In Techno-feudalism: What Killed Capitalism, the former Greek minister of finance, Yannis Varoufakis, argues that wealth accumulation is no longer defined by capitalist relations. The book is at pains to address objections that current conditions represent a post-capitalist system because it assumes a Marxist audience disposed to understand capitalism as a pre-socialist rather than neo-feudal phase of history. Capitalism was supposed to mark the end of human exploitation before something better, not the antechamber to something worse.
Varoufakis’s argument for the global economy being post-capitalist is that it no longer principally relies on the pursuit of profits under conditions of market competition but on rent extraction, the way that feudalism did. He sees this as resulting from a recent de facto privatization of the Internet, like a new enclosure of the commons (despite 18th–century enclosures actually inaugurating capitalism).
Large platforms like Amazon, on which the capitalist has to sell his products to be competitive, or social media, where he has to advertise, would be new fiefdoms, and the capitalist paying rent to use them to make money would be a vassal.
And yet, the serfs in this system are precisely not serfs. The latter, after all, were given cradle-to-grave employment in a system without social mobility. What we have today is rather the opposite: what has been described as a precariat (a precariously employed workforce).
True, rent has overtaken profit in a certain sense. Positioning themselves in such a way as to dominate the market and be able to extract rents, even at the cost of short- and medium-term profit, has been the M.O. of many large companies, but far from being anything novel, this is one of the classical criticisms made against capitalist/corporatist oligarchs.
In any case, whether we describe it as techno-feudalist or, more accurately, Cloudist (as in the Cloud), the way this M.O. has played out in recent decades does represent something new, and Varoufakis pinpoints the emergence of this something new to August 12th, 2020, when it was announced that “[As a result of the COVID-19 pandemic] the UK’s national income had fallen by a whopping 20.4%,” but “instead of plummeting in response to the data, the UK stock exchange jumped up by 2.3%.”
This is key.
Varoufakis’s assessment is that such a thing was “utterly at odds” with any variety of capitalism and that, with this 2.3% jump, “the world of money has finally decoupled from the capitalist world.” The City of London had done nothing short of defying “the gravitational laws of capitalism,” and this trend was about to repeat throughout the world.
True, sometimes “share markets do rise in response to bad news … but only when the news is better than anticipated,” In this case, however, the news was quite a bit worse than expected (markets had been predicting a 15% drop in the UK’s national income at most).
What happened was that traders in the City of London had the following realization:
When things are this dismal, the Bank of England panics. And what have panicky central banks been doing since the crash of 2008? They print money and give it to us. And what do we do with all the newly minted money? We buy shares, sending their price up. If prices are destined to go up, only a fool would miss out. … A wall of printed money is on its way to us. Time to buy.
Arguably then, as with the rise of modern industrial capitalism itself, Britain was a kind of ground zero. As Blake wrote, things begin “in Albion’s ancient Druid rocky shore.” But the decoupling of money and capital was about to go global.
Authorities … responded by [doing what they had been doing since 2008] … printing money to give to the financiers [banks] in hopes that it would buttress investment in business, generating stable jobs. … It didn’t. Fearing that run-of-the-mill businesses would not be able to repay them, the financiers lent only to big business. And big business either refused to invest or invested solely in Cloud capital. Conglomerates founded on traditional terrestrial capital, like General Electric and Volkswagen, refused to invest the interest-free central bank money because when they surveyed the ongoing carnage of the pandemic they saw the same thing the banks had seen … masses of little people condemned to low wages, B.S. jobs, and diminished prospects. A sea of people unable to afford new high-value products. So why invest in such stuff? Instead, they would do something riskless, profitable, and stress-free. They used it to buy back their own companies’ shares, boosting their companies’ share price and their own bonuses. Meanwhile, Big Tech was having an even more fabulous pandemic.
While the U.S. economy was shedding jobs, Amazon appeared, in the words of Varoufakis, as a “hybrid of the Red Cross, by delivering parcels to confined citizens, and [by hiring people] Roosevelt’s New Deal.” But the jobs it created were a precarious kind of labour, suited to its ends, and the investment it made was in building Cloud capital.
Thus dawned our present age of Cloudism, about whose staying power Varoufakis makes the following observations:
- Whatever economic shocks might come, Cloud capital will likely endure, as will its ability to extract rents. Infrastructure often far outlives the bubble that takes out the actors who built it. Fibre optic cable and server farms, for example, survived the dot-com bubble bursting in 2001.
- And, in any case, money is still flowing from central banks. If central banks withdraw money, writes Varoufakis, a “vortex of volatility is ready to hit the 24 trillion dollar market for U.S. public debt, [which is] the very bedrock of international banking and finance.” In other words, central bank money will continue to “play the systemic role once played by capitalist profits.”
- Finally, “Cloud capital is now so well entrenched that it is bolstered and augmented not just by central bank money and its own capacity to amass Cloud rent, but by every new development,” from green energy to demands for cheap online degree programs.
We may describe Cloudism, then, as a system in which central banks print money that ends up in the coffers of Big Tech and associated conglomerates, leading to reduced pressure for these entities to pursue profits in a competitive market and so allowing them to focus instead on pursuing the entrenchment of the system that so benefits them.
This they do by trying to capture people’s attention (through adaptive algorithms) and predict their behaviour (through big data). The end point of this central bank/Big Tech nexus of control-seeking is something like China’s WeChat, an ‘everything app’ providing citizens/consumers with everything they need and corralling them into conformity through some kind of social credit score.
The solution? Varoufakis has said that it is easier to imagine nationalising Big Tech than it is to imagine taxing them effectively. Indeed, the idea that certain platforms provide services that really ought to be public utilities has been floating around, including on the political Right, for some years.
This is crucial for any political platform seeking to address current conditions. In addition, we have to consider how to promote and package open source technology, in which context we have the excellent case-study of Stability AI, which is meant (as its founder and CEO, Emad Mostaque, has said) to be like a pizza base, ready to be stacked with local, culturally appropriate or sectional, business-specific ‘toppings.’
With this (and after dismissing his excessively fraught and not all helpful titular “feudalism”), we may take Varoufakis’ analysis of Cloudism onboard.
It should be developed through an analysis of how the attention-capturing, behaviour-predicting project of Cloud-capital-owning corporations ends up manifesting as a cultural and ideological project that is precisely aligned with the aims of the central banks (the states) that fund them.
But this warrants a separate essay.
