This is an okay story, but I do not agree with the insistence that it counts as steampunk.
The ending seems a little rapey to me. But the solution to rape is not "rape 'em right back." Tit-for-tat doesn't seem right with rape scenario. On the other hand, who is to say it doesn't work in the story culture? But it left me feeling uncomfortable and the other girl seems exceptionally sadistic and empathy-free.
Since some parts read a bit like erotica or a bad romance, I am happy for the dark turn towards the end. It made things a bit more interesting.
And there really is no argument that there is a scientific basis for the dream stuff. Crystals holding dreams is about the most MAGICAL thing I've ever heard. Until I read a bit further and read about dreams carved into crystals stealing the nocturnal willpower of distant persons and forcing them to do things against their will. That is nothing but pure MAGIC. Which is fine for a fantasy story. But it was driving me a bit crazy that there was a claim this was scientifically justified.
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So those were my thoughts about the story in general, now about the great Steampunk Definition debate.
There is a steam automaton in the background of one scene that is irrelevant to the story. That is the ENTIRE SUM OF TECHNOLOGY in the story. The argument that "steampunk things are happening in other parts of the world" is irrelevant. Just as stories which might as well take place at the grocery store do not become Science Fiction if you declare that said grocery store is located on a space station. It takes more than hydroponic tomatoes to make science fiction. And however we want to define steampunk, I think that it takes some amount of "steam" (a.k.a. anachronisticly advanced microprocessor-free technology) elements. (Punk is an altogether trickier subject, the term itself is widely abused.)
While cyberpunk is a sub-genre of attitude and philosophy as well as aesthetic, steampunk seems to be entirely about setting. Much like definitions of planets must either exclude Pluto, include far too many things to be useful, or be applied unevenly, a useful and fairly applied definition of steampunk must exclude some border cases. It seems unhelpful to classify anything with a zeppelin or a tophat somewhere in the story as steampunk. No technology is relevant or central to this story, all the elements work by plain and simple magic. I agree that steampunk need not be confined to Victorian England, but you can't just set something in the 1800s and declare it steampunk by theoretical (irrelevant) time period alone. And if we want to talk feelings, this story has a very magical, standard-fantasy feel. It has a lot in common with Hooves and the Hovel of Abdel Jameela, from a setting and feeling point of view, although that even feels more "punk" to me than this story.
Dragons don't make Fantasy, Fantasy sometimes makes dragons. I like that quote. This should be true in any subgenre. But I still don't see a definition of steampunk that gets this story included. Unless it is overbroad. Like Pluto is only a planet if way way too many things are. So better to define Pluto as not a planet, for the term to have any meaning.
And honestly, both wikipedia and I consider Steampunk a sub-genre of Science Fiction, not Fantasy. Magic is all well and good, and Steampunk generally isn't trying to be hard, but things tend to be approached from a rational angle.
-punk made sense with "Cyberpunk" and has been misused and abused ever since, and has increasingly been appended to things that are much less literary movements and much more trends of setting.
Am I ranting too much off topic here?