The business legacy of the Sept. 11 terrorist attacks is today's Nervous Economy -- the pervasive sense that we can rely on nothing, there is no certainty and the other shoe is always poised to drop. That dangling shoe may be a U.S. invasion of Iraq, another terrorist act, or the latest instalment in the continuing series of corporate scandals.

More than anything, this sense of dread is depressing stock markets, restraining capital spending and travel. It touches all kinds of decisions -- and it will take time to get over it.

The events of Sept. 11, on their own, may seem less important than they did on Sept. 12, but they are part of a chain of events that are powerful in their cumulative impact. They have wiped out the self-confidence of the 1990s, and replaced it with an era of jumpiness.

The confidence-eroding sequence began with the bursting of the dot-com and telecommunications bubbles in 2000. That set the stage for a fragile economy and erratic stock markets. Then came the Sept. 11 attacks, which nipped any hope of a quick rebound -- and implanted the sense of a world that is more scarily unpredictable than had been thought.

Even as the mood seemed to lighten in 2002, it was darkened by events that, in the long term, may have more enduring impact on markets and business than Sept. 11. The accounting and securities scandals around Enron Corp., WorldCom Inc. and even that nineties icon Martha Stewart have helped keep markets in turmoil. The rash of mixed economic signals, the collapse of the Argentine economy and Middle East angst have only stirred the skittishness.

It is "a period of tempest," says Robert Brown, the president of Bombardier Inc., the Montreal-based transportation giant, who knows more than most about the uncertainty. The airline industry, Bombardier's most important market, has yet to recover, and companies are still nervous about making investments, particularly in luxuries such as corporate jets.

But this Nervous Economy has also been captured in smaller, more personal experiences. Arlene Beck, a senior vice-president of large insurance broker Aon Corp., barely escaped death in the World Trade Center on Sept. 11.

Ms. Beck, a Canadian who has worked in New York since 1998, was in her office on the 104th floor of the second tower hit but managed to get out of the building a few minutes before it was struck by a terrorist-commandeered airplane.

She lost 176 colleagues, including a number of Canadian friends. She returned to work a month later in a Manhattan that was determined to go about its business, but remained haunted by what had happened.

Over the next few months, she saw survivors jump almost out of their skins at the sound of fire alarms. She panicked when she would see an unusual concentration of police and fire vehicles, or when her commuter bus got stuck in the Lincoln Tunnel. She gradually got over the extreme fear, but even now, she observes that New Yorkers are consuming more alcohol at lunch.

The lingering impact hit home recently when her 8-year-old son, who had never discussed the terrorist attacks, asked what floor she was working on now. Ms. Beck explained that her office was on the eighth. When he asked if a plane could hit her building, she assured him terrorists were unlikely to use the same method of attack, but privately she worries that New York remains a target.

Yet even if the business world -- and particularly New York -- remains skittish, it has not experienced the kind of life-altering transformation that was widely predicted in the wake of Sept. 11.

The hours and days after the attacks summoned sweeping predictions that the nature of business would be altered. Priorities would shift from making money and building careers to spending time with family and friends. People would not work as hard. Government would emerge as a more important player, after decades of declining influence. Globalization would retreat in the face of heightened border security.

Some of those things may yet transpire -- certainly, big government is making something of a comeback -- but Sept. 11 cannot be seen as a transforming, revolutionary and isolated event on its own.

"I was struck by how little has changed," says Rosabeth Moss Kanter, a Harvard Business School professor and one of those who, in the week of Sept. 11, predicted dramatic transformation in the conduct of business.

"People kept talking about changing the world, but practically it didn't happen."

That's not to say specific industries and companies weren't affected -- although many of the problems had already surfaced in the shaky pre-Sept. 11 economy. Business travel cratered, as airline customers coped with long waits and more intense security. Advertising slumped and the media industry suffered. The insurance industry was hit with massive claims, and uncertainty over terrorism coverage. All are significant effects, but modest in terms of what was predicted.

Ms. Beck knows the danger of misreading signals. For several months after Sept. 11, she found it hard to recognize the New York business world. Something had changed -- life had toned down. Even the car horns on the street were not honking as insistently. At Aon, client files were missing amid the smoke and the rubble of lower Manhattan, but the customers didn't seem to care that much.

"People were very tolerant of the fact that we had not one file, not one piece of paper, we had nothing," Ms. Beck recalls.

Then, about Christmas, the mood changed again. The business world decided those pieces of paper were actually important, and competitors were exploiting that deficiency. "Clients were saying, 'Okay, yeah, but it has been three months. You don't have a file and I accepted that two to three months ago and I don't accept it now.' "

The transformation to a kinder, gentler work world had not happened, and it was back to business as usual. Ms. Beck was, in fact, relieved to find that the workaholic tendencies, the impatience, the insistent demands that made New York such an exasperating but vital place to do business had returned.

Her experiences underline the dangers of making sweeping conclusions about the impact of individual events, even those as horrific as the Sept. 11 terrorist attacks.

Ms. Kanter suspects that when the business history of this era is written, there may be more emphasis on Enron and the accounting scandals than on the World Trade Center. The ethical lapses, she says, "are going to be rewriting the rules of the game for capitalism, and reversing the trend of the decade when business could do no wrong."

But she can also see ways in which Sept. 11 and the Enron fiasco are linked. The terrorist attacks were directed against structures and cities that were symbols of U.S. capitalism, which in the nineties had proclaimed itself triumphant in the clash of ideas. The attacks were carried out by people alienated from that system, who did not accept the triumph of free-market consumerist values.

Then, the Enron scandal exposed how misguided that triumphalism actually had been. At the time that U.S.-style capitalism was declaring itself the winner, the system it had created was being undermined by many of the people who benefited so grandly from it.

The Sept. 11 tragedy heightened the feeling of betrayal that is rampant in the United States. On top of all the suffering and sacrifice, corporate leaders were robbing the system. "The feeling here is: How greedy can you get?," Ms. Beck says.

The public distaste over the accounting allegations gave regulators and politicians incentive to intensify the hunt for guilty executives, and to bolster the argument for increased government oversight of accounting and governance.

In the media-saturated United States, every major event is treated as the most important thing that ever happened to that point. In fact, it is not necessarily an obviously cataclysmic happening, such as the Sept. 11 attacks, that leaves the most enduring impact.

Ms. Kanter sees a compulsion by business analysts to overhype any phenomenon -- on the upside or downside. She saw it in the nineties, when the thinking was that "everyone should be an entrepreneur, everyone should go into business, global capitalism has won and technology has changed the rules of the game forever."

"This was not dead wrong but wrong in terms of the magnitude of the claims," says Ms. Kanter, who wrote a book, Evolve!, about Internet companies. Now, we are seeing the overkill in the other direction, as society pays for the excesses of the nineties. "We're overdepressed now, but isn't that the nature of capitalism? It swings to extremes and then corrects itself."

And Sept. 11 may emerge as an even more important economic event. Its biggest legacy is the delineation of the deep division between the Western and Muslim worlds. In the next weeks and months, that division could widen with an invasion of Iraq, and continuing violence elsewhere. That could turn the Nervous Economy into something more real and frightening.
A troubled year
Markets have been whipsawed by the events of the past year, from the terror attacks of Sept. 11, through the stream of corporate scandals and most recently fears over possible military action against Iraq.
2001 low: Sept. 21 - 8,235.81
Post Sept. 11 low: July 23 - 7,702.39
Friday's close: 8,427.20