in the 1990s United States. The Federal Reserve lowered interest rates, foreign capital was attracted, and post-depression legislation restricting investment and commercial banking was weakened or removed. Abolafia and Kilduff hold that ‘‘a speculative bubble is generally preceded by an exogenous shock (an event or circumstance outside the market).’’70 A shock came with the 1992 Clinton-Gore victory, and the US government began to redirect approximately 30 billion dollars of the Cold War peace dividend toward an ‘‘Information Superhighway’’ that promised to link ‘‘computers in Government, universities, industry and libraries.’’ The traffic metaphor imagined a horizon for ‘‘robotics, smart roads, biotechnology, machine tools, magnetic-levitation trains, fiber-optic communications and national computer networks . . . [with] digital imaging and data storage’’*novel devices and promising systems, all, which would soon ‘‘flood the economy with innovative goods and services, lifting the general level of prosperity and strengthening American industry.’’71 Government power and private enthusiasms joined to build the road to a digital future. The High Performance Computing and Communication Act of 1991 was followed quickly by the National Information Infrastructure Act in late 1993.72 With state and technical discourses swelling, public enthrallment neared. In the summer of 1993, major US magazines heralded the forthcoming ‘‘Information Superhighway.’’ A novel language flashed a new future into public view. Newsweek’s cover story on May 31, 1993, suggested that the digital revolution would create a zillion dollar industry.73 Business Week followed on June 12 with a cover story that announced ‘‘Media Mania’’ resulting from ‘‘the greatest leap forward in communications since the invention of the transistor.’’74 These narratives represented new technology as a bridge to a world where revolutionary changes in the personal and networked practices of communication were in the offing. Promoters of the superhighway talked of such sweeping innovations ‘‘not just as a way to watch more TV, but as [a] way to revolutionize education, medical care and working at home as well.’’75 New communications were named ‘‘the techno-fad of the decade.’’76 According to one pop-up ad, the Internet was the place ‘‘where millions of friends and strangers could chat and ‘flame’ each other about every topic under the sun, from sex to Spam and Superman.’’ Interactive to the core, another noted that these new technologies would enable users to ‘‘browse through thousands of on-line libraries, play new types of games, and trade software.’’77 Soon, it was expected that already ubiquitous modern consumer items*like the telephone, the television, and cable*would converge and transform into a digital utopia. Science promised vast, new networks of The Dot-Com Bubble 123 exchange, while promoters guaranteed that anyone could play. Finding the digital world ‘‘a wide-open hothouse of innovation where scientists and now executives try out their best ideas,’’ Bill Washburn of the Commercial Internet Exchange announced that ‘‘with the Internet, the whole globe is one marketplace.’’78 The vision distilled into a real possibility with the stunning response to the August 9, 1995, initial public offering (IPO) of Netscape. Netscape had developed Mosaic, the first web browser. Mosaic was a critical link to broad consumer access and commercialization of the Internet. Up to its offering, most IPOs had to exhibit proven earnings and years of operational experience. Netscape had neither. It traded solely on future expectations of value. The company went public with only one tenth the earnings that Microsoft had when it had debuted in 1986. Nonetheless, the IPO zipped from its initial set price of twenty-eight dollars per share to seventy-one dollars ‘‘astonishing investors from Silicon Valley to Wall Street.’’79 ‘‘Netscape didn’t just mesmerize investors, it also captured America’s imagination,’’ Adam Lashinsky recollects. ‘‘More than any other company, it set the technological, social, and financial tone of the Internet Age.’’ Smart, cool, and open to sharing, the youthful entrepreneurs became model millionaires. In a single day, the reputation of Silicon Valley went from ‘‘just a place where microchips are made’’ to the ‘‘fountainhead of commerce.’’80 Soon, newer dot-coms were found to be imitating the original. Junius Elis spread the buzz by stating, ‘‘Netscape is far from the hottest new on-line issue. . . . In the past 10 months, seven such IPOs have rushed to market to stake their claims in an emergent global business that Wall Street promoters forecast will expand 60% annually to $5 billion by 2000.’’81 The attributed speech act ‘‘promoters forecast’’ has the ring of an illocutionary description, but also performs iconically as a call for participation. Venture capitalists listened. The older investment logic regulating this sector and emphasizing a wait-and-see reluctance for startups was tossed. ‘‘Former valuations metrics were replaced by the discounting of future earnings. It was widely believed that this ‘new era’ economy would not only lead to the end of the boom/bust cycle, but also promote steady growth in wealth and savings, and lead to continuously rising stock prices.’’82 ‘‘New Era’’ theories were advanced to justify and expand the excitement.83 Individual providers and diverse services were grouped and represented as the Internet revolution.84 Together, these were situated as a special once-in-a-lifetime opportunity, just like the railway booms of the nineteenth century, and the car, airplane, and radio booms of the 1920s.85 ‘‘Investors were swept away by the notion that everything would be conducted on-line*commerce, trip-planning, information exchange, you name it.’’86 Companies that went public using the Netscape model saw record-setting price rises in initial offerings. For example, in early 1996, the major search engine Yahoo offered an IPO that traded up 152 percent on its first day.87 Such investment successes became the new norm. To be persuaded to invest in a company without a record of earnings would seem to be out of line with ordinary prudence, but ‘‘[y]ou have to understand this trend isn’t about next quarter’s earnings . . . If you bet on the Internet, you’re really betting on the world’s next form of mass media,’’ Alan 124 G. T. Goodnight & S. Green Braverman concluded, dubbing Yahoo the ‘‘McDonald’s of the Internet.’’88 Single day returns of more than 100 percent encouraged venture capitalists, investment bankers, and market investors to copy and build on Netscape-like successes. In the beginning, expressed enthusiasm for a new norm putting money at risk is met with public skepticism*not withstanding a string of great successes. Experts advance reasons grounded in traditional economic models to argue that soon the everyday rules of proper investment would reassert themselves. Of the Yahoo IPO, business professor Jeremy Siegel noted that buyers of the stock ‘‘must believe not only that the Internet is as revolutionary as the telephone or telegraph, but also that any future profits won’t be lost to competition.’’ That, he cautioned, is ‘‘where a lot of us have problems.’’89 Investors were betting that the dot-com field was not likely to undergo a ‘‘correction’’ any time soon. The models of investment were shaped to suit the imagined world of open-ended expansion. Specifically, it was held that companies could operate at a sustained net loss in early years in order to build market share (or mind share). Once a company built public awareness through branding and advertising, in later stages it could generate sustained profits. The goal was to get ‘‘big fast’’ by using venture capital and money gained from initial public offerings, then to pay back the investors after success. ‘‘[L]iquidity events’’ modeled on Netscape ‘‘came faster and faster. A loop was formed: profits from IPO investments poured back into new venture funds, then into new start-ups, then back out again as IPOs.’’90 The key to copying well was copying fast. Displacing the rule of thumb of a stable market, to avoid risk before seeking profit, the Internet created a ‘‘Virtual Gold Rush.’’91 In an uncertainty-spreading situation, where a new technology promises to change market structures and practices, the prevailing mimetic impulse begins to switch from securing or preserving capital under current economic conditions to assuring a seat at the table or perhaps even survival under new economic circumstances.92 As Matthew May described the situation in 1993, ‘‘even some of the most enthusiastic companies in America admit that they are still looking for a so-called ‘killer application’ that will prove irresistible to customers. Some observers point out that the fear of being left out of a possible communications revolution is as much a motivator as a clear understanding of what and whether new electronic services will take off.’’93 Prudence is then hinged to initiative, fueled by the insight that a lack of aggressive risk taking is likely to eliminate a place on the ‘‘ground floor’’ of an imminent future where the rules have changed. As the head of Tele-Communications (TCI), the world’s largest cable company, put it in 1993, ‘‘[w]e’ve got the core piece of the system. . .. Unless someone trips us up, we win because the first guy there wins.’’94 The need to be first was limited only by the possible commercial opportunities rhetorically imagined for the age. Momentum. By 1996, the Netscape model was proving extremely lucrative. So rapid was the success that in December, Alan Greenspan intervened at the close of US markets on a Friday by characterizing new technologies investment as ‘‘irrational exuberance.’’95 His speech act started a global sell-off. By Monday, the downturn had The Dot-Com Bubble 125 run its course. True, Greenspan continued to speak with skepticism of ‘‘new era’’ theories, but ‘‘irrational exuberance’’ was re-read by the markets and integrated into the mix as a spur to the practices of a new economy rather than as an inferred threat to end the party. Economic momentum is built by overcoming objections that departures from equilibrium are illegitimate. The transition to a new economy was predicated on the reliability of predictions for the Internet field. Calculating probable returns of individual startups was difficult because standards for evaluating worth in the sector had yet to be developed fully. Departing from its most similar counterpart, mass media ratings, new ways of gathering data were forwarded*such as ‘‘eyeballs’’ or hits*to ‘‘measure’’ prospects for long-run profitability.96 The novelty of the technology put off, to the future, a refined, established set of rules for valuation. Traditional institutional logics were flown in to fill the gap. While calculation of value would remain uncertain, momentum was sustained by new sector investment products that structured buy-ins within the persuasive patterns of more or less normal risk taking. Two strategies were featured: (1) bringing the Netscape model within the boundaries of traditional caution, and (2) renewing an older strategy to capture the game with less risk. One example of the first was to assemble a portfolio of these businesses and let the market pick the winners. For example, CMGI went public in 1994 as the first Internet-only venture capital firm by offering a basket of up and coming Internet companies and operating as an incubator*an enterprise that invests in startups with the intent of spinning off or operating them. Over the bubble, CMGI shares rose nearly 1700 percent and it amassed over seventy majority-owned venture investment companies, rationalizing investment by spreading risk across the field.97 The rhetorical use of diversification and portfolio building were strategies borrowed from modern financial theory. The effect was to create a sense of legitimacy by normalizing the rules of the game through diversifying risk. Powerful pension and institutional funds managers thus were induced to ride the bubble.98 The second strategy legitimated investment by recalling rules for success from an older era. The new ‘‘craze’’ was likened to a ‘‘gold rush.’’99 Many would strike it rich; others, not. Why not bet on a sure thing? For Andreas Smith, ‘‘[t]he [new] gold rush is following the classic pattern. It is not the diggers themselves who make the first money, but the manufacturers of picks and shovels.’’100 Just as Sears and Levi Straus had made fortunes during the California gold rush by selling miners clothes and tools, smart investors would invest in infrastructure companies that supplied the routers and network devices needed to provide materials for the new economy, no matter which Internet content provider won. Together, the net effects of these and other strategies were to lend momentum to the boom by satisfactorily decreasing apparent risk; the problem was that in driving up values, the attractive structures increased overall uncertainty. With caution muted, an economy-wide lift-off began. Between 1996 and 1998, the S&P 500 averaged over 20 percent returns, and stock returns in the new communications area were several times higher than that. A string of events 126 G. T. Goodnight & S. Green intervened. The 1998 Asian financial crises, as well as the Long Term Capital Fund bailout of the summer of 1998, gave the market its biggest tests. In the fall, the S&P 500 plunged over 20 percent and most investors got their first confirmation that skepticism was warranted. The market recovered shortly, and its bounce back was used as rhetorical evidence that this time, indeed, things were different. Alan Greenspan, while finding the Internet to be ‘‘[a] key factor behind this extremely favorable performance,’’ nonetheless had opened the money spigot and flooded the system with easy credit.101 In November 1998, theglobe.com went public, and its value soared over 700 percent in a single day!102 As 1999 began, the Internet analyst Henry Blodget made the bold and audacious call that Amazon, a darling of virtual commerce, would hit $400 when it was currently evaluated with much lower expectations.103 Over the next year, Amazon reached this price, and vaulted even higher. The prediction made Blodget an overnight celebrity, and encouraged Wall Street analysts to drum up similar, outrageous, self-feeding predictions.104 Between 1998 and 2000, ‘‘the Internet sector earned over l000 percent returns on its public equity.’’105 At some point, legitimacy strategies began to recede. Sustaining one’s reputation for success became nastily attached to sector-defining promotion. One of the best technology investors in the country, Roger McNamee of Integrated Capital Partners, confessed: ‘‘I buy these stocks because I live in a competitive universe, and I can’t beat my benchmarks . . . You either participate in this mania, or you go out of business.’’106 The dot-com startup model was circulating with speed. In 1999, 446 companies went public with an average first-day return of over 70 percent; some were spectacular winners. VA Linux appeared in late fall with a first day return of 697 percent; Freemarkets, 483 percent; Cobalt Networks, 482 percent. The list goes on and on.107 Jim Breyer, managing partner of Accel in Palo Alto explained the prevailing norm: ‘‘Use the capital to build a preemptive first-strike position. And with the public currency, go out and make acquisitions, and fill in around the business, and really build a critical mass.’’108 The money flowed in from investors who ignored prudent risk formula to get in on an imagined ground floor of expanding enterprises. For others, these reasons washed to fade. As Baudrillard would predict, successes now were copied in anticipation of success later on. Traders appeared to service those who ‘‘would like to ride the bubble as it continues to grow and generate high returns,’’ with an imperative ‘‘to exit the market just prior to the crash.’’109 Spectacular successes were shared for a while, and these did not go unnoticed. Popular magazines and ‘‘news’’ channels like CNBC spread investment stories into the fare of entertainment. Coverage took on a positive, even euphoric glow. ‘‘It was almost like a train that couldn’t be stopped,’’ one publicist remembered. Media ‘‘loved to get a hold of ’’ company founders transforming a clumsy geek to an industrial titan, ritually showering the public with heroic rags-to-riches stories.110 Samples of early successes fed desires to ballyhoo louder even newer beginnings. Venture capitalists responded by multiplying e-business opportunities across imagined virtual worlds of new products and services. Pet care? Pizza delivery? Health tags? No one knew the limits. It was as if the economic apparatus was geared to the logic that The Dot-Com Bubble 127 111 investors’ perceptions and thinking served to shape reality. In fact, the effects of initial price increases appeared to create a ‘‘feedback loop’’ that stimulated everincreasing investor interest.112 As the bubble expanded, logics animating inside speculators and novice latecomers split and widened. Crash. The continuation of a bubble depends in the end on new buyers who commit to the risk that goods ‘‘when bought today, are worth more tomorrow.’’113 In this case, new communication technologies, themselves, attracted and enabled new investors. ‘‘Between 1995 and 1998, the number of households investing directly in stock grew by over 30 percent’’; and ‘‘new orders originating from firms that cater to day traders made up approximately 20 percent of the new orders flowing into Nasdaq stocks.’’114 Online accounts grew from 3.7 million in 1997 to 10 million in 1999.115 In retrospect, this kind of popular transformation inevitably is described as a psychology of ‘‘euphoria’’ inducing a ‘‘mania’’ to invest at any price.116 Yet, the Internet technology itself embedded novices in powerful information structures. These investors had more data to work with than ever, but the communication systems fed confidence with the online chat rooms, populated most frequently by like-minded enthusiasts.117 Further, mass media reports interacted with new technologies and induced an unprecedented amount of personal investing. Workers were quitting jobs to become day-trading media heroes. At an Internet cafe?, one could read charts, assemble news, put in or take out real-time money, and make profit*all with a latte? before lunch. On January 10, 2000, the leading dot-com, America Online (AOL), announced plans to purchase the world’s largest media giant, Time Warner, for $182 billion in stock and debt.118 This announcement marked the ultimate challenge and legitimation of the ‘‘new economy’’ by emphasizing synergies between old and new vehicles of distribution and marketing. Television commercials, print ads, and targeted sporting events became the scenes for expansion. At its crest in 2000 during Super Bowl XXXIV, ‘‘[m]ore than a dozen Internet companies spent an average of $2.2 million for 30-second spots.’’119 Splashy publicity found its counterpart in the disappearance of balanced, expert norms of assessment. Zacks investment research in 1999, Shiller finds, ‘‘had only l% sell recommendations’’ compared to ‘‘ten years earlier, the fraction of sells, at 9.1%, was nine times higher.’’ From such shifts, he concludes, the ‘‘tacit understanding that recommendations are as objective as the analyst can make them’’ was withered by quotas that tied bonuses to stock sales; thus, ‘‘a change in the fundamental culture of the investment industry’’ took place.120 Jon Elster frames this moment of thinned consensus as a ‘‘spiral equilibrium’’ in which group members are deterred from leaving by the expectation that in so doing others may leave as well.121 Accordingly, the bubble continued to expand. As late as February 11, 2000, Webmethods went public with a one-day IPO return of 507 percent.122 All this was about to change. When consensus is flattened to shear appearances in a competitive world, timing is everything. John Maynard Keynes likens the moment to ‘‘a game of Snap, of Old Maid, of Musical Chairs*a pastime in which he is victor who says Snap neither too soon nor too late, who passes the Old Maid to his neighbour before the game is over, who secures a chair for himself when the music 128 G. T. Goodnight & S. Green stops.’’ Everyone knows that when the music stops, the card is passed, or snap called, someone will lose; still, parlor play delights and entrances.123 Ironically, Alan Greenspan appeared to be among those finally convinced that a new economy was here to stay. Speaking at Boston College on March 6, 2000, he affirmed that information technology had reduced uncertainty and improved markets. ‘‘The fact that the capital spending boom is still going strong indicates that businesses continue to find a wide array of potential high-rate-of-return, productivity-enhancing investments.’’124 Many experts were confident, too. ‘‘Stanley Druckenmiller, who managed George Soros’ $8.2 billion Quantum Fund, was asked why he did not get out . . . earlier.’’ He replied, ‘‘We thought it was the eighth inning, and it was the ninth.’’125 It seems that new investors and professionals alike were fooled into a sticky game difficult to exit play. Substantive evidence of ‘‘fundamental value’’ was hard to find; many were not looking, anyway. Facts fused with fluff. For example, UUNet was ‘‘a vast, high-speed network’’ including about ‘‘half of the world’s Internet traffic’’ with ‘‘about 70 percent of all e-mails sent within the United States and half of all e-mails sent in the world.’’126 Its parent, WorldCom, ‘‘reported’’ that traffic ‘‘was almost doubling every quarter.’’ Old and new media repeated, circulated, and celebrated the finding with affirmations and build-on inferences by government officials, expert analysts, and company promoters.127 The self-serving claim was false, but at the time the data on which the tantalizing assertion was predicated remained hidden by proprietary privilege. Companies built out on anticipated future demand, and in turn the building signaled reflexively future profits, thereby calling up more investment. Together, all these activities were read as convergent signals that the new economy was here to stay. It was a house of cards. The technology-heavy NASDAQ Composite index peaked on March 10, 2000, at 5048.62, reflecting the high point of the dot-com bubble. ‘‘The Fed’s sharp 1.75 percentage-point hike in interest rates in 1999 and 2000’’ had slowed the runaway economy.128 Insiders had begun to get out. Selling accelerated from March 10 to March 13, culminating in the NASDAQ opening roughly four percentage points lower on March 13, the greatest percentage ‘‘pre-market’’ sell-off for the entire year. Although the market had corrected before, this time was different. The Y2K millennial date-switchover had been anticipated with boosted spending to ward off apocalyptic fears. The new year began without incident and spending moderated. Further, the 1999 Christmas season saw a subpar performance by Internet retailers, adding evidence for an approaching bear market. As Thomas Lux reports, ‘‘speculators are not simply blind followers of the crowd.’’ Once imaginations turn to see opportunities as limited, confidence erodes. ‘‘This ends with a crash, and the game is repeated with reversed signs.’’129 The ‘‘causa proxima may be trivial,’’ Charles Kindelberger observes.130 The co-occurrence of two events in March interacted with devastating force to shake boom logic. On March 14, 2000, President Clinton and Prime Minister Blair issued a joint statement suggesting that scientists worldwide should have free access to research mapping the human genome.131 For the last year, there had been a tremendous run The Dot-Com Bubble 129 up in the biotech sector. Genomic stocks like Celera, Affymetrix, and PEB Biosystems had tremendous increases as investors applied the Netscape model to an anticipated genomic and information revolution in medical treatment. The joint statement indicated that scientific discovery regarding the informational codes of the human body would remain public and thus limit commercial opportunities. Stocks were hit hard. The announcement capped the communication revolution as an open-ended matrix of new commerce by withdrawing its most promising extension from the logic of privatization. The fall of genomic stocks shook the market. With confidence breached, a week later Barron’s put the question, ‘‘When will the Internet Bubble burst?’’ ‘‘[T]hat unpleasant popping sound is likely to be heard before the end of this year.’’ Featured in the story were data on the ‘‘burn rate.’’ Seventy-four percent of companies in the field had negative cash flows, and these were not just the ‘‘small fries’’; in the autumn, the cash hunt would be on with survival at stake.132 Many Internet firms would not stay in business long enough to move from the losses of the early stage to profits later on. The article was highly cited, diffused, and spread throughout investment communities.133 On April 14, NBC’s Brian Williams found himself reporting, ‘‘They are calling it whack Friday, the worst one-day plunge ever on Wall Street, a stunning free fall on both the Dow and NASDAQ, setting records for both.’’134 A ‘‘dramatic shift [had] taken place on Wall Street.’’ Internet companies suddenly had to ‘‘prove they are on track to making a profit soon*or else.’’135 Recovery. On April 17, CNN Wolf Blitzer tried to restrain panic through normalizing loss. The show began with Blitzer dutifully reporting that ‘‘[f]or those who consider history, they have seen it all before: a new technology changes how we live, sets stock prices on fire for a time, but eventually the markets return to reality.’’ NYU economic historian Richard Scilla, an expert mustered to draw similarities, read the roll: ‘‘The first crash on Wall Street was 1792. There was another one in 1819, 1837, 1857, 1873, 1884, 1893, 1907, 1929, 1962, 1987 and now in the year 2000.’’136 Finally, the anchor’s partner, Garrick Utley, reminded Blitzer that ‘‘economists’’ hold ‘‘creative destruction’’ to be a legitimate part of capitalism; downturns are to be endured until innovation again fuels overall growth.137 No reassuring comparisons could staunch the bleeding. The Internet index lost 19 percent of its value in April 2000 alone; at least 60 percent of the equity values of Internet companies were lost by the end of the year; more than 140 Internet companies were trading at two dollars a share or below and more than half below five dollars.138 The market value of Internet companies that went through IPOs declined from $1 trillion in March 2000 to $572 billion in December.139 Approximately 800 Internet companies disappeared.140 Sector failure accompanied an overall downward spiral in the market. Decision rule cascade theorists find that as imitation spreads across inexpert publics, knowledge degrades.141 It was Plato who first explained the idea by analogizing the magnetic force of an inspired work to a lodestone that not only attracts rings of iron, but communicates power to these to attract others, ‘‘so that there’s sometimes a very long chain of iron pieces and rings hanging from one 130 G. T. Goodnight & S. Green another.’’ In an ever-weakening chain of attraction, the spectator is the last to catch on, and one supposes the first to fall off.142 A market ‘‘correction’’ shakes out all ‘‘speculators’’ and directs a return to legitimate, rational first principles, requiring that true worth be assessed by return on investment*a proper institutional logic. Thus, a downward spiral is said to return a market to its natural equilibrium. At the time, such a rationalization proves less than satisfying. People were angry. By 2001, dot-coms were derided as ‘‘dot-bombs.’’ Barron’s appeared prescient. Many Internet companies had burned through initial venture capital and IPO cash, and were delisted and going out of business. The contrast was stunning. In 1999, there were 457 IPOs, most of which were Internet and technology related. Of those, 117 doubled in price on the first day of trading. In 2001, the number of IPOs dwindled to seventy-six and none of them doubled on the first day of trading. Even as investment retreats, the search for the causes of failure grows. For a time, rhetoric is ‘‘dominated by the attribution of blame for the disruption of normal trading activity.’’143 The reputations of individuals and corporate performance suffer. Victimage plays out in personal tragedies put public by the press. The common man appears, in print and on screen, made sadder but wiser. So, ‘‘Erik Otto, 28, of Phonenixville’’ reports that the value of his fully invested 401K with ePlus Inc. stock had zoomed from nine dollars to seventy-two dollars, then fell to nineteen dollars a share. Fearing continued declines, he laments: ‘‘I’d like to get something out of it. It’s double what it started, but I was hoping for more.’’144 Celebrities, too, fall from grace. The former surgeon general, C. Everett Koop, had lent his name to drkoop.com, a new service promising health care online. Combining a prestigious title with breakthrough services, the stock was predicted to be a ‘‘barn burner’’ and did quintuple in value. Koop had sold $1 million of his own portfolio a little before the March meltdown. He was singled out as one of those ‘‘copycat entrepreneurs who will try to ride that bubble and try to get their own money out as quickly as they can.’’145 Koop found a measure of redemption by donating some proceeds to charity. Less lucky was Blodget, the reputed high priest of dot-com augury. Emails were discovered that found him ‘‘privately describing stock he was publicly recommending as a ‘piece of shit.’’’146 Moral outrage against analysts quickly rolled downhill into an avalanche of lawsuits against firms they represented. The US Securities and Exchange Commission (SEC) launched its own investigation. ‘‘On September 26, 2002, the former controller of WorldCom pled guilty to criminal fraud in connection with the company’s accounting scandal and bankruptcy.’’147 This became the biggest bankruptcy of the Internet bubble, suggesting that companies were actually imitating one another in withdrawing transparency from investment publics by using accounting tricks to overstate revenues and understate expenditures. A string of major bankruptcies, including Enron, Tyco International, Adelphia, and Peregrine Systems, appeared where accounting procedures and public representation of risk and worth were questionably related. ‘‘In a democracy in which most voters own stock either directly or through their pension and retirement funds,’’ John Coates concludes, ‘‘government was certain to react.’’148 The Dot-Com Bubble 131 After intense congressional hearings, the Sarbanes-Oxley Act was passed in the summer of 2002. It instituted new federal regulations concerning auditing practices and the disclosure, reporting, and flow of financial information. The worst excesses of the Internet bubble were attributed to a structure that embedded systematically distorted communication. For instance, often the same firms that analyzed, valued, or accounted for these companies also promoted stock sales. Loose accounting standards weaken evidence of risk by shading the financial health of a company, while quotas for investment analysts demand an uptake in sales, thus distorting communication with investors who rely on impartial, expert assessments. ‘‘The biggest factor now contaminating the system is compensation,’’ Vickers and France reported. ‘‘To an ever-increasing degree, analysts’ pay is tied to how much investment banking business they bring in.’’149 Instituting the Public Company Accounting Oversight Board, President George W. Bush quickly signed legislation into law proclaiming the new regulations to be ‘‘the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.’’150 The dot-com companies that survived the crash*Amazon, Yahoo, eBay*now form the basis of a prosperous Internet world. The downturn that wiped out $5 trillion in market value from March 2000 to October 2002 gradually receded. A new market enthusiasm arose: real estate. Conclusion ‘‘The United States has become increasingly prone to financial bubbles*huge, seemingly irreversible rises in the value of one sort of asset or another, followed by sudden and largely unforeseen plunges,’’ Peter Gosselin reported shortly before the economic crash of 2008.151 Whereas once bubbles appeared to be spaced between generations, the US new technologies, dot-com boom was followed rapidly by a global housing boom and bust with a credit collapse. What does economic criticism contribute to the study of the practices of an industry-market risk culture transformed by a rhetorical movement? How should critical inquiry be positioned to address the digital age, itself a legacy of the dot-com bubble? Richard Lanham provides a bold answer.152 Economics and rhetoric should switch places. Whereas once economics constituted the science of distributing scarce material resources, information surpluses now constitute the core predicaments of a post-industrial era. Attention is the scarce commodity. The ‘‘economy of attention’’ finds value in intellectual property that designs and tropologically stylizes participation for audiences. Rhetoric figures inherently in such economic valuation because its practices always thrive by oscillating between figuring dramas of interest and driving material outcomes. Indeed, the dot-com bubble constitutes such a self-feeding movement where information systems were extended dramatically by stylizing communications as a new information highway, even while expectations attracted investment needed to build out materially on anticipated revolutionary changes. The bubbles of an attention economy are available for critique, however, either as manifestations of late capitalism or as new iterations of class divisions.153 Indeed, the new technologies of the dot-com boom did alter radically communicative labor, and 132 G. T. Goodnight & S. Green twenty-first-century bubbles appear representative of the postmodern condition. Alternatively, the dot-com bubble created a digital divide and expanded global communications industries with labor exploitation. Yet, economic bubbles are not unique to this cultural moment but have always been ‘‘the inherent wisdom of the market itself,’’154 and the experimental differences among technology, debt, commodity, and real estate bubbles do not yield easily to claims for a single, abstract subjectivity or order of control. Further, the unexpected appropriations of new technologies by labor suggest mixed rather than uniform class mediation, and communist regimes themselves are not immune to these market behaviors. While resistance and struggle are appropriate aims for critique of structures, they are not exhaustive of inquiry into the articulation of symbolic and material practices unfolding in the interchanges between risk cultures and rhetorical movements.155 Economic criticism developed in this essay extends Boltanski and The?venot’s efforts to empower ‘‘critical capacity’’ by analyzing ‘‘economies of worth’’ as they shape into the practices of risk cultures that from time to time become rearticulated through rhetorical movements.156 The task of addressing standing risk cultures transformed by rhetorical movements partners inquiry with economic theories and builds out criticism across multiple sites. Markets cross a range of industrial sectors for analysis at equilibrium and in turbulence, of course, extending beyond the communications industry. Moreover, markets mix with the social worlds of inspiration, civil society, domestic life, fame, and others. Finally, economies of worth hybridize where non-market worlds of valuation combine to weigh practices (e.g., domestic-civic risk culture). Critical appraisal of these blended cultures opens spaces for extended projects that focus on the interlocking mimetic practices across all economies of worth*at moments attracting attention through refinements of probability certified by competence, legitimacy, and calculation or through movements spawning excitement over new possibilities heralded as innovation, discontinuity, and novel performance. Economic criticism of the dot-com bubble positions analysis of its ongoing legacies. These outcomes continue to challenge the basic building blocks of traditional economic thinking and state interventions, with impacts extending far beyond their initial sector spiral. New communication technologies enabled trade with accelerated speed, scope, and autonomy. The communication revolution disseminated laptops, mobile phones, software and other devices that enabled novel sites of participation, data flows, Internet browsing, and chat rooms*all these networking amateurs and professionals alike into a heterogeneous risk culture, thereby creating ‘‘the potential for financial and economic dislocation’’ through a system of ‘‘high-speed transmission’’ where ‘‘there are no fire walls.’’157 Ongoing twenty-first-century governing interventions, global banking, and credit markets continue to combine and remodel risk-taking, create value, and circulate participation, thereby dramatically expanding the scope of economic bubbles. Traditionally, the calculations of value*certified by probability assessments of means in relation to ends*have extended the power of modern institutions. As Greenspan retrospectively observes, the ‘‘inbred’’ human ‘‘capacity to weigh probabilities,’’ while ‘‘not always right . . . [has] been good enough to enable The Dot-Com Bubble 133 158 humans to survive and multiply.’’ State intervention and new technologies now combine, however, to produce risk with (1) expanding interdependency on a global scale and (2) reflexive uncertainty of unimaginable reach. In 2007, Nassim Taleb anticipated unusual predicaments resulting from the attendant hyper-complexity, and surmised a Black Swan effect, where economic conditions once thought to be rare appear with increasing frequency. With new communications, markets now inter-coordinate successfully across the globe*if predictions remain grounded*and spread negative results rapidly on an unforeseen scale*if outliers strike a seam. Globalization ‘‘creates interlocking fragility, while reducing volatility and giving the appearance of stability,’’ Taleb concludes, predicting that anomalous events will erupt with increasing frequency.159 Following the recent collapse of the housing bubble, Henry Paulson, outgoing US Secretary of Treasury described the difficulties of dealing with fractal-scaled interruptions from unplanned events in the fall of 2008: ‘‘When you look at the complexity of the system and all the interconnectivity and size of these institutions, that is the challenge.’’160 Stephen Roach, chairman of Morgan Stanley Asia, puts it more wistfully: ‘‘Finance has simply moved too far from its moorings in the real economy.’’161 Economic bubbles have long been associated with periodic innovations in communications.162 Yet the implications of the present communications revolution appear to extend beyond industry and markets. The vast changes in economic practices attending the dot-com bubble may be jumping laterally across all blended cultures of risk as well. Health, education, energy, transportation, agriculture, housing, trade, environment, education, and media organizations (to name a few) are adopting and adapting innovative, new technologies of communication. Practices supplemented by new technologies promise to improve ordinary routines, but the differences generate unpredictable, mimetic vectors that destabilize and transform risk cultures, thereby pushing institutions into unanticipated change through rhetorical movement. As more numerous and ever greater attention economy spirals open and transform risk cultures in a digital age, rhetorical studies are challenged to position and extend critical capacity under conditions of accelerating complexity. Notes [1] Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (1841; New York: John Wiley & Sons, 1996), 118. [2] Mackay, Extraordinary Popular Delusions, 11920. [3] Anna Goldgar, ‘‘Flower Power: Tulipmania: An Overblown Crisis?’’ History Today 57 (2007): 35. [4] Peter M. Garber, ‘‘Famous First Bubbles,’’ Journal of Economic Perspectives 4 (1990): 36. [5] Jeremy J. Siegel, ‘‘What Is an Asset Price Bubble? An Operational Definition,’’ European Financial Mangement 9 (2003): 12. [6] Francois Trahan, Kurt Walters, and Caroline Portny, ‘‘Asset Bubbles: A Look at Past and Future Manias,’’ Bear Stearns Equity Research Investment Strategy Report (2005), 15. [7] Trahan, Walters, and Portny, ‘‘Asset Bubbles,’’ 15; Greg Ip, ‘‘Year-End Review of Markets & Finance 2000,’’ Wall Street Journal, January 2, 2001. 134 G. T. Goodnight & S. Green [8] Eli Ofek and Matthew Richardson, ‘‘DotCom Mania: The Rise and Fall of Internet Stock Prices,’’ Journal of Finance 58 (2003): 1113. 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