How Stanford Helped Capitalism Take Over the World

When Leland and Jane Stanford bought a Santa Clara County horse farm in 1876, they were upholding an aristocratic tradition of placid living away from the city’s multitudes. They were also making a capital investment.

Stanford had made his fortune as a railroad baron, and while iron horses now connected the California frontier to parts east, the old mammalian ones remained essential to agricultural work, transportation, and military action for the expanding country. Horse-rearing was a tradition-bound industry, one that breeders approached largely as they had for centuries. Stanford proposed to improve the breeding of horses with the rigor and insights of science; as there were, by his own estimate, some 13 million horses in the country at the time, this offered a major value proposition for anyone who could find a way to cultivate more productive steeds.

Stanford’s answer was what he called the Palo Alto System: essentially, an acceleration of the existing horse-production process. Where typically horses began training in their third year of life and matured a half-decade later, Stanford inaugurated a system in which horses would learn to trot as young as five months old, demonstrating their potential, or lack of it, as soon as possible.

“Better to snap a yearling’s tendon than to feed him to age five just to see it snap then,” writes Malcolm Harris in Palo Alto: A History of California, Capitalism, and the World. “If performance was destiny, then there could be no accidents in colt training, just early information, and early information was money saved.”

The ruthless production logics of the Palo Alto System recur throughout Harris’s sweeping history. With the Gold Rush of the 1840s, Harris writes, “capital hit California like a meteor.” California’s barons set about expropriating its Indigenous inhabitants, consolidating whiteness as a rationale of domination, and subjugating diverse laboring populations to their dictates. Harris introduces a panoply of industrialists, unionists, tycoons, charlatans, revolutionaries and counter-revolutionaries. Throughout this bustling narrative, however, one institution plays a starring role: Leland Stanford Junior University.

The university was founded in 1885 in honor of the Stanfords’ son, who had succumbed suddenly to typhoid fever a year earlier at age 15. The namesake institution, Leland Sr. declared, nonetheless ensured that “the children of California shall be our children.” The university aspired to produce the elite of a settler California still in formation. After Leland Sr.’s death in 1893, a struggle ensued over just what that inchoate elite would learn. Where his widow, Jane, hoped to cultivate the “soul germ” of the matriculating students by including spiritualist instruction, the university’s first president, David Starr Jordan, an ichthyologist, favored a more scientific direction. The power struggle between the two was definitively settled when Jane Stanford died mysteriously by poisoning during a trip to Hawaii in 1905.

Jordan styled himself a rigorous man of science; a posture that for him entailed a commitment to preserving and improving the genes of the white race. His control over Stanford assured, he turned it into what Harris calls a “eugenic university,” pushing “the Palo Alto System out of the barn and into the classroom” by identifying and cultivating talent as early as possible, while sequestering and excluding the undesirable. Among the early beneficiaries of the system was the future President Herbert Hoover, who was part of the university’s original “pioneer class” of 1891. The young Hoover demonstrated a preternatural gift for organizing; as student manager of the baseball and football teams, he compelled them “to keep standard books and pay their bills, to behave like twentieth-century bureaucrats and reap the resulting efficiencies.” Hoover went on to a successful career as an engineer and manager rationalizing mining operations across the world. Two years after graduation, he was plucked by a London mining consultancy to lead operations in western Australia. Hoover’s managerial approach would have been familiar to Leland Stanford and other architects of the Palo Alto System: “he rationalized the mines,” Harris explains, “standardizing the books and techniques, eschewing folk wisdom in favor of science, introducing labor-saving technology, and submitting every decision to the cold knife of profit calculation.”

Hoover subsequently imported the methods he’d honed at Stanford to China (where he witnessed the Boxer Rebellion firsthand), to South Africa, to Czarist Russia, and beyond. His experiences in mining attuned him to the threat restive laborers posed to capital accumulation. Subsequent experience administering American food aid to Europe during World War I by coordinating with agri-businesses convinced Hoover that, in Harris’ words, “the voluntary association of leading men … could be more than just a lifestyle or business strategy. It could become a whole ideology.”

Hoover brought this sensibility with him into the White House in 1929; Harris lays part of the blame for that year’s stock-market crash at Hoover’s feet for his feather-light touch in regulating banks that were creating esoteric new stocks to keep the investment climate sunny. When tens of thousands of World War I veterans and their families showed up at the Capitol hoping to redeem service-bonus certificates for dollars, Hoover suspected a Bolshevik plot, and sent U.S. army troops to forcibly displace the ragtag throngs and burn down their tents. After he was voted out by a horrified public, Hoover found a new perch at his alma mater: the Hoover Institution was established on the Stanford campus in 1919. Hoover’s namesake institute evolved into a think tank promoting free-market capitalism, ideological support for the system emanating from the Hoover Tower just off the campus’s Main Quad “like a capitalist call to prayer.” Its thinkers argued for reductions in taxes and public spending, cuts to regulations and to foreign aid, quelling of affirmative action and organized labor, and aggressive foreign policy. This policy agenda would reach its apotheosis in the administrations of Ronald Reagan and George W. Bush; the Hoover Institution lent critical early support to both during their runs for the Republican nomination.

Kathleen Fu for The Chronicle

Despite the think tank’s role in promoting free markets, Stanford was — like other institutions of higher ed — shaped by the demands of midcentury statecraft. During World War II, the university become enmeshed with an expanding military apparatus. Scions of Palo Alto such as William B. Shockley Jr. and Frederick Terman offered their skills in physics and engineering to the war effort, and then brought their wartime experience back to campus as faculty.

The university emerged from the war under Terman’s leadership with a new orientation: investments in aerospace, communications, and electronics (ACE) fields attracted federal funds into the research sectors that would burgeon as the global contest between capitalism and communism deepened. Already by 1948, Harris writes, “military contracts paid more of the Stanford physics department’s bills than the university did.” Orienting around the profit incentives of the capitalist class generally, Stanford became a “full-spectrum Cold War lab,” attracting federal funding to R&D in technological areas of emphasis for the military-Keynesian state and, via the creation of the research-focused Stanford Industrial Park for high-tech start-ups in the 1950s, anchoring an ecosystem of ACE firms. These firms would in turn produce the tools that allowed the United States to project its power across the globe during the Cold War: making the planet safe for capital accumulation, just as Hoover had dreamed. “Organized capital had to find a way,” as Harris puts it,

to reconcile the expansion of the world’s enfranchised population as a result of the previous period’s liberation struggles with a fixed system of arbitrary inequality. If the American masses voted themselves a greater share of the domestic product through social democracy, and if the Third World threw off its chains and reappropriated its natural resources, then investors would find themselves cornered, boxed out from paths to profitable growth. … By definition, Anglo-American domination couldn’t survive in a world where everyone was equal. The supposedly natural pigmentocracy threatened to crumble, which would reveal it to have been, in retrospect, unnatural, merely imposed. As a bastion of American anticommunism, it was Palo Alto’s job to rediscover and refound inequality.

Inequality, of course, breeds discontent. As midcentury national movements struggled for independence from the colonial yoke, homegrown revolutionaries likewise agitated against American militarism, racial oppression, and exploitation in the workplace. The Black Panther Party — a Maoist organization born just up the bay from Palo Alto, in Oakland — was merely the most visible of a suite of revolutionary left movements that emerged largely from the state’s community colleges: The list also included the Chicano Brown Berets, San Francisco Chinatown’s Red Guard Party, the umbrella Third World Liberation Front at San Francisco State, and the Indians of All Tribes, who occupied the former federal penitentiary on Alcatraz Island starting in 1969.

This radical fervor would prove inconvenient for the technicians of American empire. The Cold War R&D happening on California’s campuses offered ample opportunities to contest American militarism without traveling out of state. In 1969 the communist Revolutionary Union, led by the Stanford English professor H. Bruce Franklin among others, occupied a campus compound where classified research on “electronic countermeasures” enabled circumvention of enemy radar during bombing campaigns in Vietnam. The April Third Movement (as the occupiers styled themselves) held the building for nine days, releasing what information they found and pamphleteering about the Vietnam War using university resources. This was a step toward a goal the Panthers would later call “people’s community control over technology,” and led to the booting of the project from campus. A 1969 pamphlet linked the movement’s action to its wider context:

We are engaged in a conflict with the kind of men — and some of the very men — whose interests got us into Vietnam, and whose disenchantment with the rising costs of that conflict will eventually get us out. … The struggle at Stanford, then, is a microcosm: the trustees’ intransigence will not give way to moral persuasion or majority votes any more than our outcries have ended the war. If this view is correct, then the trustees will respond only to rising costs.

Harris writes of such revolutionary moments with admiration, tempered by a clear-eyed appraisal of how these movements would eventually fall apart. When the April Third occupiers trained their sights on a campus building researching counterinsurgency tactics, they were blocked by cops with tear gas. In the late 1960s, with the FBI targeting activists under its infamous Cointelpro surveillance program, many of the connected social movements splintered under their own contradictions: differing emphases between revolutionaries of color and white organizers, distinct diagnoses among nationalist movements and internationalists, and schisms between hardening leadership cadres and the social bases they were supposedly representing. The wave of radicalism crested and ebbed, and capital launched its counterattack.

In Palo Alto, Harris convincingly presents the Stanford campus as a stage on which many of the most important dramas of 20th-century capitalism played out. But if it hadn’t been Stanford, some other university would have played the role. Indeed, in some ways Stanford offers a stand-in for higher ed writ large in Palo Alto, even as other colleges weave in and out of Harris’s narrative. MIT and Caltech exceeded Stanford in defense contracts in the 1960s. California’s community colleges incubated revolutionary movements. And the UC system, under the guidance of Gov. Ronald Reagan, responded to student unrest in the 1960s with the fateful imposition of tuition fees that would recast the students as investors in themselves, transforming that paradigmatic institution of higher education forever.

In the 1980s, the Reagan solution went national. The mandarins of the Hoover Institution helped President Reagan deregulate financial markets, break organized labor, and cut taxes on the wealthy and on businesses. A new epoch of what the education scholars Sheila Slaughter and Gary Rhoades call academic capitalism emerged with the 1980 passage of the federal Bayh-Dole act, which allowed universities to keep even those intellectual-property patents they developed on the public dime. The act encouraged entrepreneurialism and the penetration of speculative venture capital into academe.

In the turn toward university-housed entrepreneurship, Stanford again played a crucial role, with the recombinant-DNA company Genentech netting the university a cool quarter-of-a-billion dollars and helping push it into pole position in terms of patent income. As what Harris calls “bifurcation” of labor markets deepened in the Reagan years, the college-degree wage premium increased, leaving graduates ever better off in comparison to non-grads, enabling universities to charge their students much higher prices to invest in themselves via the accumulation of human capital. Ed-tech start-ups and private tutoring ballooned as even well-off families looked for any advantage they could gain to send their kids to a top university. “Demand for top-college seats is a proxy measure of inequality,” Harris explains. “The way capital keeps concentrating, mere proximity to wealth and potential wealth is worth a lot on its own.” By 2021, per Harris, the acceptance rate at Stanford — designed to identify talent early and capitalize on it — had dropped to a minuscule 5 percent. The Palo Alto System had produced its Harvard of the West.

The system sometimes derails. On July 19, after months of reporting by The Stanford Daily detailing accusations of irregularities in his published scientific work, Marc Tessier-Lavigne resigned as the university’s president. Among the most damning was the charge, by former scientific colleagues, that Tessier-Lavigne had fabricated data as an executive at the very same pathbreaking Genentech firm that provided Stanford with its initial post-Bayh-Dole patent boom. A panel of five scientists and a lawyer appointed to review the accusations found instead a “lack of rigor” in the Genentech paper in question, as well as “various errors and shortcomings” in the day-to-day scientific work that informed it: part of a larger pattern of “unusual frequency of manipulation of research data and/or substandard scientific practices” in Tessier-Lavigne’s lab, spanning decades. Small surprise, perhaps, as the practices of his lab recall those of Leland Stanford’s stock farm: Junior scientists in Tessier-Lavigne’s lab attested to a culture that rewarded “winners,” who could “generate favorable results,” while marginalizing “losers,” who were “unable or struggled to generate such data.”

As formidable as Palo Alto-style capitalism may be — its cycle of rationalization, speculation, and subjugation via division of labor repeating almost metronomically across industries and geographies — Harris finds hope in the examples of those able to analyze their context and, in doing so, to exceed and challenge it. The verve of his writing allows the book a reach beyond academics; yet among the readers it may prove most useful for are those living and working at Stanford University.

On April 3, 2023 — a date marking the 54th anniversary of the April Third Movement — graduate students at the university announced their intention to organize themselves into a union. On July 6, they voted 9 to 1 to do so. Em Horst, a member of the fledgling union’s coordinating committee, found Harris’s narration of Palo Alto’s haunting by its brutal past poignant. “When we walk around campus, we see the building where the Stanford Prison Experiment was conducted. We see all of these buildings named after mining barons. We see the Hoover Tower. To be on campus is to be haunted by this tragic influence,” Horst told me. But at the same time Harris’s reanimation of the campus’s radical past “conjures a spirit of possibility. Hopefully what we’re building toward by unionizing is precisely that same spirit of possibility for future generations of workers here and elsewhere.”

Horst likewise finds inspiration — and a possible bargaining demand — in Harris’s closing proposal in the book. Stanford’s campus is the largest in the United States, and, because of an injunction by Leland and Jane Stanford against selling off the land they bequeathed to the school, its 8,000-odd acres sit largely undeveloped and unsold. Harris proposes that Stanford recognize the sovereign claims of the Indigenous Muwékma Ohlone, inhabitants of the land that would become Palo Alto before the railroads were a twinkle in continental capital’s eye, and turn its land over to these claimants.

Of course, such a return is exceedingly unlikely, militated against by the very capitalist structures that Stanford, Hoover, and the Palo Alto System helped to produce and normalize. The demand is worth making nonetheless. “If the creatures of the earth are to have a medium-term chance, then at the very least we need some space right now to develop, practice, and deploy new modes of production, distribution, and reproduction — social metabolism,” Harris writes. “As a fortuitously located, substantial piece of land to which hundreds of identified Indigenous people have a specific claim and where, contrariwise, no individual settler holds a property deed, the acres known during the long twentieth century as Stanford present a unique opportunity for the human race.” Stanford, then — jewel in the Cold War state’s war-making crown, space-age technological hearth, fulcrum for dizzying capital accumulation, and recurring site of struggle — is especially well positioned to lay its ghosts to rest by relinquishing a piece of its holdings toward the possibility of living otherwise.