Hazlett in Financial Times on the Latest "Bubble"

Venture capitalists decide who saddles up, and profits decide who wins in the high tech world that Professor Thomas Hazlett,writing in the Financial Times,likens to the western frontier. Noting that venture capitalists spread their investments widely in hope of a few big successes, Hazlett maintains that the current "bubble" is far from a recreation of that preceding the bust of only a few years ago.

A web bubble blown out of proportion, Financial Times, October 3, 2006. By Thomas Hazlett.

"The rush to embrace new web businesses may look like a knee-jerk response to, say, News Corp's $580m grab of But those reflexes are embedded in the DNA of the capitalist internet. The scent of profit trips instincts. Packs of investors are soon hunting for the next big kill.

"This primal urge co-ordinates enormous complexity. In pursuit of mutual advantage, investors and innovators mesh their interests by negotiating profit-sharing contracts. The buzz about web culture is that it promotes new and socially useful forms of sharing. These observations are correct in the sense that corporations organise common shareholders to pool their assets and bond with labour and management.

"But they also play down the motivation behind the emergent culture: profit-seeking. Never was a social system so comfortable with science, technology and change. Nowhere else have people so naturally co-operated in seizing the opportunities presented by human ingenuity. Sampling alternative business models, services and products, the capitalist continuously calculates prospects for making markets anew. This system works by trial and error and amid the confusion some competitors will find remarkable success."

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