In his classic 1977 study of the history of economic ideas, The Passions and the Interests, the economic theorist Albert Hirschman examined the political and moral arguments that were made in favour of capitalism prior to its “triumph” in the late 18th century. What Hirschman showed was that the case for commercial society was generally advanced not in terms of how it would enrich people, but in terms of how it would pacify them. Where politics was fuelled by unruly “passions”, which risked tipping into violence, markets allowed people to be governed by their more sedate and reasonable “interests”.
Following the rise of state socialism in the 20th century, however, many economic liberals came to defend capitalism for the opposite reason. For conservative Austrian economists such as Joseph Schumpeter and Ludwig von Mises, it was now socialism that threatened to sedate people, and only capitalism that could revive their heroic, warlike, masculine passions. For these thinkers, still lionised by American libertarians and reactionaries, entrepreneurs were the last best hope for “the West”, having retained the courage to break rules and invent new futures.
Which is it? Is capitalism a guarantor of peace, or a proxy for war? The answer partly depends on how one understands the institution on which capitalism has always tacitly depended: the rule of law. The classically liberal view would be that markets work best where law creates the “rules of the game” (contracts, property rights, regulations) that everyone agrees to abide by, in an egalitarian and peaceful fashion. But there is another, starker view of economic law, in which it is a kind of weapon, deployed by the powerful to hoard their advantages and exploit the weak. The state may be the source of this tool, but it is money and fighting spirit that determines who ultimately benefits from it.
[See also: Your very own Sylvia Plath]
If anyone still subscribes to the progressive view of capitalism as a source of enlightenment and peace, the story of Peter Thiel’s career should be enough to disabuse them. “Competition is for losers,” Thiel wrote in his 2014 political and economic manifesto, Zero to One, and losing is something Thiel has avoided with startling consistency. As a founder of PayPal, early investor in Facebook, founder of Palantir, early backer of Donald Trump’s presidential campaign, public intellectual and billionaire venture capitalist, nobody has exploited the various political and economic crises of the US’s post-Reagan era as successfully as Thiel. What’s unnerving about this ostensible triumph is its psychological back story: Thiel may have accumulated vast wealth, fame and influence, but reading the journalist Max Chafkin’s The Contrarian, his motivations sometimes seem to lie more in a bleak millenarian pessimism than simple economic interests.
Thiel subscribes to a set of conservative libertarian beliefs that are anti-democratic, hostile to feminism and “political correctness”, and authoritarian on national security. But we learn more about existing “Thielism” if we focus on his relationship to law. The launch of PayPal in the late 1990s served a need for peer-to-peer online payments, but there were competitors such as Billpoint. Setting the model for later “disrupters” such as Uber, Thiel was concerned with driving all competitors to the wall.
On the one hand this meant effectively ignoring whatever regulations stood in PayPal’s way, including those that (not unreasonably) threatened to treat the firm as a bank, or others that would have shone a light on the number of pornography and illegal gambling transactions being handled. But on the other hand, Thiel was perfectly content to deploy the US state against his enemies. In addition to lobbying Congress against regulatory intervention in PayPal, it seems that Thiel and his entourage prompted congressional threats of antitrust hearings against Visa and Mastercard if they blocked PayPal transactions.
In 2016 Palantir shocked the military-industrial complex by suing the US army, claiming that they had been denied the chance to bid for a contract. Between 2015 and 2017 Thiel made a series of campaign donations to the Trump-ite politician Josh Hawley, who immediately launched legal investigations into Thiel’s greatest corporate bête noire, Google. Throughout the Trump presidency, Thiel helped to sow unease in Silicon Valley, suggesting that tech giants were about to be punished for their “political correctness” with antitrust suits. Perhaps what he really meant was that competition is what gets imposed upon political losers.
But Thiel’s most notorious litigious indulgence was built up over the best part of a decade. Gawker media, which ran a collection of celebrity and media gossip websites, had been poking fun at Thiel since 2006. It also began to drop hints that Thiel was gay, a matter on which there was little doubt, but which Thiel had never publicly spoken of. In December 2007 the Gawker-run tech blog Valleywag ran the headline “Peter Thiel is Totally Gay, People”. This, it turned out, was a serious mistake.
In 2015 the former wrestler Hulk Hogan took Gawker to court, the accusation being that they had caused him “emotional distress” by publishing a sex tape of him. Gawker was insured for such eventualities and the case was nearly settled, when suddenly Hogan’s legal team changed tack and accused Gawker of invading his privacy, something for which Gawker had no legal indemnity. Hogan now appeared to be trying to destroy Gawker, to the point where he might not actually receive any compensation from the bankrupted company. Why would he do such a thing? The answer lay in the identity of the grudge bearing billionaire who was funding Hogan. Gawker filed for bankruptcy in June 2016.
The Thiel enigma, as presented by Chafkin, is that he never appears guilty of the familiar American sins of greed or selfishness, but rather of a more nihilistic desire to take down others and to spoil their fun. Like a walking exemplar of the prisoner’s dilemma, every potential ally or asset can quickly be ostracised or attacked. Everything and everyone that helped Thiel get where he is – Stanford University, Elon Musk, Facebook, San Francisco, Silicon Valley, America itself – is, sooner or later, subjected to his pessimism. In Thiel’s world, according to Chafkin, there are an infinite number of bad guys to be destroyed, and the only good ones are whoever can help him destroy them. One of the most telling features of The Contrarian is that virtually everyone who agreed to speak to Chafkin about their memories of Thiel only did so on grounds of anonymity.
Peter Thiel was born in Frankfurt in 1967, but his parents moved to Cleveland the following year so that his father could train as an engineer. Some of Thiel’s school years were spent in Namibia, after his father took a mining job there, before the family moved back to Cleveland, where Thiel lived until enrolling at Stanford in 1985 to study philosophy. While he excelled at school, his greatest talent was for playing chess (a game that, not incidentally, leaves only one player standing), especially a form of speed chess known as “blitz”. Thiel continued to excel academically at Stanford, where he had the chance to attend lectures by the French philosopher René Girard, whose theory of “mimetic desire” (that people primarily want what others want) is said to have driven his initial enthusiasm for Mark Zuckerberg’s Facebook.
Yet Thiel’s overriding response to Stanford was political disgust with the culture of the other students and the Bay Area more widely, which struck him as hedonistic and ill-disciplined. In 1987 he launched the Stanford Review, a journal of political writing that took aim at “political correctness” and associated shibboleths of “diversity” and “equality”, through which he built up a network of ideological co-travellers that he has continued to draw on politically ever since. Teased by his fellow students for being uptight, he associated instead with conservative provocateurs such as Keith Rabois, with whom he later partnered at PayPal and the venture capital firm Founders Fund, and David Sacks, with whom he co authored The Diversity Myth (1995), which attacked the flamboyance of San Francisco gay culture.
Thiel progressed to Stanford Law School, and assumed he was destined for a high-flying legal career, but failed in his initial search for a job – possibly his only significant professional failure. Becoming rich was clearly important to him, though largely because it would distinguish him from the liberal culture he so despised. Angry at being rejected by the legal profession, he turned his attention to tech investment, before forming the business that became PayPal in 1998.
Curiously, given the fortune that Thiel was amassing, the cultural and political pessimism that informed the Stanford Review soon morphed into a kind of economic pessimism. Even while he himself was benefiting from it, he soon became fiercely critical of Silicon Valley and the tech giants that were emerging at the time, including Google and Facebook, who seemed trapped in an idle mindset of consumerism, multiculturalism and globalism. The 9/11 attacks convinced him that these technologies needed repurposing towards a national security agenda, which led to the creation of Palantir in 2003, a company that uses data analytics to detect and predict security threats. The financial crisis only deepened his gloomy sense that capitalism was running out of energy, as too much money flowed into pointless exercises of marketing and consumer tracking. Venture capital was now backing what Thiel termed “fake technologies” solving “fake problems”, most manifest in social media and “consumer analytics”, none of which served the US’s real national interests.
Along the way, Thiel supported an array of projects that appealed to him intellectually, such as the Thiel Fellowship that paid talented people to drop out of college, and “seasteading”, a libertarian utopia of floating societies built in international waters. It was dreamt up by Milton Friedman’s grandson Patri, whom Thiel encouraged to quit Google in 2008, offering him $500,000 to fund a nonprofit focused on the idea. With money being dished out to new ventures and libertarian political candidates, Thiel became the centre of an entrepreneurial-cum-activist network (the “Thielverse”), almost entirely made up of young men. And yet.
For someone who’d made his career on the strength of his network, Thiel had few real friendships or relationships of any kind that were entirely separate from his professional life. His longtime boyfriend, Matt Danzeisen, wasn’t just his partner but was – like almost everyone close to Thiel – his employee.
On reading this passage in Chafkin’s book I was struck by the similarity to another affectless, gay, European child of émigré parents, who also turned himself into a kind of machine in which to hide: Andy Warhol. The Thielverse functions as a factory, spinning off projects at the master’s whim (which I guess makes Facebook the Velvet Underground).
His support for Trump in 2016, which paid off with a position in the Trump transition team, seemed born out of Thiel’s sustained desire to troll and disrupt. There are few better ways to secure one’s distance from the multicultural world of Google and others than to ally with a demagogue. How a man with so much wealth and influence retained such a deep need to “own the libs” is an intriguing psychological question, which takes us to the core of many similar oligarch-funded nationalist uprisings of recent years, including Brexit. Was there some deep-lying envy for his more hedonistic opponents? Had he been mocked too often? It’s hard to imagine Thiel on the couch, but a therapist would no doubt find some fascinating material.
Peppered throughout The Contrarian is the idea that Peter Thiel is the yin to Steve Jobs’s yang. Where the legend of Jobs was built out of Californian optimism and consumerism, Thiel’s rebuke is pessimistic and pugilistic. Both represent a passionate entrepreneurial capitalism – the question is which passion, love or revenge? Thiel’s outlook will never win him the adoration that Jobs received, and his businesses are far more feared than loved. But there’s an uncomfortable truth in his philosophy that gets airbrushed out of the Jobs story. As historians and sociologists have noted, Silicon Valley was the product of a unique alliance between the counterculture and the Pentagon – a distinctive model of “creative destruction”, in which new inventions were dreamt up for destroying enemies. To suggest that we can divorce the “creativity” from the “destruction”, the hippies from the military, is a form of capitalist self-deception. Thiel at least grasps that.
The Contrarian: Peter Thiel and Silicon Valley’s Pursuit of Power
Bloomsbury, 400pp, £25
This article appears in the 27 Oct 2021 issue of the New Statesman, Our Fragile Future