From each according to his IPO

Stalin would have loved Silicon Valley's dot-communists. Too bad they got purged.

Published April 25, 2001 7:30PM (EDT)

The government has encouraged young people to ignore all other questions in favor of economic progress ... for the younger generation, this regulation has in some ways been a very happy one. It has relieved these young people to a large extent of the curses of egotism, romanticism, daydreaming, introspection, and perplexity which befall the youth of bourgeois countries. But its permanent effect cannot be a beneficial one. -- George Kennan, "Memorandum for the Minister"

Kennan was analyzing the youth of the Soviet Union in 1932, but he could equally well have been describing the Christmas-rush atmosphere at, or the prelaunch frenzy at Netscape. His memorandum predicted the ultimate collapse of the Soviet Union as a consequence of the inevitable disillusionment of its economically obsessed youth, but his analysis applies just as well to the equally sudden collapse of any number of dot-com companies as their internal unreality engines finally ran out of steam.

"Work hard. Have fun. Make history," reads Amazon's employment Web page, offering the helpful gloss that "have fun" is to be interpreted as "We are passionate about what we're doing. Because of that, we have fun at work, and it makes it easy for us to work hard." The all-consuming role that world-shaping ambitions are expected to play in defining one's Amazonian life, both personal and professional, is hard to miss. Tellme, a phone-to-Internet company, proudly advertises to potential employees that its offices are equipped with bunk beds. Especially in the halcyon days of Internet start-ups, such details, with their unmissable implications of sacrifice and grueling labor, were routinely offered as inducements to attract employees, a fact that is curious enough to deserve closer scrutiny.

The conventional line holds that most Internet start-ups were created and staffed by men and women who openly sought (and sometimes achieved) enormous personal fortunes, who preached the power of the market, who were wholly in favor of the accumulation of capital. They believed wholeheartedly in an economy fundamentally built upon private investment. All of which is entirely true, but fails utterly to explain why such self-interested, utility-maximizing capitalists would so joyfully forgo any personal existence other than endless hours staring at their computer screens. The missing element in this psychological portrait is that doing a dot-com wasn't work, it was revolution. And revolution is a different kettle of fish.

In the glory days of the new economy, suddenly everyone was a revolutionary. The most fanatical free-market capitalists on the planet started thinking of themselves as radicals: Every leveraged buyout or IPO was a bold strike on behalf of humanity, every layoff a liberation from bondage. Tom Frank's "One Market Under God" provides the most trenchant analysis of this phenomenon, describing such rhetoric as a form of posturing, a co-optation of the language of genuine social change for purely commercial purposes. As Frank pointedly notes, such talk, when it comes from CEOs of Fortune 500 corporations, is highly suspect. But if one looks more closely at some of the words and deeds of the dot-com start-ups, there is something oddly familiar about the imagery and the ideas.

The concept of worker ownership of the means of production hardly began with the invention of stock options; the idea that old economic structures needed to be swept away long predated the new economy. Radical disruptive change, breaking down outmoded materialistic class distinctions, worldwide revolution led by a vanguard of knowledge workers -- nothing new here. And any company dedicated to empowering its customers by delivering to them exactly what they needed usually wound up recapitulating Marx's famous "From each according to his ability, to each according to his need," albeit in the less felicitous phrasing used for corporate mission statements.

Nor was all of this rhetoric entirely for show. Most e-commerce ventures were attempts to trim out some middleman or other, to remove some expropriating capitalist from the equation. New media companies like Icebox and Pseudo would give their content away. would liberate musicians from exploitative recording contracts, freeing them to create their art for the good of all humanity. Open-source software companies would renounce intellectual property and build their business by building community. All knowledge would be available to anyone, anywhere, anytime: In such a world, how could injustice or inequality possibly endure?

Reduced to its essence, the idea goes something like this: The dawning electronic age is replacing physical things with virtual ones. Information intrinsically "wants to be free," unfettered by silly property restrictions on its transmission and exchange. Therefore, in the glorious future, there will be no property! Think of Napster: You can get anything you want entirely for free, thanks to the selfless cooperation of people just like you. Everyone has all the music he wants, and thanks to some iffily specified mechanism, the musicians are better compensated than they were under the old surplus-value expropriations of the record labels. The abolition of private intellectual property just works.

It's a screwy syllogism, suspect on any number of grounds -- not the least of which is the absurd reality that so many of these new economy entrepreneurs were themselves looking to rake in oodles of cash by giving away things for free -- but it has an undeniable immediate appeal, an appeal that has much in common with the collectivization of agriculture that so inspired the revolutionaries Kennan describes. Not that the "dot-communists," as their detractors termed them, harped much on the connection. "Communist," after all, is a dirty word, one that summons up images of gray concrete buildings surrounded by endless lines of weary-eyed socialists under the repressive thumb of a dithering bureaucracy.

Then again, if you'd asked a foot soldier of the Revolution in 1932 precisely what sort of a society he was forgoing the "pleasures" of youth to build, endless lines and repressive thumbs would hardly have been foremost among his replies. The conversion of a revolution into a failed revolution is a disheartening process, and for no one is the disillusionment sadder or more shocking than for the revolutionary himself. And however much dot-communism may have owed to its Soviet predecessor while it was in the ascendant, it was on the way back down that the truly telling psychic parallels emerged.

Five-year business plans for 30 percent annual growth in revenue recalled equally unrealistic Five-Year Plans for 30 percent annual growth in pig-iron production. The incompetently handled layoffs that have characterized the death of dot-coms read as farcical repetitions of the tragedies of Stalinist purges. If the Soviet Union bankrupted itself in an unwinnable arms race with the United States, dot-coms spent themselves out of existence trying desperately to carve out enough of a market share to survive their competitors.

In the end, in both Silicon Valley and the former Soviet Union, the hard-line capitalists smelled weakness and moved in, encouraging defections, manipulating the money supply, pulling out the supports. And then they started picking through the wreckage, buying up whole industries at pennies on the dollar while offering hypocritical advice on what should have been done differently.

To a true believer, it's hard for such advice not to rankle. To you, that "silly ideology" you're being asked to repudiate isn't just a bunch of economic ideas; it's an all-consuming system that justifies the choices you've made with your life, both public and personal. A sense of historical inevitability is potent stuff; it frees you from needing to think about the everyday details of life.

That said, as inspiring as the rhetoric of revolution may be, it had a very specific function at most Internet start-ups: to convince the employees that their late nights and lost weekends were sacrifices in the name of the revolution. Come the shakeout, though, they were left scratching their heads and asking precisely why they had given so much of themselves, when all they had to show for their sacrifices were a few nearly worthless scraps of paper, entitling them to some microscopic share of the assets of a defunct entity. Or, as Kennan put it:

The world will see a disappearance of the artificial conditions which now maintain the unlimited self-confidence, mental health, and happiness of the younger Russian generation ... introspection and mental perplexity will make short work of his self-confidence, once his faith in the mystic qualities of communism is ruined.

A questionable psychological analysis of the Soviet Union, perhaps, but not a bad summary of the prevailing mood in Silicon Valley. Revolutionaries in every age like to think they are ushering in something unprecedented in human history. And sometimes they are, but revolution itself, in all its forms, has precedent aplenty -- including more than a few harsh warnings for those who think that economics and business can forever stand in for the rest of human existence. And this is a trap into which both the dot-communists and their implacably capitalist foes have been known to fall.

By James Grimmelmann

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