A New Book Claims the Internet Has Bred a Different Type of Capitalism

On a former industrial patch five floors of glass and steel luxury rise skyward. Bebo founders Michael and Xochi Birch recently launched the Battery, a new hangout for the Silicon Valley elite which, in the owners' words, will "build community and understanding in San Francisco." There's no dress code and they want a diverse clientele.

"So I asked if I could join," said Andrew Keen. "And they start mumbling and looking at their feet. They say you have to be invited."

In his new book The Internet is not t​he Answer, Keen rubs up against the "Silicon one percent" to document what he sees as a profound hypocrisy—an elite made wealthy by the internet, co-opting the language of "community" while privatizing public life in every direction.

"You've got wealthy Oakland residents crowd-funding thei​r own militias," he told me in a phone interview. "Google have superimposed Google Bus on San Francisco's public transit system. These companies are eating away at the idea of public society." The so-called Google bus is the private shuttle service that recently​ sparked protests as a symbol of gentrification and over the way it used public stops.

A British-born writer and a prominent critic of the web since his 2008 best-seller The​ Cult of the Amateur, Keen occupies an unusual position in the Valley. He is an entrepreneur who's worked on startups like Audiocafe but is now most famous as Silicon Valley's rebel critic, a businessman-turned-pundit emphasising social responsibility. His new book fights the current tendency to recommend the internet's model of networked capitalism as the solution to the world's social, political, and economic problems.

"There's this belief that the internet's the answer to everything," he explained, citing venture capitalist Shervin ​Pishevar's call to "Uberize the government." (Pishevar later tweeted that he was joking).

With the disintermediating tools of the digital sharing economy, traditional mediators like agencies/small-ads/labor exchanges are replaced by networks. Such networks have a phenomenal edge in matching supply and demand (hence the massive success of something like ​Airbnb) but in Keen's view would make a disastrous choice for managing government and economies.

He believes decentralized digital networks have birthed an entirely new mode of capitalism, one where profit and power resides in the network, administering the labour of others—"so-called 'sharing economy' start-ups making even respectable professions like doctors and lawyers into low-paid pieceworkers." According to Keen, this has led to a growing "Silicon chasm" both within the Valley and the wider world: Gatsbyesque members' clubs and private islands for the winners of the tech revolution, poverty and insecurity for everyone else.

"Go to East Palo Alto and you see queues of people on food stamps," he said. "And literally next door is Palo Alto itself with billionaires hanging off trees. But rather than bearing any gratitude or responsibility, the tech community is actually against the poor, against organized labour."

He cited the examples of the 2013 strike by the Bay Area's metro union, which provoked a storm of moral outrage online with one start-up​ CEO even calling on tech workers to "figure out how to automate their jobs," and the restaurant lobbyists threatening to rep​lace striking staff with iPads.

But didn't the corporate giants of old—Standard Oil, GM and so on—also profit from a vast pool of labour? "Yes, but they also employed a workforce army. Now decentralized networks mean billion-dollar corporations like Instagram can operate with a skeleton staff. We users become the product, what's sold."

I put it to Keen that Silicon Valley also creates jobs—that "disintermediating" platforms like Uber and TaskRabbit also make new kinds of labour exchanges possible, while market flotations may generate wealth for the wider economy.

"Yeah, but it's a bubble economy. There's a saying that San Francisco is full of people walking around with 1.2 percent of nothing," he quipped. "And disintermediation is a poor replacement for employment. It creates tasks, not jobs."

So how to disrupt the disruptors? "The role of the public needs to be brought back into the discussion," he told me, describing how the ostensibly libertarian tech world is actually partly underwritten by the state, with elite cor​porations subsidized for charity work or Google gettin​g tax breaks for its air fuel.

"If we leave things unchecked, the technorati will abdicate any notion of society whatsoever," Keen said, citing the Google engineer who tweeted about replaci​ng food stamps for the poor with Soylent, or the growing tide of Bay Area "secessionism." "Jeff Bezos has invested large amounts in a spaceship program in Texas. Paypal's Peter Thiel is part of a group planning their own floating offshore colonies. These are radical ideas—of very rich people," he said.

I ask if he ruffled any feathers disrupting the valley's cult of disruption. How can he criticise on one hand and do business on the other?

There was a delicate pause. "The smartest people in the universe are coming to Silicon Valley," he said carefully. "I wouldn't write this stuff if I didn't think highly of them."

And did anyone finally invite him to the Battery?

"I was allowed to drop in for lunch."