Historians joke that some parts of the world – Crete and the Balkans, for instance– produce more history than they can consume locally. The California town of Palo Alto produces more economics than it can consume, and therefore more politics, and therefore more culture. But this comes at a price. Malcolm Harris, a thirtysomething Marxist writer who grew up there, begins his book by citing the alarming rate at which his high-school classmates committed suicide, and argues that Palo Alto is haunted by the historical crimes on which it is built. He then itemises them across two centuries of history, tracing their influence from Stanford University and Silicon Valley out across the world.

The town has long been at the forefront of communication technologies: the railroad that Leland Stanford, among others, brought to California; then radios, vacuum tubes and transistors; the silicon chips that gave the Santa Clara Valley its new name; personal computers; and the contemporary apparatus of surveillance capitalism, from Apple to Google. Along the way the technologies, at least in terms of what is visible in Palo Alto, become more abstract, but the urge to extraction remains the same.

At times Palo Alto is as dense as its southern Californian twin, Mike Davis’s City of Quartz, but its narrative has the intoxicating capitalist rush of Stefano Massini’s play The Lehman Trilogy, though hewing tighter to actual chronology. It is a story told around people: Leland Stanford, who became the prime mover behind Stanford University, and his wife Jane, until she was fatally poisoned; Herbert Hoover, Stanford alumnus, who became an ill-fated president but whose subsequent career, Harris argues, shaped and continues to shape American politics; William Shockley, who helped commercialise the silicon chip and whose failures as a manager catalysed the rise of Silicon Valley when all the people who couldn’t stand working with him set up their own companies; Peter Thiel, the investor whom Harris depicts as the centre of a nexus of science fiction; and ‘handsome young white men with elite credentials and very conservative politics’. (Elon Musk, here, is little more than a footnote.) Inter-woven with this story is a thread – running from 19th-century union organisers to expatriate Japanese communists to Black Panthers to San Franciscans protesting against the Google buses – of resistance to Silicon Valley’s form of capitalism.

What is that form of capitalism? Conventional histories of economic clusters emphasise the interplay of four factors. Intellectual property, here in the form of Stanford’s research, is turned into companies through the availability of venture capital funding that will subsidise early losses in return for, essentially, a lottery ticket. The companies’ chances of success are boosted by the government in two ways: first, through friendly (or, arguably, lax) regulation, and second, through serving as an early, price-insensitive customer. In California, that function is served admirably by the Department of Defense. The rewards from this flow back to the university, to the entrepreneurs and the venture capitalists, and the whole dance begins again.

Harris offers ample examples of the cycle. But in his telling, the ‘Palo Alto System’ is also built on other unacknowledged foundations. The first is bifurcation – a system that repeatedly splits winners from losers and ruthlessly exploits the latter: the people whose dirty, hazardous manufacturing labour makes the shiny, aseptic tech companies work, are tidily offshored so they can be maltreated and underpaid. (One literal instance of bifurcation is the way the railroad cuts rich Palo Alto off from crime-ridden East Palo Alto.)

Second, the bifurcation has a strong racial and national component, from foreign miners being stripped of legal rights during the Gold Rush, to Chinese, Japanese, Mexican and black Americans being systematically excluded. Shockley famously railed against the ‘dysgenic threat’ of minority groups; but Harris finds many other examples of eugenic thinking among the valley’s prominent citizens, past and present. His final foundation is the fetishisation of property rights – culminating in the state-wide votes that radically reduced residential property taxes to Californian municipalities.

Several recent books have told parts of this story: Chris Miller’s Chip Wars covers the development and the geopolitical significance of the silicon chip; Sebastian Mallaby’s The Power Law the rise of venture capital. Even smaller byways have their own books, such as Richard White’s self-explanatory Who Killed Jane Stanford? But Harris’s synthesis is uneasily compelling. Californian boosters have attacked it for not including the upside of capitalism, but this is unfair. Harris acknowledges the wealth created, but without being blind to the cost, or to who benefits and who does not.

Events after the book went to press bear out its argument. The university continues to grapple with issues around free speech and anti-Semitism. FTX, the cryptocurrency exchange that collapsed bathetically late last year, was founded by Sam Bankman-Fried, the son of two Stanford professors. Silicon Valley Bank was brought down in part by a bank run by its tech investors, who were then bailed out of their losses. Much the same has just happened to First Republic Bank. Even the much-mocked recent stories about ‘elite couples breeding to save humanity’ centre on a couple who had met – inevitably – at Stanford.