A alternative history of Silicon Valley disruption - it's really just capitalism with a diff skin

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Kimi Wei <kimiwei88 () gmail com>
> Date: October 25, 2018 15:35:15 JST
> To: David Farber <dave () farber net>
> Subject: A alternative history of Silicon Valley disruption - it's really just capitalism with a diff skin
>
> https://www.wired.com/story/alternative-history-of-silicon-valley-disruption/?fbclid=IwAR26mFWSNpEOXvYWX2NUdO0pe9UldmYLpgMl5WkogfM5WVbC9gP3d6hYLLE
>
> AN ALTERNATIVE HISTORY OF SILICON VALLEY DISRUPTION
> BY NITASHA TIKUNITASHA TIKU  10.22.1807:00 AM
>
> A FEW YEARS after the Great Recession, you couldn’t scroll through Google Reader without seeing the word “disrupt.” 
> TechCrunch named a conference after it, the New York Times named a column after it, investor Marc Andreessen warned 
> that “software disruption” would eat the world; not long after, Peter Thiel, his fellow Facebook board member, called 
> “disrupt” one of his favorite words. (One of the future Trump adviser’s least favorite words? “Politics.”)
>
> The term “disruptive innovation” was coined by Harvard Business School professor Clayton Christensen in the mid-90’s 
> to describe a particular business phenomenon, whereby established companies focus on high-priced products for their 
> existing customers, while disruptors develop simpler, cheaper innovations, introduce the products to a new audience, 
> and eventually displace incumbents. PCs disrupted mainframes, discount stores disrupted department stores, cellphones 
> disrupted landlines, you get the idea.
>
> In Silicon Valley’s telling, however, “disruption” became shorthand for something closer to techno-darwinism. By 
> imposing the rules of nature on man-made markets, the theory justified almost any act of upheaval. The companies 
> still standing post-disruption must have survived because they were the fittest.
>
> “Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon 
> Valley companies doing the disruption in more cases than not,” Andreessen wrote in his seminal 2011 essay on software 
> in the Wall Street Journal. “This problem is even worse than it looks because many workers in existing industries 
> will be stranded on the wrong side of software-based disruption and may never be able to work in their fields again.”
>
> Even after the word lost its meaning from overuse, it still suffused our understanding of why the ground beneath our 
> feet felt so shaky. They tried to freak us out and we believed them. Why wouldn’t we? Their products were dazzling, 
> sci-fi magic come to life. They transformed our days, our hours, our interior life. Fear of being stranded on “the 
> wrong side,” in turn, primed us to look to these world-beating companies to understand what comes next.
>
> It is only now, a decade after the financial crisis, that the American public seems to appreciate that what we 
> thought was disruption worked more like extraction—of our data, our attention, our time, our creativity, our content, 
> our DNA, our homes, our cities, our relationships. The tech visionaries’ predictions did not usher us into the 
> future, but rather a future where they are kings.
>
> They promised the open web, we got walled gardens. They promised individual liberty, then broke democracy—and now 
> they’ve appointed themselves the right men to fix it.
>
> But did the digital revolution have to end in an oligopoly? In our fog of resentment, three recent books argue that 
> the current state of rising inequality was not a technological inevitability. Rather the narrative of disruption 
> duped us into thinking this was a new kind of capitalism. The authors argue that tech companies conquered the world 
> not with software, but via the usual route to power: ducking regulation, squeezing workers, strangling competitors, 
> consolidating power, raising rents, and riding the wave of an economic shift already well underway.
>
> Job Insecurity
> Louis Hyman’s new book, Temp: How American Work, American Business, and the American Dream Became Temporary, argues 
> that many of the dystopian business practices we associate with fast-growing tech platforms—operating with a small 
> group of well-paid engineers, surrounded by contractors—began in the 1970’s when McKinsey consultants and business 
> gurus pushed for flexible labor over job security as a way to maximize profits. But from its earliest days, Silicon 
> Valley said automation was the reason high-tech companies were more profitable and productive.
>
> For instance, in 1984, along with the Macintosh computer, Apple also introduced a $20 million “Robot Factory” in 
> Fremont, California, that the company called “the most automated factory in the Western world,” even though it was 
> 140 human beings, “mostly women, mostly immigrants–who actually put the Macintosh together,” Hyman says. In that, it 
> was like the rest of the fast-growing electronics industry, which relied on undocumented workers and immigrants for 
> its factories and temps for its offices to create a “buffer zone” to keep layoffs off the front page.
>
> Apple’s use of the word “robot” turned out to be a “a very important cultural sleight of hand,” Hyman says. “This 
> rhetorical distinction helped Silicon Valley employ workers in ways that never would have happened in postwar 
> Detroit,” because unofficial and subcontracted workers were not protected by the same wage and safety rights.
>
> To Hyman, an economic historian at Cornell, this explains the absence of labor unions in tech. “Managers wanted 
> obedient employees—preferably immigrants. While technical knowledge, and venture capital, was lauded for the valley’s 
> achievements, that success was made possible by a hidden underworld of flexible, poorly paid labor,” he writes.
>
> Decades later, Uber could stay flexible because workers had few options. But observers often conflated cause and 
> effect, blaming the gig economy, its use of non-employee contractors, and the unfeeling efficiency of smartphone 
> apps. “Uber did not cause this precarious economy. It is the waste product of the service economy,” Hyman counters. 
> “Uber is possible because shift work, even with a W-2 is so bad.”
>
> The social disruption came first, and technology was built to exploit it. Nonetheless, Uber’s association with our 
> ruthless app-driven future served the company well. Regulators were reluctant to enforce the law not only because 
> consumers loved the convenience, but also because we were told that technology made this business model—which shifted 
> risk to cities, workers, and citizens—inevitable.
>
> It may seem self-evident that Silicon Valley is not the alpha and omega of economic change. In fact, the critiques in 
> these books resonate not because they expose the industry’s villainous core or reveal some nefarious intent, but 
> because the authors provide context missing from the tech industry’s often ahistoric version of events. The 
> ruminations on technology are tucked between chapters on Wall Street, big pharma, robber barons, the Sackler family, 
> and McKinsey, gently eroding the idea that the tech industry operates (and should be treated) differently.
>
> The Risk and Reward of Innovation
> In The Value of Everything: Making and Taking in the Global Economy, economist Mariana Mazzucato chips away at 
> another myth of Silicon Valley exceptionalism: the idea that big tech and its investors deserve massive profits 
> because they are risk-taking innovators who create value, rather than extract it. “In the case of venture 
> capitalists,” Mazzucato writes, “their real genius appears to lie in their timing: their ability to enter a sector 
> late, after the highest development risks had already been taken, but at an optimum moment to make a killing.”
>
> Much of the hard work of innovation, she argues, has been funded by the government, which sees little direct return. 
> Contrary to tech industry sneering, public funds are responsible for a lot of the technology we attribute to Silicon 
> Valley. Mazzucato points out that GPS was funded by the US Navy, touchscreen display was backed by the CIA, both the 
> internet and SIRI were funded by the Pentagon’s DARPA, and Google’s search algorithm was funded by a National Science 
> Foundation grant.
>
> Yet the government reaps few of the rewards. For instance, the same year the government loaned $535 million to 
> solar-power company Solyndra, it also loaned Tesla $465 million. “Taxpayers footed the bill for Solyndra’s losses—yet 
> got hardly any of Tesla’s” gains, she says. Solyndra has become “a byword for the government’s sorry track record 
> when it came to picking winners,” a story that has helped keep regulators at bay, she says.
>
> In theory, Mazzucato says, the public sector gets paid back through indirect means, like higher tax receipts, or 
> public good. Instead, the “persuasive narrative” that technological progress would not be possible without Silicon 
> Valley has enabled it to privatize the profits from big data, while offloading all the risks.
>
> Advocacy as Prophecy
> In Winners Take All: The Elite Charade of Changing the World, journalist Anand Giridharadas unpacks the same penchant 
> for prediction when it’s applied to philanthropy instead of the free market.
>
> Giridharadas takes readers aboard Summit at Sea, a startup conference on a cruise ship, where world-changers have 
> gathered for a panel on storytelling from investor Shervin Pishevar, who urges the crowd to keep their bodies alive 
> because genetic research that prolongs the human life span will soon arrive. “The idea of retiring at 70 is gonna 
> seem like people telling you at 30 to retire,” Pishevar said.
>
> Giridharadas argues that this is a reflection not of where science is headed, but rather the type of causes favored 
> by tech donors. “Longer lives for rich people were just something that happened to be coming down the pipe. Not so 
> much better healthcare system for all,” he writes.
>
> “Here Pishevar was engaging in advocacy that disguised itself as prophecy,” Giridharadas writes. “VCs and 
> entrepreneurs are considered by many to be thinkers these days, their commercial utterances treated like ideas, and 
> these ideas are often in the future tense: claims about the next world, forged by adding up the theses of their 
> portfolio companies to extrapolating rom their own startup mission statement”
>
> The weather has turned on tech since Giridharadas stepped off that cruise. The arguments in these books would’ve been 
> shrugged off a few years ago, now the authors are invited to give talks at tech events. On Capitol Hill, regulators 
> have finally found their voice; in Silicon Valley, companies are acting contrite. But look a little closer and it’s 
> clear they are still pitching a future where disruptors know best. AI can fix hate speech and misinformation. China 
> is better off with Google’s censored search. Basic income will set us free.
>
> In a winners-take-all economy, it’s hard to prove the rulers wrong. But if the tech backlash wants to become more 
> than just the next chapter in their myth, we have to question the fitness of the companies that survived.
>
>
> Kimi Wei
> kimi () thewei com  @kimiwei
> facebook.com/thekimiwei
> 862-203-8814



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