Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 3

As a journalist, a reporter, I sometimes have to read things I would not otherwise. My luxury as a freelance journalist has been to write what I want, for whom I wish, when I want, and charge what the market will bear. But even I, in the interest of good reporting, have to sometimes go to a source document I know I will disagree with, know I will regret having to pay money for only to put on a shelf or in an archive afterward never to look at again except perhaps to seethe.

Ben Horowitz, of venture capital firm Andreessen Horowitz, wrote a book, The Hard Thing About Hard Things and it’s one of those books. I already hated it because of the title when I ordered it from Amazon—ironic given what I used it for. I wrote about the book at Medium.com while talking about Horowitz’s colleague Benedict Evans’ views on Amazon’s profitless streak and its auditor EY.

Benedict Evans’ boss at Andreessen Horowitz, Ben Horowitz, has a funny strange — not funny ha ha — anecdote about auditor EY in his book, The Hard Thing About Hard Things. Horowitz tells the story of two EY audit clients, software makers BMC and HP, bidding in 2007 to acquire another EY audit client, software maker Opsware, then run by Horowitz. Opsware’s CFO was also an EY alum. BMC’s EY audit partner questioned some aggressive revenue recognition by Opsware for software upgrade contracts.

Horowitz says in his book that the aggressive revenue recognition approach had been approved by Opsware’s EY audit partner. EY’s national standards office was called in and insisted that revisions to the contracts must be made or else EY would insist that Opsware reverse its early recognition of the revenue. A reversal of the revenue would have forced an ugly formal earnings restatement by Opsware that could have jeopardized its share price and the deal. Even though Horowitz was able to get his clients to revise the contracts as EY insisted— he said the clients were large banks — BMC backed out of the deal and HP bought Opsware and Horowitz instead.

Funny… Horowitz doesn’t say that HP’s EY audit partners questioned Opsware’s EY partner and the aggressive revenue recognition approach the way BMC did. It’s possible HP and its EY auditor, also aggressively recognized revenue for similar contracts.

Peter Thiel’s book, Zero to One: Notes on Startups, Or How to Build the Future, is another one of those books that now sits on my shelf gathering dust.

By the way, last week I was in New York and went to see Dame Helen Mirren on Broadway in The Audience. Mirren plays Queen Elizabeth and the play recreates her Tuesday evening meetings with her Prime Ministers over the years from Churchill to David Cameron. In it I heard actress Judith Ivey playing Margaret Thatcher say the words I’ve quoted below that Peter Thiel admires so much.

Part 3, the last and final, of my paper for the University of Chicago Masters of Liberal Arts class, “Meaning and Motive in Social Thought”.

Parts 1 and 2 can be found here.

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What does Peter Thiel think will happen to democracy? What system does he think will replace it? He warns in Zero to None[i] that the revolution Marx predicted is a real threat.

Without new technology to relieve competitive pressures, stagnation is likely to erupt into conflict. In case of conflict on a global scale, stagnation collapses into extinction.

Even before he lost billions in late 2008 and early 2009, he was very pessimistic. [ii]

From the point of view of an investor, one may define such a “secular apocalypse” as a world where capitalism fails. Therefore, the secular apocalypse would encompass not only catastrophic futures in which humanity completely self-destructs (most likely through a runaway technological disaster), but also include a range of other scenarios in which free markets cease to function, such as a series of wars and crises so disruptive as to drive the developed world towards fascism, anarchy, or both.

Thiel would have made money if his timing hadn’t been so off. He has said more than once that he trusts the individual to meet the challenges of stagnation better than society. He likes to quote Margaret Thatcher:

There is no such thing as society. There are individual men and women.[iii]

Thiel, in an opinion piece penned jointly with chess master Garry Kasparov [iv], reiterated these views for the Financial Times in advance of an appearance at an Oxford Union Debate:

Above all the future will be created by individuals. Those with the most liberty to take on risk and make long-term plans, young people, should consider their options carefully.[v]

David Graeber, a contributor to The Baffler, “believes that both the nation-state and capitalism need to be replaced entirely.”[vi] Graeber interviewed Thiel[vii] during Thiel’s book launch blitz in late 2014. The two men, unsurprisingly, parted ways sharply on the kind of political environment that would encourage and support technological innovation. Mr. Graeber believes we should replace what currently passes for democracy with a genuinely participatory system of the sort prefigured by the Occupy Wall Street movement. The problem isn’t a lack of good ideas but that “the overwhelming majority of people are constantly being told to shut up.”

Mr. Thiel described himself during the debate as a “political atheist” and said people should spend less time trying to change the system. They can simply create things outside of it. The key to progress, Thiel said, may not be more democracy. Revealing his belief in the corporation as the framework for fixing what’s wrong with society, he described the real world as a place where innovative organizations are often “shockingly hierarchical. A start-up is really far from a democracy. People don’t get to vote on things.”

It should be noted that nowhere in any of Thiel’s writing, speaking or teaching does he talk about how to make ethical decisions, how much progress is good for society as a whole, and which kinds of innovation are moral or ethical. Thiel says he is a Christian. Does he plan to bypass old-fashioned morality when pursuing initiatives such as “The Singularity” and other utopian dreams, as Stephen Meredith says the “well-intentioned radicals of Dostoevsky’s Demons” did? [viii]

In the Prologue to The human condition, Hannah Arendt worried about a focus on Doing—here realized via technology— rather than Thinking—or science.

If it should turn out to be true that knowledge (in the modern sense of know-how) and thought have parted company for good, then we would indeed become the helpless slaves, not so much of our machines as of our know-how, thoughtless creatures at the mercy of every gadget which is technically possible, no matter how murderous it is.[ix]

Thiel is not the first businessman to believe he knows better what’s best for his fellow man than a democratically elected government. Lloyd Blankfein, CEO of Goldman Sachs, was questioned in 2009 in the midst of the most recent financial crisis about the level of compensation his employees earned and whether their paychecks, and ambitions, had become obscene.

Is it possible to make too much money? “Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.”

So, it’s business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God?

An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker “doing God’s work”[x]

Thiel also takes ambition and the work ethic very seriously. He called Europe a “slacker with low expectations” held back by the poor work ethic of its people and run by politicians that strangle technological progress with regulations that are a “cure worse than the disease”.[xi]

George Packer quotes one young entrepreneur on the insularity of the Silicon Valley elite:

Many see their social responsibility fulfilled by their businesses, not by social or political action. It’s remarkably convenient that they can achieve all their goals just by doing their start-up.” He added, “They actually think that Facebook is going to be the panacea for many of the world’s problems. It isn’t cynicism—it’s arrogance and ignorance.[xii]

It’s arrogance, and it exemplifies the Calvinistic determinism common in the tech industry. Thiel, too, sees corporations as the governments of the future and capitalists such as himself as their kings. When the libertarian view is taken to the extreme you get this:

You can preach compassion, equality, and be the biggest lover in the world, but there is an area of town for degenerates and an area of town for the working class. There is nothing positive gained from having them so close to us. It’s a burden and a liability having them so close to us. Believe me, if they added the smallest iota of value I’d consider thinking different …[xiii]

Thiel has always been a superior, but somewhat odd, specimen. He was a math prodigy, a nationally ranked under-21 chess player and a huge fan of Lord of the Rings by J.R.R. Tolkien. (Thiel names his business entities after Tolkien themes. Palantir is named after the magic stone in the book.) His image of himself as smarter than the masses is a big reason why he thinks Peter Thiel should be in charge. He delivered a lecture at Stanford where he explained his ideas of how startups should be run.

A startup is basically structured as a monarchy. We don’t call it that, of course. That would seem weirdly outdated, and anything that’s not democracy makes people uncomfortable. We are biased toward the democratic-republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups.

Thiel clearly likes to keep founders on when he invest in their companies. They make the best startup leaders precisely because they are typically so undemocratic. From his Founders Fund web page:

Indeed, we have often tried to ensure that founders can continue to run their businesses through voting control mechanisms, as Peter Thiel did with Mark Zuckerberg and Facebook…This brings us to another counterintuitive point: the best founders want to radically change the world for the better. To many investors, visionary entrepreneurs come off as naïve or worse – isn’t it safer/easier/more profitable to create a(nother) social network for cat fanciers than to try to cure cancer, defeat terrorism, or organize the world’s information? The problem is that all start-ups are difficult – long hours, low pay, and fierce competition wear on even the most dedicated teams.

The entrepreneurs who make it have a near-messianic attitude and believe their company is essential to making the world a better place. It doesn’t matter whether everyone agrees with the entrepreneur about the world-historical nature of the project – if the entrepreneur seeks an impact beyond his own payday and can convince employees of the same, the project is much more likely to get done.

In her book The Origins of Totalitarianism, Hannah Arendt tells us:

Totalitarian government can be safe only to the extent that it can mobilize man’s own will power in order to force him into that gigantic movement of History or Nature which supposedly uses mankind as its material and knows neither birth nor death.

Thiel believes in the superiority of the individual versus society to solve problems and improve life on earth. He promotes a utopian aristocracy that will be made possible by technological innovation initiated by individuals exercising their freedom outside the control of the state. His “Big Data” firm Palantir earns billions promoting the rationale it’ s better to develop technology like this, because “the alternative is that you will get very low-tech solutions that are enormously intrusive but have very little value, which is basically what happened after 9/11 in the United States”. That’s been called his “another Patriot Act” defense of invading privacy a little to avoid invading privacy a lot when the state is threatened by terrorism. He jokes blithely that that he’s not helping the state, he already is the state.

Ideally, Thiel would love to cheat both death and taxes, two things the rest of us accept as inevitable aspects of life and living in a modern complex society.

Tony Kushner, in the Afterword to his play Angels in America [xiv] writes:

Marx was right: The smallest indivisible human unit is two people, not one; one is a fiction. From such nets of souls societies, the social world, human life springs.”[xv]

Peter Thiel is still relatively young. Perhaps he will eventually change his tune. He may become more human at some point, via disease or disappointment, drop the hubris, and begin to accept his limits. It may help if he put down Leo Strauss and picked up poet, essayist, farmer and novelist Wendell Berry instead:

To recover from our disease of limitlessness, we will have to give up the idea that we have a right to be godlike animals, that we are potentially omniscient and omnipotent, ready to discover ‘the secret of the universe.’ We will have to start over, with a different and much older premise: the naturalness and, for creatures of limited intelligence, the necessity, of limits. We must learn again to ask how we can make the most of what we are, what we have, what we have been given.[xvi]

[i] Thiel, Peter, and Blake Masters. Zero to One.

[ii] Thiel, Peter A. “The Optimistic Thought Experiment”. The Hoover Institution. January 29, 2008.

[iii] Packer, George. “Change The World” The New Yorker magazine. May 27, 2013.

[iv] Gary Kasparov is the chess master that competed against IBM’s Deep Blue computer. Kasparov beat the computer in 1996 but Deep Blue conquered in a rematch in 1997.

[v] Kasparov, Gary and Thiel, Peter. “Our dangerous illusion of tech progress”. The Financial Times. November 8, 2012.

[vi] Schuessler, Jennifer. “Still No Flying Cars? Debating Technology’s Future”. The New York Times. September 22, 2014.

[vii] http://www.thebaffler.com/videos/graeber-thiel/#.VPnXG2b9paV

[viii] Meredith. “The Modern Scientist…”

[ix] Arendt. The human condition.

[x] Phillips, Matt, The Wall Street Journal, “Goldman Sachs’ Blankfein On Banking – Doing God’s Work” November 9, 2009. March 14, 2015.

[xi] Ahmed, Murad and Davies, Sally. “PayPal’s Thiel rounds on European tech entrepreneurs and regulators”. The Financial Times. September 30, 2014.

[xii] Packer, George. “Change The World”.

[xiii] Oremus, Will. “San Francisco Techie Says ‘Lower Part of Society’ Should Be Segregated. Slate. December 11. 2013.

[xiv] Kushner, Tony, afterword to Angels in America. 1st. ed. Theatre Communications Group, inc., New York, New York. 1995.

[xv] “With close analysis of the causality and relationships between characters in the play, it becomes quickly apparent that Kushner’s concept of progress, highlighted in the afterword as writing Angels in America itself, is a thing generated from the collaboration of people.” Harrod, Eric. “Collaboration in Angels in America.”

[xvi] Berry, Wendell. “Faustian Economics.” Harper’s Magazine (2008).