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Ask any old Kwakiutl or young Kwakwaka'wakw, as these Native Americans of the Northwest are now called, and you will find that winter was the favored season for a potlatch. A potlatch is a ceremony that includes a variety of rituals, some involving the redistribution of wealth and others the destruction of wealth. It's a bit like what is going on around the world as governments try to keep us warm and loyal during a severe economic winter. It's a bit like what liquidators say is going on in the server business, too.
A potlatch was a huge party thrown by the chief another figure of substance. The details varied from ceremony to ceremony, but one common aspect of many if not all potlatch ceremonies was the way the host demonstrated his magnanimity and greatness. The host, always a man, would give the guests a lot of his wealth. Sometimes this wealth, often in the form of physical possessions, was summarily destroyed. After a potlatch the host would return to his normal life and that life would yield wealth once again, making it possible for the host to hold another potlatch at some future date. The potlatch was part of a cycle, but it was not a regular cycle. It was more like the kind of cycle that occurs in an economy, where the timing, magnitude and other aspects of growth and decline may never precisely repeat, but where the overall pattern can be seen again and again.
The computer industry, like every other creature of the wider economy, goes through periods of boom and bust, and these days it is common to point out that the last high tech crash, the dot com bust, was a big factor in the Federal Reserve's decision to loosen up economic controls, a move that fostered a housing bubble. That bubble has burst, producing a housing credit crisis, which is of course not a crisis in housing alone and lately looks like a it has no boundaries at all in geography and time although a time boundary will eventually appear if we live long enough.
The dot com bust led to a lot of computer companies going through a painful period of readjustment, but the most severe pain was largely confined to the one industry and its investors; the rest of the US economy and most of the world economy just felt a bump, not a crushing blow. That's not the case this time.
When problems in housing first hit the headlines a year or so ago the computer business seemed to be doing very well. Even now, when there are signs that computer companies might be heading for trouble, the two biggest outfits, Hewlett-Packard and IBM, say that they are keeping a close watch on menacing conditions but so far it they are actually doing just fine. (Even IBM Global Finance, which backs IBM's resellers, seems to be hanging in there for now.) Other players in computing beg to differ and a few could end up like the auto companies, just plain begging, although high tech is a lot less likely to get the attention of Washington than the motor trade. The current argument for optimism about computing goes like this: Somebody has to count the beans whether they are more numerous or less numerous. For now at least the industry giants don't seem to believe that having fewer beans to count could lead to some big changes in the computer business any more than the Kwakiutl of the nineteenth century, having learned to coexist with the Canadians who surrounded them, didn't always see the forces of change growing like thunderheads over their totems of thunderbirds.
Well, more than a century ago things started to change for the Native Americans of British Columbia and the Pacific Northwest. Canadian authorities found the potlatch with its redistributive and destructive ceremonies abhorrent and 1885 passed a law making potlatch illegal under its Indian Act. This didn't actually bring potlatch to a halt any more than a law could eliminate economic cycles. The most that could be said about the Canadian law was that it eventually suppressed open potlatch ceremonies. But some aspects of Northwest Native American culture and its potlatch have nevertheless faded away, just as changing laws and mores have altered business and banking practices. Even anthropologists who wrote about the potlatch pointed out that some aspects of some versions of this ceremony were, to say the least, not part of ordinary life for university scholars.
The Wikipedia article on potlatch suffers a bit from political correctness and glosses over the Native Americans' practice of slavery. When goods were destroyed at a potlatch, sometimes the list of goods included slaves, who were killed during the ceremony. There's not a lot in the article about cannibalism, either, a practice that played an important role in some tribes' potlatch ceremonies.
The Kwakiutl and other groups in the region were wealthy because they lived off a rich land and sea. Forests and fisheries provided food, shelter and other material goods. Nature also provided both the raw materials and inspiration for sculpture, architecture, dance and other artistic endeavors. The Native Americans had to work hard, but when they did they were amply rewarded. This was also the case in the high tech industries that took root on the same West Coast between San Francisco and San Jose, several hundred miles south of the Kwakiutl heartland that lay around Vancouver.
West Coat high tech companies did more than invent chips, software and computers, they provided the foundation for a new style of capitalism based on high risk ventures that were sometimes gold mines and almost always a lot like salt mines. Life in Silicon Valley had its ups and downs, but until the dot com boom and bust the general trend upwards was much more apparent than its fluctuations. And that culture also seemed to take root very well far from its birthplace, fueling progress at Motorola in the Midwest and inspiring developers everywhere in IBM's far-flung archipelago.
It is probably too soon to expect the best books explaining the dot com cycle to be in print, but they might not be long in coming. The most influential books on the potlatch tribes were not written until after the prevailing culture of modern Canada had largely overwhelmed that of the indigenous people. Still, truly important studies of American high tech culture's ride on the wheel of fortune are bound to appear and take their place on the shelves of anthropology libraries and business school study halls only a short distance from the monumentally important volumes about their potlatch neighbors from the north.
Studies of the potlatch ceremonies were at the heart of work that defined modern anthropology. This began in the late nineteenth century with the work of Franz (also known as Frank) Boas and blossomed in the first half of the twentieth when Margaret Mead, the ink still wet on her doctorate, published Coming of Age in Samoa. Between the two was Ruth Benedict, a student of Boas and a teacher of Mead, whose persistent book, Patters of Culture, includes a substantial section on the potlatch drawn in part from the published and unpublished research done by Boas.
Benedict was a socially controversial figure but her work was so outstanding that in the end Columbia had to name her a full professor, but did so only shortly before her death. The salient personal controversy that engendered Ruth Benedict's poor treatment by the academic establishment was the widely held belief that she was romantically involved with other women, including at one time Margaret Mead. Mead's anthropologist daughter wrote that Benedict and Mead had a very close if not intimate relationship. At the very least the who had great affection for each other, and that shows in the Benedict obituary written by Mead.
Ruth Benedict's personal life might have been controversial during her lifetime, but today it would hardy raise an eyebrow. By contrast, the developing flaps surrounding the gray market in computers can quickly bring manufacturers, distributors and resellers to a boil.
It's not surprising that the current economic downturn is forcing some outfits that own computers to sell off their inventories at distressed prices. The computer industry's sales practices are designed to force extra equipment into distribution channels, mainly with the aid of deep large volume discounts. After channel companies have bought more than they can sell, they dump the surplus through liquidators -- the firms that define the gray market in computer hardware -- and sell what they keep for whatever the market will bear.
In normal times the volume of equipment that ends up in the hands of liquidators is modest and has little impact on the prices paid by most VARs and end users. The vendors who force-feed their distributors also try to protect the same distributors by saying they won't maintain or support systems that are moved through the gray market. This turns out not to be true, but the bluff usually works, and vendors from the leaders to the also-rans usually keep the gray market relatively small and unusually quiet.
Well that was then and this is now. The liquidators want all the publicity they can get because they have lots of equipment on hand and they need to flog it fast before it loses value. The result is that when a reporter from Bloomberg (the ambitious news agency not the arrogant mayor) got wind of the boom in gray market computer sales, possibly with the help of some of the gray markers, the resulting story got quite a few people stirred up.
Shopping for bargains seems to be catching on. Computer buyers who don't usually phone the liquidators such as Liquid Technology or Network Liquidators and who don't generally surf sites like Pacific Geek now look for them or stumble across unauthorized but enthusiastic surplus equipment dealers including outfits on Ebay that feature IBM servers on their main page.
Prospective purchasers won't have any problem getting maintenance on machines sold in the gray market, but they might have to turn to third parties for the service, at least until the prime vendors look at the way they are making third party rivals so prosperous and decide to give the gray market buyers an even break. If users have trouble getting operating systems from the big name vendors, they can always pick up Linux. In fact, the whole Open software movement is in its own way a potlatch, powered by people who want to redistribute intellectual if not material wealth and who don't seem to mind destroying whole forks of software in the interest of cultural progress. These days, the Open world even shares with the Kwakiutl tribe an inclination to indulge in cannibalism and perform violent dances in public. Right this minute there could be an anthropologist with an MBA working on Coming of Age in a Red Hat. It won't do for computing what Margaret Mead did for teenagers in Samoa, but it wouldn't have to be that good to outshine the vast collection immensely boring books written about the wonders of the computer business. It won't take a writer with the gifts of Boas, Benedict or Mead and make it to the achingly small shelf of good reads that are actually worthy of the computing industry.
All somebody has to do is just write down the story of the baby boomers: from potheads to potlatch in one short lifetime.
— Hesh Wiener December 2008