Why Peter Thiel praises monopolies

April 9, 2019 (1747 words) :: Thoughts on Peter Thiel's political belief system and the unstated assumptions buried within it.
Tags: startups, ideology

This post is day 99 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.


I just finished Noam Cohen’s book The Know-It-Alls, a mildly interesting book that looks into the personal/professional histories of various Silicon Valley luminaries. I wouldn’t really recommend it unless you’re dying to hear more about the childhood & founder stories of people like Bill Gates, Mark Zuckerberg, etc, because a lot of it is rehashing what’s been covered in multiple news outlets over the years, and there isn’t much analysis to stitch these individual threads together.

Still, the material in the book is fun to read and think about, even if you’ve heard it before. Some of my favourite bits are in the chapter on Peter Thiel. Here’s how Thiel pitched PayPal:

“What we’re calling ‘convenient’ for American users will be revolutionary for the developing world. Many of these countries’ governments play fast and loose with their currencies. . . . Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars.” [p.139, citing p.19 of the book The PayPal Wars]

Buddy, most of the ordinary people there don’t have the money to get their hands on more than a few bills of your good old stable currency. Giving them “access” to other currencies won’t help them if they can barely afford to save anyway. You’d basically be attempting to undermine national sovereignty for no reason other than - as Cohen writes later in the paragraph - to “collect a cut from each online transaction”. The goal here is to make money, and it’s highly misleading to frame it as if it were some selfless endeavour.

On Thiel and his friend David O. Sacks’ crusade against diversity efforts at Stanford:

“[…] it appeared to Thiel and his comrades, multiculturalism had the single, overarching purpose of coddling the weak” [p. 140]

I guess this makes sense if you define “weakness” as “having been deliberately excluded from positions of power in institutionalised systems of oppression”. One person’s “coddling” is another’s emancipation.

Cohen follows with some quotes from The Diversity Myth (a book co-authored by Thiel and Sacks on this topic):

“[…] multiculturalists conveniently overlook the fact that without productive people paying taxes, there could be no welfare for the poor.” [p. 141]

What really amazes me about this quote is how drastically it misjudges the role of the state in modern society, given that it’s coming from a libertarian perspective. Surely, if you’re a libertarian, it’s because you object to the state’s monopoly over the use of force in the territory you happen to be find yourself within (as in the Weberian definition of a state). You recognise that the state has the power to set laws, collect taxes, direct economic behaviour, etc, upon pain of imprisonment. So why, then, would you think that funding a welfare state requires people to pay taxes?

If you zoom out a bit, taxes are essentially just an accounting fiction, a way of taking money out of circulation. No government actually needs to balance its books in this way - that so many attempt to so is an ideological choice, a mode of reasoning that’s highly entwined with capitalism. You could, after all, simply take crucial economic activity out of private hands (in other words: collective ownership of the means of production) in which case you wouldn’t actually need to tax anyone at all. It is entirely possible to fund welfare for everyone without taxing those misleadingly deemed “productive” (i.e., participating in private industry), and without creating an unnecessary dichotomy between rich and poor.

Thiel on the early PayPal team (nearly all young men, mostly white) getting along because they were all the “same kind of nerd”:

“We all loved science fiction: ‘Cryptonomicon’ [by Neal Stephenson] was required reading […]” [p.148, quoting p.122 in Zero to One]

Oh boy. I loved Cryptonomicon when I was a teenager - I would read it over and over and over - and I genuinely thought it was the height of modern literature. I’ve only recently realised how deeply the booked is steeped in capitalist realism, and how it imparts some pretty reactionary ideas (especially when it comes to gender). I still love the book, if I’m being honest, but at least now I’m able to see the problems with its political subtext. A topic for another day, I think.

Finally, there’s some really interesting stuff about PayPal’s rivalry with eBay back in the early days (PayPal’s “growth hacking” was achieved through spamming eBay sellers to sign up for PayPal, which may sound sketchy, but it worked out because eBay later bought PayPal):

[…] when eBay executives decided to drop the hammer and try to chase away PayPal by exploiting its obvious advantages with its own customers—say, by adding extra hurdles for users of PayPal—the libertarian-leaning company didn’t hesitate to threaten to enlist U.S. regulators to restrain what they argued was eBay’s anti-competitive behavior. [p.150] ​ I want to analyse this more deeply, because the book makes it sound like a simple case of hypocrisy on Thiel’s part. Presumably, the reasoning goes like this: in his book Zero to One, Thiel extols the virtues of monopolies and denigrates the excessive powers of government regulation, but in his professional life, he relies on those same regulators to curb monopoly power??

I don’t think it’s that simple. I don’t think he’s being hypocritical at all - I think PayPal’s actions are the perfect expression of Thiel’s political beliefs. I think the confusion stems from a core axiom that (imo) undergirds Thiel’s poltiical philosophy, but which is never explicitly stated in his writing. When Thiel says monopolies are good, he’s not saying all monopolies are inevitably good simply because they’re monopolies - he’s saying monopolies run by people who think like me are good. The book Zero to One is less a coherent statement about economic principles and more a (perhaps unintended) declaration of Thiel’s personal worldview. A worldview that, somewhat understandably, places himself at the very centre.

I definitely want to revisit this in a future post after I’ve had a chance to re-read Zero to One (I first read it circa 2014 in my pre-socialism era and so didn’t have an informed critique), but the core of what I’m getting at is this. Peter Thiel’s worldview re: monopolies is not at odds with his personal actions. It seems, to me, to be fairly internally consistent. He just strongly believes in himself, and his intelligence, and his ability to create value, etc. His political views, then, are just a natural extension of a swollen egotism that values others only insofar as they remind him of himself.

And look, to be fair, who doesn’t indulge in this sort of thing from time to time? It is tempting to believe that you’re really smart and can, with some help with your similarly smart friends, solve all the world’s problems. It’s the sort of thing you’re really inclined to believe if you’ve been singularly praised for your intelligence since you were young and have experienced no major setbacks that diminished your arrogance, as seems to be the case for Thiel. It’s a pretty reasonable personal belief to hold, in those circumstances, and I don’t think it’s necessarily a problem that someone like Thiel would believe this. Arrogance is good, sometimes!

What is a problem is when you extrapolate your own personal arrogance into a whole political belief system which omits the possiblity that other people are also subjects, who may feel exactly the same way as you, but about themselves. And they may strongly believe that their personal conception of intelligence, or fairness, or progress are correct, even though they may see the world very differently from you, and have every bit the claim to being right that you do.

Who is to adjudicate, in such a scenario? Who is right, and who is wrong? The libertarian ethos associated with people like Peter Thiel takes it for granted that those who “win” are right, because they wouldn’t have succeeded otherwise. But that assumes the existence of a just system which functions as a universally valid arbiter of what is right and wrong, and I’m not sure what evidence you’d have for believing that to be the case. Right now, those who win are merely those who’ve asserted their power over those who have less, due to accidents of history or birth or whatever. The “winners” are the lucky few sitting at the top of relations of domination, and who have subsequently deluded themselves into thinking that they deserve it.

I think part of growing up involves recognising that even though you can only know your own self, you shouldn’t deny the subjectivity of others. Just because you can only access your own thoughts and feelings doesn’t mean everybody else’s thoughts and feelings are less real. People are allowed to feel this way, of course, and even act that way to some extent, but when it comes to interacting on a societal level, we need to design a political system that accommodates the fact that everybody sees the world differently and cares about different things. This is, after all, the whole aim of democracy (even if the ideal always remains slightly out of reach): reconciling differing values and interests, without privileging any individual epistemic lens over everyone else’s.

In this vein, I think the problem with Peter Thiel’s political belief system (at least, my interpretation of it) is that it’s inherently anti-democratic, because he wants to project his own personal perceptions of the world to the point where he has power over everybody else (mediated by the market). On the one hand, it’s pretty understandable to want power, as a personal desire; on the other hand, Peter Thiel’s thirst for power is not a good basis for a political system. We should see it as extreme solipsism packaged up in Peter Thiel’s own idiosyncrasies, not as a valid coherent ideology that we should all ascribe to.

To sum up: believing in yourself is good! Believing in yourself to the point where you think everybody else should also believe in you, because you’re simply smarter than they are, is incredibly naive and makes for bad politics. Of course, Peter Thiel’s more than welcome to hold an emotionally immature worldview like this; the rest of us, however, should not not take this seriously.


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