Johannesburg, California

The connection between the West Coast of the United States and South Africa spans more than a century. Consult a map of California, and you will find the towns of Randsburg and Johannesburg (“Jo-burg” to its local residents) on the western edge of the Mojave Desert. These toponyms are not simply an homage to the region’s shared history of gold mining. They also attest to the exchange of expertise and manpower between the two. For if the massive mining houses that emerged on the Witwatersrand at the turn of the 20th century were owned by the plutocratic Randlords, they were overwhelmingly managed by Californian engineers.

In the 1890s, the gold standard fell into crisis as the supply of bullion failed to keep pace with the growth of the American economy. Roughly 2,000 Californian engineers flooded to the Transvaal as part of an effort to overcome the chronic shortage of gold. They brought with them not only their technical expertise but also the politics of the American West. “Vigilance committees” soon sprang up to administer justice in the lawless mining town of Johannesburg. Some historians have even come to question whether the design of the Jameson raid—the botched plot against Paul Kruger’s South African Republic hatched by a coalition of British colonial administrators and American engineers—owes more to 19th-century filibustering in central America than to British imperialism.

However, as the historian Keith Breckenridge has argued, it was in the realm of industrial organization that the American engineers would leave their most lasting imprint on South Africa’s political economy. The unique mining conditions in the Transvaal—the presence of deep-level reserves and low-grade ore—presented formidable financing and technical challenges. The engineers looked to the American railway corporations as a model for profitable operations in the Rand. These corporations had surmounted the formidable capital requirements and daunting managerial challenges associated with continental-wide operations by ushering in a revolutionary new corporate form of capitalism.

The principal element of this organizational revolution was the separation of ownership and management. This allowed the raising of capital that was beyond the investment capacity of any individual by utilizing the bond markets of New York. It also allowed the corporations to deal with the geographical scale of their operations, separating local and central authority. The sheer scope and scale of the railway corporations also required standardization across several domains: a single rail gauge across the network, nationally demarcated time zones, legally stipulated equipment specifications, state-sanctioned accounting practices, and the compilation of detailed, standardized financial reports on every aspect of the workings of the corporation. Standardization facilitated the calculation of systems-wide statistics, which soon became the cornerstone of corporate management.

The importation of the corporate model of capitalism into the South African mining industry was not without its challenges. The corporate revolution not only entailed a transformation of the internal organizational structure of firms but also crucially relied upon a specific form of regulatory state. Paul Kruger’s administration in the Transvaal was too corrupt and inefficient, and its elites too beholden to preindustrial agrarian ideologies, lifestyles, and kinship obligations, to facilitate the emergence of the kind of centralized and effectively coercive state apparatus required for the flowering of the corporate form of capitalism. It was only after the defeat of the Boer republics in the South African War that a reformist zeal emerged within the Transvaal state to match that of the Californian engineers and their new corporate ideology.

Sir Alfred Milner, the man charged with reconstructing South Africa after the war, was typical of early 20th-century anglophone reformers who championed a “progressive new world.” An arch social-imperialist and product of the same turn-of-the-century institutions that produced the New Liberal and Fabian architects of the British welfare state, Milner disdained the Afrikaner republic’s inefficiencies and aversion to progress.

Milner began by moving the high commission from Colonial Cape Town to the Transvaal, the center of the Boer republics and the Witwatersrand gold rush. There, Milner and his Oxford-trained “Kindergarten” sought to kit out what Winston Churchill described as “Monte Carlo on top of Sodom and Gomorrah” with the rudiments of state administration, public transport, housing, and sanitation. But these were no run-of-the-mill technocrats. Operating in the aftermath of a brutal, near-total war, these administrators, unlike their counterparts in the metropole, encountered no meaningful opposition to the harder edge of their social vision.

The Kindergarten’s social reforms were decidedly eugenicist in theory and thoroughly segregationist in practice. Social reforms were understood to have particular racially defined beneficiaries. Addressing a banquet held in his honor in Johannesburg in 1902, Milner explained that “A great Johannesburg … means a British Transvaal.” His idea was to use the gold mines as an engine of wealth generation that would stimulate the entire economy and encourage mass British immigration. There, a municipal revolution would transform Johannesburg into a modern residential, industrial, and commercial city and encourage permanent British settlement. The end goal was the eventual replacement of the cosmopolitan, migrant, and—in the eyes of the Kindergarten—unfit population of the prewar years with a stable British workforce; a virile imperial race. If clear beneficiaries of social reforms were defined, other groups would be singled out as either barriers to those reforms or as means to them. Black people fell definitively into these latter categories.

Education for barbarism

One of the cornerstones of Milner’s project to engineer a virile imperial race was his effort to build a technical university in the heart of South Africa’s gold mines. Milner explained that Johannesburg was to be great “not only in number but in the character of its inhabitants, in their intelligence, cultivation, their public spirit.” The effort received the emphatic stamp of approval from British colonial secretary Joseph Chamberlain. Chamberlain—former screw manufacturer, ardent imperialist, tariff reformer, and municipal socialist—had himself produced a blueprint for a university during his tenure as lord mayor of Birmingham that appealed to Milner’s modernizing sensibilities. 

The Oxbridge model of a residential community of scholars and students located in a small town rather than an urban center, and focused on the cultivation of humane gentlemen, was seen as totally inappropriate for a university at the heart of a bustling mining town replete with all the vices of modern urban life. Chamberlain’s utilitarian and civic model for the University of Birmingham seemed far better suited to a scientific university imbricated with modern industry. Founded in 1900, Birmingham represented the university of the future. It was designed to link scholarship and knowledge to industry, trade, and transport. Moreover, it was deliberately designed to offer the working-class population of the city upward mobility by providing training for the occupations that had grown around industry. Birmingham was in the business of producing technicians, not scholars and gentlemen.

Milner’s vision would have a long gestation period. The impetus for the establishment of the university on the Rand would eventually come not from elites, but from Johannesburg’s poor white electorate. By the mid-1910s, alongside its importance in mining, Johannesburg had grown into a major commercial, industrial, and retailing center. The city’s development had encouraged a sense of civic pride among its white residents. For them, a research university was both a necessary supplement to the city’s newfound standing and significance, and essential for securing the “European” ascendancy. Tapping into the mood of his constituents, Mayor John O’Hara led the charge for establishing a research university in the city. In his highly populist campaign, O’Hara married fiery class rhetoric with blatant racism. 

The expectation that white families would send their children to Pretoria or far-flung Cape Town to receive a tertiary education was lambasted as nothing but a plot hatched by “reactionary politicians who oppose the extension of university education to the people and who wish to keep the door closed to the poor classes and opened only to the sons and daughters of the well-to-do section of the community.” At the same time, an institution of higher education was seen as essential “particularly when it is remembered that the European in South Africa has to face the competition of an overwhelming coloured population.”

There was a widespread perception, grounded in some truth, that Black people possessed an educational advantage over white people. While white people in the Transvaal and rural South Africa received next to no formal education, there existed by the turn of the 20th century, a relatively large-scale system of mission schools dedicated to educating a minority of Black people. This educational discrepancy had long been a target of education reformers in South Africa. Already at the end of the 19th century, the superintendent of education in the Cape Langham Dale complained of the “insult to our common Christianity” that “native heathen races” receive education while “we overlook our own stock and blood degenerating into the grossest ignorance and lowest habits of life.” In 1909, the missionary A. T. Bryant observed “that comparatively the average Zulu can boast of a larger share of pure scientific knowledge than the average European.” 

The popular campaign for white higher education in Johannesburg eventually succeeded with the incorporation of the University of the Witwatersrand in 1922. So began a three-quarter-century-long transformation of poor white Johannesburgers into world-leading technicians and professionals and, simultaneously, the systematic de-skilling of Black people. Above all, it was South Africa’s place in the new (and increasingly US-centric) global financial system that turned its new universities into formidable engines of professionalization. 

Following South Africa’s abandonment of the gold standard in December 1932, mining boomed as the price of gold immediately jumped from 85 shillings to 120 shillings an ounce. By 1939 it had reached 154 shillings. The simultaneous devaluation of South African currency significantly reduced the mines’ wage bills. The massive profits which resulted provided the foreign exchange to finance a major expansion of secondary industry. The 1930s saw the explosion of everything from metal engineering and explosives and chemical industries to a massive expansion of national transport infrastructure and steadily growing municipal engineering divisions. 

When it came to setting up a public power utility to meet the energy requirements of this expansion, the engineering expertise would once again come from America. This time, however, in the form of the South African-born physicist Hendrik van der Bijl who, while employed by Western Electric, had worked on the team that built the first transcontinental telephone line linking New York and San Francisco. 

Mining would receive an additional boon in 1944 when the agreements at Bretton Woods pegged the price of gold at $35 per troy ounce. The resulting precipitous decline in the real value of gold made mining the commodity unattractive practically everywhere but South Africa. The combination of the heavily capitalized, vertically integrated mining corporations built by the Californian mining engineers and the machinery of a segregationist state designed to depress of Black workers’ wages meant South Africa was uniquely placed to mine profitably under the conditions of the newly minted global financial order. During the Bretton Woods era, South Africa produced over 70 percent of the world’s gold. 

The unique technical challenges associated with deep-level mining on the Rand transformed South Africa’s universities into world-class centers for applied mathematics, engineering and other applied sciences. Exclusive access to these extremely demanding technical degree programs, and a monopoly over skilled jobs offered white South Africans all the accoutrements of suburbanized middle-class affluence and leisure. 

All major groups in white South Africa—and not just Anglo-Saxons, as Milner had originally intended—were beneficiaries of the expansion of tertiary education in this period. In the first two decades of its existence, a quarter of enrolled students at Wits were Afrikaans speakers, and about a third were drawn from the cities’ working-class Jewish families. Tragically, it was not only in this respect that the early-century populist campaign for higher education for white people turned out to be a resounding success. 

South Africa’s Bretton Woods era coincided with so-called “high Apartheid,” when racist social engineering was at its most ambitious and deranged. Shortly after coming to power, the National Party passed one of its cornerstone policies. The Bantu Education Act of 1953 brought all educational provision under the control of the state. It effectively brought an end to the independent church and mission school system which had, for a century, provided education to a minority of rural Black people. The passage of separate university legislation in 1959 barred all but a tiny number of Black people from most South African universities and made obtaining training in science and engineering practically impossible. For Hendrik Verwoerd and his National Party, there was simply no need to teach mathematics to units of cheap labor that would never utilize it in practice. 

This was, in the words of Non-European Unity Movement activist and intellectual I. B. Tabata, “education for barbarism.”  Likewise, for African National Congress spokesperson at the time, Duma Nokwe, the intentions underlying Bantu education were unambiguous: “Dr Verwoerd’s ideal member of the Bantu Society will be an automaton who will grow the ‘green pastures’ for the Europeans, but will be blind to the wealth he is creating, insensitive to and dumb about his sufferings, deaf to anything else except the commands of his master.”

From poor whites to theoretical physicists

It was at the apogee of high apartheid in the 1960s that Emanuel Derman, then a student of physics and applied mathematics at the University of Cape Town (UCT), first learned to code. The university had acquired an ICT 1301, a mainframe computer which runs programs that have been mechanically punched onto cards. Very high rates of return on investment in the 1960s encouraged a flood of foreign capital into South Africa, mostly from the United States. IBM and UK-based ICL dominated the supply of computers to the country in this period. Both companies were subject to prominent anti-apartheid divestment campaigns in the 1970s and 1980s. In 1978, for instance, 2,000 ICL workers went on strike in the UK to protest the company’s role in supplying computers to the South African police.

Derman’s encounter with these machines was less sinister. He had taken a summer job working for Professor Frank Brooks, a pioneer of nuclear physics in South Africa. Brooks had tasked Derman with writing a code to automate the plotting of curves related to his study of “resonances”—the state of a nucleus when it is bombarded with high-energy charged particles. Derman soon got the hang of it, and when he finished plotting Brooks’s curves, he decided to surreptitiously program the computer to produce multiple random poems. Priming the print statements with melancholy romantic words, he hoped to generate “drearily sad love poetry.”

Derman was a theorist at heart and failed to be wooed by the experimental work he had undertaken during his summer job. His particular intellectual predilections would lead him out of the utilitarian Chamberlainite South African university system to pursue a PhD in theoretical physics at Columbia University. By all accounts, his education in South Africa had prepared him poorly for one of the most dynamic and innovative theoretical physics departments in the world. At UCT, quantum mechanics was treated as inscrutable and bewildering. Physicists at Columbia, by contrast, “didn’t think of modern physics as something esoterically advanced and difficult … they expected you simply to plunge right in.”

It was only once Derman had decided to ditch the life of an itinerant early-career academic that he came to appreciate the pragmatic and experimental training he had dabbled in during his summer job in South Africa. It was during a stint at Bell Laboratories’ Business Analysis Systems Center, and in the wake of the programming revolution heralded by the UNIX operating system and C programming language, that he realized the art of programming was as much about style and usability as it was about computational capacity. 

With the new programming credo’s demand to produce humanly comprehensible texts of information, Derman would begin his journey away from pure theory and towards providing the practical link between principles and experiments. Physicists who specialize in establishing such links are called “phenomenologists”; “they create heuristic approximations to engineer the theory into a pragmatic tool … Phenomenologists deal a little more with the ripples on the surface and a little less with the laws beneath it.”

Derman’s most influential achievement as a phenomenologist emerged neither in a research university nor at that powerhouse of postwar American R&D Bell Laboratories, but at the investment bank Goldman Sachs, where he headed up the Quantitative Strategies Group in the equities division between 1990 and 2000. There he joined other ex-physicists who took mathematical techniques originally developed to study dynamics in the physical world and applied them to the movement of interest rates and stock prices. 

This journey was traveled by several brilliant products of South Africa’s Bretton Woods–era machine for white professionalization. All received a foundational math and science education in South Africa in the 1960s, and all went on to have successful careers in finance, while keeping one foot in the academy’s door. Besides Derman, there is the Wits-trained engineer Ron Dembo, founder and CEO of Algorithmics Incorporated (a developer of risk management software) and former joint professor of management and computer science at Yale University; André Perold, a Wits-trained mathematician who went on to collaborate on academic papers with both Fischer Black and Robert C. Merton and is today an emeritus professor at Harvard Business School and CEO of a boutique asset management firm; finally, there is Jonathan Berk, the Johannesburg-born and Rice University–trained physicist who traded an early career on Wall Street for a successful academic career at UC Berkeley and, latterly, Stanford University. 

The influx of South African scientists into Wall Street was, in part, a product of the multiple economic crises of the 1970s. In the US, a deteriorating economy and backlash to the Vietnam War put an end to the postwar golden years of generous Departments of Energy and Defense grants to fund pure research. In South Africa, the shocks of the 1970s dealt a particular seismic and epochal blow to the country’s economy. Nixon’s unilateral cancellation of the direct international convertibility of the dollar to gold in 1971 immediately led to a spike in the price of gold. While this benefited the South African mines in the short term, it effectively put an end to the competitive advantage they had enjoyed for the past 27 years. By the time the gold price fell again in the 1980s, mines in South Africa, where gold remained difficult and expensive to extract, struggled to compete against cheaper sources of gold from a revived globalized mining industry. The South African industry never recovered. Today, the country produces only 3 percent of the world’s gold.

The very same forces that led to the collapse of the academic job market for scientists, opened opportunities for the employment of physicists and mathematicians on Wall Street. The 1973 oil crisis caused fuel prices to soar and interest rates to climb, and the fear of inflation propelled gold prices above $800 an ounce. Bonds, traditionally a conservative investment, became more volatile than ever. All of this created new demand for complex financial products that could provide protection against the proliferation of risk. 

In search of the technical skills to craft these products, Wall Street resorted to hiring foreign-born math and physics PhD students in their droves. According to Derman, Stanley Diller (head of Goldman Sachs’s Financial Strategies Group in the early 1980s), had a reputation for hiring foreigners—patronizingly referred to as “Diller’s Dillies” in a Forbes magazine profile. The Volcker shock had sent shockwaves across the developing world—including increasingly sanction-saddled South Africa—causing capital outflows and external dollar-denominated debt crises. This may, in part, explain the gravitation of highly skilled immigrants to Wall Street.

The South Africans among these “financial engineers” were probably not the technicians Milner had in mind when he imagined graduates of his “University of the Future” on the Rand. But they certainly played a role in the transformation of capitalism every bit as dramatic as the one pioneered by their early-century Californian counterparts. Their extension of the Black-Scholes-Merton model for options pricing to ever-increasing domains made possible the financialization of the firm—a cornerstone of so-called neoliberalism. These new financial modeling tools, and the new techniques for leveraging debt on financial markets they facilitated, empowered managers to drive a wave of mergers and acquisitions and corporate unbundling in the 1980s and 1990s. The use of stock options to incentivize top-level corporate managers also resulted in the vast earnings of executives, a key feature of the inequality of contemporary capitalism.

However, as trained physicists, these South Africans were also well-placed to see the limits of their models. While there is a generic resemblance between finance theory and mathematical physics (the Black-Scholes-Merton equation is a form of heat diffusion equation), finance theory does not deal with phenomena in the natural world. Rather, it tries to describe the world of human institutions, beliefs, and actions. As the Scottish sociologist Donald MacKenzie influentially argued vis-à-vis the Black-Scholes-Merton equation, theories about the social world, to the extent that they are believed and acted upon, run the risk of becoming part of the world they describe. 

On the one hand, this results in financial markets that increasingly resemble the assumptions of finance theory. On the other, when models are adhered to too closely, or believed in too ardently, they begin to blind their practitioners to phenomena that lie outside the model’s assumptions and emerge from the messiness and complexity of the real world. As Derman puts it, “In physics, you’re playing against God, and God doesn’t change laws very often … In finance, you’re playing against God’s creatures, agents who value assets based on their feelings about that future in general and their future in particular; these feelings are ephemeral, or at best unstable.”

The South African financial engineers were hardly converted into ardent critics of capitalism by their time spent on Wall Street. They did, however, end up spending a good portion of their academic careers trying to explain to their business school students how even the most skilled financial modelers could lead funds into disastrous market positions. Derman explains that the models he created while at Goldman had a “toy-like quality to their description.” They took inspiration from Feynman diagrams in physics: pictorial representation of complex mathematical expressions in which space and time are discrete and exist only as points on a lattice, making the visualization of the mathematics easier. It would be dangerous indeed to mistake these models for descriptions of the real world.

In the wake of the 2008 crash, Derman drew examples from his early life in South Africa to illustrate the tragic consequences of mistaking models for reality. Apartheid itself is summed up as “a tortuous attempt to impose a flawed model on unruly reality.” A particular episode from his youth, however, provides the most striking illustration: while a student at UCT, Derman attended the trial of the anti-apartheid activist Adrian Leftwich. Leftwich had been the charismatic leader of the National Union of South African Students before joining the African Resistance Movement and engaging in acts of sabotage against strategic infrastructure in 1963. Leftwich had been a principled activist whose courageous stance against apartheid Derman had admired. However, once arrested, and under threat of torture, he collaborated with the police and state prosecutors, leading to the imprisonment of his co-conspirators. “You can count yourself lucky,” writes Derman, “if your model of yourself survives its collision with time.”

The other ex-South Africans

Quintessential child of the ’60s that he is, Derman in his writings reveals a lifelong flirtation with the counterculture. The next generation of South Africans to leave their stamp on American capitalism, by contrast, reveal a lifelong revulsion to some of the counterculture’s legacies. Amid Stanford student activism inspired by Jesse Jackson’s Rainbow Coalition, and just one year after the first free, fair, and non-racial elections in South Africa, Peter Thiel and David Sacks published their The Diversity Myth. In it, they worried about the adverse effects the “extreme focus on racism” on American college campuses would have on scholarly inquiry. The echoes of Thiel and Sacks’s youthful conservative activism in our contemporary culture wars are resounding. Musk and Thiel’s embrace of far-right ideologies is well documented, and critical interrogation of these ideas is crucial. However, less well appreciated is how their practical work—the particular economic and technical challenges associated with their line of business—has shaped and reinforced their worldviews.

The Silicon Valley start-up ethos was the product of the very same collapse in the traditional job market for scientists that led to the migration of PhDs to Wall Street in the 1980s. As the historian Susannah Glickman has recently shown, start-up culture has its origins in the aftermath of the Vietnam War. It grew out of concerns about the effects demilitarization would have on the job prospects of scientists and engineers. Operating within the structures of the Democratic Party, activists like Arthur Obermayer campaigned to stabilize the job prospects and funding of these professionals. Working closely with the professionals themselves, as well as senior Massachusetts Democrats like Ted Kennedy and John Kerry, Obermayer successfully organized unemployed scientists and engineers into a political bloc.

These technical professionals had, in the 1980s, began to turn to venture capital as an alternative funding source to government contracts. Inspired by this development and by fads within the conservative economics of the period, Obermayer began framing his advocacy for these professionals as a defense of “small business.” His strategy was not to push for the restoration of state support to the sciences, but to campaign for an economic environment that would allow “small business” to thrive: tax cuts, reduced regulation, government support to small businesses, reversal of anti-monopoly legislation, and the lowering of the minimum wage.

The founding members of PayPal mastered the new art of small business advocacy, rechristened “start-up culture” in the 1990s. First and foremost, they managed to siphon off talent from the old “Cold War Triple Helix” of defense, industry, and academia. As Peter Thiel later explained, PayPal recruited through referrals from their top engineers: “We should try to build things through existing networks as much as possible … Once you hit that inflection point, you’re under incredible pressure to hire people yesterday.” A particularly fruitful network PayPal tapped into through their engineers was the Illinois public education system, particularly the prestigious magnet high school Illinois Mathematics and Science Academy (IMSA) and the University of Illinois in Urbana-Champaign. The university was home to the National Center for Supercomputing Applications (NCSA), which had grown out of a series of programs, beginning in 1949, to design and build large computers for the US Department of Defense and its research wing, the Advanced Research Projects Agency (ARPA). 

In the 1990s, it also became one of the key seedbeds for the small-business revolution. Several of PayPal’s founders and early employees admitted to being attracted to Illinois on hearing of the university’s role in producing the first widely available web browsers, Mosaic. One of the co-developers of Mosaic, Marc Andreessen, found himself on the cover of Time magazine on becoming a multimillionaire after Netscape, the company he co-founded, IPOed. The image of the 24-year-old future author of the libertarian “techno-optimist manifesto”—baby faced, barefoot, and wearing jeans while irreverently slouched across an elaborate throne—captured the imagination of Illinois engineers. Max Levchin, co-founder of PayPal explained that “one thing that really shaped me—and probably a lot of other people at Illinois—was the constant sense of opportunity in the air because of Mosaic and, subsequently, Netscape. It was this notion that students like us built these amazing tools that were not at all contemplated by the industry.”

What is also remarkable about these Urbana-Champaign engineers is that they were all—the core group, at least—immigrants and, like the South Africans, born in formidable 20th-century factories of technical expertise that had recently spluttered to a halt: Max Levchin (Soviet Ukraine), Luke Nosek (Poland) and Jawed Karim (East Germany). While Musk completed high school in what was designed by Milner to be one of the core feeder schools to his technical university, the South African at PayPal whose trajectory was most affected by the emerging market shocks in the 1990s was Roelof Botha. 

Grandson of Pik Botha, the external spokesperson for the apartheid regime in the last seventeen years, Roelof moved to the US in the late 1990s to earn an MBA at Stanford. A gifted student (he had received the highest-ever marks in his undergraduate program in actuarial sciences at UCT) and on a student visa without work authorization, Botha was at first resistant to overtures from Musk to drop out of Stanford and join him at the company that would become PayPal. He changed his mind when he saw his savings decimated after the fallout from the Asian financial crisis, which led the South African rand to collapse to half its 1994 value between 1999 and 2000. 

PayPal had its immigrant engineers; it just had to build the product. Like other dot-com start-ups, PayPal’s success hinged on “network effects,” a concept popularized by Robert Metcalfe, co-inventor of Ethernet, to explain the growth of telecommunication networks. Take, for instance, the growth of telephone use: each new telephone added to a network increases the value of every other telephone on it and thus increases the incentive for non-telephone users to buy one.

In the overheated start-up environment of the late 1990s, the ability to leverage network effects was critically dependent upon time to market. This, in turn, was determined by the ability to scoop up the funding of venture capitalists before anyone else could and getting usable and accessible systems up and running as quickly as possible. Musk had a particular knack at courting venture capitalists, mastering the art of the pitch and going viral in the business press. In the words of Harris Fricker, one of the founders of X.com, predecessor to PayPal, “One of the things that Elon was highly adept at which frankly I underestimated … was on the VC side. He articulated what was wrong with the industry. You know, big monoliths, the lack of democracy in pricing … everybody would get all fired up.”

As for the rollout of technical and financial infrastructure, Musk was a particularly extreme advocate of what the journalist Jimmy Soni calls PayPal’s  philosophy of “rigorous simplicity.” While setting up his first attempt at a digital bank, X.com, he opted to work with third-party vendors, using software that had already been licensed to and approved by traditional banks as the foundation for his products. He also advocated vociferously for the use of Microsoft products, as opposed to open-source ones, as the backbone of PayPal’s technical infrastructure. Musk argued that Microsoft offered plug-in frameworks that would simplify the engineering workload. 

Musk’s approach put him increasingly at loggerheads with the other immigrant engineers within PayPal, particularly with PayPal co-founder Illinois-trained Max Levchin. Levchin had been a pioneer of “rigorous simplicity” within PayPal, simplifying human-user verification by designing the first commercial implementation of a CAPTCHA. However, he and other engineers had severe misgivings about Microsoft’s capacity to meet PayPal’s scale and needs. “Microsoft was set up to run your enterprise and have ten thousand records of people. It was not meant to be this high-performance online processing, run-for-years sort of system,” one engineer explained.

Roelof Botha put his actuarial and financial modeling skills to work shortly after joining PayPal. His “chain ladder analysis,” a technique used by insurance companies to estimate reserves needed for future claims, had spelled disaster. It revealed that, having underestimated the number of fraudulent transactions that went through its systems, the company didn’t have anywhere near the reserves it needed. Musk rebuffed Botha’s concerns, doggedly focusing on further expansion. For the engineers within PayPal, both financial and software, there were technical and financial limits to expansion. Not to mention ethical and security questions around fraud prevention and protection of personal information. Musk’s refusal to concede any of this is part of the reason they eventually supported his ousting as CEO.

It was not just the engineers within PayPal trying to regulate Musk’s vision. Musk has a long history of run-ins with federal regulatory bodies tracing back to his early attempt to build an online payments and financial services platform. Musk’s early vision of fusing retail banking and investment banking was thwarted by the Glass-Steagall Act of 1933, which forbade selling both banking and brokerage products. While Glass-Steagall was repealed in 1999, the notion that a Depression-era law should stand in the way of his vaulting ambition seems to have stuck with Musk. At a Recode Code conference in 2016, Musk recommended “some adjustment for the inertia of laws.” His vision for the government of Mars, he continued, would be one in which all laws had built-in sunset clauses and where direct democracy would ensure that “it’s slightly harder to put laws in place than to take them away.” Less apartheid South Africa, then, and more the apotheosis of Obermayer’s small-business revolution.

The cornerstones of Muskian ideology seem to have been shaped by his standoffs with his would-be regulators. His zero tolerance for dissent within his companies—as demonstrated by the mass layoffs at Twitter and Tesla—seems designed to forestall the kind of rebellion of the experts he encountered at PayPal. His embrace of Trump cannot be unrelated to the Biden administration’s challenge to the once symbiotic relationship between Big Tech and Democratic administrations. Elizabeth Warren in the Senate and Gary Gensler of the SEC have led the charge against crypto. Lina Khan of the Federal Trade Commission and Jonathan Kanter at the DOJ have attempted to limit Big Tech acquisitions—the former won’t even return Musk’s calls. Moreover, Musk’s increasingly staunch stance against DEI, as well as his increasingly vocal concerns over America becoming a minority-majority country, seem curiously to coincide with a 2017 anti-discrimination lawsuit brought against Tesla by Black factory workers. 

While it might be cathartic to compare Musk’s tech firms to apartheid-era mines, the connection between South African engineers and American capitalism is a more complicated one. It must be viewed as a part of the evolution of expertise in the American century. It has to do with the transformations of capitalist firms, their regulatory environment, and experts’ navigation of both. It also has to do with the global diffusion of experts. Particularly how this diffusion is determined by US dominance over the global financial system and the periodic and outsized shocks this dominance inflicts on peripheral and semi-peripheral economies. The politics of these experts is not one thing, it frequently involves an antagonism between those in favor of regulation and restraint (broadly construed) and those in favor of license. Above all, it has to do with the deliberate undermining of the intellectual and professional aspirations of Black South Africans over the course of nearly a century. For my part, a product of Wits University, I can only sympathize with a sentiment recently tweeted by Emanuel Derman: “embarrassed by the other ex-South Africans.”