The mood of the Valley
If Silicon Valley had its own Constitution, the first article would sound like this: "Silicon Valley is a community founded on individual meritocracy and the market". Meritocracy, the individual and the market are the foundations of a school of thought that is increasingly gaining ground with the fall of Keynesianism and the winter of socialism. This school of thought is the Austrian School of Economics, long marginalized, but now in full bloom. It happens precisely among the young disrupters who, with technology and a strong entrepreneurial culture, are turning contemporary society upside down, often, alas! unaware or indifferent to the social consequences of their actions.
Those belonging to the Austrian School are for the most part in favor of a "minimal state" which must intervene only to guarantee the conditions for the correct development of the market economy and to protect individual rights which are considered as natural rights, such as he had postulated of John Locke, the noble father of liberalism.
And this is precisely the mood of the young founders of technology companies in the United States. To tell us, now in a reliable way, is an investigation into the political opinions of the hi-tech entrepreneurial elite reported by the New York Times. This is a survey conducted by a group of policy researchers from Stanford University who reached a sample of 600 entrepreneurs included in the TechCrunch database as founders of start-ups. A third of these operate in Silicon Valley. The results of the survey have been collected in a very interesting 100-page paper, also available online.
Libertarians sui generis
24% of those interviewed by Stanford researchers declare that they agree with the philosophy of the libertarians, the most genuinely political expression of the Austrian School. In fact, a quarter of those interviewed answered affirmatively to the following statement: "I would like to live in a society where the state does nothing but provide for national defense and the protection of individuals, leaving people free to enrich themselves as they wish". It seems like a sentence from the pen of Robert Nozick, one of the major thinkers of the Austrian-derived libertarian wing. The singular aspect is that 44% of the entrepreneurs who say they accept this declaration are voters of the Democratic Party (82% percent voted for Clinton) against 63% of the Republican camp. A figure that shows the transversal nature of the theses of the Austrian School, generally labeled as the heritage of the political right.
Another curious result of the survey is that 80% of the interviewees say yes against any form of public regulation of economic activity, but 62% say they are in favor of taxing the rich to obtain the resources necessary for a more equitable redistribution of wealth. It is no coincidence that one of the founders of Facebook, Chris Hughes, is in favor of basic income and has written a book to promote it. Taxing the rich (with income exceeding $250 a year) has long been a position advocated by Warren Buffett and Bill Gates, constantly on the podium of the richest people on the planet.
Taxation and the redistribution of income, however, are something foreign to the thought of the Austrians, indeed they are a sort of anathema. And they are difficult to reconcile with the original idea of a minimal state. It is a rather undrinkable cocktail today for any political force. For this reason, in commenting on the survey, The Economist writes that the disrupters of Silicon Valley are more "globalist" than "libertarian" or, at least, they have implemented an outdated synthesis that we could define as social-libertarian. Who knows, however, that it may not be the winning formula for the relaunch of liberalism that is retreating everywhere in the world.
On civil rights, however, the technology entrepreneurs appear incontrovertibly liberal: they are in favor of abortion, they advocate gay rights (Bezos and his wife have donated a million dollars to support this cause), they are in favor of gun control and yes they fiercely oppose the death penalty and any measure that limits the freedom of choice and the responsibility of the individual. However, they do not want trade unions in their businesses and abhor any form of regulation of the market and working conditions.
La remediation di Aynur Rand E its influence
The vision and theses of the Austrian School have had, in the largest democracy in the world, a sort of very effective narrative remediation by Ayn Rand whose works and whose example have converged, enlarging it, in the impetuous libertarian current of American society that dates back to to its colonizers. If Rand hasn't had much luck with the east coast's mainstream European intellectuality, she has penetrated deeply into some sectors of American society, forging its mentality and public and private attitudes. According to one studio of the Library of Congress, Atlas Shrugged (1957, 1200 pages), Rand's major work, is the most influential book in America after Bible.
And one of these places is Silicon Valley where Rand's objectivism has merged with the counterculture of hippies, LSD and draft evasion of the sixties/seventies. For example one of the children of the counterculture, Steve Wozniak co-founder of Apple, considers Atlas Shrugged "one of life's guides”, also referring to his friend and partner Steve Jobs, who could really be the protagonist of an objectivist novel by Rand. The advent of the web has therefore led to the fusion between counterculture and libertarianism as shown by a manifesto that has had great success among technologists and beyond, The Declaration of Independence of Cyberspace by John Perry Barlow.
The Libertarians of the Valley
Nick Bolton, one of cyberspace's most astute observers, New York Times pundit and essayist of stature, took it upon himself to hunt down the libertarians of the Silicon Valley and “debunk” them on “Vanity Fair”. Many will have heard of Peter Thiel, Trump's favorite adviser until the recent cooling in relations with the President, who has never concealed his libertarian inclinations, even extreme ones, which have also led him to eccentric actions such as citizenship of New Zealand (a scandal that nearly overwhelmed Bill English's government), the piece of land that most echoes his ideal of a floating, artificial sovereign island. Thiel, one of the founders of PayPal and one of the first financiers of Facebook on whose board he still sits, was perhaps the Valley's major influencer until his active and controversial endorsement of Trump.
Who are the other "Austrian Randians" of the Valley? There's Kevin Systrom, founder of Instagram part of Facebook; Travis Kalanick, co-founder of Uber recently ousted from the company, Evan Spiegel, co-founder of Snapchat, Jack Dorsey, co-founder of Twitter and current CEO of microblogging as well as founder and CEO of Square, an electronic payments company. Collectively, the capitalization of these companies that libertarians have founded or control amounts to $250 billion. A nice figure!
At this point comes the curiosity to know more about the Austrian Economic School, also because in Italy until now it has been confined to a sort of Indian reservation by the prevailing Keynism and Marxism. A book has recently been published which clearly and concisely exposes the crucial points of the thought of the Austrian School. We asked one of its authors to explain to us what are the peculiarities of this school and the reason for its importance for the times in which we live. Below we report the speech by Guglielmo Piombini who, with Giuseppe Gagliano, is the author of Rediscover the Austrian School of econame The challenge of Bets, Hayek e Rothbard a Marx and Keynes. Happy reading.
The topicality of the Austrian School
The Austrian School is also arousing growing interest among university students, as a reaction to the inability of economics taught in academic courses to explain recent economic events in a convincing manner. In this regard, an interesting signal is the birth in numerous universities in Italy and around the world of a student network, called Rethinking Economics, which calls for the study of economics to be extended to other traditions of thought neglected by the teaching staff, including the Austrian School. These students, who call themselves "econosceptics," accuse their professors of not predicting any of the latest financial crises, and organize lectures with heterodox guests from outside their faculty.
The attraction for the Austrian School also stems from dissatisfaction with the arid statistical and mathematical approach that prevails in economics lessons and textbooks. Scholars of the Austrian tradition, on the other hand, believe that the methods used in the natural sciences are not suitable for a social science such as economics, which studies not inanimate objects, but beings endowed with will, whose choices are largely unpredictable. In fact, two individuals can react to an economic event in opposite ways. For example, a rising price could convince Tom that the time has come to buy to ride the positive trend, and instead push Tom to sell to make a profit.
For this reason, the huge aggregates used in the macroeconomy (aggregate demand, the propensity to save or consume, gross domestic product, the general price level and so on) are viewed with great suspicion by Austrian economists, because they hide behind a number a large variety of individual choices which often have very different motivations, and which therefore cannot be added together. There are no universal and constant laws between these economic quantities, and therefore it makes little sense to use macroeconomic aggregates as a basis for formulating scientific theories or economic policies. This explains the poor forecasting results of the economic "science" that is prevalent in universities and the media.
The points of strength of our business model are represented by: model of the Austrian School
The great Austrian economists Ludwig von Mises and Friedrich von Hayek were among the few to foresee the arrival of the 1929 crisis, while the most celebrated economists of the time, Irving Fischer and John Maynard Keynes, fell right into it, ruining themselves financially. Almost all Western economists were taken aback by the collapse of communist regimes, while Austrian economists had been explaining since the 1989s the theoretical reasons why a centrally planned economy could never work, and that sooner or later collectivist systems they would collapse. It may seem incredible, but still in XNUMX, shortly before the fall of the Berlin Wall, in the study textbook most adopted in American universities, that of Paul Samuelson, one could read that «The Soviet economy is proof that, contrary to what many skeptics thought, a command socialist economy can work and even thrive»: an embarrassing phrase that was dropped in later editions.
The Austrian School has always consistently defended private property and free economic initiative, today trampled upon by the intrusiveness of fiscal and bureaucratic states in many parts of the world. It is also the only school that applies the general rule "there are no free lunches" to the monetary sphere. Indeed, it is convinced that the government cannot create genuine long-term prosperity by printing money or encouraging the expansion of bank credit, because the results of monetary expansion are opposite to those intended: a cycle of boom and bust that lasting economy.
It is no coincidence that in recent years various economists, applying the sophisticated Austrian theory of the economic cycle, have predicted financial crises, warning that the monetary stimulus measures implemented by the Federal Reserve, from Alan Greenspan onwards, would have caused bubbles financial institutions destined to explode: their articles still present on the net testify to this. Even today, many economists of the Austrian school argue that the excessive sovereign debts accumulated by governments and the exceptional measures of monetary expansion implemented by central banks will lead to a financial crisis worse than the previous ones. Sadly, there are still few fashionable politicians and intellectuals willing to heed the uncomfortable warnings of the Austrian School of economics.
