Quick Note: Consumption and Production Theories of Berlin

I’ve periodically written about consumption and production theories of cities – that is, whether people mostly move to cities based on consumption or production amenities. The production theory is that what matters is mostly production amenities, that is, jobs, and this underlies YIMBYism. Consumption theory is that people move for consumption amenities, and, moreover, these amenities are not exactly consumption in the city, for example good health outcomes, but consuming the city itself, that is neighborhood-level amenities in which who lives in the city matters. The latter theory, for example promulgated by Richard Florida, is that jobs follow consumption amenities like gay bars, and not the other way around. It is wrong and production theory is right, and I’d like to give some personal examples from Berlin, because I feel like Berliners all believe in consumption theory.

The situation in Berlin

Berlin is an increasingly desirable city. After decades in which it was economically behind, the city is growing. Unemployment, which stood at 19% in 2005, was down to 7.8% last year. With higher incomes come higher rents, and because Berlin for years built little housing as there was little demand, rents rose, and it took time for housing growth to catch up; on the eve of corona, the city was permitting about 6 annual dwellings per 1,000 people, up from about 1 in the early 2000s.

This is generally attributed to tech industry growth. There are a lot of tech startups in the city. I don’t want to exaggerate this too much – Google’s biggest Germany office is by far Munich’s, and the Berlin office is mostly a sales office with a handful of engineers who are here because of a two-body problem. But the smaller firms are here and the accelerator spaces are very visible, in a way that simply didn’t exist in Paris, or even in Stockholm.

Berlin’s production amenities

I might not have thought that Berlin should attract so much tech investment. My vulgar guess would be that tech would go to cities with many preexisting engineers, like Munich and Stuttgart, or maybe to Frankfurt for the international flight connections. But Berlin does make sense in a number of ways.

English

The city is mostly fluent in English. Jakub Marian’s map has France 39% Anglophone and Germany 56%, which doesn’t seem too outlandish to me. But Paris seems in line with the rest of France, whereas in Berlin, service workers seem mostly Anglophone, which is not the case in (say) Mainz or Munich.

The global tech industry is Anglophone, and good command of English is a huge production amenity. Other English-dependent industries seem to favor Anglophone European cities as well, for example various firms fleeing Brexit moved their European headquarters not to Paris but to Amsterdam or maybe Dublin.

The capital

The federal government is here. This is not relevant to tech – the startups here don’t seem to be looking for lobbying opportunities, and at any case German lobbying works differently from American lobbying and firm-level proximity to the capital is unimportant. However, the government stimulates local spending, which has increased employment. The government’s move here has been gradual, with institutions that during division were spread all over West Germany slowly migrating to Berlin.

Good infrastructure

The quality of infrastructure in Berlin is very good. The urban rail network was built when Berlin was Western Europe’s third largest city, after London and Paris, and has even grown after the war because the West built U7 and U9 to bypass Mitte. This means that commute pain here is not serious, especially on any even vaguely middle-class income. Moreover, Berlin has benefited from post-reunification investment, including Hauptbahnhof and two high-speed rail lines.

Consumption theory and the counterculture

The queer counterculture that I am involved with in Berlin tells a different story. To hear them tell it, Berlin has a quirky, individualistic, nonconforming culture, unlike the stifling normality of Munich. Artists moved here, and then other people moved here to be near the artists, paying higher rents until the artists could no longer afford the city. This story is told at every scale, from Berlin as a city to individual neighborhoods like Prenzlauer Berg and Neukölln. A lot of the discourse about Berlin repeats this uncritically, for example Feargus O’Sullivan at CityLab/Bloomberg Cities writes about the cool factor and about gentrification of old buildings.

It is also a completely wrong story. This is really important to understand: nobody that I know in the sort of spaces that are being blamed for gentrification, that is the tech industry and its penumbra, has any interest in the counterculture. I go to board games meetups full of tech workers who are fluent in English and often don’t know any German, and they have no connections at all to the local counterculture. They interact with immigrant culture spaces, not with the 95%+ white counterculture as defined by queer spaces in Neukölln that complain about gentrification in a neighborhood undergoing white flight at the rate of postwar New York (compare 2019 data, PDF-pp. 25 and 28, with 2016, PDF-pp. 28 and 31). Occasionally there are crossovers, as when an American comedian hosted live standup in February and then there were tech workers and said American also interacts with the counterculture, but a standup comic is not why Berliners complain.

Nor do I find foreign tech workers especially interested in German minutiae comparing Berlin with Munich. By my non-German standards, Berliners already jaywalk at indescribably lower rates, and I gather that Munich is stuffier but that’s not why I’m here and not there, the rents and the language are.

We’re not even particularly oppositional to the counterculture. I personally am because seeing queer space after queer space host indoor events during corona without masks was a horrifying experience; I went to a queer leftist meetup in late October in which people huddled together maskless and I was the only one with a mask on, except for one trans Australian physicist who drank a beer and then masked after finished. But the rest? They don’t care, nor should they. The counterculture is not the protagonist or the antagonist of Berlin’s story; it’s barely a bystander. Consumption theory is just what it promotes in order to convince itself that it’s important, that it spreads ideas and not viruses.

48 comments

  1. michaelrjames

    I’m still grappling with this. I can’t see that you’ve presented much evidence, and while you want to claim English-speaking as a huge production amenity for the city itself it seems to me it is entirely cultural and thus a consumption factor. We’ve had similar discussions here before, for example that some people hesitate to relocate to Paris or France not due to language issues in employment (if they are science or tech, everyone including all French speak English) but culturally–ie. worry about social exclusion. OTOH my move from Paris to Oxford was on pure production grounds–it was a career move not to be wasted despite my dislike of British culture (and possibly even worse, Oxford culture). This year’s Nobellist Emmanuelle Charpentier moved to Berlin (a few years ago though the Nobel was inevitable for CRISPR likely to be one of the most impactful bio-medical techniques) because of pure production factor: they offered her a good lab setup and security, for someone who has had an amazingly peripatetic career. Hmm, no maybe it wasn’t pure production because I suspect Berlin’s reputation as a haven for refugees and people who don’t fit in elsewhere was a factor. (I’m guessing such factors are why she isn’t back in her native Paris because assuredly they would have offered her the world.)
    Anyway while I ponder it more, this:

    https://www.theguardian.com/education/2020/dec/26/bonjour-europe-britons-are-turning-to-learning-languages-like-never-before
    Bonjour Europe: Britons are turning to learning languages like never before
    French is one of the most popular choices, as 10% of adults take up a language online during lockdown
    James Tapper, 26 Dec 2020

    With our exit from the European Union just days away, we should be saying a very firm and British goodbye. Yet for many in the UK, it seems that on the eve of departure it is more a case of au revoir.
    The number of people learning a language in Britain has risen twice as fast as the rest of the world in the last year, according to online learning platform Duolingo, and one of the fastest growing groups is those learning French.
    Thousands more are learning Spanish, German, Italian, or other EU languages – with some of them hoping to improve their language skills to a level where they qualify for citizenship of a European country.

    The Brits have excluded themselves from the Erasmus scheme which means 15,000 Brit students won’t be spending time in the EU, and vice versa.

    • rational plan

      The truth about Erasmus is that it all came at a bad time. The UK has long in effect cross subsidized Erasmus because twice as many came to Britain to study as went abroad ( the fees that universities could charge for Erasmus students is very low). At the same time the EU had announced a plan to triple the number of students that could qualify and expand the type of courses in Erasmus. This combined with an EU demand for a 7 year funding agreement and payments to be calculated based on GDP, .meant that the UK would be in line for a very hefty bill, that in effect would be mainly to the benefit of non UK citizens. As to what will replace it, they promise to pay for UK students to go abroad in their new Turing scheme, but nothing about EU students to come here. But most EU students in the UK are on full fee paying courses anyway and despite some crocodile tears from the universities, they wont particularly care as they were all provided at a loss to the university. I’ve heard the more popular ones already have had contact from other universities about continuing (at a higher price of course). But as everything Brexit related, it is watch this space.

      • michaelrjames

        @rational plan

        Doesn’t that fall into the “knowing the cost of everything and the value of nothing” maxim?
        The great centres of learning have always benefitted from their ability to attract talent from a much wider pool than their own nation. The notion that these places are “subsidizing” Europeans is silly and just what a braindead BCA would conclude.
        Anyway, there seems some kind of belated recognition of this because the universities of UK have created a £100m fund to “substitute” … though presumably under their T&C.

        It’s common in the Anglosphere. In the 70+ years post-war Australia had a scheme called Colombo which has sponsored Asia’s brightest and best to do a degree in Australia. Alumni are scattered around the upper echelons of our Asian neighbours (including once the vice-president of Indonesia and the foreign minister of Indonesia during the influential SBY era who, it was said, could pick up the phone for a back-channel chat to many top political and foreign affairs movers and shakers here; he was a graduate of ANU probably the Crawford School). But it was scrapped and the Abbott government “replaced” it with the New Colombo scheme but it is only for Australians to spend time in Asian universities. (This may be ok as an attempt to overcome Australia’s appalling lack of engagement, eg. foreign language study and knowledge is close to zero with Indonesian–our closest neighbour and the largest muslim-majority country in the world–almost extinct.)

        This is cutting off one’s nose …
        ………………….
        Half a lifetime ago, I was sponsored (chosen by my institute) to take a several-month Euratom exchange scheme to 3 labs in The Netherlands. Even though I was just a newbie (and non-European!) doctoral student, it was me because none of the Brits wanted to do it. Plus ca change … Though Euratom survives Brexit, presumably because the beancounters figure they gain more than they “lose”–or more likely, its funding looks like a rounding error of nuclear & related defence budgets.

        • fjod

          yeah, ça change a lot – thesedays (at least pre-2020) Dutch universities are full of British students.

          • michaelrjames

            @fjod

            Is that due to Erasmus (coincidentally a Dutchman, and as it happens I did my Euratom workstint at Erasmus Medical School in Rotterdam), or is it that once students have to go into lifelong debt to finance their degrees they start looking outside their own “market”. Do the Dutch charge them full fees. Do the Dutch have fees? OK googled and answered:

            The Netherlands is a great destination for international students looking for quality education in Europe. The Dutch environment and people are very friendly towards foreign students and there are many English-taught programmes available. On our portals alone, you can find over 400 Bachelor’s and 1,400 Master’s degrees in the Netherlands.
            The low tuition fees and affordable living costs are the most important benefits for students. Keep on reading as we’ll offer more information about them to help you decide if studying in the Netherlands matches your personal and academic goals.

            It’s quite true that The Netherlands is quite agreeable to we from the Anglosphere.

          • Alon Levy

            Master’s and doctoral programs here are in English in the sciences; I know people with master’s degrees here who speak worse German than I do. But I think it’s still less common than in the Netherlands and Sweden?

  2. df1982

    I can’t speak much for Munich or Stuttgart (or Hamburg et al.), but none of the reasons you give would suggest why tech companies should have been attracted to Berlin over Frankfurt. Frankfurt has a more international population and is markedly more Anglophone in day-to-day life (remember, Berlin has a large former East German population who generally speak limited English, although obviously they’re ageing now). It may not be the political capital but it is the financial capital of Germany, and has better access to the Euro capitals of Brussels and Strasbourg (and as the HQ of the ECB, it IS a kind of EU capital). And pound for pound its transport infrastructure is probably better than Berlin’s. The U-Bahn in Frankfurt can get you around the city more quickly (being a more compact city also helps), and its intercity connections are vastly better. Not just the airport, but you can also get to Paris, Brussels, Amsterdam and Zurich in under 4 hours on the train, not to mention a large number of populous German cities. Berlin by contrast is much more isolated. So why did tech end up going there rather than clustering in Frankfurt?

    All in all, I think a combination of production and consumption theory is probably the most accurate explanation model. Obviously Richard Florida and his ilk emphasise consumption too much, but it can’t be totally disregarded. It does seem interesting that Berlin appears to reproducing San Francisco’s trajectory from counter-culture hub to obscenely overpriced tech centre. It’s not necessarily that tech workers care about Berlin’s ecosystem of sub-cultures per se, but the environment that it creates can form a magnet for an industry that is both demographically young and geographically untethered.

    • Eric2

      I think San Francisco didn’t become a tech hub because of counterculture, but rather because of proximity to Silicon Valley, which itself became a tech hub for non-cultural reasons (proximity to Stanford, California weather, California prohibition on noncompete agreements, and the accident that William Shockley’s mother lived in Mountain View).

      • df1982

        OK, I should have said Bay Area rather than SF. I agree that Stanford was a (if not the) primary factor in the advent of Silicon Valley. But proximity to San Francisco proper probably had an influence on the kind of hippie libertarianism that became the governing worldview of the tech industry, and I can see how the members of that world would see Berlin as a kind of European cognate.

        • Alon Levy

          Berlin does not have that hippie libertarianism, though. For one, the idea that the government isn’t really legitimate and that all social change happens bottom-up does not exist here except among the most marginal people even within countercultural spaces, the ones whose friends whisper “they need a social worker” behind their backs. Within those spaces people who have children, for example, don’t let you forget that there is cheap subsidized daycare here, and teachers complain about insufficient salaries but also make it clear that they are in no way poor. People in those spaces vote Green (or maybe occasionally Die Linke) and seem pretty happy with their vote.

          For two, over here, if you like capitalism, you definitely like mainstream culture and the idea of the state. The sort of politics animating Elon Musk does not exist here; someone this plugged into business does not go on TV to smoke weed here. The business culture here is way more subdued, more like Boston or Washington than like San Francisco. Nor is there space for someone like Cathy Reisenwitz in Berlin politics – I went to a sex worker rights protest just before corona, and there were representatives from SPD, the Greens, and Die Linke giving speeches about their opposition to criminalizing sex work, but nobody from FDP, because FDP is not the same as American libertarianism.

    • Herbert

      Frankfurt rents are pretty high. And while the Frankfurt U-Bahn Stadtbahn may be better at getting around inside city limits than Berlin public transit, Berlin’s city limits include what in Frankfurt is suburb. What’s the figure of commuters compared to workers who live in Frankfurt again?

      • df1982

        Agreed, but low rent is an argument in favour of consumption theory, surely. And while Frankfurt has a large commuter belt beyond its city limits, the kind of people who work in tech would most likely reside in the inner districts (e.g. Bornheim, Nordend, Bockenheim), which are served by U-Bahn corridors with trains every 2-3min most of the day.

        • Eric2

          Low rent shows that the area is relatively undesirable to live in, or else that housing is easy to build. The former could be caused by either consumption or production, and the latter is unrelated to consumption/production.

          • threestationsquare

            Housing is cheap in Vienna because of low wages (i.e. production), no? Alon has previously noted that while London, Paris, Munich etc have higher average income than their countries as a whole, Vienna does not.

          • Nilo

            Vienna is also below peak population which was hit a century ago. A lot easier to produce tons of housing to keep rents low when you’re not even dealing with a growing population.

          • Eric2

            Vienna also isn’t exactly a job center. I know someone who moved there with his Austrian wife. He would have had to take a 50% pay cut to get a tech job in Vienna, luckily he was able to keep working remotely at his previous job (pre-pandemic!)

          • Eric2

            (I imagine the population peaked when it was the capital of a large empire.)

          • Herbert

            Vienna has gained half a million people in the last thirty years…

          • Herbert

            That’s more in absolute numbers than Berlin (and obviously more in relative numbers) and both are below their historical peak population (but inching towards it)

            Also back in the day people lived on less m² of built space per person. That’s one of the reasons why D.C. has a housing crisis despite having once housed more people…

    • Onux

      San Francisco counter-culture had no impact on the location of Silicon Valley because tech preceded the counter-culture. Hewlett Packard founded in a garage in 1939, Stanford Research Institute started in 1946, Shockley Semiconductor in 1956, and the “Traitorous Eight” left Shockley to form Fairchild Semiconductor in 1957. This is at best simultaneous with the early Beat culture (Howl published in ’56, On the Road ’57) and by the Summer of Love in 1967 SV was firmly established (Don Hoefler’s article coining “Silicon Valley” was published in ’71).

      Stanford and Hewlett-Packard fans will cry heresy, but as Eric2 noted, the biggest reason for Silicon Valley is that William Shockley’s mother lived in Palo Alto and he founded Shockley semiconductor in nearby Menlo Park. Shockley literally put the “silicon” in Silicon Valley; he shared the Nobel Prize for the transistor, conceived of silicon as a transistor base instead of geranium, and designed a new way to grow single-crystal silicon. Before Shockley, Camden and Syracuse had more transistor companies than the Bay Area. One of of the Traitorous Eight was from Stanford, the others came to the Bay for Shockley. When they left for Fairchild they effectively made SV; members of the eight (or other Fairchild employees) founded, funded, or mentored Intel, AMD, Apple, and many others. Hoefler’s article profiled almost exclusively Fairchild spinoffs. Fairchild spawned Kleiner Perkins and Sequoia Capital, VC funds synonymous with IPO culture and funders of thousands of companies like Google, Oracle and Twitter. All because Shockley wanted to be close to his old and ill mother.

      It is true that the counter-culture later influenced SV. Steve Jobs is the prominent example (seeking Hindu gurus in India, “LSD is one of the most important things I did”), but there are others (the “change the world” joke theme in Season 1 of Silicon Valley, Elon Musk saying “Burning Man is Silicon Valley”).

      Recently the consumption argument has been made as tech firms move to San Francisco proper (“Hippies and gays made SF fun so tech bros come and push us out.”) – Twitter, Salesforce and Uber are best known, and South of Market is (was?) called Silicon Alley due to startups. The argument is also false, people moved to SF for production. Original SV companies were hardware based, they needed campuses for factories where they built transistors, chips, and Apple IIs (of the Traitorous Eight, only 1 had an electrical background, the rest were mathematicians, mech engineers, etc.). Current tech companies are software based; the office requirements of coders and software engineers are similar to banking or marketing, so these companies to gravitate to CBDs for the aggregation effect, and SF is the biggest downtown in the region. People follow the jobs.

      There is still a consumption argument to be made, demonstrated by the dust up a few years back over “tech busses” – private shuttles carrying workers from San Francisco to companies in SV. Living in the suburbs for more space and/or less cost then commuting to the center is common everywhere, but something causes some tech professionals to spend more money for less space in SF, then commute to a job in the periphery. It’s not everyone, but enough the tech companies run regular routes. This is partially because tech companies have money (no meat packer in Illinois can afford to bus employees from Chicago’s loop) but that explains the “can do” not the “want to”. Perhaps there is a consumption/production continuum, or perhaps desire for consumption amenities is real, but usually trumped by production amenities. Is it possible that tech professionals (in Berlin and SF) do not interact with queer or other counter-cultures directly, but do enjoy proximity to second order effects of those cultures (a larger/livelier arts scene? unique dining/shopping opportunities? I realize this treads on the antiquing/coffee bar stereotypes parodied decades ago by Will & Grace, but the fact is you are probably more likely to find – due to aggregation or culture – a poetry reading or an Afghan fusion restaurant in SF or Berlin rather than Stockton or Oranienburg.)

      • michaelrjames

        I’m not disagreeing with most of what you wrote, but I do think it was simultaneous. Ferliinghetti founded City Lights bookstore in 1953 and that was because there was already a long established Beat presence. It probably tracks back to being a city founded on gold wealth which creates surplus to spend on all kinds of extras including cultural. In Australia Melbourne is the same (and as it happens in exactly the same timeframe; many in the mid-19th century Victorian goldmines were ex-49ers) and to this day carries the mantle of cultural capital of Oz compared to the more mercantile and ‘shallow, glitzy’ Sydney in the SF v LA, NoCal/SoCal mould.

        Re SV, I would give more credit to HP which predates the actual silicon part but established the Palo Alto science park as a successful start-up generator, and is also responsible for that culture which persists to this day (all the perks, enlightened management in contrast to uptight big-biz in other industries). The Fairchild thing is true but its viability ex-Shockley was at least enabled by the precedents of HP and the others that predated it there. And I am not sure why you credit Fairchild for Apple because Steve Wozniak was working at HP at the time he & Jobs founded Apple.

        Then there is the more-or-less independent birth of biotech which the SV crowd may forget but is another huge industry essentially founded there. Biogen (in Harvard, founded by Nobellist Wally Gilbert) may have been the first but just behind was Genentech at #2 and today the highest-value such company in the world (owned by Roche but run independently). The big three research universities (UC-B, UCSF, Stanford) were and are biomed powerhouses who attracted people for multiple reasons; several professors in molecular biology I knew at UCB and Stanford were proto-hippies; seeding key people founding the likes of Genentech came from the Cohen-Stanford and Boyer-UCSF and I suppose the Google patents surpass them now but for decades Stanford’s (and the world’s) top earner was the Cohen-Boyer patents that earned ≈$300m (just for Stanford; one Australian post-doc at that time involved in the insulin gene story, John Shine, earned $50m in royalties). Howard Boyer was a notorious dopehead or worse. Another Nobellist, for inventing PCR no less, Kary Mullis was a slacker dopehead barely hanging on as a doctoral student in UCB then Cetus down the road at UCB’s tech park in Emeryville. These three places have more biomed Nobels than most countries, just this year Doudna at UCB won for CRISPR (though it originated with Emmanuelle Charpentier in Paris).
        As someone who has worked briefly at UCSF in the 90s and had been offered a doctoral slot there in the 80s, I can tell you this region has immense attraction for people in these other (non-SV) fields, and it is the universities multiplied by the cultural and the physical (SF has the best weather in the world if you don’t like extremes; and it is that rare thing in America, a beautiful city).

        I think the consumption factor became much more of a thing in the new millenium as both 2nd and 3rd generation founders (ie. people from other startups in the BA) found it much more interesting to live/work in the city than in the suburbs (which down the peninsula were just as, or more, expensive with few attractions except perhaps the short commute and increasingly not even that–SV is a giant sprawltown). Plus young people willing to live in crowded sharehouses … (No accident that AirBnB was invented there by someone used to pumping up an air mattress to sleep in the living room.) And in SoMa and Mission Bay it had masses of underused space.

        • Onux

          Even if it was simultaneous, that doesn’t mean the Beat Culture created Silicon Valley or drew its pioneers to the Bay. There is no evidence Shockley knew of City Lights let alone visited it; it is known he wanted to be close to his frail mother. Moore, Noyce, et. al. didn’t meet at the Six Gallery beat poetry reading and happen to form a company, they came to work for Shockley.

          Other than the mythology of “founded in a garage”, HP had nothing to do with SV. In 1956, when Shockley founded, 17 years after HP, there were zero transistor related companies in the Bay Area (granted there were only 22 in the country, but HP wasn’t one). 15 years later the Valley was the world’s undisputed tech capital due to semiconductor production. HP didn’t incorporate until 1957 and didn’t start a semiconductor division until 1960, and as late as 1967 computer products were only 2% of revenue. Around the same time Fairchild Semiconductor was responsible for 2/3 of their parent company revenue. HP eventually became enormously successful off of computers, but in this sense SV made HP, not the other way around.

          HP didn’t start Stanford Research Park, the University did. It was not a startup generator, it was a way for Stanford to make money by renting some of its enormous campus (8,000+ acres, one of the largest in the US). In ’56 when HP moved their HQ there and Shockley started, it was called Stanford *Industrial* Park. Other tenants were GE and Kodak.

          It is well known that Robert Noyce of Fairchild/Intel mentored Steve Jobs when he was starting Apple (Jobs, being idiosyncratic, would wake him with phone calls in the middle of the night). Apple’s first investor, Mike Markkula, made his fortune from stock options he earned while working for . . . Fairchild Semiconductor.

          I am not familiar with the history of biotech companies in the Bay, but all of the reasons you cite remain production amenities (a concentration of universities and hospitals performing biomed research) not consumption (I’m leaving my biomed job in Cambridge to drop acid in Berkeley and I’ll form a company there later).

          There is no doubt the “Fairchildren” companies found fertile ground in Silicon Valley, with Cal, Stanford, Stanford Research Institute, and Stanford Research Park. Yet there was no tech company explosion after SRI started in ’46, or SRP in ’51. Frederick Terman personally invested in the companies of his students like Hewlett and Packard, but didn’t create a venture capital ecosystem the way Fairchild alums Kleiner and Valentine did. For the tech industry as it is known today it all comes back to Fairchild (somehow: founded/funded/spun off/guided, 1st/2nd/3rd order), and Fairchild happened because of Shockley.

          • michaelrjames

            @Onux

            I didn’t say almost anything that you are implying I did.

            For example I didn’t say HP created the science park, but they were one of the first two companies (the other being Varian) who established it as a success. HP predated Fairchild by almost 2 decades, founded in the veritable Palo Alto domestic garage in 1939. Wiki says: “The HP Garage at 367 Addison Avenue is now designated an official California Historical Landmark, and is marked with a plaque calling it the “Birthplace of ‘Silicon Valley'”. Now, one can argue that that is an incorrect statement but I think the term means more than the narrow definition of silicon, and as I wrote in my first post it is unarguable that Fairchild, via Shockley, brought the silicon to the valley (but as you know, he also almost ruined it; except for the traitorous eight it would have been a washout). And perhaps you might be thinking of HP as a maker of PCs and laser printers (the most visible consumer element) but long before all that it was the world’s largest tech company that every scientist and engineer on the planet knew of, for its electronic, testing and analytical equipment. And of course the first handheld personal scientific calculator, the HP35 of which I still have mine (somewhere in my museum drawer; the only one better than it all these decades later is the HP32S; once you’ve used RPN you really don’t want to use any other).

            As to your claims about Apple, some of that might well be true but while Jobs provided the commercial drive, clearly it would never have happened without Woz. As Wiki explains:

            HP is identified by Wired magazine as the producer of the world’s first device to be called a personal computer: the Hewlett-Packard 9100A, introduced in 1968.[20] …. An engineering triumph at the time, the logic circuit was produced without any integrated circuits; the assembly of the CPU having been entirely executed in discrete components. With CRT display, magnetic-card storage, and printer, the price was around $5,000. The machine’s keyboard was a cross between that of a scientific calculator and an adding machine. There was no alphabetic keyboard.
            Apple co-founder Steve Wozniak originally designed the Apple I computer while working at HP and offered it to them under their right of first refusal to his work; they did not take it up as the company wanted to stay in scientific, business, and industrial markets. Wozniak said that HP “turned him down five times”, but that his loyalty to HP made him hesitant to start Apple with Steve Jobs.[21

            Seriously, Apple (and how many others) happened because there were both HP and Fairchild/Intel and many others there. The peninsula had long passed that magic point of autocatalytic creation by then. Wiki says that “more than 65 new enterprises would end up having employee connections back to Fairchild” and I am confident at least that many trace back to HP, and quite probably some of them to both. HP was both much bigger and much broader in activities so would have seeded many different types of spinouts. HP was the company that established a new more liberal way of working–it was legendary and spread that culture to the whole of SV and its startup culture; almost an anti-Shockley! Incidentally Shockley Semiconductor Laboratory was a division of Beckman another titan in the biomed equipment field which really just shows that the leaders in that field of tech–and doubtless many others–knew what was coming.

            Shockley’s parents were there for the same reason Hewlett & Packard were there: Stanford. (Did the early Stanford have a thing for mining engineers because in addition to Shockley’s father, Herbert Hoover claimed he was Stanford’s student #1 when they were still in downtown SF; Hoover as a mining engineer made his fortune as CEO of a gold mining multinational in Kalgoolie, West Australia.) And many were there for a mixture of consumption & production even as its universities were young but California but particularly the Bay Area as the new frontier. One of the transformative events in biomed for the Bay Area when Arthur Kornberg was recruited in the 50s to head up new departments at Stanford in the ‘new’ biology (biochemistry, enzymology, molecular biology, genetics). He was already a renowned researcher at St Louis but had run up against anti-semitism there. In the hope of escape from that he took his entire team which included future Nobel winners like Paul Berg (founding director of the Beckman Center for Molecular and Genetic Medicine, one of Arnold Beckman’s biggest bequests) and many others like Robert Lehman (who Kornberg insisted form his own department of genetics–where Stanley Cohen of the Boyer-Cohen DNA cloning tech worked). Kornberg won his Nobel in 1959 (for DNA polymerase, curiously before Watson & Crick in ’62) and his son Roger won his in 2006, also at Stanford (after a stint at another world renowned Nobel factory, the Laboratory of Molecular Biology in Cambridge, UK (a ‘spin out’ of the Cavendish lab where Crick & Watson had practically created the field of molecular biology).

            Kleiner, the future uber-VC, like these top biologists may have gravitated to the Bay Area not by accident, as he was a refugee from Nazi Austria. What I am saying is that this was a definite cultural aspect to California and especially the Bay Area, that it represented a fresh start free of some old persistent cultural detritus in the older parts of the US and the world. Although it must have been a shock (sic) to have run into the whole race/eugenics horrorshow in Shockley. (Just fyi, I’m not trying to trash Shockley who was clearly freakishly intelligent and creative. But that trait often results in going too far left field, like Nash. The same happened to Jim Watson in later years, though he too was pretty singular his whole life. Another double Nobellist, Linus Pauling went overboard on several issues in later life. )

          • Onux

            The plaque is wrong. “Hewlett-Packard founded Silicon Valley in a garage” is a nice myth, but it is just that, a myth. HP predated Fairchild by two decades but during that time the Bay Area was not a hotbed of tech innovation, certainly not for the modern “technology industry”. Silicon Valley did not happen because Stanford led computing research in the 40’s/50’s (that was MIT, with Shannon, Huffman and Wes Clark); or because SRI funded transistor research (that was Bell Labs, in NJ, where Shockley earned his Nobel); or because HP took a bet on semiconductors (that HP division didn’t start until 1960). It happened because Noyce, Hoenri and Moore developed the integrated circuit, the planar process and Moore’s law at Fairchild, after being brought together at Shockley.

            HP was not the world’s largest technology firm back then. It’s revenue in 1957 (18 years in) was $28M; in 1960 Fairchild (3 years old) had revenue of $20M and was doubling each year. HP didn’t join the Dow Jones until 1997, and when it was the world’s largest technology company in the 2000’s it was on the back of consumer electronics using the tech developed at Fairchild, not due to test and analytic equipment.

            It would not have happened without Wozniak, but it did happen without HP. Woz highlights how HP was not the driving force in the Valley culture. Woz was working on calculators and mainframe computers at HP, building a personal computer was a side project and hobby. He offered his design to HP five times and they kept rejecting it because they were not a consumer product company (oh the irony). So he left to start Apple. Contrast with Fairchild, where when an employee had a good idea they were encouraged to leave and start a company around it (the way the eight founders did), and given encouragement, contacts and funding as they left. That was what Apple got from Noyce and Markkula, that is, from Fairchild connections. That is the SV culture, indeed in about ten years all the eight founders left Fairchild for new pursuits.

            If Apple benefited from autocatalytic creation on the peninsula, it is because Fairchild created the “many others” through direct spinoffs and the startup/venture capital culture. Far more than 65 firms trace back to Fairchild. A study in 1986 found 126 (not all of them still around). In 2014, 92 public listed companies could be traced back to it. Through KPCB and Sequoia it is thousands (not all in tech). You say you are confident HP has as many, but can you list them? Has anyone produced a map charting all the relationships of an “HP Family” the way they have for Fairchild (and later the Netscape and Paypal Mafias)? No.

            I apologize if I misunderstood your comment about HP “establishing” SRP, but they still did not make it a success as a “startup generator” like some proto Y-Combinator. HP didn’t move to SRP until 1956 when it was 17 years old (no startup) and at the time “Stanford Industrial Park” had tenants like Kodak, GE, and Lockheed Martin. It was a real estate venture providing office space to established companies who wanted to be near Stanford (not all tech/research is computer tech). The Silicon Valley that Fairchild created made SRP famous for tech incubation, not the other way around. Once there was a critical mass of semiconductor startups they began to get offices at SRP, which was close to existing SV firms in Menlo Park/Sunnyvale, the money on Sand Hill Road, and Stanford itself. But the prior startups and VC firms that made SRP attractive trace back to Fairchild, not Stanford.

            Kleiner did not “gravitate to the Bay Area” due to the “culture” because he was a refugee from the Nazis, he came because he accepted a job offer in 1956 . . . at Shockley Semiconductor.

          • michaelrjames

            Again you are repeating stuff that we (mostly) agree on. However you have got carried away with some things. The garage story may or may not be a myth but it is a foundational myth of SV that the entire world understands, and the myth began with HP; to deny that because some later players did it different and founded a different branch of tech that became big/bigger doesn’t change it. Also, one wonders why you persist with the fervent desire to diminish HP like your argument with the California State historical landmark commission. The histories I have read put Varian as the first occupant of the SRP with HP the second (incidentally, much later Agilent (a HP progeny) purchased Variian (at least the part that made testing gear, and I believe mass-spec).

            HP wasn’t some dinosaur, and as I remarked w.r.t. Beckman Instruments (another big tech company many in the world won’t have heard of because they don’t make consumer products) all the savvy tech companies could see where electronics and control functions were heading and many tried to get into the act if only to prevent themselves being made redundant. HP was similar, as the citation below shows, but equally Bill Hewlett decided he didn’t want to become a consumer company but keep the focus on the industry’s tech needs, the tools and analytical gear they use.

            1960s
            HP is recognized as the symbolic founder of Silicon Valley, although it did not actively investigate semiconductor devices until a few years after the “traitorous eight” had abandoned William Shockley to create Fairchild Semiconductor in 1957. Hewlett-Packard’s HP Associates division, established around 1960, developed semiconductor devices primarily for internal use. HP Associates was co-founded by another former Bell Labs researcher, MOSFET (MOS transistor) inventor Mohamed Atalla,[13] who served as Director of Semiconductor Research.[14] Instruments and calculators were some of the products using semiconductor devices from HP Associates.

            This desire to stay out of the retail market is why HP declined Woziak’s offer. To say that HP didn’t encourage spinout (while Fairchild did etc) is the exact opposite of reality. They had the condition of first right of investment to their employees ideas etc for the very reason that they knew the way these things operate. In fact they were acting as in-house VC to their most entrepreneurial employees (while expecting to benefit too of course). Woz’s loyalty to HP should tell you about the way employees regarded the company, plus he probably thought Apple would be more secure, have more cred etc with HP as a backer. You admit Woz worked in their computer and calculator division so I’m not sure why you want to credit Fairchild instead; it was simply that HP were only interested in creating those tools for engineers and the industry, not for the consumer. (That was to change bigtime when Bill Hewlett stepped back and they launched laser printers etc in the 80s. Incidentally Carly Fiorina’s buyout of Compaq was everything that Hewlett wanted to avoid: chasing a low-value-added commodity market; I see too that at the time of her appointment in 1999 HP was a Dow Fortune-20 [twenty] company so I have no idea how you believe they only joined the Dow in 1997.)

            No one, least of all me, is denying the role of Fairchild and its offshoots like Intel, in the expansion of the valley. But HP was a giant company by the 60s when it was the leader in its area (which wasn’t competing with Fairchild/Intel)–it was already a multinational around the world by the end of the 50s–and I don’t understand your remark “HP didn’t join the Dow Jones until 1997” because that can only be due to “In 1999, all of the businesses not related to computers, storage, and imaging were spun off from HP to form Agilent Technologies. Agilent’s spin-off was the largest initial public offering in the history of Silicon Valley.[26] The spin-off created an $8 billion company with about 30,000 employees, manufacturing scientific instruments, semiconductors, optical networking devices, and electronic test equipment for telecom and wireless R&D and production.” Agilent is closest to what the original HP was. You say HP didn’t create spinouts but I can’t keep track of its own splits, each of which created a multibillion dollar company usually the world leader in its field. Even Agilent has split off its division of test and measurement equipment for electronics, into Keysight.

            This demonstrates what I was saying, that HP spanned a very broad range of technologies and for that reason would have (in those early days 50s-60s) a larger and more technically diverse workforce than Fairchild or indeed Intel, and that is why there were constant spinouts as those people recognised opportunities that HP didn’t want to pursue themselves. Also, coming from HP gave those founders an extra pinch of cred with VC etc. You say that HP didn’t have anything like the 60 or 120 “offspring” as Fairchild but you haven’t convinced me of that. It may be so extensive in the valley and around the world that historians may find it difficult to track. I don’t know why you’d deny this.

            You haven’t convinced me not to identify Apple as one of those HP spinouts (and if any other company “owns” the right it would be Xerox PARC (for the IP) which was established there by Xerox to try to mimic the famous creative R&D model tracking back to HP). Of course Apple happens to be the most valuable company in the world. In my own field I’d name ABI which brought to market automated DNA sequencing (responsible for 99% of the work behind the Human Genome Program) which was invented in CalTech, roadshowed to HP who passed on it but whose engineers saw the potential and left HP to create ABI etc.

            It’s kinda silly to be arguing about this. It’s a bit like the People’s Front of Judea versus the Judean People’s Front.

          • Onux

            That is is a “foundational” myth doesn’t make it true. The notion of “welfare queens” driving Cadillacs is a “foundational myth” of Reagan/Thatcher policies like disinvestment in infrastructure and state capacity that you regularly criticize – are you willing to accept it just because many people believe and understand it?

            The elements that made Silicon Valley what it is today were silicon transistors, integrated circuits, computers (especially personal computers), and the internet. HP was not involved with the creation of any of them. Many of them (and for the key early ones almost all) came from Fairchild or companies linked to it.

            All of the elements of HP culture are why it was not key to SV success and why the Valley was dormant for 17 years after HP founded. Loyalty to company is the antithesis of SV culture, people were loyal to ideas and opportunities and by constantly moving companies both sparked and exploited innovation (note the founding Traitorous Eight all left Fairchild in a few years, thus Intel and others). Sticking to the business model or right of first refusal was not SV practice even before the modern buzzwords of “disrupt” and “pivot” – an early Fairchild employee was encouraged by Kleiner to found a company making specialized glass used in semiconductor fabrication; such ecosystem creation made it possible for other firms to establish in Valley. HP (and Beckman, and Varian) were closely held companies that eschewed or delayed outside ownership, venture capital by contrast helped make SV by allowing new ideas to be quickly capitalized and pursued.

            I say that HP only joined the Dow in 1997 because it is true: https://www.bizjournals.com/sacramento/stories/1997/03/31/editorial1.html

            HP was not a giant company in the 60’s. It joined the Fortune 500 in 1962. Fairchild Camera (parent of Fairchild Semiconductor) joined the same year and ranked higher than HP until 1968. HP remained ranked in the 300’s through the 60’s. It was 150 in 1980, but 33 in 1990, jumping from 110 to 81 in 1983. As I said, HP became huge when it adopted the tech other SV companies developed and became a consumer company starting with laser printers; it was not a major player in the R&D of the tech that made SV famous, or a loadstar for the firms that did.

            There were not constant spinoffs from HP, otherwise people could name them. Absence of evidence is not evidence of absence, but it is evidence of presence even less. It is silly to claim the number of HP spinoffs is so extensive historians would find it “difficult to track” without being able to name a single such spinoff that was significant in the early history of SV. Historians have no trouble tracking the descendants of Fairchild, Netscape, Paypal, etc. Someone even made a relationship chart mapping all of the rappers who could be tied back to Dr. Dre. If it existed for HP there would be a list. Agilient wasn’t a spinoff in the SV sense of a few employees leaving to exploit a new idea (like the 8 did with silicon transistors at Fairchild), it was just HP splitting itself up, Agilent had 30k employees on Day 1 and the IPO was huge because HP was already huge.

            Apple’s only connection to HP is that Woz worked there before he quit, and he bought HP parts to build the Apple I. HP did not inspire the personal computer, that was the Homebrew Computer Club. Designing and laying out the circuits wasn’t an HP project, Woz did that on his own. HP didn’t encourage Woz to found a company, that was Jobs. Woz didn’t bring any other HP employees with him the way Noyce and Moore founded intel together, or Widlar and Talbert founded National. No one at HP mentored Jobs through the process of starting firm from a garage, that was Noyce (Fairchild). HP didn’t provide the funding to get Apple off of the ground or act as a “backer”, that was Markkula (Fairchild). The marketing executive who made the Apple II a smash success and green light the famous “1984” commercial that launched the Mac was Floyd Kvamme (National, before that . . . Fairchild).

            HP was not a leader in SV R&D, at least not in the things above that mattered. Mohamed Atalla didn’t invent the MOSFET transistor at HP, he did it at Bell Labs and came to HP later. He then founded HP Labs (modeled on Bell Labs) because HP didn’t have a exploratory/advanced research group – this as late as 1966. That HP may have conducted R&D in other fields (test, measurement, etc.) is as irrelevant to the current tech industry as Boeing’s investments in aeronautic R&D.

            Varian was not a factor in the success of SV tech either. They were founded as a company specializing in klystrons, a type of *vacuum tube*. They didn’t get into computers until they bought an existing computer maker in 1967. Crediting them for the current tech industry is like crediting a buggy whip maker for the automobile because they switched to making engine timing belts.

          • michaelrjames

            You’re doing it again. Providing endless examples of the significance and influence of Fairchild and its offshoots. But I haven’t denied any of that. I am not in denial of it, never have been. But you seem in denial of giving any significance to HP, especially as to the so-called culture of SV:

            The company got its first big contract in 1938, providing its test and measurement instruments for production of Walt Disney’s hugely successful animated film Fantasia. This success led Hewlett and Packard to formally establish their Hewlett-Packard Company on January 1, 1939. The company grew into a multinational corporation widely respected for its products, and its management style and culture known as the HP Way, which was adopted by other businesses worldwide.
            The founders developed a management style that came to be known as “The HP Way.”
            In Hewlett’s words, the HP Way is “a core ideology … which includes a deep respect for the individual, a dedication to affordable quality and reliability, a commitment to community responsibility, and a view that the company exists to make technical contributions for the advancement and welfare of humanity.”[116] The following are the tenets of The HP Way:[117]
            We have trust and respect for individuals.
            We focus on a high level of achievement and contribution.
            We conduct our business with uncompromising integrity.
            We achieve our common objectives through teamwork.
            We encourage flexibility and innovation.

            You don’t recognise a smidgin of that culture in Google’s now-abandoned statement of “first, do no wrong”.

            I didn’t claim Varian was hugely influence (or huge) but that it is remembered as the first tenant of SRP. I note that you are also deploying a strategy of belittling a company and their products in very different eras, eg. early 50s versus late 50s or 60s. In fact Varian was a very successful company, one of the hundreds required to support tech in specialised areas. With HP, it seems a big factor is that it was not especially ‘sexy’ but it was a giant and well before it moved into consumer electronics etc. You yourself write:

            HP was not a giant company in the 60’s. It joined the Fortune 500 in 1962. Fairchild Camera (parent of Fairchild Semiconductor) joined the same year and ranked higher than HP until 1968.

            So, somehow being on the (Dow) Fortune 500 doesn’t rate any company as big! You’re tying yourself in knots here.

            HP was not a leader in SV R&D, at least not in the things above that mattered. Mohamed Atalla didn’t invent the MOSFET transistor at HP, he did it at Bell Labs and came to HP later. He then founded HP Labs (modeled on Bell Labs) because HP didn’t have a exploratory/advanced research group

            You mean the way Beckman brought Shockley to the valley? And no one claimed Atalla invented his seminal transistor work at HP just as Shockley didn’t at SSC/Beckman. Though: “His work at HP and Fairchild included research on Schottky diode, gallium arsenide (GaAs), gallium arsenide phosphide (GaAsP), indium arsenide (InAs) and light-emitting diode (LED) technologies.” And he did leave Bell to join HP in 1962 which according to you was an insignificant company making blah products of no significance to tech or the valley. You are persisting with the fantasy that I claimed HP played a big role in silicon tech which I never did (and I agreed that the brass plaque on that garage is a bit of a misnomer, while also thinking your view is too narrow on that front.
            HP was a leader in R&D, and again the reason you discount it is because it wasn’t directly (or mostly) in the S part of SV. Of equal importance was the way it pursued its R&D (the HP Way). Though it had no interest in computing from the consumer products side, clearly its R&D on computers and calculators was influential, not least via Steve Wozniak. Note that Woz built his first computer in 1971 before he joined the calculators (and computers) section of HP, so it was no accident. Though they produced the HP2100 series minicomputers from 1966 for 20y, and “The HP 2640 series included one of the first bit mapped graphics displays that when combined with the HP 2100 21MX F-Series microcoded Scientific Instruction Set[18] enabled the first commercial WYSIWYG Presentation Program, BRUNO that later became the program HP-Draw on the HP 3000. … HP is identified by Wired magazine as the producer of the world’s first device to be called a personal computer: the Hewlett-Packard 9100A, introduced in 1968.[20]
            I don’t know why you continue to deny that. Well, probably because none of this stuff is out there in the consciousness of the general public. Of course there were other companies making similar experimental computers that didn’t quite get it right (like Xerox with the tech that made its way into the first Macintosh). HP’s thing was making the tools that other tech (users and makers) used. That is, or was, the HP that other tech people in the valley and wider world, admired. I think your attitudes reflect more the modern HP which became a consumer products company often using others’ tech (including laser printers) and PCs; I agree and found the changes, especially of Fiorina, sad. But it doesn’t erase the history.

            HP didn’t provide the funding to get Apple off of the ground or act as a “backer”, that was Markkula (Fairchild). The marketing executive who made the Apple II a smash success and green light the famous “1984” commercial that launched the Mac was Floyd Kvamme (National, before that . . . Fairchild).

            I didn’t claim otherwise. But a spinout is not defined by being funded by the parent company, but by one or more workers choosing to leave the parent often to develop an idea/technology created or suggested by R&D at that parent company. Certainly I believe that is true for Woz, without denying that there were plenty of ideas brewing (!) in the valley and they all came together in the Homebrew club. The fact is that Woz worked in the computer division of HP and it is a bit weird to imagine that that didn’t have any influence on what he did (and why he believed HP should support his plans with Jobs). You’re also confounding what happened with the traitorous eight with SV culture, claiming it is antithesis of the HP Way. That’s largely not true. Shockley was an authoritarian, somewhat crazed leader and it was essentially the whole company (the 8) that left SSC to recreate the same thing under different management. Very different to the way most spinouts happen–even as there will always be cases where the progeny go on to eclipse the parent. And I’d say that the corporate culture of the two dominant new players in SV, Facebook and Google, is the opposite with incredibly tight corporate control both internally and externally (ie. they buy up or otherwise neutralise anything perceived as competitors).
            As to funding, sure Markkula funded Apple and he had made his fortune while at Fairchild (trading options; curious as it must have presumably been on his personal account?) though that was after the Apple-1, so as critical as it was at that time (as Apple incorporated in ’77 several years after the Apple-1) one wonders whether Jobs and Woz would have somehow given up without him? Hardly. Woz credits Markkula but I reckon that is just being nice. The fact is that it was Jobs and Woz who enticed Markkula out of early retirement … so beyond being rich he owes an awful lot to them.

            You make plenty of claims for Kleiner-Perkins which is all true and nothing I have denied. But curious that you don’t mention the history of Perkins:

            In 1963, he was invited by Bill Hewlett and Dave Packard to become the administrative head of the research department at Hewlett-Packard. He was the first general manager of HP’s computer divisions, credited with helping shepherd HP’s entry into the minicomputer business.

            He and Kleiner co-founded their eponymous VC company in 1973. So if you assign so much credit to Fairchild via Kleiner, logically you should do the same for HP and Perkins. If you wish to credit the creation of so many SV startups to Kleiner-Perkins (et al) to Fairchild then ….
            In any corporate pedigree of SV companies I can’t see how Apple isn’t on the branch of the tree that leads back to HP.
            ………………..
            This gives the number of companies founded by HP alumni as 40; beyond the summary it is paywall so can’t see much (but can’t believe Apple is not on the list); this would be first generational companies and won’t list second-gen, ie. companies that those first-gen give rise to, etc. They also say HP invested in 176 other companies of which 49 they were lead investors.
            https://www.crunchbase.com/hub/hewlett-packard-enterprise-alumni-founded-companies
            This list of organizations founded by former employees of Hewlett Packard Enterprise provides data on their funding history, investment activities, and acquisition trends. Insights about top trending companies, startups, investments and M&A activities, notable investors of these companies, their management team, and recent news are also included.
            …………………
            https://www.hpalumni.org/hp_way
            The HP Way
            “…an egalitarian, decentralized system that came to be known as ‘the HP Way.’ The essence of the idea, radical at the time, was that employees’ brainpower was the company’s most important resource. …one of the first all-company profit-sharing plans… gave shares to all employees… among the first to offer tuition assistance, flex time, and job sharing…” – Peter Burrows, BusinessWeek

            “The garage was left behind… So too were the audio oscillator and thousands of other products – all abandoned in the endless pursuit of something better. Only the people remained, and they were cherished and respected…” – Michael Malone, Forbes

            “The janitor gets exactly the same percentage increase due to profit sharing that I do, or anyone else in the company.” – Bill Hewlett, Bill & Dave’s Memos

            In 1942, at age 29, Packard attended a Stanford conference on wartime production. “Somehow, we got into a discussion of the responsibility of management. Professor Holden made the point that management’s responsibility is to the shareholders – that’s the end of it. And I objected. I said, ‘I think you’re absolutely wrong. Management has a responsibility to its employees, it has a responsibility to its customers, it has a responsibility to the community at large.’ And they almost laughed me out of the room.” – David Packard, Stanford Magazine

            “…a uniquely dedicated culture that became a fierce competitive weapon, delivering 40 consecutive years of profitable growth. While Packard’s values have since waned within HP, he did more to create the DNA of Silicon Valley than perhaps any other CEO.” – Jim Collins, Fortune, 2003
            ………………..

  3. shakeddown

    You’re making the assumption that “culture” means “artist spaces”, which I think is wrong – techie culture is itself a draw for people (for example, when I first got a job I moved to San Francisco over New York, despite having comparable job offers in both, because I wanted to be near the cool techie culture, and a lot of my friends had similar stories. SF’s gay or artist culture didn’t impact me either way).

      • Herbert

        Citation needed.

        Certainly a lot of startups are founded by local university graduates. Of which Berlin certainly has many – punching above its weight, one might argue…

  4. Lee Ratner

    From my reading, Berlin developed as a counter-culture center because the West German government really subsidized living in West Berlin during the Cold War. So it was a lot easier for people that didn’t want to live a traditional lifestyle to get by in Berlin than Munich or Frankfurt. So basically, the current subcultures of Berlin have the Cold War to thank for their existence.

    • Alon Levy

      Oh, interesting! What do you recommend I read about it? I know a lot less than I should about the city’s cultural history – I know about the 1920s cabaret, but I don’t know to what extent it influenced the 1960s counterculture.

      At least in the official history as seen in for example museums about the Wall, the postwar city was fiercely anti-communist, to the point that Western cops sometimes had to prevent Westerners from attacking the Wall. Brandt called it the Wall of Shame. I don’t know to what extent this was inherited by the 1960s’ counterculture – the New Left was mostly neither-NATO-nor-the-USSR, unlike the pro-Soviet Old Left, but I don’t know the specifics of this in West Berlin.

      For what it’s worth, today’s countercultural spaces here are notably anti-tankie. One of the queer meetups I would go to right until June when it was held indoors and I was the only person with a mask on donated excess funds to a Venezuelan feminist collective that opposes both Maduro and the US. In Friedrichshain, there were #Chinazi banners right next to anti-gentrification ones last year, when the Hong Kong protests were in the news. (In general, the green left today is probably the most consistently anti-PRC force in Europe; Greta signal-boosts Joshua Wong while German industry loves Russian natural gas and Xinjiang slave labor-produced goods.)

      • Lee Ratner

        There isn’t anything in depth but I picked this up from the two big histories of Berlin available in English, Faust’s Metropolis by Alexandra Richie and Berlin by David Clay Large. In the chapters on divided Berlin, they both talk about how a lot of West Berlin life had to be subsidized by the West German government to keep the facts on the ground. Otherwise Berlin was mainly going to be a city with a senior citizen population. Naturally these subsidies allowed a lot of people not very interested in a mainstream life to form a lot of subcultures in Berlin.

        I think this makes intuitive sense. The Cold War created a very unique situation in West Berlin compared to other European cities and these were perfect conditions for non-mainstream subcultures to thrive. It is roughly how urban decline in mid-20th century America allowed sub-cultures to become big in some place like San Francisco since they didn’t have to compete for housing stock with wealthier, more normie families.

        • Onux

          Except San Francisco never really declined. Population loss by 1970 (at the end of the Hippie era) was less than 8% off the peak. At its lowest in 1980 it still had a larger population than prewar.

          • Lee Ratner

            San Francisco was hit a lot less hard than the Mid-West cities but it did lose quite a bit of it’s economy to the suburbs. A lot of the pre-suburban institutions like the various stores that were around for ages didn’t survive either. There was a big change in the culture and society of San Francisco even without a big population decline.

          • Onux

            I think SF lost economy to the suburbs less than it lost population. The first big skyscraper building boom to turn SF from a mid rise to high rise CBD happened in the 60’s. BoA building was completed in ‘69, the Transamerica Pyramid in ‘72. The big financial firms that were the SF economic foundation before tech (because of the gold rush SF got the west coast mint, and the banks followed) certainly never left. Stores close all of the time, but the regional SF department stores like Emporium and I. Magnin survived to the ‘90s; they didn’t flounder in the ‘60s.

          • Herbert

            Rudi Dutschke (the “leader” of Germany’s 1968 youth revolt) lived in Berlin, but unlike its current structural left majority, during the forty years of partition, Berlin was led by the CDU quite often. Berlin also got a lot of federal cash to build the U-Bahn because the tram was shut down for ideological reasons (“hinders cars”) and the S-Bahn was boycotted for ideological reasons (“we won’t pay Ulbricht’s barbed wire”). Despite West Berlin getting control of the rump of West Berlin’s S-Bahn in 1984, there were still harebrained “what’s an S-Bahn” schemes like the extension of U8 northward (which then stopped short of MV because money ran out). In 2001 the eternal mayor Eberhard Diepgen was finally kicked out of office due to a banking crash, but Berlin lost billions of € over it and now the same people who would pump money into Berlin to “beat the reds” during partition moan about Länderfinanzausgleich and “lazy Berliners”…

          • Lee Ratner

            I agree that SF managed to keep a lot of business compared to other cities and acted as a sort of Manhattan for the Bay Area.

      • michaelrjames

        I presume you have read Franz Hessel’s Walking in Berlin“. It was only published in English in 2016 hence its subtitle of “A Flaneur in the Capital” but was written in 1929. Here’s the blurb:

        Franz Hessel was born in 1880 to a Jewish banking family and grew up in Berlin. After studying in Munich, he lived in Paris, moving in artistic circles in both cities. He co-translated Proust with Walter Benjamin, as well as works by Casanova, Stendhal, and Balzac. His relationship with the fashion journalist Helen Grund was the inspiration for Henri-Pierre Roché’s novel and, later, Francois Truffaut’s film Jules et Jim. Their son Stéphane went on to become a diplomat and author of the worldwide bestselling Indignez-Vous! (Time for Outrage [inspired the Occupy movement]). Franz Hessel died in early 1941, shortly after his release from an internment camp.

        (I should confess my copy lies unread in a bedside pile.)

        • michaelrjames

          But I have evidently browsed it because I found this passage marked out (the pronoun crimes are Hessel’s):

          These young people are also learning how to enjoy things, which doesn’t come naturally to Germans. In his zeal for pleasure, the Berliner of yesterday still lapses into the dangers of accumulation, quantity, excess. His coffee houses are establishments of pretentious refinement. Nowhere to be found are the cosy, unremarkable leather sofas, the quiet corners so loved by the Parisians and the viennese.

    • Herbert

      West-Berliners were also exempted from the draft (in fact they could not serve even if they wanted to) – regardless of where they were born…

  5. Matthew A da Silva

    Your description of the gentrification-displacement paradigm in Berlin sounds so North American! It’s fascinating. It sounds very similar to the tech/professional-counterculture relationship (and the misreading thereof by the countercultural community) in San Francisco, Portland, Austin, NYC, etc. Really fascinating to hear a European example.

    • Alon Levy

      I do want to clarify that Berlin’s primary industry is not tech, it’s the federal government. But then the federal government isn’t here because of the counterculture either, it’s here because it’s the historic capital.

      • Herbert

        Berlin is also getting back company HQs. Granted, many of them for the letterhead, but still…

  6. AJ

    Could it be that the production theory dominates at the metropolitan level, but the consumption theory may dominate occasionally at the neighborhood level? It’s not cities that gentrify but specific neighborhoods. So high amenity neighborhoods are desirable with or without regional job growth, but overall city population and rents require economic growth to grow? It seems to me people might see the consumption theory at work at the neighborhood or block level but are not able to see the production theory at work at the metropolitan level because it is too abstract / too large of scale?

    Reading your post made me make a connection to a common housing debate, in how how new housing construction can make a local housing market worse by signaling that a neighborhood is more desirable (consumption theory) while at the same time making the regional housing market better by growing the total housing stock (production theory)

    • Alon Levy

      In the case of Berlin, neighborhood-level gentrification is entirely a production story. As soon as the Wall falls, people rush in to buy property in Mitte and in the abutting Eastern neighborhoods, Prenzlauer Berg and Friedrichshain, which immediately gentrify. Kreuzberg, on the Western side of Checkpoint Charlie, begins to commercialize near Mitte, but complaints of gentrification there are overblown given that it’s undergoing white flight. Neukölln, which all the Aryans here are sure is gentrifying, is undergoing white flight at the pace of 1950-70’s New York. Some of the immigrants who move there (hi) are high-skill and high-income, and immigrants lack the racial prejudice the Aryans have against the neighborhood’s Arab and Turkish population, but again, nobody is moving for the counterculture. It’s notable that the countercultural spaces of Neukölln – B-Lage, FAQ, K-Fetisch – have no people of color, in a neighborhood that’s probably 50% nonwhite at this point.

      • Michael Whelan

        Even at the neighborhood level, production theory makes more sense. Here in DC, we have experienced the most gentrification of any US city during the 2010s. Some people (like Derek Hyra, an American University professor) have argued this was due to consumption factors. But looking at a map, it is clear that gentrification has almost exclusively occurred in the neighborhoods within walking distance of downtown or on metro lines. In fact, this understanding has percolated out of the urbanist space into general media, such as this article that points to the Green Line specifically as a gentrification engine: https://wamu.org/story/17/01/12/report-growth-gentrification-metros-green-line-leads-d-c/

        Your second point about how new housing construction can make a local housing market more expensive by signaling investment is dubious. The production-theory forces that cause neighborhoods to gentrify will act on a neighborhood regardless of how much much housing it builds, so if you build no housing in an increasingly-desirable neighborhood, prices will rise faster than if you had built some. For an example, see this article about two adjacent neighborhoods in DC: https://ggwash.org/view/68373/a-tale-of-two-20003s-high-rises-or-high-rents

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