(Staff post from the PERSUASION COMMUNITY on 30 April 2024.)
The Age of Cloud Capital: Capitalism is finished. What's replaced it is
even worse. Extracts from “Technofeudalism: What Killed Capitalism” by Yanis
Varoufakis.
Capitalism is now dead, in the sense that its
dynamics no longer govern our economies. In that role it has been replaced by
something fundamentally different, which I call technofeudalism. At the heart
of my thesis is an irony that may sound confusing at first but which I contend
makes perfect sense: the thing that has killed capitalism is… capital itself.
Not capital as we have known it since the dawn of the industrial era, but a new form of capital, a mutation of it that has arisen in the last two decades, so much more powerful than its predecessor that like a stupid, overzealous virus it has killed off its host.
What caused this to happen? Two main developments:
the privatization of the internet by America’s and China’s Big Tech. And the
manner in which Western governments and central banks responded to the 2008
great financial crisis.
If we do pay attention, it is not hard to see that
capital’s mutation into what I call cloud capital has demolished capitalism’s
two pillars: markets and profits. Of course, markets and profits remain
ubiquitous—indeed, markets and profits were ubiquitous under feudalism too—they
just aren’t running the show anymore.
What has happened over the last two decades is that
profit and markets have been evicted from the epicenter of our economic and
social system, pushed out to its margins, and replaced. With what? Markets, the
medium of capitalism, have been replaced by digital trading platforms which
look like, but are not, markets, and are better understood as fiefdoms.
And profit, the engine of capitalism, has been replaced with its feudal predecessor: rent. Specifically, it is a form of rent that must be paid for access to those platforms and to the cloud more broadly. I call it cloud rent.
As a result, real power today resides not with the
owners of traditional capital, such as machinery, buildings, railway and phone
networks, industrial robots. They continue to extract profits from workers,
from waged labor, but they are not in charge as they once were. They have
become vassals in relation to a new class of feudal overlord, the owners of
cloud capital.
As for the rest of us, we have returned to our
former status as serfs, contributing to the wealth and power of the new ruling
class with our unpaid labor—in addition to the waged labor we perform, when we
get the chance.
This great transformation, triggered by capital’s
recent mutation, comes three centuries after capital’s original triumph in
transforming feudalism into capitalism. Capitalism prevailed when profit
overwhelmed rent, a historic triumph coinciding with the transformation of
productive work and property rights into commodities to be sold via labor and
share markets respectively.
It was not just an economic victory. Whereas rent
reeked of vulgar exploitation, profit claimed moral superiority as a just
reward to brave entrepreneurs risking everything to navigate the treacherous
currents of stormy markets.
Nevertheless, despite profit’s triumph, rent
survived capitalism’s golden age in the same way that remnants of the DNA of
our ancient ancestors, including long-extinct serpents and microbes, survive in
human DNA.
Capitalist mega-firms, like Ford, Edison, General Electric, General Motors, ThyssenKrupp, Volkswagen, Toyota, Sony and all the others, generated the profits that outweighed rent and propelled capitalism to its dominance.
However, like remora fish living parasitically in
the shadow of great sharks, some rentiers not only survived but, in fact,
flourished by feeding on the generous scraps left in profit’s wake. Oil
companies, for example, have raked in gargantuan ground rents from the right to
drill on particular plots of land or ocean beds—not to mention the unearned
privilege to damage the planet at no cost to themselves.
To exercise capital’s power to command and make
other humans work faster and consume more, capitalists required two types of
professionals: managers and marketeers. Especially under the auspices of the
post-war technostructure, these two service professions achieved greater
prominence even than bankers and insurance brokers.
Gleaming new business schools were set up to
initiate MBA students in the dark arts of quick-marching a workforce towards
explosive labor productivity. Advertising and marketing departments nurtured a
generation of Don Drapers.
Then, cloud capital arrived. At one fell swoop it
automated both roles. The exercise of capital’s power to command workers and
consumers alike was handed over to the algorithms.
This was a far more revolutionary step than
replacing autoworkers with industrial robots. After all, industrial robots
simply do what automation has been doing since before the Luddites: making
proletarians redundant, or more miserable, or both.
No, the truly historic disruption was to automate capital’s power to command people outside the factory, the shop or the office—to turn all of us, cloud proles and everyone else, into cloud serfs in the direct (unremunerated) service of cloud capital, unmediated by any market.
From factory owners in America’s Midwest to poets
struggling to sell their latest anthology, from London Uber drivers to
Indonesian street hawkers, all are now dependent on some cloud fief for access
to customers. It is progress, of sorts.
Gone is the time when, to collect their rent,
feudal lords employed thugs to break their vassals’ knees or spill their blood.
The cloudalists don’t need to deploy bailiffs to confiscate or to evict.
Instead, every vassal capitalist knows that with the removal of a link from
their cloud vassal’s site they could lose access to the bulk of their
customers.
And with the removal of a link or two from Google’s
search engine or from a couple of ecommerce and social media sites, they could
disappear from the online world altogether. A sanitized tech-terror is the
bedrock of technofeudalism. Looked at in totality, it becomes apparent that the
world economy is lubricated less and less with profit and increasingly with
cloud rent.
And so the delightful antinomy of our era comes
into focus: capitalist activity is growing within the same process of energetic
capital accumulation that degrades capitalist profit and gradually replaces
capitalist markets with cloud fiefs. In short, capitalism is withering as a
result of burgeoning capitalist activity. It is through capitalist activity
that technofeudalism was born and is now sweeping to power.
Does all this matter to the way we live and
experience our lives? It certainly does.
Recognizing that our world has become technofeudal
helps us dissolve puzzles great and small: from the elusive green energy
revolution and Elon Musk’s decision to buy Twitter to the New Cold War between
the USA and China and how the war in Ukraine is threatening the dollar’s reign;
from the death of the liberal individual and the impossibility of social
democracy to the false promise of crypto and the burning question of how we may
recover our autonomy, perhaps our freedom too.
Today, to own our minds individually, we must own
cloud capital collectively. It’s the only way we can turn our cloud-based
artifacts from automated means of behavior modification, that poison our social
reality, to automated means of human collaboration and emancipation.
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| Greek leftwing-Icon was assaulted by hired-thugs in March-2023 in Athen. |
(Yanis Varoufakis is an economist and former Greek Minister of Finance. He is the author of several best-selling books, including Technofeudalism: What Killed Capitalism. He was for many years a professor of economics in Britain, Australia, and the USA before he entered politics. He is co-founder of the international grassroots movement DiEM25 and a Professor of Economics at the University of Athens.)
