> Working out here in the belly of the Sillycon Valley beast, I've been
> wondering recently if part of the continued strength of the economy could be
> due to a sort of "IPO Keynesianism". Most of the Internet companies I see
> out here not only have no chance of ever making any money, but no remotely
> rational person could ever believe they will. And yet they're taking all
> this extra capital sloshing around the markets and spending it on my
> ridiculously overpriced labor, on TV ads, on construction, etc. Wasn't
> Keynes's perscription large amounts of investment with no productive outcome
> ("hiring one set of men to dig holes, and another to fill them in")? I'm
> not entirely sure I'm joking about this...
I think this thought should be taken further - if this is IPO Keynesianism (and I think you're right to some degree), it is a rather different beast from Keynesianism of the 'welfare state' variety. In particular, the much-touted IPO boom funds a sharply divided labour market, and the 'California ideology' (of individualism, anti-statism, meritocracy, etc) which goes along with this boom is merely a sharply-defined version of the 'good honest workers' xenophobia that accompanies the welfare states.
What makes this IPO Keynesianism possible - and rather preferable to Keynesianism of the old order, from a capitalist's perspective - is a change in the nature of production, an increased role for a tiny segment of 'knowledge workers'. As Negri said in that piece Yoshie quoted not too long ago, capitalism is absorbing entrepeneurship into itself. The flexibility of the start-ups allows for possibilites excluded from the more rigidly disciplined environment of the large corporates.
This IPO-mania seems to be spreading outside of Internet/computing startups - it looks like biotechnology is going to be the next venture-capital magnet. It all depends on the cost of production systems - at present, setting up a biotech lab is still quite expensive, but the cost-per-base of sequencing DNA is falling, and we might well see a time when it is quick and cheap to fund a new startup - quicker and cheaper than re-organising an existing lab.
So - IPO mania might not be insanity. It might be a quite effective way of ensuring profits, and disciplining labour.
Something for socialists to think about, at least...
Peter P.S. talk is that at this science park just north of here, they're effectively excluding all unions by firing anyone who joins one. -- Peter van Heusden : pvanheus at hgmp.mrc.ac.uk : PGP key available Criticism has torn up the imaginary flowers from the chain not so that man shall wear the unadorned, bleak chain but so that he will shake off the chain and pluck the living flower. - Karl Marx
NOTE: I do not speak for the HGMP or the MRC.