PHM-Exch> The idea of techno-feudalism Yanis Varoufakis

[Claudio Schuftan]

*The idea that we are entering an era of techno-feudalism that will be
worse than capitalism is chilling and controversial. We asked former Greek
finance minister Yanis Varoufakis to elucidate this idea, explain how we
got here, and map out some alternatives.*



The controversial
<https://jacobin.com/2023/10/cloud-capitalism-technofeudalism-serfs-cloud-big-data-yanis-varoufakis>
concept of techno-feudalism suggests we have transitioned from capitalism
to something even worse — a new era that exhibits disturbing feudal
characteristics. On this view, capitalists now primarily rely on
consolidated political power and rents to extract capital. If true, this
form of feudal extraction represents a drastic shift away from the
conventional mechanisms of capitalism. Importantly, it would mark a move
from capitalism’s claimed foundational attributes of competition and
innovation.

*Jacobin*’s David Moscrop <https://jacobin.com/author/david-moscrop>
recently talked to economist and former Greek finance minister Yanis
Varoufakis <https://jacobin.com/author/yanis-varoufakis> about his latest
book *Technofeudalism: What Killed Capitalism*
<https://www.penguinrandomhouse.com/books/751443/technofeudalism-by-yanis-varoufakis/>.
Varoufakis makes the case for techno-feudalism, arguing that rents have
displaced profits. He delves into the rise of cloud capital, the
implications of what a new feudal order would mean for us, and the
possibilities of an alternative future.

*Capitalism, But Not as We’ve Known It*

David Moscrop

In *Technofeudalism*, you argue capitalism has brought about its own
demise, but not in the way that, say, Marx would have expected. Capitalism
has its own contradictions — most fundamentally in the antagonism between
capital and labor — and yet those contradictions seem to have produced a
mutation that is perhaps worse than anyone might’ve expected. So how did
capitalism kill itself and what is replacing it?

Yanis Varoufakis

This book falls squarely within the Marxist political-economic tradition. I
wrote it as a piece of Marxist scholarship. So, from my Marxist
perspective, this is a tragic book to have to write.

The contradictions of capitalism didn’t lead to the anticipated resolution
where, after all these centuries of class stratification, society would be
distilled into two classes, poised for a high-noon clash. This decisive
confrontation between oppressor and oppressed would result in the
liberation of humanity — the emancipation of humanity from all class
conflict. Instead of that, however, this clash between the capitalist — the
bourgeoisie — and the proletariat ended up in the complete victory of the
bourgeoisie: a complete loss after 1991, especially.

In the absence of a competitor in the form of trade unions — the organized
working class — capitalism went into a rampant dynamic evolution that
caused this mutation into what I call cloud capital. This transformation
effectively marked the end of traditional capitalism. It killed capitalism
— a development that embodies a Marxist-Hegelian contradiction, but not the
kind of contradiction we would have hoped for.

Cloud capital has killed off markets and replaced them with a kind of a
digital fiefdom where not just proletarians — the precarious — but
bourgeois people and vassal capitalists are all producing surplus value for
the vassal capitalists. They are producing rents. They’re producing cloud
rent, because the fiefdom is a cloud fiefdom now, for the owners of cloud
capital.

Cloud capital created a kind of power, which we as Marxists must recognize
as being structurally, qualitatively different from the monopoly power of
somebody like Henry Ford, Thomas Edison, or the great robber barons.
Because those people concentrated capital, concentrated power, bought out
governments, and killed off their competitors to sell their stuff. Today’s
“cloudalists” — cloud capital owners — they don’t even care about producing
anything and selling their stuff. This is because they have replaced
markets — they have not simply monopolized them.

If capitalism is market-based and profit-driven, well then this is no
longer capitalism, because this is not marketplace-based. It’s based on
digital platforms that are closer to techno-fiefdoms or cloud fiefdoms, and
they’re driven by two forms of liquidity. One is cloud rent, which is the
opposite of profit, and the other is central bank money, which funded the
building of cloud capital. And that is not capitalism.

Now you can choose to call it capitalism if you want, if you redefine
capitalism and if you say that anything that stems from the power of
capital is capitalism, but it’s not capitalism as we’ve known it. To
paraphrase Spock in Star Trek: “It is life but not life as we’ve known it.”

And I think that it’s important to make the linguistic transition from the
word “capitalism” to something else, which is very difficult to make,
because we’re all wedded to the idea that we’re fighting against
capitalism. After all those decades of feeling that we came to this planet
to overthrow capitalism, it’s really very difficult to have an idiot like
me coming along and saying, “But this is not capitalism anymore.” You say,
“Bugger off. Of course it is capitalism. If it’s not socialism, it must be
capitalism.” That’s what a fellow Marxist said to me. And I killed myself
laughing because I remember my Rosa Luxembourg. No, it can be barbarism.

*Vampire-Like Parasitism*

David Moscrop

If techno-feudalism has replaced capitalism, as you’ve suggested, it has
also led to the emergence of “cloud serfs” and “cloud proles,” modern
equivalents of the serfs and proletarians discussed in historical contexts.
How do these contemporary classes differ from their counterparts in the
traditional capitalist model?

Yanis Varoufakis

>From a Marxist perspective, the simple answer is that cloud serfs directly
produce capital with their free labor. That has never happened before.
Serfs under feudalism produced agricultural commodities. They did not
produce capital — that was up to the artisans who produced tools and
instruments and plows and stuff. In contrast, modern users contribute to
capital formation simply by engaging with platforms, offering free labor to
augment cloud capital for the capitalist. That never happened under
capitalism.

Techno-feudalism remains deeply reliant on the capitalist sector, mirroring
the dependence of capitalism on the agricultural sector and the feudal
sectors for sustenance. And just as capitalism needed feudalism to ensure a
food supply, techno-feudalism is parasitic, drawing essential support from
the capitalist sector to sustain itself.

So, the capitalist sector remains foundational. It is producing all value —
it’s why this analysis is distinctly Marxist. All surplus value is produced
in the capitalist sector, but then it is usurped. It is appropriated by
this mutant capital — cloud capital — most of which is not reproduced by
proletarians. It’s reproduced by people in their leisure time who work for
no pay. That has never happened. That’s why I’m saying this is not
capitalism. And it doesn’t help to think of this as capitalism, because if
you remain wedded to the word capitalism, the mind fails to comprehend the
great transformation.

David Moscrop

You mentioned that the rise of techno-feudalism is driven by two primary
causes: the enclosure and privatization of the internet, similar to pasture
enclosure in eighteenth- and nineteenth-century England, and a steady,
heavy flow of central bank money, particularly after 2008. Could things
have gone otherwise?

Yanis Varoufakis

Well, everything could be different. That’s what David Graeber
<https://jacobin.com/author/david-graeber> has taught us, right? And as
leftists, we have to believe that nothing was foretold. Otherwise, we don’t
believe in human agency — otherwise, what’s the point of living? We might
as well become couch potatoes watching the world go by. So, everything can
always be different. The historical counterfactual is always interesting,
but I cannot do it. I really cannot do it. I mean, I tried to do it often
in my previous book, which was a political science-fiction novel
called *Another
Now*
<https://www.penguinrandomhouse.com/books/696968/another-now-by-yanis-varoufakis/>.
Effectively, I created another time line where in 2008 we did things
differently with Occupy Wall Street to bring about socialist
transformation. And that’s a great game to play with your own mind, but I
don’t think it’s historically pertinent.

How could things have been different? Well, one could say that the
privatization of the internet was inevitable because we live under
capitalism. And capitalism has this capacity of eating up and infecting
every capitalist-free zone. The reason why I could never align with utopian
socialism, like that of Robert Owen in the nineteenth century. Despite his
efforts to create capitalism-free zones, history shows that capitalism
inevitably invades and corrupts these spaces. You cannot have pockets of
socialism surviving for long within capitalism.

*Now With More Crisis*

David Moscrop

You say techno-feudalism is parasitic on capitalism. If that’s the case,
techno-feudalism will still require the existence of classical capitalist
production. Amazon still needs producers to manufacture goods to sell on
its platform. Uber and Tesla require physical vehicles. How will that
relationship work in the long run under a techno-feudalist order?

Yanis Varoufakis

Again, I need to make this point very clearly. Capitalism in the eighteenth
century and nineteenth century, when it emerged, overthrew feudalism, but
it needed the feudal sector to continue producing food because otherwise we
would all have died. That’s why I’m saying that capital was parasitic on
the feudal agricultural sector. So, it’s not that one dies and the other
lives. What happens is that capital takes over the hegemony of the system,
but it is parasitic on the previous system. That’s a standard Marxist,
historical, material analysis.

Now what is happening is that at the center of techno-feudalism you have a
capital sector, which is absolutely necessary. The capital sector is the
only sector that produces value — exchange value in Marxist terms — but the
owners of that capital, of old-fashioned capital, are vassals to the cloud
capitalists. Their profits are being skimmed off. So surplus value is
withdrawn from the circular flow of income by the “cloudalists.”

Now that makes the system even more unstable, even more prone to crisis,
and even more contradictory and even less viable than capitalism was.
That’s what I’m saying in the book: that the takeover by cloud capital —
the supplantation of capitalism by techno-feudalism — is making our
societies more fraught with conflict. They’re becoming more stupid, more
conflictual, more poisoned, and less capable of allowing space within them
for social democracy, for the liberal individual — for values that even the
Right cherished under capitalism.

The Left was never against the idea of liberty; our critique lies in the
limiting of liberty to a select few. But now even this limited form of
liberty is under threat, and therefore the contradictions are getting
worse. I hold on to hope that perhaps these growing tensions will push
humanity into a decisive showdown between good and evil — between the
oppressors and the oppressed. But the rapid approach of climate catastrophe
poses the risk that we may reach the point of no return before that
resolution takes place. So, we have our work cut out for us, and humanity
is staring extinction in the face — unless we pull our socks up.

*Not Your Parents’ Rentiers*

David Moscrop

You spend a lot of time making the case that rents have usurped profit. Is
it not the dream, though, of every “capitalist” to extract rent? Does any
capitalist really want to be a capitalist? It seems to me every capitalist
wants to be a rentier.

Yanis Varoufakis

Well, the era when capitalists wanted to be capitalists was gone a long
time ago. I trust that Henry Ford liked being a capitalist in the same way
that, in a strange and completely warped manner, Rupert Murdoch likes to be
a newspaperman — even though he has done so much to destroy newspapers. But
these people are either dead or on their way to hell. So, yes, capitalists
don’t want to be capitalists, especially here in Europe, especially in my
country. All the capitalists, and I’ve known quite a few, have stopped
being capitalists; they’ve become rentiers.

The difference is that the capitalists who were transforming themselves
into being rentiers, until the emergence of cloud capital, were essentially
passing their capital stock onto others or possibly to private equity.
These former capitalists extracted rent from the monopoly profits of these
highly concentrated capitalist firms.

But what happens with people like Jeff Bezos and Elon Musk, I mean, they
*want* to do what they’re doing. They want to be cloud capitalists or
“cloudalists,” as I call them. They love it. These people, a bit like
Thomas Edison, love what they do. They’re not like standard rentiers.
They’re not like the feudal lords of the past. They are not like the
capitalists who no longer want to be capitalists. These people are
enthusiastic’ and they’re very talented, and, unfortunately, they’re very
smart. The combination of their drive with the exorbitant power of the
cloud capital that they own creates a highly potent, concentrated form of
“cloudalist” power, which we have to take very seriously.

David Moscrop

The end of the Bretton Woods system transformed global capitalism and
ultimately made possible, among other things, techno-feudalism. Could we
imagine a contemporary Bretton Woods cast in the mold of deep egalitarian
multilateralism and a socialist financial system?

Yanis Varoufakis

Oh, yes, I have done that. That was the reason why I wrote my previous
book. *Another Now* envisions exactly what you say. It features a new
Bretton Woods system inspired by John Maynard Keynes’s original proposal —
rejected by Harry Dexter White and the Roosevelt administration — merged
with a participatory democratic socialist framework. This setup has been
designed for ongoing redistribution of income and wealth from the Global
North to the Global South, especially in the form of green investment. So,
I’ve mapped all that and can answer your question of how things could work
today, with the technologies that we have, if property rights were equally
distributed — which is what I believe socialists should be aiming at. But
that was my political science fiction. This book is about what we’re facing.

*The World’s Biggest Excel File to the Rescue?*

David Moscrop

As part of an alternative order, you advance this idea of a central bank
digital wallet system and monthly dividend. How would that work?

Yanis Varoufakis

Well, technically it’s dead easy. It can be done in a week because it is so
straightforward. Imagine something like an Excel file, which is kept by the
Fed, and every single resident in the United States is one row. And when a
payment is made, the corresponding value transfers from one cell to
another, representing the payer and payee. This process would be free,
instantaneous, and anonymized. By creating a separation between the
software operators and the identities of individuals, identified only by
codes similar to Bitcoin addresses, privacy can be assured. And checks and
balances could be established to ensure that the state is not watching what
each one of us is doing.

And because the money will be shuffled through the same spreadsheet,
nothing stops the central bank from adding the same number to everybody
every month. And that’s a universal basic income (UBI), which is not, and
this is crucial, funded by taxation. Because the problem with the idea of
UBI is that it is vulnerable to complaints like, “What are you talking
about? You’re going to tax me, tax the dollars that I earn, to give to a
bum, a surfer in California or to a drug addict or to a rich person?” But
this proposal leverages the central bank’s capacity to generate funds. And
we should let no one tell us that it would be inflationary or would be a
problem — because they’re printing trillions on behalf of financiers. Why
not print them on behalf of the little people? Of everyone equally?

Now, the reason why you don’t have this system in the United States and why
you are very far away from a digital dollar is because if anybody in the
Fed dares move in that direction, they will be murdered by Wall Street —
they’ll experience political and character assassination. Wall Street will
never allow it because it would spell the end of Wall Street. Because why
would you want to have a bank account with Bank of America if you can have
a digital wallet with the Fed?

Bank of America would be compelled to justify their services and fees.
They’d have to come and convince you that you need to have an account with
them because they want to give you something at a decent price — like a
loan — without scamming you. And they can’t do that because the whole point
of Bank of America or Citigroup is to extract rents from you by
monopolizing payment systems and holding deposits. You keep your money with
them because, currently, there’s no other way of keeping your money.
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