Overinvestment and overcapacity will be the outcome of the internet boom. The internet and IT revolution is a huge deflationary force on the capitalist economy. That is the result of system that develops technology through competition and private capitalist investment. Intense competition means that very quickly the profitable advantages gained by the first company to use the new technology quickly disappear. The eventual outcome is that everybody uses the new technology and nobody gains extra profit as a result.
Investment eventually shoots up much faster than the extra productivity of labour created.
In other words, the rate of profit in relation to each unit of capital stock begins to fall. The faster the technology is adopted, the quicker prices fall, and the speedier profitable advantages disappear. Eventually, the large swathes of the new industry will go belly up from over optimistic investment. In the 1850s there were hundreds of railroad companies formed, asking investors for money. Similarly in the 1920s and 1930s, there were hundreds of automobile companies formed.