The Obscene Invention of California Capitalism

The Obscene Invention of California Capitalism

The Obscene Invention of California Capitalism

A conversation with Malcolm Harris about his new history of Silicon Valley, Palo Alto, the West Coast’s settler ideology, and recent turbulence in the world of tech.


When gold was found in the American River in 1848, a brand-new world was born—one that thrust Northern California into the perpetual spotlight, and one in which the market’s insatiable appetite for “innovation” solidified, however ironically, the region’s loyalty to draconian conceptions of racial order. The miners are, in effect, still here—their wash pans have just become iPhones—and still doing their part to uphold a long-standing tradition of the American West: overpromising and under-delivering, all while devouring obscene amounts of global assets in the process. In Palo Alto: A History of California, Capitalism, and the World, journalist Malcolm Harris sets out to identify the origins of Silicon Valley’s doctrine of abundance and rigorously traces its technocratic lineage all the way back to the Golden State’s early opportunists.

Readers of Harris’s earlier books—Kids These Days and Shit Is Fucked Up and Bullshit—will recognize in Palo Alto the author’s biting Marxist critique, deployed here to expose the structural mechanisms of a place so shrouded in its own mythology. I spoke with Harris about the continuous rebirth of the California settler ideology, what a cohesive assessment of the state’s storied tradition of resistance might look like, and what it means that Silicon Valley—especially considering the recent turbulence in tech—exerts dominance in the realm of finance capital. This interview has been edited for length and clarity.

—Emma Hager

Emma Hager: You write that the establishment of California was uniquely a pet project of the US government, more so than other roughly contemporaneous Western states. Can you explain why?

Malcolm Harris: There are a number of particular things. The Gold Rush, as it occurred, was a pretty dramatic world-historical event. It also coincides with the emergence of a financial form, as banks get set up in California. Finance development is really, as much as anything, what’s taken over the state, and that ties directly to the land quality.

It’s also worth noting that one side of the state is pointing directly into the Pacific Ocean, which is the last link in the chain of the global capitalist system. The state becomes one of the more globally important centers of capitalism. Also, the rush of wage laborers to California, from other states and from around the world, pushed technology forward really quickly. It’s a place that has turned to capitalist technology over and over again, and one of those capitalist technologies is the racialization of labor throughout the world, which was important for the development of the 20th century.

California history is way thinner than other parts of US history—it’s present-weighted, which means a lot of the best studies of the area are coming out of disciplines other than history, and more specifically out of the ethnic-studies revolution that happened here. This means you have an almost organic production of a knowledge form that is now just being turned on itself. All this to say, while on one level I was surprised this project hadn’t been done before, on another, I don’t think you could have done this project earlier.

EH: As you write, “The Gold Rush had started, finished, and transitioned the state to a new economic foundation.” Can you explain, in plain terms, what that “economic foundation” was?

MH: Well, capitalism! If you think about the 19th century and the proletarianization of the world that’s going on at that time, then this period is one of global transition to a new system of organization. Now, there are well-developed debates about when capitalism actually started, but the question of when did capitalism succeed as a global system is not very broad. That’s pretty clear, and that happens with the incorporation of California, China, Australia, Japan, and the connection of this, say, belt, across the world, largely with the incorporation of California. This arrangement not only transitioned California, but it also transitioned the world into what was a univocal system of organization and production. And, with California, we also see the development of not just the agribusiness but of banking—Bank of America specifically—that surrounds the agribusiness, and with them just the ludicrous amount of world capital that flows into the area. I was shocked when I read the figures; I think it was around $1 trillion from Europe going into railroad securities. Those figures make all that tech-bubble stuff look like—

EH: Child’s play?

MH: That, yes, but more of a continuation, really.

EH: You claim that whiteness was the “core organizing principle” of California. Could you detail for us how that played out in terms of the cycle of exploitation and then expulsion of the state’s early, nonwhite labor forces?

MH: Whiteness is still figuring itself out. White people were still figuring out the bounds of whiteness during this period, and California became the real headquarters for that project, because there are immigrants coming from so many places. The question becomes: Are Southern Italians going to be considered white? Are Syrians going to be considered white? What are Indians going to be considered? Are Japanese people going to be considered white? These deliberations are especially playing out in the agricultural labor sector, since that was the main channel for immigration to California. If you review the jurisprudence about white racial formation—like, there are actual Supreme Court cases about whether or not the Indians or the Japanese count as white—a lot of these cases emerge from California, which is not at all a melting pot, and it really shows how segregation is going to keep playing out in the United States.

EH: Let’s discuss the Santa Clara Valley, and let’s start with one time governor Leland Stanford. He sort of self-exiled himself to this place, just south of San Francisco, that would become Palo Alto. Why does he move there, and, in turn, why does he start Stanford University?

MH: Anyone who’s spent time in San Francisco knows Nob Hill. Its original name was Nabob Hill, as in the rich courtiers. That’s where the big Stanford house was, on top of Nob Hill, and everyone knew it. And it seems like a really nice place to live, until all the people who work for you and are really mad at you start showing up outside your house all the time. The 1860s and 1870s were a very fraught time for industrial relations; this was a time of rapid proletarianization, and a period of pretty intense labor struggle. Basically, it was Stanford’s job to be a front man for capital in California. He was the railroads guy, even though he, out of the four associates, did the least amount of work. What his job really was was standing out front, and that was a really bad time to be a capitalist who was standing out in front of capital. There were constant threats against him and his family, and so, like a lot of rich people both in the 1870s and today, Stanford moved to the suburbs to avoid the class conflict that they had themselves caused in the cities.

In the suburbs, Stanford ends up starting this stock farm for trotting horses. He puts insane amounts of money into this project, and there’s all sorts of fun technological externalities, like the invention of movies. With this trainer, Charles Marvin, Stanford works out something called the Palo Alto System, which involves shortening the period of development for these horses so that they can sell them earlier in the cycle. Basically, they come up with this new production logic to apply to this old product. In it, we can recognize something of the Silicon Valley way: The project never really scales the way he says it can scale, and it never informs the production of every horse in the United States, which was his initial idea.

While Stanford is working on this project, his beloved only son, Leland Stanford Jr., ends up dying as a teenager. This devastates the town; Stanford and his wife, Jane, planned to open Leland Stanford Jr. University in his honor. And then, after Stanford Sr.’s death, his widow sells the horses and the stock farm and transitions it fully into a university, although that institution pretty strongly keeps intact the principle of the Palo Alto System.

EH: To your mind, what’s the most relevant or analogous contemporary example of the Palo Alto System as it plays out today?

MH: I mean, I think you can just look at the finance-startup culture as some extension of the Palo Alto System that you’re optimizing for the presentation of potential, in that you’re trying to shorten the business cycle before you get fired. Tech companies and Silicon Valley have done a really good job of this—look at Instagram, which gets bought for tons of money before it’s really even a company. You can even go back to Genentech, let’s say, which really launches tech as a concept, and also a scientific concept as a company. And it’s that potential that then provides the financing for these concepts to actually grow into a company that says it could be based on its potential. So that idea of shortening the production cycle, acquisition, and then it doesn’t really matter whether or not it works out exactly at the end. Of course, this cycle is very wasteful. If a company doesn’t show that it’s going to scale to some world size, then it can’t really get funded even if it’s good or useful, or even if it’s essentially profitable at a smaller scale.

EH: I see one of the central tasks of this book as to debunk the “great man” or “boy genius” myth that permeates Silicon Valley, that their existences are devoid of social and market forces, or even influence altogether. To do this, you forge a lineage between these men and their predecessors in the region—and often back to philosophies that were being cultivated at Stanford specifically. Could you extrapolate on the types of eugenic thinking that took the university by storm in its early days?

MH: David Starr Jordan, the president of Stanford University, took over the institution after the death of its founders—which he may or may not have been involved in causing! He was an evil dude. For a while, he had done a pretty good job whitewashing his records, but he was a straight-up eugenicist. And eugenics was one of Stanford’s most important ideas, to the degree that Jordan and other faculty developed this short-lived ideology called “bionomics,” which we can still see under different names as the underlying ideology of the valley. That is, the application of capital to the existential functions of man—the idea that some people are better than others, and that our job is to improve our ways through the cultivation of our better genes.

You have to come up with all sorts of racial typology to do this; these men were coming up with all sorts of ways to try to figure out how we keep the Italians from infecting the rest of the white people once the Italians start moving to town. These Stanford men end up playing a very important role in designing whiteness. To be fair, eugenics played a huge role throughout academia—I don’t want to let Harvard off the hook—but this ideology was a priority to the ruling administration at Stanford, and that administration makes real clear choices about the future of their institution based on this thinking. There’s this mentality that they have to be really good at whatever the highest-tech, most important fields are going to be, so that they can place Stanford graduates in those fields and become influential worldwide.

EH: Let’s discuss Stanford graduate Herbert Hoover. Understanding his political philosophy is pretty crucial to identifying Palo Alto’s orientation toward the federal government, and the social and economic buttressing that kept the place profitable, from the early days to the Cold War–era manufacturing of weapons to now. Define “associative state” for us—a hallmark term of the book.

MH: Hoover ends up being a really important figure, and a product of Stanford pretty directly, and they understand him as such. They sort of produced him and really set him up to be a mining engineer. But he very quickly doesn’t do that, and instead sort of becomes the equivalent of what a hedge-fund guy would be now: His job was to go and improve mine financials, which meant a lot more paperwork than actual mining. So, over time, he transitions from being a mining guy to a finance guy and travels all over the world. He’s sort of like the Forrest Gump of that century: He was there for the Boxer Rebellion; just dodged the Bolshevik Revolution; was there for World War I. Eventually, he ends up the leader of the effort to get Americans out of the continent. Stanford sort of gifts America the man they needed at the moment. And this really influences the model that’s being built in California at the time.

Historians famously refer to the Hoover administration, once he becomes president, as the “associative state,” which effectively is the act of bringing stakeholders—and business stakeholders predominantly—into a sort of win-win relationship with the state to try to achieve large projects. And really, it’s no coincidence that the associates are the ones who built the railroads, who end up paying for the university. And then that becomes a model for a government under Hoover, where, whenever he has a chance, he’ll try to create a structure of rich friends who can run the world. Because in terms of that logic, the most efficient, smartest way to run everything is obviously by putting the best men in charge.

For a while, this goes very well for him. He has a sort of heat-check moment, where he becomes the head of the food program. He brings food into Europe, and they call him the “food dictator” because, again, it’s just him making decisions with his rich buddies within the food industry.

By the 1920s, he comes back to the United States, where he hasn’t really spent any time since he graduated Stanford, but he is this bipartisan national figure. He wants to be president, and thinks both parties should nominate him to be president. And he probably could have pulled it off at the time, since politics didn’t look like the way it does now; it was really more of a backroom sort of nominating procedure, and both sides got kinda mad at him for trying to field the nomination in public. He ends up leading two Republican administrations before his own, and as the head of the Department of Commerce, he really sets up the American economy for the 20th century.

EH: Since the dramatic fallout of Silicon Valley Bank last week, federal regulators have stepped in with what amounts to a bail out plan. Does this not seem like some iteration of the parasitic relationship between Palo Alto industry and the state that solidified during the Hoover administration? 

MH: Yes, in some ways, I think it speaks to the cooperative relationship, ultimately between Silicon Valley and national capital. We’ll see what arrangements get worked out between which Silicon Valley banking institutions and which Wall Street institutions; I don’t think that’s quite shaken out yet. But it does point to this whole cooperative history that people sometimes bely when they talk about tensions between East Coast capital and West Coast capital—the history really shows a much more cooperative relationship than what people might expect.

EH: I’d like to shift gears a moment and acknowledge that because of the state’s strong adherence to its white-supremacist roots, there has also been a long tradition of resistance in California. I’m thinking firstly in terms of labor. Worker resistance is one of the largest, potentially unforeseen consequences of the capitalists’ needing such a massive workforce from the start. You get into the history of the Socialist Revolutionary Party—the first of its kind to form in the state, around 1905—and also that of the Industrial Workers of the World, or the Wobblies. Can you describe the early tactics of the IWW, and what the California labor landscape looked like back then?

MH: California labor goes through many periods. During the pre-IWW period, California labor had really been split up and also confounded by this process of settlement. At the time, you had a lot of white workers who thought of themselves not as workers, but as settlers or homesteaders with entitlement to the land. This made organizing around class lines very fraught during that period, and also for a long time afterward. But the IWW, as well as a bunch of other internationalist currents that coalesced into the IWW in the West, are—by way, mostly, of farm laborers in California—bringing together a lot of different political thought from around the world. This is a world that’s churning and undergoing major political development. Through workers, you had anti-colonial thought coming from East India and from the rest of the British Empire into California as well. And, at the time, there was sort of a safe haven for anti-British thought in the state, partly because David Starr Jordan personally was not a fan of the British. So, even as the state becomes a home for capital, it also becomes a home for anti-capitalists, and this happens even in Palo Alto specifically. I was surprised to learn about this; I didn’t know so much about the Palo Alto anarchist-communist-radical club of 19-whatever. It was crazy to read about this stuff!

The organizing of this polyglot California workforce then falls to really far-left-wing forces, which coalesce in the IWW—which, at the time, is a multi-left, internationalist, revolutionary workers’ organization. It’s an industrial union, one big union. Mind you, this is pre–Bolshevik Revolution, and so you haven’t quite yet had the split on the left over such questions, and especially in California, where everything was a bit further out and the political lines weren’t as clear. So they were able to develop this unique kind of left—at least as far as the United States goes during that period—that’s led by somewhat whacky folk. You’ve got to be real far-left if you’re going to go all the way out to California and organize farm workers there, where the conditions suck and they didn’t bring in a ton of money, so there wasn’t the same promise of rewards if you could organize these people. And where the growers themselves—who workers were organizing against in the orchards and canneries—were the law, and they were perfectly willing to send folks to beat the crap out of you. The organizers’ job was really hard, and that led to a certain kind of hard-scrabble, anarcho-y labor movement in California.

Mike Davis does such a great job of telling this history, so people might know a little bit more about the IWW. At some point, a good part of the IWW gets absorbed into the West Coast Communist Party after the Bolshevik Revolution, which is very different in its temperament and vibe than a lot of the other communist organizations in the United States and throughout the world, because it’s so internationalist, so anti-racist, because they’re dealing with a different workforce composition than elsewhere in the country. The politics of the left in California, I think, became qualitatively different during this era.

EH: Beyond shared geography, do you feel like there’s enough of a traceable through line between the efforts of various parties, organizations, and thinkers throughout the state’s history to make some sort of statement about what the unique but also cohesive tenets of the California communist tradition might be? I don’t mean to gloss over the left’s subsets and factions, but still, the conditions of this state catalyzed the mentioned revolutionary workers’ unions, groups like the Black Panthers, and then, of course, guided the crucial work of scholars such as Mike Davis, Angela Davis, Ruth Wilson Gilmore, and so on.

MH: I think we’re still very much in the process of working all this out as a tradition. Even when we use “California communist” as a phrase, here, that’s not totally a real thing that people talk about yet. I hope that maybe one of the outcomes of this book is that people start to think more seriously about that legacy. Again, Anglo-American Alta California history is so short that, if we wanted to think about this tradition that is itself so unsure, it wouldn’t be so surprising if we started that project now. Even within the larger context of US left-wing history, we’re all just standing on Mike Davis’s shoulders. But I think that’s changing, and people are starting to pay a lot more attention to the work of Cedric Robinson, for example, who should be considered an important California communist thinker, and whose own history is important to that story. So, if people start thinking about that historical line as something distinct and worth investigating—especially if people start thinking about racial capitalism and taking that idea seriously, about what role whiteness and racialization play in the history of capitalism—California communists have a lot of experience there, and we can learn a lot from that history.

EH: To a similar point, what do we do about the hippies? I mean, I’ve always seen them as a reactionary breed, and their privileged retaliations against the mores of East Coast society a flimsy stand-in for anything that might have resembled an actual political ideology. Still, in the book, you take what I think is a more ambivalent approach to the hippies and even seem to suggest that our entire historical framing of them is a little misguided. Would you expand on that?

MH: One of the myths of California history that I found myself fighting against is the conflation of the New Left and the counterculture. The counterculture became a very popular cultural movement. And it’s funny—there’s this history book written by one of the teachers at Palo Alto High School, which I attended, about teaching there in the late ’60s. One of the things she said that was really interesting is that students would get frustrated with the implication that the counterculture was necessarily connected to politics. There were more conservative students who were like, you know, “We get along and we like the Rolling Stones too, and it’s not a radical political thing—in fact, we don’t care about politics.” And this was a very popular position at the time, right? So it’s interesting that people conflate that with the New Left, where people were engaged with worldwide political struggle on the opposite side of the country. That’s a marginal population, whereas the counterculture transcended political boundaries and was not at all about that political struggle. This all led to some confusion at the time, too. You have the case of the anti-war protesters who invited Ken Kesey to address a crowd; they had this idea that the One Flew Over the Cuckoo’s Nest, “Acid Test” guy was going against the war in Vietnam. But he didn’t speak to that at all, and instead thought the anti-war people were obnoxious, which I think is stupid. Kesey was politically naive and represented the worst of that sort of hippie thought.

So I feel bad for some of the New Left people who are conflated with the counterculture and hippies when they were relatively straitlaced in the aesthetic sense, particularly in the Bay Area. The revolutionary movement was disciplined; discipline was very important to the New Left in the Bay Area, and so it’s odd that that gets mixed up with the anti-disciplinary hippie wing of the culture. Ultimately, hippiedom was more of a mainstream thing in California than the New Left was. And this conflation warps and labels the California ideology. This is a historical mistake that we can start correcting.

EH: It seems that, in order to grow and strengthen the reach of Silicon Valley, developers keep trying to sell us on this concept of “techno-optimism”—in other words, the idea that technology is the one true path forward to a better world. Is there any reason to have earnest faith in this belief, or do you think it’s all in service of the technocrats’ bottom lines?

MH: Well, I think the objective case for optimism about the continued development of capitalist society in harmony with the ecology of this planet is a tough case to make, to the degree that some people are just no longer making it. I think the interplanetary conception of humanity is pretty delusional. Think about climate change, how fires continue to close in on the Bay Area itself, but there’s still someone who could look at it historically and say, “Look, what capital does is overcome limits. That’s the whole function of the system, to come up against limits and find ways to overcome them.” And that’s the story of the state in some ways, right? That’s what California represents. Marx writes in a letter that I didn’t include in the book—it’s sort of this hilarious, offhand comment that he makes in a letter to Engels—that now that capital has Asia connected to California, it seems like the revolution in Europe probably won’t work, because they’ve still got all this other territory to keep building capitalism in, so we’re probably going to lose a little corner of Europe. That observation is an important thing to note about the history of the world: that California itself represents people coming up against the early limits of the capitalist system and then having to think about the class conflict that they’re running into. Same thing with Leland Stanford: He runs into the conflict of his laborers wanting to drag him from his house and kill him. How do you get around that conflict?

That’s what it’s about—you constantly find limits and then you find new ways to work around them. And so if you’re pro-capitalist, or a capitalist ideologue, you recognize that the system sees limits as obstacles to overcome with the help of capitalist technology. Empirically, is that a good response to, say, climate change? If you look at the United States’ response compared to the Chinese response? I don’t know. But you can see where, if you believe in this system—or if, earlier on, you were a bionomicist—and if you believe that there’s something existential about the principles of capital and competition, and that people are not equal, fundamentally, then this is the natural and the only realistic organization of humanity in the world. Of course, I do not believe that. I believe that people are fundamentally equal and that capitalism is a distortion.

EH: I was in Vegas recently for a conference on the state of the Colorado River, and of course the most effective solution to save the river would be to incentivize drastic cuts in water usage, mainly by the agribusiness. But there were so many vendors trying to hawk apps that would supposedly make excessive water use more efficient. And that really crystallizes this idea of coming up against the limits and proposing outlandish solutions to a problem that can really only be solved by drastic intervention in a capitalist system.

MH: That sort of coordinated action is difficult unless it’s a coordinated action to improve their profits. It seems like they’re trying instead to find some possible action that would allow them to work around hard ecological limits.

EH: Well, there are certainly hard ecological limits when it comes to water supply. And this reminds me of your earlier point, where you mention that California history is so compacted and that the Gold Rush is astonishingly close to whatever we’re doing today. Our water supply and daily water use is still partially dictated by laws established to benefit the activities of miners and other early settlers.

MH: This is one of the big goals of this whole project, to get people to try and think about California settlement not just as something that happened in the 19th century, but something that is continually going on. You can talk about the bulldozing of the orchards in the ’60s, too, as the process of settlement. They were still settling California into the 1960s. And that’s not even a century from the first settlements in some of those same places. When I talk about being the grandson of California settlers, I am talking about the 1950s.

EH: Do you think the tech bubble will ever burst?

MH: I’ll do that even more annoying thing, which is to ask you what you think, now that you’ve read the book.

EH: I mean, I’m inclined now to believe that the bubble will reinflate. Maybe I didn’t totally believe that before I read the book, because I wasn’t necessarily connecting the dots between the continuous renewal and abundance of California’s early days until now. I’ve no sense what the next thing might look like, but of course it’d be great if all these people ended up hitting the road; I fantasize about my obscenely high rent going down, that sort of thing. I doubt any of that fantasy will come true.

MH: I think that’s right. When you think of limits as possibilities, hitting more limits only means more possibilities. When there’s a bubble pop, you still have someone sitting in the chair when the music stops. Around Y2K, that was Jeff Bezos. Amazon sold $600 million in European bonds at just the right moment to survive the Y2K pop, and then they bought everybody and became the Amazon that they’ve become. We’re going to see the same thing again. There was a short time when everyone thought that we really needed to reinvest in domestic microchip production and stop all the speculative-finance-bubble nonsense and invest in building actual things. But then that lasted, like, five minutes, before everyone was like, “Look, that chatbot sounds like a real person! This company doesn’t have a business plan, really, but I’d say it’s worth $100 billion!”

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