Technofeudalism: The Emergence of a New Economic Order

Yanis Varoufakis’s book challenges the notion of capitalism’s survival in the era of Big Tech dominance.

In a time when many Marxist philosophers believed that capitalism had become an unstoppable force, Yanis Varoufakis, former finance minister of Greece, offers a different perspective. In his new book, “Technofeudalism: What Killed Capitalism,” Varoufakis argues that capitalism has not been overthrown but has transformed into something else entirely. He joins a growing chorus of thinkers who contend that the rise of Big Tech has tipped the scales in favor of a new form of feudalism, stripping capitalism of its defining characteristics. This article will explore Varoufakis’s argument and its implications for our economic and social systems.

The Rent Extraction Economy

Varoufakis highlights the role of Big Tech companies such as Amazon, Apple, Meta, Alphabet, Microsoft, Baidu, Tencent, and Alibaba in the transformation of capitalism. Rather than simply participating in markets, these companies have become markets themselves. Their primary function, according to Varoufakis, is to extract rent. This distinction between rent and profit is crucial. Rent, unlike profit, does not contribute to economic growth. Varoufakis points out that companies like Apple charge rent for being on their platforms, even though they do not actively contribute to the production of the goods being sold. This shift towards rent extraction threatens the potential for economic growth and innovation.

The Rise of Cloud Capital

Varoufakis introduces the concept of “cloud capital” as the replacement for traditional capital in the digital age. Cloud capital focuses on rent extraction and control rather than growth, value, and profit. Varoufakis argues that the influence of the “cloudalists,” the new capitalist bosses, extends beyond the workplace and into every aspect of our app-powered lives. This shift from capitalism to technofeudalism grants those who control the platforms direct power over individuals, reducing them to the status of “cloud serfs.” The rise of Big Tech represents not just the Fourth Industrial Revolution but also the end of the agreement that dissolved feudalism and gave birth to capitalism and democracy.

The Precarious Nature of Freedom

While Varoufakis presents a compelling case for the emergence of technofeudalism, some argue that it is a continuation of capitalism rather than a new economic order. Capitalism has always been characterized by precarious freedoms, and the connection between everyday life and capital has become even more pronounced with the advent of digital technologies. The question then becomes whether capitalism can survive the cloud or if freedom itself is at stake. Varoufakis’s book prompts us to consider the nature of global capitalism in the digital age and the challenges it poses to human values and autonomy.

Conclusion:

Yanis Varoufakis’s book, “Technofeudalism: What Killed Capitalism,” offers a thought-provoking analysis of the transformation of capitalism in the era of Big Tech dominance. His argument that capitalism has become a rent extraction economy and that cloud capital has replaced traditional capital challenges our understanding of the economic and social systems we live in. While some may debate whether this shift represents a new economic order or a continuation of capitalism, Varoufakis’s exploration of the value and control dynamics in the digital age is undeniably illuminating. As we navigate the complexities of a global digitally mediated economy, it is crucial to critically examine the impact of technology on our freedoms and the future of capitalism itself.