undercurrent

April 06, 2004

Tulip tales

K-punk reports that a researcher at Deutsche Bank has discovered that 'tulipmania' never really had as much of a financial effect as we have been led to believe: Don't believe the hype about the hype. This apparently exaggerated or fictional tale of deluded speculation has been used as an analog, warning, and moral fable against the contemporary dotcom bubble. One can't help suspecting that such damaging parallels provide a psychological motive for this apparently random piece of research from the 'Global Strategy' PR team...

k-p > I desperately want to believe that the tulipmania story was true....

Desperate for truth...not a very hyperstitional attitude either way ;) I'm inclined to hedge that the truth of the matter, as if we could ever know, probably lies somewhere in between the story-myth and the statistical-myth.

It's interesting though, this relationship between stories/myths/tales and 'hard' economics - because what was the 'new economy' but a collection of myths (about the future, apocalypse rather than cosmogony), get-rich-quick stories, libido-stirring tales of glamour...and those business plans of course. A business plan's just a science fiction story, that's all it is, no matter how many spreadsheets you adorn it with. Many's the time the flakiest, most outlandish business plan got funding because the financiers were so desperate to believe (indeed, in that climate, couldn't afford not to believe) what couldn't possibly, _rationally_ be true...(But the concept of 'belief', like that of 'greed', is clearly nothing more than a parochial delusion, insufficiently addressing the transhuman tensors that tug these people about like so much flotsam). The stories became so powerful that for a while money flowed like water - finance could be taken for granted so long as you were a good storyteller.

So for a short moment, money really did become totally flush with desire, at least for some people. Where one flowed, the other flowed instantly, because in the absence of material constraint (and that's what the technology seemed to offer), the mere presence of desire signalled the potential for future profit. And in the absence of current hardships, in the soft climate of financial ease, the mere possibility of future profit, no matter how distant, was worthy of investment. So the future took over briefly. It seemed that the (western) world finally could afford for stories to become reality. So long as you could identify a large group of people who desired something, it was possible to obtain funding for an apparatus to electronically capture the constituency, on the basis of its potential monetization.

Ultimately, of course, the reality principle struck twelve, Now returned, and the magic fell away: it turned out that people were not so easily captured and kept locked-in, it turned out that the technology was not a universal cipher, but had specific traits more suitable for some types of commerce than others; but above all the slush fund had run out, and the flows could no longer rush along unperturbed. Future horizons began to recede, returns were expected sooner and sooner (there was a time when a business plan could get by predicting a profit in year 10, now it was 1 or 2), there was no space for loose stories and tall tales anymore.

Difficult to make any judgment on all of this yet, except that it's unfortunate who we allowed the privilege of writing the plot - a bunch of harvard MBAs and bored toffs, basically.

And now we call it madness. We'll probably be told in a few years that it wasn't as big as it was cracked up to be, that it can all be fitted into rational economic models, that it was just a blip, that everything's really quite sensible and that stories don't ever come true - and they don't, not for us, anyway.

Posted by robin at April 6, 2004 11:45 AM