The economist and author’s latest book considers how 21st-century capitalism resembles feudalism, and offers an alternative
Yanis Varoufakis – former Greek minister of finance, economics lecturer and prolific writer of books – has often admitted that the left is good at critiquing capitalism but not so good at suggesting alternatives.
“When Margaret Thatcher coined ‘Tina’ – her 1980s dictum that ‘There is no alternative’ – I was incensed because, deep down, I felt she had a point: the left had neither a credible nor a desirable alternative to capitalism,” he wrote in his last book, Another Now:Dispatches from an Alternative Present(2020). Her acolytes didn’t last so long. “Just as when the Soviet Union collapsed in 1991,” he continued, “we on the left – social democrats, Keynesians and Marxists alike – had the sense we would live the rest of our days as history’s losers, so in 2008, with Lehman’s collapse, those living the ideology of neoliberalism saw history erupt with similar soul-destroying force.”
That ideology still dominates the Western – certainly the Anglophone – world, but capitalism has morphed once again, by necessity as much as by inevitable evolution. “Metamorphosis is to capitalism what camouflage is to a chameleon: essence and defence mechanism combined,” Varoufakis writes in his new book, Technofeudalism: What Killed Capitalism, out this week. “Assuming, wrongly, that capitalism’s only serious threat was the rise of organised Iabour, I missed completely the epic transformation of our times: how the privatisation of the internet commons, aided by the 2008 crisis that led central banks to open the floodgates of state money, would beget a new, super-powerful type of capital.”
That flood of government-printed money created by the G7 to keep central banks afloat, the only apparent way to keep the international economy alive, spawned a new incarnation of capitalism. It was not the end result, but the segue to a system that would not only change the economics but the very organisation – political and social – of society.
“That central banks’ balance sheets, not profits, power the economic system explains what happened on August 12, 2020,” he wrote, by way of example in a 2021 Project Syndicate article, which presaged the content of his new book. That was when the world of money found out that the national income of the UK had plummeted by 20 per cent. “Upon hearing the grim news, financiers thought: ‘Great! The Bank of England, panicking, will print even more pounds and channel them to us. Time to buy shares!’ All over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares (whose prices have decoupled from profits).”
This was true, but something else was happening as well. Digital platforms had been quietly replacing markets as the locus of private wealth extraction. It was a radical turn when the rising crop of tech idealists – Larry Page, Sergey Brin, Bill Gates, Mark Zuckerberg, Jack Dorsey, Elon Musk, et al – became disappointed by surveillance and other tech developments in state control and began to run with their own form of commercial success. Their ideal of a new commons quickly turned into a global mass market. And they materialised quite suddenly at the top of lists of capitalists with eye-watering wealth. They are the harbingers of Varoufakis’s prediction of capitalism’s demise.
In Technofeudalism, he hangs onto the blueprint he had previously outlined for an alternative to 21st-century capitalism. He called it “corpo-syndicalism”: a kind of development of the German concept of Mitbestimmung (co-determination between management and workers), plus elements such as an ethical world financial system that transfers wealth to the global south, and more. He then runs through a clear precis in the final appendices. He steps us through the history of capitalism, going all the way back to Greek mythology, using a lively (if posthumous) conversation with his father, who had endured prison as a dissident against Greek totalitarianism. His account of feudalism, before the rise of industrialisation, gives him the metaphor he will circle back to.
What makes the book a gripping read, however, is the main game: his meticulously pieced-together analysis of the latest incarnation of capitalism, which he calls “cloud capitalism”. Value extraction has shifted away from markets and onto digital platforms such as Facebook and Amazon, he points out, which no longer operate like oligopolistic firms concentrating and monopolising investment in production. Rather, they operate more like the private estates or fiefdoms presided over by the old feudal lords who collected their wealth by aggregating the percentages they took from the production of the serfs who were bonded to them.
“For the first time in history, almost everyone produces for free the capital stock of large corporations,” Varoufakis writes. “That is what it means to upload stuff on Facebook or move around while linked to Google Maps.” He calls technofeudalism the greatest threat yet to social democracy.
Cloud capital – the massive amount of value that is shuttling around the internet in tiny, fragmented percentages – would spawn a new ruling class. And that ruling class, he explains, would prove revolutionary, “leveraging its cloud capital to make almost the whole of humanity work for them, either for free or for a pittance – including many capitalists. And, crucially, what a backward step all that would prove in the grander scheme of emancipating humanity and the planet from exploitation.”
Meanwhile, companies that Varoufakis calls the Big Three – BlackRock, Vanguard and State Street – would come to own a staggering number of the massive American companies that produce the goods and services still required for humans to live. That includes major airlines, car manufacturers, arms manufacturers, much of Wall Steet and more. Those three titans are, between them, the single largest shareholders in almost 90 per cent of the US Stock Exchange, including ExxonMobil, Coca-Cola and tech companies such as Apple and Microsoft, managing shares for passive investors who prefer to delegate handling the precariousness of the business. BlackRock’s investments come to nearly US$10 trillion, Vanguard’s US$8 trillion and State Street’s US$4 trillion. Varoufakis points out that, with the total between them US$22 trillion, the dollar value “has too many zeros to mean much”.
Feudalism has been rising as a metaphor for the economic shift in Western society for less than a decade. It is rapidly becoming more than a figure of speech. The most sobering theory so far was outlined by Harvard professor Shoshana Zuboff in her 2019 book The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power. If global warming is an existential threat to the planet, she argued, the exponential growth of unregulated surveillance, via the sophistication of the global internet, is a threat to our political, social and psychological wellbeing – in other words, to the existence of human society as we know it.
“What is unbearable,” Zuboff stresses in her book, “is that economic and social inequalities have reverted to the pre-industrial ‘feudal’ pattern but that we, the people, have not. We are not illiterate peasants, serfs, or slaves. Whether ‘middle class’ or ‘marginalised’ … we know ourselves to be worthy of dignity and the opportunity to live an effective life. This is existential toothpaste that, once liberated, cannot be squeezed back into the tube.”
The future is becoming increasingly difficult to imagine without entering the realm of science fiction.