A Vaporwave-Style Edit of the Former Enron Headquarters, 1400 Smith Street, Houston

Two towers, in the beating heart of a city. Glistening symbols of the triumph of capitalism and its boundless success. Of the American Dream. Thousands of jobs, of lives, inside. Technology advancing at breakneck speeds, poised to change the world in so many different ways. Hundreds of millions of dollars zipping in and out of existence with key and penstrokes. A power unmatched, an empire stretching the world over. Everyone who was anyone wanted in, wanted a piece of that power, a cut of that money. A profound sense that nothing could or would go wrong, that this money, this power, would forever expand, forever change everything. But by the end of 2001, there would be nothing left of this empire built on sand. Nothing but a million miles of shredded paper, floating on the wind.

Corporate History For People Who Hate Corporations

It had taken Enron 16 years to go from about 10 billion of assets to 65 billion of assets. It took them 24 days to go bankrupt. [1]

Now, I’m firstly not qualified to, and secondly not interested in, giving you a detailed history of the Enron corporation. You can go and find that somewhere else. The Netflix documentary Enron: The Smartest Guys In The Room is a good choice, in my opinion. But to make a long story short, here’s Enron in a nutshell. Ken Lay was an executive for various oil companies until he founds his own — Enron — in Houston in 1985, through a merger of two small local oil companies. Lay quickly brings on Jeffrey Skilling as CEO, joining under the condition they use mark-to-market accounting, whereby profits are noted when deals were signed, not when the money from those deals actually came in. The company begins shifting from being an energy supplier to an energy trader — treating energy like stocks. CFO Andy Fastow begins hiding debt in shell companies to make the company seem more profitable. Enron expands into becoming a retail energy company, as well as moving into the emerging broadband internet market. The company unveils new technologically advanced services like trading internet bandwidth and weather as a commodity, collaborate with Blockbuster to stream movies on demand, and more. At the same time, Enron’s energy business is seeing record profits due to the recently deregulated California market. Their staff is very loyal and very good at making the company money. Every quarter they beat analyst predictions for their profits. Year after year, Enron is seen as the best company to work at, the most innovative, the most technologically advanced, the most stable, and most importantly — the stock price keeps climbing.

And then, after a few glorious moments at the top, it all falls apart. Mark-to-market accounting was allowing the company to pretty much say they were making however much they wanted to make. Fastow’s shell companies quickly devolved from legal movings-around of money into a web of illegal dealings and fraud. Almost every single new venture the company undertakes is a massive failure, as they have neither the expertise nor the technology to carry them through. The only reason California was so profitable was because Enron was gaming the system and intentionally limiting the energy supply in order to cause rolling blackouts and drive up the price of power. The staff was loyal and made so much money because Enron had a policy of firing the bottom performing 15% of the company every year. The profits were consistently beating predictions and the stock price was consistently rising only because of massive, company-wide, financial fraud. When it started to fall apart, it fell apart very quickly. In the aftermath of Blockbuster pulling out of the movie streaming deal, the stock price began a plunge it would never recover from. The biggest problem was that Fastow had leveraged a lot of the shell company deals with Enron stock, counting on the stock never stopping its climb. The collapse of the network of shell companies meant Enron had to publicly admit the debt that was previously hidden. They issued a series of restatements, essentially wiping out all of the profit the company had claimed over the past few years. This snowballed, as the stock price continued to decline, undoing more of the shell companies, meaning more restatements had to be issued, further declining the price. Most executives had already cashed in their stock when the price was still high, with tens of thousands of employees being left with less than a hundred dollars in their retirement accounts. And on November 30, 2001, the company filed for bankruptcy.

A Brief History Of Historiography

However, there can be no serious doubt that in the late 1980s and early 1990s an era in world history ended and a new one began. [2]

The 1990s, here defined as being between the last lowering of the Soviet flag on December 25th, 1991, and the collapse of the Twin Towers on September 11th, 2001, are a cultural, historiographical, political, and aesthetic anomaly, seemingly untied from anything surrounding it. It’s certainly not connected to the decade prior and the 20th century at large. The Cold War and the ideological conflict between Liberal Capitalism and Marxism-Leninism in a larger sense paint so much of that time period, inform so many political and cultural actions, and that conflict is entirely not seen in the 90s. British Historiographer Eric Hobsbawm writes in The Age of Extremes, “However, there can be no serious doubt that in the late 1980s and early 1990s an era in world history ended and a new one began.” [2] Hobsbawm is noted for establishing the ideas of the long 19th century and the short 20th century, where the mentioned time periods don’t refer to simply a range of dates between a January 1st and a December 31st, but a distinct period in human history, with certain themes, ideas, guiding principles, and such. Hobsbawm wrote this in 1994, and as such wasn’t aware of 9/11, and how this new era of history would end — though, as I’ll bring up later, his predictions do get saliently close. Returning to my point, the 90s is similarly not connected to the 21st century, with its war on terror and capitalist realism and widespread societal pessimism.

Where Hobsbawm outlined the cultural-political ‘shape’ of the 19th and 20th centuries, the task now is to carry on his work, and piece together the history that has happened since. While we are not in a position at all to begin evaluating the guiding principles of the 21st century, there is a majorly self-contained era of history that has ended, and that we are far enough removed from, that we may begin he work of dissecting it. This is, of course, the 1990s. Utilizing Enron, a corporation whose timescale and history roughly maps to that of the 90s, we can extrapolate a wider case for the ineffable ‘shape’ of the decade. If I may be so bold, I’m going to put forth a series of basic principles that sketch out the 90s as an entity, based on the story of Enron. While these principles are by no means exclusive to the 90s, their strength and prominence marks the decade in a way that other decades are not. These principles build on eachother, one by one, into a grand house of cultural cards. The first principle is that Liberal Capitalism is fundamentally good. The second is that technology and the ideas thereof can and will solve all our societal problems, and soon — we needn’t worry about the details. The third and last principle is that the perception is the reality. These principles at times meld together and be sortof nebulous, but are generally distinct.

Part One: This Is The Part Where I Talk About Fukuyama

What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government. [3]

I think this is a new record for, when I’m talking about the 90s, how long I take to get to everyone’s favorite ender of history, Francis Fukuyama. In 1992, this dork wrote a book called The End Of History and the Last Man, which pretty much posited what the quote above says. The development of ideology has ended with the collapse of Marxism-Leninism, and world events from then on would be just be the buildup to the inevitable world-wide victory of liberal [capitalist] democracy. This belief was not contained to Fukuyama, there was a profound spirit of optimism imbued within society. 33 days into the 90s, outgoing president Bush Sr. said in his State of the Union Speech, “By the grace of God, America won the cold war. I mean to speak this evening of the changes that can take place in our country, now that we can stop making the sacrifices we had to make when we had an avowed enemy that was a superpower. Now we can look homeward even more and move to set right what needs to be set right.” [4] Here Bush directly says that America, and by extension the system of liberal capitalism that America represents, has defeated its enemy and no longer has a real threat to it on the scale that the Soviet Union and Marxism-Leninism were. Belief in the market and the wonders it could do was at a very big high. Stemming from this faith in the market’s power, and even discussed by Bush later on in that speech, was a wave of deregulation and putting things more in the hands of the markets. Though deregulation had been going on since the 70s, it came to a head in the 90s, with the deregulation of industries like telecomms, with the Telecommunications Act of 1996, finance, with the Financial Services Modernization Act of 1999 — which would later lead to the 08 crash — and, where we jump back to Enron, energy, with the Energy Policy Act of 1992.

Enron was one of many companies that lobbied hard for the Energy Policy Act, which allowed for states to deregulate their energy markets and allow for greater market influence. In 1996, California took up this allowance and deregulated their markets — 40% of California’s installed energy capacity was sold to ‘independent power producers’, which public power utilities were forced to buy power from daily. Enron had their chance. Utilizing the new set of rules, they engaged in a wide variety of tactics to game the system and extract as much money as possible out of the California public utilities. They moved power out of crucial zones when power was needed, then massively increased prices the utilities had to pay to get it back. This caused wide-spread rolling blackouts and a years-long political crisis that torpedoed the political career of Governor Davis, who at the time was being touted as a potential 2004 Democratic candidate for President. Lay summed it up best in a call he made to Governor Davis, saying “It doesn’t matter really to us what kooky rules you Californians put in place. I got a bunch of really smart people down here who will figure out how to make money anyhow.” [1]

The debacle in California was coupled with Enron doubling down on its deregulation efforts, trying to get other states to adopt the Californian model, or at times an even more deregulated one. The free market, the extension of the liberal capitalist ethos of leaving it all up to corporations, was a chief and fundamental good to Enron. And funnily enough, when confronted with the ongoing crisis in California, Enron continued to push that California was the problem, that they hadn’t deregulated enough — while they were quite directly causing said crisis. Furthermore this rhetoric of not enough deregulation was working — the federal government refused to intervene and Lay was even considered to be tapped as Bush Jr.’s Secretary of Energy. Magazines and analysts were praising Enron’s ‘innovative business model’ during this same time. And even though Governor Davis was beset on all sides by people trying to exacerbate the crisis, he still got recalled for it, leading to the Governorship of Arnold Schwarzenegger, who had previously met with Enron executives and called for the investigations into Enron’s involvement in the crisis to end.

Enron’s firm commitment to the free market was also seen in a controverisal personnel practice of theirs, the Performance Review Committee. “Skilling instituted the performance review committee (PRC), which became known as the harshest employee-ranking system in the country. […] the only real performance measure was the amount of profits they could produce. In order to achieve top ratings, everyone in the organization became instantly motivated to “do deals” and post earnings. Employees were regularly rated on a scale of 1 to 5, with 5s usually being fired within six months. […] Skilling’s division was known for replacing up to 15% of its workforce every year.” [5] This implementation of the social darwinist viewpoint that underpins ideas of the market — that the successful should be allowed to become more successful and the unsuccessful should be discarded — was seen as part of Enron’s aforementioned ‘innovative business model.’ Enron believed, quite firmly, that the free market should be applied to everything. They had vast optimism, like the rest of the country, that the victorious and opponent-less liberal capitalism would and should absorb all of human society as time went on — Enron simply had the power to actually put the ideas Fukuyama and others put forward.

Part Two: The Fetishization of Fucking Magic

I’ve managed to arrive at a more cynical view in which this era — while largely being defined by the nearly unexplainable emotional giddiness of it — fetishized the idea of technological progress rather than actually engage with it. [6]

The 1990s, above the veneration of liberal capitalism as the best system, and inline with the idea of society marching ever upward towards modernity and success that underscores that veneration, had an explosion of interest in technology, and how that technology will inevitable solve all our societal problems. Noted aesthetic writer Maurice Robichaud writes of the Y2K era — and while the Y2K era isn’t precisely the 90s, it still can apply, “I’ve managed to arrive at a more cynical view in which this era — while largely being defined by the nearly unexplainable emotional giddiness of it — fetishized the idea of technological progress rather than actually engage with it. The gist was that all of this progress we’d soon be making should be left in the hands of the smart, professional science people…” [6] Here Robichaud establishes the twin axes of this principle, those being the supremacy of technology, and the supremacy of ideas, as well as how they act simultaneously. In the 90s, technologies like the internet came into popular use, and the personal computer became even more ubiquitous among workplaces and homes. The 21st century, a time once considered a far-away land of the future as explored in various science fiction properties, was now only a few years away. Again we see this pervasive optimism discussed earlier, but this time in technology instead of liberal capitalism. ‘Idea guys’ began dreaming up all sorts of schemes, products, and services. On the back of the internet and a seemingly infinite number of internet-based ventures, the stock market soared in the late 90s. In the words of a techworker reflecting on the era, “It was never going to end.” [7] Companies were given massive amounts of money from investors based only on ideas they had, not provable success. The mere announcement of an internet-based venture was enough to send any otherwise mundane stock soaring in value. Most of these internet-based companies folded quickly, not producing the idea they had promised, let alone a profitable version of one. There was as, Robichaud says, a fetishization of technology, an elevation of it beyond the real and into the mental. This relates strongly to the engineering idea of AM/FM, as explained by youtuber donoteat01 to mean “…the difference between the boring, clunky world of Actual Machines and the extremely sexy high-tech utopian world of Fucking Magic.” [8] The technology of the 90s was very chiefly Fucking Magic, representing science-fiction influenced dreams of a technological utopia that could never and were never realized.

And hooh boy was Enron good at developing Fucking Magic schemes as well as profiting from them. The entire corporate structure was structured around thinking up ideas and rewarding people for those ideas, and given the cultural space that Enron was living in, they were all technological. The company’s motto summed it up best — Ask Why. Employees were encouraged to ask why at all steps, developing new ideas from this questioning that the company could use to make money. This guiding philosophy of thinking up things was at the forefront of the company. “Every year, every day, every week you have to come up with new ideas.” [1] The company’s usage of mark-to-market accounting, which logged the future potential profits of an idea as concrete profits in the books, is one of the most profound manifestations of this. Executives were given ten and even hundred million dollar bonuses for simply developing an idea, before a cent in revenue had come in, or even a sheet of planning had been laid out. This led to Enron having a slate of at best feasible in a decade or two, and at worst were just insane. From a deal with Blockbuster to stream movies — with 2001’s internet speeds — to plans to trade weather and internet bandwidth like stocks, to massive power plants in India where the populace on a wide scale could not afford to pay for the electricity, to other madcap schemes. Technology was all-important, and ideas were all-important. It ultimately didn’t matter that these ideas were unprofitable or even at times flat-out impossible, what mattered was that an idea was thought of. That grander concept of the subordination of reality to perception is exactly what the final principle is about.

Part Three: This Is The (Second) Part Where I Talk About Fukuyama

And I think it was the battle of holding these two totally disjointed thoughts in his mind at… at the same time. One is Enron a super-star company and the other of feeling like it was all crumbling away. [1]

Let’s revisit our good friend Mr. Fukuyama. Standing in 2019 we can very clearly assert that his concept of the end of history and the eternal triumph of liberal capitalism as laughably incorrect. The optimism of the 90s was incredibly misplaced, capitalism hadn’t triumphed over its most crucial enemy — itself, and world peace wasn’t even close to being attained. And, you might say, that’s just the power of hindsight and the things we know today not being known then, but I rebut that the problems of the 90s were well known within it, but society as a whole built a perception that everything was fine and would only get better. Returning to Hobsbawm, only 2 years into the 90s he discussed the glaring issues with the societal order of the post 20th century, and how they would cause its collapse. “In any case”, he wrote, “It will be highly likely that the present phase of post-Cold War breakdown will be temporary […] The future cannot be a continuation of the past, and there are signs, both externally, and as it were internally, that we have reached a point of historic crisis.” [2] And Hobsbawm delves into a series of issues that he says will plague that era, including widespread confusion as to what exactly the field of geopolitcal power is like, the collapse and uncertainty of previously stable liberal democratic systems, and wider-scale non-state-led terrorism — all of which can be agreed to indeed be problems plaguing the current era. “The Short Twentieth Century ended in problems, for which nobody had, or even claimed to have, solutions.” But those problems, and the shared knowledge of those problems’ existence, wasn’t the important thing in the 90s, and Hobsbawm notes this. Nobody was interested in solving these problems. Liberal capitalism had defeated Marxism-Leninism, technology every day defeats the old order, new ideas defeat old, and at the very core, the perception beats the reality. The rampant failures were covered up over and over again, and society convinced itself that everything was fine. Over time people forgot that it was just cautious, tepid optimism about the future and began to sincerely believe in the narrative of the 90s as some kind of dawn of a new, grand age. And for a time everything was okay. And then it wasn’t.

A similar story of misplaced optimism can be told through the employees of Enron, and to a lesser extent, the financial caste in general. Enron was being lauded with award after award — it was named Fortune’s Most Innovative Company six years in a row — and investors kept buying and buying the stock, driving up its price. Internally, the lower employees were staking more and more of their retirement funds in Enron stock, confident it would do nothing but keep rising, and the executives could only dream of more and more success snowballing with more and more markets, ventures, and products. Enron was named by many investors one of the most stable places to work at in the country. Of course, all of this was a mirage. Fastow’s network of shell companies was buckling under the load placed on it, deals were publicly drying up, and removed from the fantasy-world of mark-to-market accounting, the company was making next to no money. Even to outsiders who didn’t know about the company’s inner workings, the constant profits were rather suspicious to a trained eye, and a number of analysts did catch on to the real state of the company before it came apart. Enron quite clearly could not go on forever, and most everybody knew this. But like the greater society in the 90s, this was not important to Enron, and to the web of other big-name companies involved in its fraud, like Merill Lynch and Arthur Andersen. All the warning signs were not so much acknowledged and ignored as they were pretended to not exist. So long as they could keep the perception up, so long as the debt was hidden in Fastow’s shell companies, so long as they kept reporting profits, the perception of Enron as stable, successful company was indistinguishable from the practical reality. The executives began to believe their bullshit, for lack of a better term. They spent so long in that financial fantasy world that it started to seem real. “It’s all about the rationalization that you’re not doing anything wrong” [1] And maybe the company, in a sense, was doing nothing wrong. Maybe everything was okay. And then, of course, it wasn’t.

Epilogue: The Twin Twin Towers

Just like America is under attack by terrorism, we’re under attack. [1]

In late 2001, the optimism, the faith in liberal capitalism, the belief in the supremacy of ideas in technology, it all collapsed, and in those Twin Towers billions of dollars and thousands of lives were ended — in both the Enron Complex and the World Trade Center. All of the problems that were all too well known before had come to roost, and spelled doom for the systems that gave birth to them. And for Enron, this is where the story ends. The bankruptcy proceedings play out, the company’s actual assets are gradually sold of to various other companies, executives found to commit serious crimes are indicted and made to serve jail time. The aftermath of the Enron debacle is pretty much played out, and only still exists in the history books and as a business ‘what not to do’. But when it comes to the aftermath of 9/11, the aftermath of the 90s, we are not so lucky. Society can’t and didn’t just fold up and dissolve. We are living in the 18 year — and continuing — bankruptcy proceedings of the world. And like Kafka’s indefinite postponement, we lumber on, living with the system of liberal capitalism that has been defeated in a ideo-cultural sense by 9/11. The perpetrators, too, are very important to this understanding. 9/11 was committed by radical islamic terrorists, who did not seek to promote a counter-system to liberal capitalism. The great nerd himself Fukuyama even realized this, writing in 2001, “it makes more sense to ask whether radical Islam constitutes a serious alternative to Western liberal democracy” [9] Liberal capitalism was left without a clear enemy to prop itself against, as in the Cold War, and without belief in the collective fiction that it’s able to justify itself, as in the 90s. The guidelines of the 90s thus still continue to this day, but without cause — they’re not believed in, they provably don’t work, and produce societal catastrophe. This era of confused hopelessness, working off a system we know isn’t working yet can’t articulate an alternative to, this, in essence, Capitalist Realism, is what I believe will paint the 21st century. But who knows, maybe some precocious writer in 2119 will pen an article detailing the foolish pessimism of the early 21st century. In any case, I leave you — I leave us here, in the ashes of 1400 Smith Street, Houston, with a million miles of shredded paper floating on in the wind around us.

Citations

[1]: Gibney, Alex, director. Enron: The Smartest Guys in the Room. Magnolia Pictures, 2005.

[2]: Hobsbawm, Eric. The Age of Extremes: the Short Twentieth Century, 1914–1991. Abacus, 2011.

[3]: Fukuyama, Francis. The End of History and the Last Man. Penguin Books, 2012.

[4]: Bush, George HW. “1992 State Of The Union.” Washington, D.C., United States Capitol.

[5]: Thomas, C W. “The Rise and Fall of Enron.” Journal of Accountancy, 1 Apr. 2002.

[6]: Robichaud, M. “Introducing Cyberskater: The Undefined Lovechild of the Y2K Era and What Cyberpunk Meant During It” Medium, 21 Feb. 2019.

[7]: Meek, Glyn. “The Good Old Days of the Dotcom Boom.” Computerworld, 27 Mar. 2011.

[8]: Roczniak, Justin, director. Elon Musk’s “Loop” — It’s Bad, Folks. Youtube, 19 Jan. 2019.

[9]: Fukuyama, Francis. “History Is Still Going Our Way.” The Wall Street Journal, 5 Oct. 2001.