"a fish, a barrel, and a smoking gun"
for 30 November 1998. Updated every WEEKDAY.
House Rules

[i bought this 1960's carpet coat a few months 
back for the bargin basment price of $25.

Economics is so complicated:

supply curves, demand curves,

inflation risks, unemployment

rates, the tendency of the rate

of profit to fall. Can't anybody

do something?


Hope appeared in 1996, but was

quickly squashed by

Nevada's office of the attorney

general. But the real power of

the new "networked" economics

cannot be suppressed by

party-pooping public

prosecutors. While "realists" at

Feed were advising readers that

the eBay run-up was losing steam

at US$46 a share (a mere 186 times

earnings per share) and the cynics

at Tulips and Bears have been

advising their victims to short

Amazon since last May when the

stock was at $40, the

visionaries at the World Wide Ad

Network were balancing these

overly negative prognostications

with a bit of free education

about life. "Well, the facts

are not every company is bad," they said.

"Not everything in life is a

'scam' or a 'trick.' If this was

really the case, the world would

fall apart quickly and nobody

would be successful."


As the typically successful

PointCast CEO David Dorman

(whose signing bonus alone was

$1.4 million) said to The New

Yorker's Ken Auletta, "Never has

more money been made in a

shorter period of time. The

convergence of the economy and

the stock market and the

Internet phenomenon: It's



i've had men comment on it after i've walked past
(hint: men don't care about coats); a woman come up to me, recognizing me from the coat 
as she's seen it in the neighborhood,
the same woman say hello to me again; the checkout boy regard it admiringly.

Certain cheap-shot artists have

been pondering this magic for

years and making fundamental and

incisive criticisms along the

lines of "How do I get some?"

Others have taken a more

serious approach, offering a

handy, practical set of new

business fundamentals. But

Wired executive editor Kevin

Kelly's new book, New Rules for

the New Economy, has gone far,

far beyond mere webonomics.


New Rules for the New Economy

offers "10 Radical Strategies

for a Connected World." The

strategies are Embrace the

Swarm; Increasing Returns;

Plenitude, Not Scarcity; Follow

the Free; Feed the Web First;

Let Go at the Top; From Places

to Spaces; No Harmony, All Flux;

Relationship Tech; and Opportunities

Before Efficiencies.


Black-hearted cynics like Chris

Byron (the New York Observer

columnist who maintains

something called the

"Cybersuckers Index") might

argue that when New Rules

advises its readers to invest

heavily in new networking and

database technology, to

rewrite their

business plans frequently, to walk away

from stable revenue streams, to

seek inefficiency, and to give

their products away for free,

the book is simply translating

the run-of-the-mill business

practices of desperate Web

managers into an overarching

economic theory.


And like all cynics, he would be

half-right: There are still

bounteous opportunities to go

broke following these rules.

(Although, come to think of it,

if you've been shorting Amazon

since May, you're broke

already.) However, the true

genius of New Rules does not lie

in its practical

recommendations, which for

better or worse, are rapidly

becoming conventional wisdom in

the competitive field of

inspirational business

consulting. Kelly's original

contribution lies in the honesty

with which he describes the

metaphysical implications of

these developments.


While others may murmur

insincere pieties about

protecting individuality,

privacy, and democracy,

Kelly boldly and cheerfully

imagines a world in which the

machines take charge: "Supply

and demand are no longer driven

by resource scarcity and human

desire. Now both are driven by

one, single, exploding force:



[i'm begining to fear it for it's unknown powers.
perhaps it was once owned by a powerful person.

How does technology take over

from human desire? It's simple.

It begins with those handy

"free" services. Order some

Beano at My Basics, and your

propensity toward flatulence is

entered into the database.

This info is noted not

to be cruelly shared with Big

Brother or his domineering

parents but simply to provide

you with the opportunity to take

advantage of additional custom

offers of specially priced

bathroom deodorizers. It's handy!


Free, as Kelly says, is how

you hook them. Or to quote Web

supergenius James Barksdale's

critique of the greatest

software giveaway in recent

memory: "Free is predatory."


The most valuable part of a new

economic enterprise are The

Relationships, also known as the

marketing database and

data-mining algorithms. The

information needed to construct

this asset is given up by the

users themselves, who are trying

to get their orders filled or

qualify to win a promotional

PalmPilot. Since the users

themselves are supplying the raw

material, Kelly defines

customers as employees that pay



Having a business in which your

customers are your employees is

a definite improvement over

Ford's ideal, which was to

balance wages and prices so that

the employees could afford to be

customers. This more modern

approach supplements crude

financial exchanges with deep

emotional ties, not only among

people but among all the objects

in a marketplace where

everything is animated and

responding in real time.


That includes, for instance,



"In the coming world," Kelly

writes, "a head of lettuce

carries its own identity and

price, displayed perhaps on an

LED slab nearby or on a

disposable chip attached to its

stem. The price changes as the

lettuce ages, as the lettuce

down the street is discounted,

as the weather in California

changes, as the dollar surges in

relation to the Mexican peso.

Traders back in the supermarket

headquarters manage the yield of

lettuce prices using the same

algorithms that airlines use to

maximize their profits from

airline seats."


So the same computer that will

transmit you a reminder to buy

hamburger buns when you pick

up the patties will raise prices

for you as you approach the

lettuce. If your desire for a

lettuce purchase lags, you'll be

stimulated by additional

promotions designed to whet your

appetite. The supermarket will

be alive, and the deities that

govern it will operate in real



i haven't noticed an increase in luck,
perhaps i should hit the track on a chilly day.]

New Rules for the New Economy is

one of the only books that

delivers the message without

sugarcoating. Machines will take

over. The illusion of human

choices will be obsolete. Those

who deride the New Economy as

tulipmania don't "get it," as

the digital revolutionaries like

to say. Even if the rate at

which Beanie Babies are

auctioned off on eBay decreases,

causing a temporary dip in the

market cap, the pain of the

speculators won't count for

squat compared with the

historical transformation

wrought by the huge investments

we have "chosen" to make in the

technologies of artificial

personality. The important thing

to realize for people who don't

have a personal stake in the

fantasy of 100 percent yearly

ROI is that the techniques we

are creating will survive the

destruction of the companies

that build them.


After all, a generation of

American stock speculators went

bankrupt funding the railroads,

but the real estate market in

California did fine. The

Mississippi Bubble damaged the

European credit markets for

decades, but as a PR campaign

for the New World, it was grand.

And today Holland is a wonderful

place to buy tulips.

courtesy of Dr. McLoo