Rhetoric, Risk and Markets The Dot.Com Bubble

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Rhetoric, Risk, and Markets: The Dot-Com BubbleG. Thomas Goodnight; Sandy Green

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Rhetoric, Risk, and Markets:The Dot-Com BubbleG. 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, 1992�2002. 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 attention-

driven 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: [email protected].

ISSN 0033-5630 (print)/ISSN 1479-5779 (online) # 2010 National Communication Association

DOI: 10.1080/00335631003796669

Quarterly Journal of Speech

Vol. 96, No. 2, May 2010, pp. 115�140

Downloaded By: [George Mason University] At: 04:09 23 February 2011

Stories of tulipmania ‘‘have been circulated for nearly 400 years.’’3 So have

accounts of the Mississippi Bubble (1719�1720) 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, 1992�2002, as a rhetorical move-

ment.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.

116 G. T. Goodnight & S. Green


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 com-

prised 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 hetero-

geneous 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

The Dot-Com Bubble 117


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’’



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 perfor-

mance 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 Thevenot 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



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 twentieth-

century new technology bubbles have been state-propelled, private-public collabora-

tions. 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 siecle communications industry into the risks and uncertainties of a twenty-

first 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 develop-

ment, 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



fulfill situated best practices for a recognized craft, and engage or extend media-

blended, 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 self-

organizing cultural play.

After an extensive historical review, Gunter Gebauer and Christoph Wulf note,

‘‘Mimesis . . . has prompted theorization in every epoch since its initial formula-

tion.’’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



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



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-life-

time 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



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



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



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



investors’ perceptions and thinking served to shape reality.111 In fact, the effects of

initial price increases appeared to create a ‘‘feedback loop’’ that stimulated ever-

increasing 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 legitima-

tion 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



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



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 destruc-

tion’’ 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



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 perfor-

mance 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 investiga-

tion. ‘‘On September 26, 2002, the former controller of WorldCom pled guilty to

criminal fraud in connection with the company’s accounting scandal and bank-

ruptcy.’’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



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 commu-

nication 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 participa-

tion 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



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 Thevenot’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 move-

ments spawning excitement over new possibilities heralded as innovation, disconti-

nuity, 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



humans to survive and multiply.’’158 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, 119�20.

[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.



[8] Eli Ofek and Matthew Richardson, ‘‘DotCom Mania: The Rise and Fall of Internet Stock

Prices,’’ Journal of Finance 58 (2003): 1113.

[9] A rhetorical movement is ‘‘the migration of an argument or appeal from the controversy that

originally contained it to quite different circumstances or events.’’ David Zarefsky, ‘‘Preface,’’

in Rhetorical Movement: Essays in Honor of Leland M. Griffin, ed. David Zarefsky (Evanston,

IL: Northwestern University Press, 1993), viii. A rhetorical movement may entangle state-

private measures for change. David Zarefsky, ‘‘President Johnson’s War on Poverty: The

Rhetoric of Three ‘Establishment’ Movements,’’ Communication Monographs 44 (1977): 352�73. Most generally, a ‘‘trajectory’’ embodies a ‘‘qualitative progression.’’ Leland M Griffin,

‘‘When Dreams Collide: Rhetorical Trajectories in the Assassination of President Kennedy,’’

Quarterly Journal of Speech 70 (1984): 126.

[10] Deirdre N. McCloskey, The Rhetoric of Economics (Madison: University of Wisconsin Press,

1985), 69; Deirdre N. McCloskey, Knowledge and Persuasion in Economics (Cambridge:

Cambridge University Press, 1994), 82.

[11] Mitchel Y. Abolafia and Martin Kilduff, ‘‘Enacting Market Crisis: The Social Construction of

a Speculative Bubble,’’ Administrative Science Quarterly 33 (1988): 177.

[12] Paul Ricoeur, Time and Narrative, vol. 1, trans. Kathleen McLaughlin and David Pellauer

(Chicago: University of Chicago Press, 1984), 71�72.

[13] Gary Stix, ‘‘The Science of Bubbles and Busts,’’ Scientific American, July 2009, 80.

[14] Thomas Schuster, The Markets and the Media: Business News and Stock Market Movements

(Lanham, MD: Lexington Books, 2006), 68.

[15] Lawrence H. Summers, ‘‘Does the Stock Market Rationally Reflect Fundamental Values?’’

Journal of Finance 41 (1986): 591; Burton G. Malkiel, ‘‘The Efficient Market Hypothesis and

Its Critics,’’ Journal of Economic Perspectives 17 (2003): 59.

[16] Eugene F. Fama, ‘‘The Behavior of Stock-Market Prices,’’ Journal of Business 38 (1965): 90, 94.

[17] Lawrence Grossberg, ‘‘On Postmodernism and Articulation: An Interview with Stuart Hall,’’

Journal of Communication Inquiry 10 (1986): 53.

[18] Paul J. DiMaggio and Walter W. Powell, ‘‘The Iron Cage Revisited: Institutional

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[64] Jean Baudrillard, Simulacra and Simulation, trans. Sheila Faria Glaser (Ann Arbor: University

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[65] Gebauer and Wulf, Mimesis, 7, 309.



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[75] Cindy Skrzycki and Paul Farhi, ‘‘The Multimedia Feeding Frenzy; As Technology Converges,

So Are Communications Giants Looking for Deals*And Billions in Future Profits,’’

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[82] Trahan, Walters, and Portny, ‘‘Asset Bubbles,’’ 6.

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[88] Mary Lowengard, ‘‘Home-run Hitters of 1997,’’ Institutional Investor, March 1998, 95�102.

[89] Greg Ip, ‘‘Internet Stock Frenzy Is Mania of Manias: AOL Shakes UP S&P as Market Cap Gets

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[90] Eric Janszen, ‘‘The Next Bubble: Priming the Market for Tomorrow’s Big Crash,’’ Harper’s

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[93] Matthew May, ‘‘The Future Is Not Here Yet,’’ Times, October 29, 1993, http://www.

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[94] Skrzycki and Farhi, ‘‘Multimedia Feeding Frenzy.’’

[95] Alan Greenspan, ‘‘Remarks by Chairman Alan Greenspan at the Annual Dinner and Francis

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[96] Erick Schonfeld, ‘‘How Much Are Your Eyeballs Worth?’’ Fortune, February 21, 2000, 197�204.

[97] ‘‘CMGI Unloads Internet Stocks as Losses Widen,’’ Reuters, December 14, 2000.

[98] Markus K. Brunnermeir and Stefan Nagel, ‘‘Hedge Funds and the Technology Bubble,’’

Journal of Finance 59 (2004): 2013�40.

[99] Tran, ‘‘Prospectors,’’ 19.

[100] Andreas Whittam Smith, ‘‘Everyone Wants a Ride on This Bandwagon,’’ Independent, June

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[101] Alan Greenspan, ‘‘The Revolution in Information Technology’’ (remarks, Boson College

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[103] Beunza and Garud, ‘‘Calculators, Lemmings,’’ 13�39.

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[106] Nocera, ‘‘Do You Believe?’’

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[108] Jim Breyer, interview by Martin Smith, Frontline, PBS, May 2001.

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[116] Kindelberger, Manias, 15.

[117] Barber and Odean, ‘‘Internet,’’ 47.

[118] Tom Johnson, ‘‘That’s AOL Folks,’’ CNNMoney, January 10, 2000, http://money.cnn.com/

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[123] John Maynard Keynes, The General Theory of Employment, Interest and Money (1942; repr.,

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[124] Greenspan, ‘‘Revolution,’’ March 6, 2000, http://www.federalreserve.gov.

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Rhetoric, Risk and Markets The Dot.Com Bubble

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