Exit through the sweatshop

Silicon Valley’s entrepreneurs can’t hack statehood. Will Wiles on the utopians desperate to break out of the reality of the nation state

Tankaut 15_43_cropMartti Kalliala, Ultimate Exit, 2014

In Iain Banks’ 1999 novel The Business, a shadowy global corporation seeks the ultimate status symbol: nation status. Bored with mere wealth and power, it wants into the UN, from which it has been unfairly excluded in favour of all sorts of dirt-poor, flag-waving riff-raff. The anonymous “Company” intends to buy out a Himalayan kingdom and operate it as a subsidiary; all on the sly, of course. But that was fiction, and 16 years ago. Today, some of the idea-mongers and venture-capital-slingers of the newest global corporations are openly speculating that it might be about time they enjoyed some of the benefits of independent nationhood.

You may have seen the chart that circulated on Twitter, Tumblr and – of course – Facebook earlier this year, of the world’s top 10 countries ranked by population. New at number one: Facebook, with 1.39 billion active users, edging out China’s 1.36 billion users, or “citizens” in old money. “What happens when Facebook decides it wants to issue passports?” asked Forbes contributor Steven Kotler in March 2014, back when the social network was only the world’s third biggest country. “This is no idle question.” Kotler argued that nation states stood on four pillars: money, guns, land and identity. What with Bitcoin, guns flowing like butter from 3D printers and social identity trumping patriotic or tribal identity, only land really matters – and we’ll get back to that.

Google also fancies a little Googlestan or Googlesylvania somewhere – for science. “There are many, many exciting and important things you could do that you just can’t do because they’re illegal or they’re not allowed by regulation,” Google CEO Larry Page said in a Q&A session in 2013. “And that makes sense; we don’t want our world to change too fast. But maybe we should set aside some small part of the world, you know, like going to Burning Man, for example. Which I’m sure many of you have been to. Yeah, a few Burners out there. That’s an environment where people try out different things, but not everybody has to go. And I think that’s a great thing, too. I think as technologists we should have some safe places where we can try out some new things and figure out: What is the effect on society? What’s the effect on people? Without having to deploy it into the normal world. And people who like those kinds of things can go there and experience that. And we don’t have mechanisms for that.”

A fun little place to crash through some boundaries, do some DNA sequencing and toy with a taboo or two – like Burning Man, or Jurassic Park. When it was discovered later in 2013 that Google was secretly building two big barges in San Francisco Bay, there was an eddy of excitement that this might be the kind of deregulated innovation space that Page had outlined. A floating, seawater-cooled data centre, perhaps, ready to be towed into international waters, out of the reach of the NSA – or the IRS. The internet in a box, on a boat, for developing nations. An offshore laboratory. As it turned out, the barges were to be floating showrooms, “interactive spaces where people can learn about new technology”, and the secrecy that arose from their avoidance of filing the building permits that would have been necessary for a structure on land, may have only been intended to… preserve secrecy itself. Google wasn’t planning to do anything very exciting; it just didn’t want to say what exactly it was doing.

The tech giants don’t want to get into the statehood game in order to make up a bunch of laws – that’s exactly where the old nation state went wrong, clogging up the system and stifling innovation with regulations. And while many of them are hungry to reform that system, some are looking for something else: a way out. The venture capitalist Tim Draper, for instance, proposes breaking California into six states, one of which would be Silicon Valley. The Valley’s political influence would thus be concentrated and it would have the clout in Washington Draper feels it deserves. Balaji Srinivasan goes further. “Is the U.S. the Microsoft of nations?” the genomics-startup founder and Stanford lecturer asked at Startup School, a talks series run by the venture-capital seed fund Y Combinator, in 2013. Srinivasan did not, of course, mean that as a compliment: he intended to portray the United States as a creaking, shutdown-prone behemoth running on decrepit source code (the 230-year-old U.S. Constitution) which, somehow, we are all stuck using. Microsoft couldn’t be reformed from inside – it was forced to reform by competition from outside, by people leaving to start tiny companies of their own, companies that would ultimately become new giants such as Google. The U.S. and Silicon Valley, Srinivasan said, were both founded on this idea of “exit”: people leaving to do their own thing, be it Pilgrims on the Mayflower or start-ups in garages.

Silicon Valley’s success in disrupting the traditional technologies and institutions of the United States – everything from newspapers and movies to universities and laws – meant, Srinivasan said, that it was at risk of a regulatory backlash, in which the economic failures of the old system were pinned on new technology. Peaceful efforts at reform were one response to this, but would be strengthened by another parallel strategy: exit, to build “an opt-in society, ultimately outside the US, run by technology”. Silicon Valley’s best and brightest could simply secede from the United States and start their own country – or countries. The old world will be forced to reform. And the best part, Srinivasan said, was, “The people who think this is weird, the people who hate the frontier, the people who sneer at technology – they won’t follow you out there.” The new states will automatically be filled with go-getters. Silicon Valley’s priority, he concluded, should be to build technologies that allow people to peacefully circumvent the restrictions on exit imposed by states.

The idea of secession – the kind of exit Srinivasan is talking about – is a good deal older than the modern state, but it has picked up a great deal of traction among libertarians in recent years. “I truly believe secession movements represent the last best hope for reclaiming our birthright: the great classical liberal tradition and the civilisation it made possible,” said Jeff Deist, president of the Ludwig von Mises Institute, a leading libertarian organisation, in a talk in Houston in January 2015. “In a world gone mad with state power, secession offers hope that truly liberal societies, organised around civil society and markets rather than central governments, can still exist.” It was not a way to strengthen the efforts of peaceful reformers, Deist argued, but the only option left by their failure. “It is far less daunting to convince liberty-minded people to walk away from the state than to convince those with a statist mindset to change.”

Libertarian ideas are widespread in Silicon Valley, even among people who would identify as being on the liberal-left side of American’s political spectrum. When the wildcard libertarian Republican presidential candidate Ron Paul spoke at Google in 2008, he was greeted by whoops and cheers; the host Elliott Schrage’s introduction was dominated by an apology for the room being over-capacity. And many of the Valley’s biggest companies are founded on explicitly libertarian ideals. Peter Thiel, one of the founders of Paypal, imagined the payment platform as an “offshore account” for people in poorer countries to get ready access to the dollar and bypass the capital controls and devaluations imposed “fast and loose” by their home states. This is precisely the kind of exit technology Srinivasan advocates. Another Paypal founder, Tesla’s Elon Musk, is now advocating individual energy independence via Tesla batteries, and freebooting Mars colonies.

“The world needs a frontier,” the hacker, entrepreneur, author and security expert Sean Hastings said in an interview with the radical Dutch design group Metahaven in 2010, prefiguring many of the themes echoed by Page and Srinivasan. “The frontier has always been a place for people who disagree with the morality of current law to be able to get away from it. It is a place where people who are willing to exchange safety for freedom can try new ways of doing things. As long as such a place exists, it puts pressure on existing governments to allow more freedom to their people, or their best and brightest might leave for greener pastures. In economic terms the government provides a service with a very high barrier to entry (starting your own country) and a very high cost of changing providers (emigration). In any industry, this leads to poor service at very high cost.”

What might Srinivasan’s Exit Republic of Silicon Valley actually look like? Some commentators imagined that Srinivasan was proposing literal secession of the actual, territorial Silicon Valley – that that small part of central California might leave the U.S. and form a city-statelet on its own. High technology leading to a proliferation of micro-sovereignties is a venerable idea: Neal Stephenson’s seminal cyberpunk novel Snow Crash (1992) features just such a scenario, in which some states – such as “Mr Lee’s Greater Hong Kong” – are little more than storefront franchises. This is presently implausible because, as Kotler noted, governments can be such sticklers about their turf. “They have aircraft carriers and we don’t,” Srinivasan said. “We don’t want to fight them; that wouldn’t be smart.”

But what if you didn’t need land? People were quick to imagine that Google’s barges were floating data centres destined for international waters precisely because such a thing has been proposed and done before. In 2000 Sean Hastings founded HavenCo, an offshore data centre on Sealand – a former military platform in the North Sea that has been an eccentric (and mostly uninhabited) “state” since its then-owner Paddy Roy Bates declared independence from the United Kingdom in 1967; it closed in 2008. In 2005 David Cook and Roger Green founded SeaCode, which proposed a new approach to outsourcing: classifying a load of Indian software engineers as “seamen” and parking them in cruise ships off the California coast (in international waters, natch). Their American managers would be based onshore, a short helicopter trip away, and clients would be spared expensive trips to India to check on the progress of projects.

In 2011 Paypal’s Thiel founded Blueseed, a company intending to anchor a floating “tech incubator” 12 miles off the coast of Northern California, a short jaunt by ferry from Silicon Valley. This would be a place for new ideas, unfettered by the unreasonable regulations of Uncle Sam – taxes, obviously, but also the U.S.’s onerous visa and citizenship rules.

“In a large, existing company there are set ways things have happened,” Thiel said in an interview with CNET in 2011. “Sometimes there’s a sclerotic bureaucracy that’s taken things over. You can change things at the margins, but you often cannot change the fundamental fabric. The reason people start new companies is because there’s a need to have a certain amount of freedom to explore doing new things. That’s why you’d start a new business. There’s a question: If you can start a new business, why can you not start a new country?”

This idea of setting up new seaborne micro-states is a surprisingly long-lived one. The author China Miéville wrote a very entertaining study-cum-demolition of then-existing seastead schemes in 2007, “Floating Utopias”, in which SeaCode make a fleeting appearance. Libertarians have “recast their most banal avarice – the disinclination to pay tax – as a principled blow for political freedom,” Miéville writes. The truly rich and powerful find it easy to not pay tax and profit nicely from the neoliberal state; in contrast, libertarian secessionists are essentially pathetic: “In its maundering about a mythical ideal-type capitalism, libertarianism betrays its fear of actually existing capitalism, at which it cannot quite succeed. It is a philosophy of capitalist inadequacy.” The seasteaders are “a joke”, Miéville concluded: “The pitiful, incoherent and cowardly utopia they pine for is a spoilt child’s autarky, an imperialism of outsourcing, a very petty fascism played as maritime farce – Pinochet of Penzance.” This splendid essay is funny and scathing enough for the reader to imagine that perhaps seasteading was firmly scuppered in 2007.

Nothing could be further from the truth: it was about to enjoy corporate sponsorship. Out went the concept cruiseliners full of bitter retirees and in came Silicon Valley’s money, energy and ideology. In 2008 Thiel founded the Seasteading Institute with Patri Friedman, grandson of the doyen of neoliberal capitalism, Milton Friedman. “Governments are the only technology that does not make progress rapidly and peacefully,” said Joe Quirk, the “Seavangelist”, author and Seasteading Institute’s communications director, in a talk given in March 2015 at Voice and Exit, a libertarian TED-like forum. Governments’ monopoly on land is a brake on (libertarian) reform, but “nearly half the Earth’s surface is a blank slate, unclaimed by existing governments, and we want to create a thousand start-up governments on the sea.” On these floating statelets, entrepreneurs would be free to conduct research into algae farming, clean energy and biotech presently held back by regulations. And the freedom-minded folk inhabiting these libertarian archipelagos would be able to vote with their fleet, unmooring their homes from an unsympathetic host and setting sail for a friendlier state.

There is something politically deficient in the idea of exit in general. It can be clearly seen in Deist’s remarks on the necessity of secession: “We make a fatal mistake when we dilute our message to seek approval from people who seemingly are hardwired to oppose us. And we waste precious time and energy. What’s important is not convincing those who fundamentally disagree with us, but the degree to which we can extract ourselves from their political control.” Viewing one’s opponents as “hardwired” or brainwashed is a fallacy rooted deep in a failure of the ideological imagination. This essentially admits that classic libertarianism of the Mises variety cannot mature out of the fringe and into the mainstream; Deist is on a path with the inshore secessionists of the survivalist and prepper movements, the cabin in the woods with the generator and the gun slits.

But the offshore, Silicon Valley exiters are different. No one could call Thiel an “inadequate capitalist” – he turned his Paypal bundle into an immensely successful venture-capital enterprise, which among other things made an early bet on a company called Facebook. The ideology has mutated in the Californian sun, and can be seen in the way many of those quoted – Thiel, Srinivasan, Hastings, Quirk – readily conflate government with their experiences running tech companies, and technology itself. They see exit as a hack.

The hacker and the entrepreneur are very similar mindsets – indeed, there’s tremendous overlap between the groups. It is not a utopian practice. Both need a status quo that can be cracked, unsettled or disrupted to their advantage. At its weakest, Silicon Valley’s “hack” culture devolves into finding extraordinary technological workaround for problems rooted in social or economic injustice as a way of avoiding looking at those injustices. For instance, the increasingly common practice of freezing female employees’ eggs to improve their chances of late-in-life childbearing, so they can better dedicate their 20s and 30s to their employer.

Applications founded in “hack” culture are based on conferring an advantage – on beating the system. Take something very simple, like an app that shows you where the traffic jams are so you can avoid them. Useful, but not utopian: a bunch of schmucks are still sat in a jam somewhere. Airbnb presents itself as a shrewd way to beat housing problems in an overcrowded, popular city such as San Francisco or London. But it provides the owners of vacant properties lucrative, insecure, short-term tenants, reducing their incentive to find long-term secure tenants and so contributing to housing shortages. Nearly all of these advantages necessitate a corresponding disadvantage. Uber’s claims to empower its workers do not extend to allowing them to unionise; the growth in similarly “empowering”, flexible, crowdsourced labour has led to the creation of what The Nation calls “the most unregulated labour marketplace that has ever existed”, subject to “an overabundance of labour, extreme competition among workers, monotonous and repetitive work, exceedingly low pay and a great deal of scamming. In this virtual world, the disparities of power in employment relationships are magnified many times over, and the New Deal may as well have never happened.” A libertarian paradise for tech giants and entrepreneurs who need to perform tasks as yet beyond the capabilities of algorithms; a sweatshop for their digital peons.

The exiters’ efforts to hack and start-up their way out of the nation state are about creating a very small paradise for hackers and entrepreneurs. And not everyone can or should be a hacker or an entrepreneur; even hackers and entrepreneurs can’t imagine it that way. For a sense of what a Silicon Valley nation-state might resemble, take a look at the “co-living arrangements” offered by some property entrepreneurs to starter-level Valley employees: bunkbeds in dorms for hefty rent cheques. “Modern ‘co-working’ and ‘co-living’ arrangements may look like high-tech hippie houses, but they don’t subvert traditional ownership,” writes Susie Cagle in “Crooked Valley”, her Pacific Standard column critical of Silicon Valley’s culture. “The selling points for a tech commune are ‘free’ laundry and entrepreneurial vibes, not group decision making, cost transparency and accountability. Tech communes are about chilling with bros in a hella culture-fitted environment with a pantry full of carbonated mate, not about creating collective power by subverting traditional ownership models.”

So it might not be all about liberty and justice for all, but a freer hand for the few. The ocean, however, is proving hard to hack. HavenCo is long gone. Sea Code’s website is stuck in 2005, and calls to its office go to generic voicemail. Blueseed still exists but is on hold awaiting further funding; it has no vessels at present. Google’s barge plan was sunk by the Coast Guard, which was worried about fire safety. Not wanting to repeat the Triangle Shirtwaist disaster at sea, the company has had them dismantled. The Seasteading Institute sails stately on, for now. §

Tankaut 15_44_cropMartti Kalliala, Ultimate Exit, 2014


Image: Jamian Juliano-Villani, The Right Time, 2015. Courtesy the artist

  • Will Wiles
  • Will Wiles