Book Review: “Technofeudalism: What Killed Capitalism,” by Yanis Varoufakis
Technofeudalism: What Killed Capitalism, Melville House, 2023, by Yanis Varoufakis
“What’s in a word?” is the title of Chapter 2 of Technofeudalism: What Killed Capitalism, where Yanis Varoufakis notes, “It is tempting to think that it does not really matter what we call the system we live in. Technofeudalism or hyper-capitalism, the system is what it is, whatever the word we use to describe it. Tempting perhaps, but quite wrong. Reserving the word ‘fascist’ for regimes that genuinely fall into that category and refraining from using it to describe regimes that, however nasty are not fascist, matters hugely.”
Varoufakis is fully aware of the odd angle—at least from a more traditional Marxist perspective—from which he is approaching the topic of his latest book. He argues that capitalism, the dominant mode of production on earth for the past two hundred years, has been replaced—not, as hoped for through generations of the left, by socialism, but by a new type of economic structure he has dubbed “technofeudalism”, and which, he says, is turning out to be even more ruthless, destructive and difficult to dislodge than capitalism.
Varoufakis, a former finance minister in Greece during the radical phase of the Syriza government, frames his analysis with the story of how his father introduced him, as a child, to understanding capitalism through the development of the forces of production throughout history, beginning with the Iron Age. By the time Varoufakis is an adult, his father poses the question to him that becomes the starting point for the book: “Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?”
This engaging approach of a dialog with his father, a touchstone throughout, serves the book well, keeping things relatively simple and straightforward as Varoufakis lays out his picture of the new mode of production. At the center is his understanding of the transformation that tech capital (which he renames “cloud capital”) has inflicted on humanity: the conversion of billions of us into “cloud serfs” willingly albeit unconsciously volunteering to labor for nothing to reproduce cloud capital for the benefit of its owners.
How does this happen? As we switch on our computers, access the web, and lend our eyeballs to cloud capital we hand them a free gift. By clocking our clicks and following our eyeballs, the tech corporations are able to refine their targeting of our wants and desires continuously; the individual cloud serf decisions add up to mass analytics that guide ever more focused algorithms for pitches and sales individualized just for us. Cloud capital, in the form of corporations like Amazon and Apple, does continue to employ workers (“cloud proles”) in their brick-and-mortar facilities and extracts surplus value from them the old-fashioned way: through the labor process and capital accumulation. But the bulk of wealth collection now occurs, Varoufakis asserts, on platforms that have replaced markets on the web. He calls this form of wealth accumulation “cloud rent”.
Yes, he says, these platforms look like markets. But markets—as in exchanges of goods and services, and a key part of the definition of how capitalism functions—are the lesser part of what happens here, on sites he calls “cloud fiefdoms”. The bulk of the income for cloud capital comes from extraction of rent from the mostly modest-sized capitalist app developers who have to use the platforms to sell stuff to us—at an average cost to the developers of thirty percent of the transactions. The people who sell things on the platforms Varoufakis terms “vassal capitalists”.
All of this represents for Varoufakis a process that looks a lot more like how wealth was accumulated during feudalism—through ground rent, with serfs handing over a portion of what they produce on the land lent to them by its owners, feudal lords—than in capitalism, where surplus value is extracted through the difference between wages paid to the worker and the larger amount the worker generates for the capitalist.
Varoufakis’s explanation of how we got here relies on a reworking of the marxist understanding of the transition from feudalism to capitalism. During the centuries-long emergence of capitalism out of feudalism the two modes of production were intertwined and coexisted. But eventually one part (surplus value production, creating profit) became dominant and the other (rent) operated in the shadows cast by its giant rival. Yet, rent survived, and ultimately and opportunistically today has taken on a new and monstrous form. In this way technofeudalism represents the revenge of the undead rent over profit. As Varoufakis puts it, “cloud capital is overpowering terrestrial capital, sucking cloud rent increasingly out of the global value chain” (169).
Interspersed within the more abstract discussion of the comparative dynamics of feudalism and capitalism are useful explanations of various recent real world developments. Like David Harvey, Varoufakis has a knack for making Marxist political economy understandable and clear. (The book helpfully includes an appendix where he defines all his terms.) Where did this cloud capital power come from in such a startlingly short period? Two sources: the enclosure of the internet commons, or privatization of what started out a public resource; and the massive transfers of public funds to private hands following the 2007-8 crash and Great Recession. The combination of the two created the primitive accumulation of cloud capital, which “differs from other kinds of capital in its ability to reproduce itself at no expense to its owner, turning all of us into cloud serfs.” But that’s not the only way it reproduces itself.
With the banking implosion of 2007-8 two things happened. The national central banks determined these businesses were too big to fail, so they shoveled huge amounts of cash to them. But to balance all this money-printing, their governments imposed austerity on the working class. Since the masses were in no position to buy new product lines, capital invested in non-productive enterprises like real estate and the stock market—and tech. Since there was no risk to the investment, having come from free central bank money, profit was optional. Hence the proliferation of startups and tech companies with soaring valuations while returning no profits for years.
Varoufakis spins a number of provocative implications out of this picture. In his final chapter he proposes what a new economy and society would look like if we could construct one free of profits and rents. But he also informs us that getting from here to there is a daunting challenge, larger than the one we faced under the rule of capital, which at least for a time gave us the opportunity to construct social democracy from class consciousness and union power. With technofeudalism, the proliferation of precarious employment, shrunken unions and the dispersal of community, social democracy is currently impossible, says the author. Organizing the working class is still necessary, but not sufficient. Now we need to build a bigger, broader alliance with all willing partners.
Like any analytic or political tradition, Marxism needs to renew its categories and rethink its presuppositions as the world changes in order to remain relevant and accurate. Technofeudalism represents a serious effort to accomplish this necessary task. I am not fully competent to assess the diagnostic picture Varoufakis presents in this book. For one thing, I don’t have the statistical chops to determine if the amount of value being removed from the global capitalist system by cloud rent has actually surpassed the volume of worldwide profit generated by labor for capital.
Solving this single equation should decisively answer the question as to whether Varoufakis is correct in his central argument. If you’ve made it through Volume One of Capital, that—along with not having slept through late neoliberalism—is really all the reader needs to follow the discussion in Technofeudalism. But following the discussion and being able to assess its correctness are two different things.
Whether his answer is correct or not, Varoufakis has asked the right questions in a book that plumbs some of the murkier depths of how our world works today.
