The High-Tech Revolution and the Disruption of American Capitalism

The people and companies of the modern American technology industry, and its command-and-control center of Silicon Valley, like to characterize themselves as “disrupters” of traditional industries, markets, and state institutions.  This paper argues that they have indeed, been “disrupters” of the capitalist order since the 1970s, but not in the way techies assume.    

First, refuting conventional wisdom that the tech revolution occurred independent of (and despite) the liberal state, it argues that generous, privatized, and federalized state investment – set in place by the New Deal – enabled the American technology industry to fly as high as it did.   The indirect and parastatal nature of much of this spending (in contrast to other industrialized nations) was critical in enabling a competitive and highly innovative tech marketplace to emerge. 

Second, tech reaped significant benefits from realignments of the 1970s and early 1980s.  The same forces that destabilized the business and labor constituencies of the New Deal also opened up avenues for small, agile new businesses that could quickly globalize supply chains and had fewer fixed labor costs (partly due to a sustained anti-unionism that is a bedrock tenet of the Silicon Valley ethos).  High-tech companies presented themselves as an attractive new model for American capitalism: culturally liberal, meritocratic, unencumbered by old constituencies and traditions. 

Third, high technology became a golden ticket – rhetorically and materially – for national politicians on both sides of the aisle seeking the votes of an increasingly independent-minded electorate after 1980.   The “think different” self-presentation of tech companies held particular appeal to a rising generation of “Atari Democrats” seeking to reinvent their party along more centrist lines.  Ultimately, Democratic liberals aided and abetted the mythos of the iconoclastic, self-sufficient technology entrepreneur and helped reaffirm a free-enterprise ideology of capitalism unfettered by the regulatory state and organized labor.