By ELEUTÉRIO FS PRADO*

Eleutério Prado reveals how Peter Thiel inverts Marxist criticism to argue that “capitalism and competition are opposites,” crystallizing monopoly as virtuous while promising “cities of freedom” policed ​​by robots with artificial intelligence

This article aims to critically examine the thesis on the current development and future of capitalism, presented by Peter Thiel in his book From zero to one. Graduated in philosophy and law and a major investor in digital technologies, this committed intellectual predicted that the future of this economic system, based as it is on the capital relationship, will be formidable.

In addition to becoming a controversial billionaire who works as an entrepreneur in Silicon Valley, this author is known for supporting the creation of “freedom cities.” In these cities, he imagines, capitalism is extreme and is free from the State and politics, but not from the police. Security in such cities will be provided by robots equipped with artificial intelligence, which will have the function of expelling or eliminating intruders and unwanted people.

According to Marco D'Eramo, he is a defender of anarcho-capitalism that wants to free “capitalists from the burden of taxes” and the “exploitation of workers”, even eliminating “nation states” and replacing them with “libertarian paradises”.[I] Paying attention to what he says – and what he does not say –, we follow here the tradition of criticism of political economy in the light of Ruy Fausto's teachings on Marxian dialectics, in his various books.[ii]

Capital in platforms

We begin by presenting some fundamental notions of this object and this critique. After all, what are platforms? Srnicek's definition is quite interesting: “At the most general level, platforms are digital infrastructures that allow the interaction of two or more groups of people. They are configured as a means of intermediation that brings together different types of users: consumers, advertisers, service providers, producers of goods, suppliers. Such platforms often have a series of tools that allow users to produce content, in addition to selling goods and services.”[iii]

A central characteristic of platforms is that they internalize markets and rely on network economies that lead to economies of scale. They therefore have a strong tendency to become monopolies. Even if they have not yet reached this advantageous situation, even if some competition may continue to exist, for example in the form of a duopoly or an oligopoly, they are always fighting to obtain this status of a single company in the activity in which they operate.

Note now that platforms are not presented as capitals themselves; rather, it is said that capital is placed in platforms; since these, as such, are mere use values. Without the position of capital, they would neither be commodities nor would they be worth as capitalist wealth.

The first formulation presents these computing machines immediately as capital and, therefore, falls into the fetish of commodities. In other words, it confuses the social form (expression of a social relationship) with the support of the form (use value). The platforms are therefore configured as means of production and/or as means of commercialization and consumption and/or as means of advertising goods.

The capitalist mode of production presents itself above all as a generalized mercantile system. In it, no mercantile exchanges occur without the counterpart of a transfer of some use value. Now, there are two types of mercantile transaction and both are based on the ownership and possession of goods.

As units of use value and exchange value, commodities were produced to be brought to the market: either the use value of the commodity as a whole is sold, transferring its ownership to someone else and realizing its exchange value, or its use value is rented out to someone else, without transferring this ownership and without realizing its full exchange value immediately, thus obtaining rental income.

Platforms sometimes allow both types of commercial transactions; however, more often than not, only the second type of transaction is available to them. For this reason, they are often seen as a source of rentierism or techno-rentierism.

The concept of ideology

Having clarified the terms “platform” and “capital” that appear in the title, it is now necessary to show how the term “ideology” is used here. It is often emphasized that the ideologies that inhabit the culture of modern society are based on mere understandings of the appearance of this system of social relations, which are manifested through mercantile interactions.

Hence, for example, capitalism is seen by the understanding as a market economy. However, to give substance to the ideology, the crude appearance of the mercantile functioning has to be reworked through metaphors. And they usually say that it is a natural order guaranteed by a political order. In any case, a complex whole subsists and it comes from the actions of the parts; but they did not design it and are not even aware of the process that engenders it. Having thought of it this way – it should be noted –, it still remains to specify the model of this order.[iv]

Now, dialectics opposes understanding in two ways: first, unlike the latter, it does not affirmatively posit first principles – for example, the economic man – when analyzing capitalism; second, it seeks to remove the notional crystallizations – for example, the natural order – that understanding posits when trying to explain the functioning of the system.

Seeking to grasp the ongoing contradictions that reside in this system, dialectics – as taught by Ruy Fausto – suppresses the founding and fixing notions of the real world, thus avoiding falling into contradiction (non-rational interventions). At the same time, it seeks to rationally intervene these same notions so that the contradictions implicit in them manifest themselves and become explicit.

This is how Ruy Fausto puts the question: “By setting principles or blocking the interversion of contradictory determinations, the discourse of understanding is configured as an ideological discourse; by suppressing principles, or interverting the contradictory determinations of the object, dialectics ‘suppresses’ ideology. Non-ideological (dialectical) discourse is what sets and denies ideological notions at the level of principles; or releases their negative content at the level of the presentation of the object. Ideological discourse is, on the contrary, what sets these notions at the level of principles and blocks their interversion at the level of the presentation of the object.”[v]

Consequently, when we talk about ideology here, we are thinking of the defenders of capitalism and the capitalists themselves not as posited subjects, but as subjects denied as such, that is, as supports of the capital relation.

“Here, the people” – says Karl Marx opening the second chapter of The capital – “they exist for each other only as representatives of the commodity and, consequently, as possessors of commodities. In the course of development, it will be seen that the economic masks of people are nothing but personifications of economic relations, as supports through which they confront each other.”[vi]

That is, if the understanding fixes the people who act in the markets as homo economist autonomous, dialectics shows that they, as such, are merely functions of the economic system. And, as supports, they make sense. They thus show why the current knowledge of the system's economists seems quite sensible and is so resilient; it survives unchanged even in the face of devastating criticism.

Competition as an ideology

To grasp the critical point to be presented, it is best to begin with a little history of economic thought. Adam Smith, in the early days of industrial capitalism in England, welcomed the competition of capital as that which promoted the progress of nations; as is well known, he crystallized an understanding of this notion through the metaphor of the “invisible hand”, partially neglecting its negative effects. Competition is a source of heteronomy that produces progress, but it also harbors enormous potential for the destruction of human and non-human nature.

“By directing his activity in such a way that his production may be of greater value, [the capitalist] aims only at his own gain, and in this, as in many other cases, he is led as if by an invisible hand to promote an object which was not part of his intention. (…) In pursuing his own interests, the individual often promotes the interest of society much more effectually than when he really intends to promote them.”[vii]

Alfred Marshall, writing in the latter half of the 19th century, felt that he should criticize competition because it had acquired “a pejorative meaning.” It had come to “imply a certain selfishness and indifference to the welfare of others.” Rather than crystallizing the notion of competition as virtuous, he preferred to crystallize the notion of deliberation: “It is deliberation, not selfishness, that is the characteristic of the modern age.”

According to him, what characterizes modern industry and commerce is “greater self-confidence, more foresight and more reflection and free choice.”[viii] Now, this formulation obviously ignores the fact that the capitalist's deliberation, and also that of consumers (supply commands demand), is subordinated precisely, as León Walras would say, to the “blind and fatal forces” of capital competition in search of the greatest possible profit, seen by him as positive.

Alfred Marshall, faced with the rise of large corporations noted in the period, realized that, if there are increasing returns to scale in a given industry, as well as rising demand, it is possible that the competition regime that exists there, at a certain point, will be replaced, at a later time, by a monopoly regime. Competition consists precisely in the struggle to overcome competitors, that is, to negate competition itself by means of reducing costs and economies of scale.

It is important to note, then, that monopolization is not an absolute trend in the modern economy and that monopolies, when they become a reality, tend to stagnate: “The interest prima facie The objective of a monopoly holder is clearly to adjust supply to demand, not so that the price at which he can sell the commodity exactly covers the expenses of production [which include the normal profit], but so as to leave him with the greatest possible total net income [which now contains an extra profit]. (…) In fact, in real life monopolies are rarely absolute and permanent (…). On the contrary, there is in the modern world an ever-increasing tendency to use new objects and methods to replace old ones that have not developed in the interests of consumers.”[ix]

In other words, competition suppresses competition, engenders a tendency toward monopolization, which in turn is challenged by competition itself, which is always reborn through innovations. Thus, selfishness as an attribute inherent in the personification of capital, which had been denied as a first principle of capitalism, reappears here as such. This antisocial affect is the necessary behavioral counterpart of market competition.

Monopoly as an ideology

At the beginning of the 21st century, when large-scale industry (which surpassed manufacturing and is characterized by the use of machines) began to be supplanted by post-large-scale industry (which is driven by machines that use information and communication technologies), the notion of monopoly now tends to crystallize as the essence of the system.

To make your eulogy,[X] Peter Thiel, in his book From zero to one, begins by posing an enigmatic question: “What important truth do very few people agree on?” As it pertains to business in today’s world, his answer to it comes as follows: “Perfect competition is considered the ideal and standard state in economics textbooks. (…) Under perfect competition, in the long run, no firm makes an economic profit. (…) [Economists] idealize competition and think it is what saves us from socialist poverty. In fact, capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition all profits disappear.”[xi]

Now, competition and monopolization are reflexive determinations of the market process. If hypocritical economists crystallize the notion of competition to praise the system, if they strive to show that this system is quite advantageous since, beyond the capitalist's own interest, but based on it, it supposedly creates wealth for everyone, the cynical capitalist, who wants to prosper in the contemporary system, crystallizes monopoly as virtuous, since it benefits the capitalist himself, appearing, according to him, to sacrifice society.

Drawing inspiration from Marx, but inverting his critique, he says that “creating value is not enough – you have to capture part of the value you create”[xii], or rather, that which is created by work in a profitable enterprise. How to obtain it? The lesson for entrepreneurs is clear: “if you want to create and achieve lasting value, do not develop a business with an undifferentiated product”, that is, stand out from the competition, seek a monopolistic position.

But is monopoly good for everyone? To answer this question, Peter Thiel creates his own version of the invisible hand. Monopolies deserve condemnation only in a static world where they act as revenue collectors. “But the world we live in,” he emphasizes, “is dynamic: it is possible to invent new and better things. (…) Creative monopolies are not only good for the rest of society; they are powerful engines for making it better.”

In making this statement, he relies on the notion of progress, taking it ideologically as something always virtuous. Now, Walter Benjamin, in his essay on the concept of history, inverted this notion that comes from the dynamic appearance of the capitalist mode of production; in doing so, he shows its opposite: behold, where one sees “a chain of events, he (Paul Klee’s angel) sees a single catastrophe, which tirelessly piles ruin upon ruin and scatters it at our feet.”[xiii] According to Walter Benjamim, progress is a founding principle that justifies violence and even the state of exception.

Reason becomes myth

The book From Zero to One develops following a rational method of argumentation, but ends in a myth, namely, the utopia of accelerationism. In his last chapter, Peter Thiel presents four possible futures for humanity that does not abandon capitalism: recurring crises, stasis at a given development plateau, extinction and takeoff.

He dismisses the first as improbable, rejects the third as undesirable, disregards the second as merely an endpoint; and is left with the fourth, which would be based on the incessant creation of new technologies. In doing so, he ignores an important result of complexity theory, namely that every process of positive feedback, i.e. of exponential growth, ends, as natural science abundantly shows, in catastrophe.

This justifies the thesis put forward in another article, according to which we are not merely dealing with neo-fascism or proto-fascism, but with a political project that insists on the suicidal logic that is ever more inherent to capitalism. This project implies the death of man, as well as of other species, and the end of civilization. This is clearly demonstrated because, in order to save his argument in favor of capitalism, he ultimately presents himself as a prophet.

In the conclusion of his “work,” this billionaire writer announces a magical future for the development of capitalism. Those who reach the final chapter of his book may read the following: “the most dramatic version of this outcome is called the singularity, an attempt to name the imagined result of new technologies so powerful that they transcend the current limits of our understanding.” Yes, indeed!

* Eleutério FS Prado is a tenured and senior professor at the Department of Economics at USP. Author of, among other books, From the logic of the critique of political economy (anti-capital fights).

Reference

Peter Thiel. From Zero to One: What to Learn About Entrepreneurship in Silicon Valley. Rio de Janeiro, Objetiva, 2014, 216 pages. [https://amzn.to/4l4K3pk]

Notes

[I] From Eramo, Marco – Peter Thiel, the dark militant capitalist. Portal of Other words: https://outraspalavras.net/outrasmidias/peter-thiel-o-sombrio-capitalista-militante/

One can also read such enormities in Chafkin's book, Max – Controversial – Peter Thiel and the pursuit of Silicon Valley power. Alta Cult Publisher, 2023.

[ii] Here are the best of them: Fausto, Ruy – Meaning of dialectics – Marx: logic and politics. Editora Vozes, 2015.

[iii] Srnicek, Nick – Platform capitalism. Polity Press, 2017.

[iv] See the interesting article by Slobodian, Quinn – Garden, swarm or factory at https://www.theideasletter.org/essay/garden-swarm-factory/

[v] Fausto, Ruy – Marx: Logic and Politics. Brasiliense, 1983, p. 56.

[vi] Marx, Carl – Capital – Critique of Political Economy. Boitime, 2017.

[vii] Smith, Adam- The wealth of nations - Inquiry into its nature and causes. April Cultural, 1983, vol. 1, p. 379.

[viii] Marshall, Alfred – Principles of Economics. April Cultural, 1982, vol. 1, p. 26.

[ix] Thiel, Peter – Op. cit., vol. 2, p. 127 and p. 138.

[X] In fact, the book we are talking about here is a self-help book for entrepreneurs who want to be successful in contemporary capitalism and a self-praise book about themselves as a successful capitalist. However, it presents itself with a lofty intention, which appears to be yet another progressive philosophy of history.

[xi] Op. cit., p. 30-31.

[xii] Ditto, p. 29.

[xiii] Benjamin, Walter – About the concept of history. Alameda Editorial, 2020.

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