Dirk Diggler is standing on a quiet street in Southern California. Generously supplied with a natural talent for adult films, Diggler has fallen on hard times as the seventies have become the eighties and his appetite for fame and cocaine has outlasted the willingness of almost all of his friends to tolerate him. A pick-up rolls along the street next to him and a brief exchange with the driver leads to an encounter in a vacant parking lot where Dirk performs an autoerotic exhibition for $10. The scene should seem sordid and dehumanizing, but Diggler has made a career out of this sort of performance and trading on his unusual endowment so perhaps we find it easier to accept. This situation is a not-entirely-surprising part of the world he inhabits because in "Boogie Nights," Paul Thomas Anderson's breakthrough film, we get a look into the adult film industry, a sort of circus freak show in which Diggler and his co-stars exhibit themselves for the idle amusement of an age that has left behind the innocence of bearded ladies and elephant men.

The film ostensibly chronicles the rise and fall of Eddie Adams (Mark Wahlberg), a seventeen-year-old nightclub dishwasher who leaves his abusive suburban family in 1977 and enters the world of adult films as a vital new talent who fits into a comfortable niche in a 'family' of pornographers to whom Jack Horner (Burt Reynolds) is patriarch. But the film truly gives us a glimpse into the lives of all the members of Horner's extended family of adult film stars: Amber Waves (Julianne Moore), Diggler's co-star who has lost custody of her son and compensates for that loss by playing mother to Diggler and "Rollergirl" (Heather Graham); Buck Swopes (Don Cheadle), who has entrepreneurial ambitions beyond adult films and seems lucky enough to overcome some setbacks and make his dreams come true; Scotty, a stagehand on Horner's set who is fascinated by Diggler and seems not to be able to decide how to handle it; and Reed Rotchild (John C. Reilly), who becomes Diggler's best friend. The real greatness of Anderson's film may lie in how deftly he handles this large ensemble and, in some of the most unlikely circumstances imaginable, manages to give each of these characters their own quiet moments of genuine humanity.

By New Years' Eve, 1979 the surrogate family Horner has gathered around himself is riding high and everyone is excited to ring in the new decade. "In the eighties, everything will get even better!" says Dirk Diggler, but there have been signs foretelling disaster along the way. The evening ends on a note that makes it clear that things can never be the same again -- soon the weight of their excessive lifestyles will collapse on top of them. The 1980s bring adult films into the era of videotape, changing the economics of the industry entirely, but economics alone cannot explain the decline in which these people are caught. As much as it is the story of a peculiar and enclosed subculture -- the adult film industry -- Boogie Nights is also a story which spells out the consequences of the "Me Decade" for America-at-large. Each character in his or her own way eventually pays the price for all of the sex, the drinking, the drugs, and -- worst of all -- the endless narcicism that has swallowed up their lives.

Perhaps the most damning criticism this film faces is that while each character does confront a crisis stemming from his or her life in the world of adult films, none of them ever faces the horrible consequences they probably should have. AIDS, for example, was already a killer by 1980 but its presence is never so much as suggested in the film. In fact, for every character the way back from the brink begins by reconnecting with the surrogate family surrounding Horner. Making pornographic films is ultimately a redemptive experience for these people, if only because it seems to provide the only loving environment they have ever known.

But none of this should give the impression that Anderson has romanticized pornographic films at all. In fact, one of the most brilliant sequences in the film relates the making of Diggler's first skin-flick. The symphony of exaggerated panting and moaning while he services Amber Waves is contrasted with close-ups of the film working its way through the spooling mechanisms of the camera: Jack Horner's films may be about sex, but there is nothing erotic happening for the people involved in making them.

Anderson has conceived a host of imaginative visual images for his audience. The comparisons which have already been drawn to Robert Altman and Martin Scorsese need no more justification than the mesmerizing opening shot of the film which begins on a theatre marquee, pans down to follow a car down the street, then Burt Reynolds out of the car, into a nightclub, through the nightclub to follow three different characters who pass each other and mingle with the crowd, back to Reynolds, until the camera finally falls on Mark Wahlberg for the first time and the take ends. The direction, the blocking, the timing, the imagination which a take like this requires boggle the mind. Anderson manages to include two more similarly impressive takes before the movie is over. From top to bottom, "Boogie Nights" is a finely honed piece of craftsmanship.

It is Mark Wahlberg and Burt Reynolds who stand out among this outstanding cast. Since his outing in "Striptease," Reynolds seems to be quietly finding a renaissance playing sleazy characters with perfect aplomb. His Jack Horner is so singularly convinced of the artistic merit of his work and of his fatherly devotion to his cast of pornographers that he acquires a strange sort of dignity simply because he seems to believe so strongly that he has it. The real story, however, is Mark Wahlberg who has shown real versatility in "Renaissance Man," "Traveler," and now in "Boogie Nights" as entirely different sorts of characters. Here, his Dirk Diggler is so perfectly shallow and clueless that we are forced to wonder whether he could ever have survived in the world outside adult films. At least we can say for him what is also true of every other character: he has found a world in which he can be a success.

It is difficult to say whether any of these characters is a victim. If they are victims, who has victimized them? Their families? Jack Horner? When Dirk Diggler says "I'm a big, big, big, big star" to a mirror in which his oversized member is all the audience sees of his person, the point is clear: he has reduced his own identity to include only what we see on the screen. The fact is that, in the end, he and all the rest have chosen to live the way they do. That may say a lot of sad things, but it does not make them victims. At best we can pity Diggler and his 'family' for the choices they have made, and in a film that makes no effort pretending to be about likeable people, that is no small accomplishment.