Yanis Varoufakis grew up during the Greek dictatorship of 1967-1974. He later became a professor of economics and was briefly Greek finance minister in 2015.
His father instilled in his son a critical appreciation of how technology drives social change. He also instilled in her the belief that capitalism and genuine freedom were antithetical: a leftist politics that made his father a political prisoner for several years during the “junta,” as they called it.
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In 1993, when he first had access to the Internet, his father asked him a serious question: “Now that computers talk to each other, will this network make capitalism impossible to overthrow?” Or could he finally reveal his Achilles heel? Varoufakis has been reflecting on it ever since.
Although it is too late to explain it to his father in person, Varoufakis’s new book Technofeudalism: What Killed Capitalism answers the question in the form of an extensive reflection addressed to his father.
Now Varoufakis argues that we no longer live in a capitalist society; Capitalism has transformed into a “technologically advanced form of feudalism.”
Rent on profit
Traditional capitalists are people who can use capital – defined as “anything that can be used to produce salable goods” (such as factories, machinery, raw materials, money) – to coerce workers and generate income in the form of profits. Those capitalists are clearly still flourishing, but Varoufakis argues that they are not driving the economy like they used to.
“By the beginning of the 19th century,” he writes, many feudal relations remained intact, but capitalist relations had begun to dominate. Today, capitalist relations remain intact, but techno-feudalist relations have begun to overtake them.
Traditional capitalists, he proposes, have become “vassal capitalists.” They are subordinated and dependent on a new generation of “lords” – the large technology companies – that generate enormous wealth through new digital platforms. A new form of algorithmic capital – what Varoufakis calls “cloud capital” – has evolved and displaced “the two pillars of capitalism: markets and profits.”
Marketplaces have been “replaced by digital trading platforms that look like marketplaces, but are not.” The moment you enter amazon.com you “leave capitalism” and enter something that resembles a “feudal fiefdom”: a digital world that belongs to one man and his algorithm, which determines what products you will see and what products you will not see.
If you are a seller, the platform will determine how you can sell and which customers you can approach. The terms on which you interact, share information, and trade are dictated by a “something” that “works for the bottom line.” [de Jeff Bezos]”.
The capitalists who depend on this mode of sale have access to the digital assets of their virtual owners, the large technology companies. And if “vassal capitalists” do not comply with the heritage laws, they are expelled (removed from Apple’s App Store or Google’s search index) with disastrous consequences for their businesses.
Access to the “digital fiefdom” comes at the cost of exorbitant rents. Varoufakis points out that many third-party developers at Apple’s store, for example, pay 30 percent “of all their revenue,” while Amazon charges its sellers “35 percent of their revenue.” This, he maintains, is as if a medieval feudal lord sent the sheriff to collect a large portion of his serfs’ produce because he owns the property and everything on it.
It is not about extracting profits through the production or provision of goods and services, since these platforms are not a “service” in the sense in which the term is used in economics. They are earning rents in the form of huge cuts they receive from capitalists on their platforms.
The moment you enter Amazon you leave capitalism and enter something that resembles a fiefdom: a digital world that determines what products you will see and what products you won’t.
Cloud Servants
But something even more transformative has happened, Varoufakis argues: Although most of us regularly interacted with capitalists and earned wages through our work, now, for the first time in history, we all contribute to “the wealth and power of new ruling class” through our “unpaid work.”
Every time we use our cloud-connected devices (smartphones, laptops, Alexa, Google Assistant, Siri) we replenish the capital of Big Tech cloudists. This, in turn, increases their ability to generate more wealth. As? We train their algorithms, which train us, to train them, etc., in a feedback loop whose goal is to shape our desires and behavior. They are “selling us things while selling our attention to others.”
This interaction, Varoufakis insists, does not occur as any kind of market exchange, such as the payment of wages by a capitalist to a group of workers. In this interaction, we are all high-tech “servants of the cloud.”
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For Varoufakis, we are not only experiencing a technological revolution, but an economic revolution driven by technology. It challenges us to come to terms with what has happened to our economies – and our societies – in the era of big technology and big finance.
His book is a welcome contribution to that task. A technofeudal era, Varoufakis argues, is not inevitable. Despite the difficulties we face, we have the ability to reject “technodystopia” and structure our institutions in ways that more meaningfully embody freedom and democracy.
* Sociology and Philosophy Tutor, Deakin University.
2023-11-13 08:00:00
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