From the closing months of 1998 until March 2000 the world was bombarded with an image of capitalist success, the "dotcom". Named after the internet's abbreviation for commercial companies, the propaganda was unremitting. Companies with an internet link grew dozens or even thousands of times in these 18 months.
In a brief moment in the history of capitalism, business fashion changed. Business suits were out, chinos in. Even chief executives stopped wearing ties to technology conferences. Newspaper social pages filled with the lives and interests of teenage and early 20's millionaires. Technology workers were being employed on packages that made them paper millionaires. People in the industry started spending money that these paper shares promised.
Unlike the greed advocates of the late 1980s, these new entrepreneurs were wealthy, we learned, because of their vision, their ideas, the value that they created through the "new economy". As the stock prices spiralled into the stratosphere smart industrial observers shook their heads and started writing articles warning of the approaching disaster.
But 18 months is a long time for such a boom. The advertising industry, fuelled by hundreds of billions of dollars of investor money, escaped the Earth's gravitational field altogether in its search for new heights of hyperbole. Traditional industrial investors began to doubt the wisdom of their own caution. The usually cautions telecommunications industry bet its future on third generation mobile, believing that an even greater opportunity than internet e-commerce awaited around the corner: mobile commerce.
Today technology markets are sifting through the wreckage of the past year. One of the web sites that tracks this from a mainstream business point of view is WebMergers (). According to their latest report, the number of failed "substantial internet companies" in April was 55, bringing the total since the start of 2000 to 435, nearly half of them this year. A more earthly view of e-commerce failure can be found at .
The economic chaos among the telecommunications companies is just starting to be felt. Lucent, the technology development company based on the huge Bell Laboratories (spun off during the breakup of the US phone monopoly), is fearing for its existence. France Telecom is in serious trouble, one of an elite group of European phone companies counting their debts in the tens of billions of dollars. British Telecom has announced a major restructure to save its credit rating. Some of the largest bond issues (a method of corporate borrowing) in history have been launched in the past few weeks to fund these companies.
Campaigners for capitalism point out that even after the technology and telephone companies drop 70-99% of their paper value, this only puts them back to their share prices of three years ago. This ignores the fact that much of capitalism's global investment activities in the past few years has been based on the trillions of dollars of extra value which has now vanished. While much of this was only ever unrealised paper value, hundreds of billions of dollars of investors' money has actually been consumed in advertising and dotcom conspicuous consumption.
The global arms industry used to have a monopoly on absolutely wasteful global consumption in the trillion dollar range. Internet e-business has now shown itself at least a temporary player in that space.
BY GREG HARRIS (gregharris_greenleft@hotmail.com)