What Was “the New Economy”?

This paper for the Business History Conference is the shaggiest thing I have written in years. Work and personal life developments — including happy things like getting a new puppy — meant I had to write this faster than I wanted. Still, my grumpiness with its form is more than counterbalanced by my joy and enthusiasm for working on a new project and wrestling with new ideas, which is something I haven’t really done since The Maintainers took off in 2015–2016. I am posting this piece in its current form because the topic is something I have been actively discussing with friends and colleagues for a long time and I know I will not be able to seriously revise it for months.

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“We are only at the beginning of a period that will go down in history as a golden age,”

— President William Jefferson Clinton, December 1999

“I believe the computer and the Internet give us a chance to move more people out of poverty more quickly than at any time in all of human history.”

— President William Jefferson Clinton, April 2000

Bill Clinton opened the White House Conference on the New Economy on April 5, 2000 with these words, “We meet in the midst of the longest economic expansion of our history and an economic transformation as profound as that that led us into the industrial revolution. . . . This conference is designed to focus on the big issues of the New Economy. How do we keep this expansion going?”

This economic transformation on par with the industrial revolution never came to be, and ironically the air had started to go out of the dot com bubble a half a month before Clinton uttered these lines. It would continue to deflate for two years. The NASDAQ index had gained 400% of value between 1995 and 2000, but by October 2002, it was 78% down. Especially hammered were once-highly-valued “tech” companies, many of which went belly up.

Use of the term “New Economy” declined precipitously after 2002. French economist Jean Gadrey notes that by 2002 he was already having discussions with colleagues about the “ex-new economy,” and in 2003, business journalist Doug Henwood published his book, After the New Economy. By 2004, productivity gains in the United States, which had undergirded much New Economy talk, hit a wall. With brief exceptions measured in quarters of years, productivity has remained comparatively low ever since. Perhaps Clinton’s “New Economy” gathering was…