Technofeudalism

Book

* Book: Yanis Varoufakis. Technofeudalism. What Killed Capitalism. Penguin, 2023

URL = https://www.penguin.co.uk/books/451795/technofeudalism-by-varoufakis-yanis/9781847927279

See also: the discussion on Techno-Feudalism

1.

"In his boldest and most far-reaching book yet, world-famous economist Yanis Varoufakis argues that capitalism is dead and a new economic era has begun.

Insane sums of money that were supposed to re-float our economies in the wake of the financial crisis and the pandemic have ended up supercharging big tech's hold over every aspect of the economy. Capitalism's twin pillars - markets and profit - have been replaced with big tech's platforms and rents. Meanwhile, with every click and scroll, we labour like serfs to increase its power.

Welcome to technofeudalism.

Drawing on stories from Greek Myth and pop culture, from Homer to Mad Men, Varoufakis explains this revolutionary transformation: how it enslaves our minds, how it rewrites the rules of global power and ultimately what it will take overthrow it."

(https://www.penguin.co.uk/books/451795/technofeudalism-by-varoufakis-yanis/9781847927279)

2. Daniel Pinchbeck:

"Varfoukanis argues that the development of the privatized Internet—the integration of digital technology into finance, media, and every aspect of our lives—has actually brought about the end of Capitalism in its traditional form. He believes we have now entered a different economic order. He calls this “technofeudalism,” dominated by “cloud capital,” where personal identity has been outsourced to private companies, who monetize our attention.

Varfoukanis compares this to the Enclosure movement of the 18th and 19th Century, when land traditionally held in common was privatized and taken over by the wealthy: “As with the original Enclosures, some form of fence would be necessary to keep the masses out of such an important resource. In the eighteenth century, it was land that the many were denied access to. In the twenty-first century, it is access to our own identity.”

(https://danielpinchbeck.substack.com/p/from-capitalism-to-technofeudalism?)

Discussion

The argumentation by Yanis Varoufakis

Yanis Varoufakis:

"It is incumbent upon Marxists to focus on a brand-new variant of capital whose proliferation weighs heavily on our twin tasks of interpreting and changing the world. I call it cloud capital: networked machines that produce no commodities but generate enormous rent-extractive powers, on behalf of their owners, through interfacing directly with us, outside anything that can be usefully described as a market. Studying this fascinatingly novel form of capital must surely be every Marxist’s burden, regardless of whether one agrees with my hypothesis that cloud capital has transformed capitalism into what I call technofeudalism.

To expedite a fruitful debate, I begin by correcting three misunderstandings regarding cloud capital’s impact and my technofeudal hypothesis. First, I am not arguing that cloud capital’s emergence has returned us to feudalism (Section 1). Second, the proliferation of rents is nothing new to capitalism (Section 2). Third, I also dismiss as an unhelpful form of data fetishism the belief that data is the new “land” from which a new technofeudal class derives its extractive powers (Section 3).

With these three red herrings cast aside, there is a clear path toward a Marxist analysis of cloud capital (Section 4), its withering effect on markets (Section 5), its deployment of influencers and unwaged labour (Section 6), its

It is incumbent upon Marxists to focus on a brand-new variant of capital whose proliferation weighs heavily on our twin tasks of interpreting and changing the world.

impact on business cycles and long term crises (Section 7), the manner in which AI enhances its monetary, geopolitical and ideological footprint (Section 8) and, finally, how it informs revolutionary politics. Only in the conclusion do I return to the question of semantics: Is Marxist theory and politics helped or hindered by referring to the current socioeconomic mode as “capitalist” or “technofeudal”?

1. No, we are not returning to feudalism

To dispel a common misconception, the technofeudal hypothesis never implied that history had gone into reverse, heading backwards towards a technologically advanced version of our medieval past whence capitalism emerged. On the contrary, driven by unbridled capital accumulation that begat astonishing machines capable of interfacing directly and dialectically with us, history is hurtling forward towards an entirely new socio-economic mode of production, distribution, exchange and communication, within which capital is more dominant than ever before—a mode I term “technofeudalism.”

Nor do I claim that wealth now accumulates chiefly in the form of rents lazily extracted from owning passive assets (land, fossil fuels, intellectual property or, indeed, our stolen data), as was the case under feudalism. No: wealth grows exponentially in the form of returns to gigantic investments in dynamic assets: extraordinary machines that cost Big Tech multi-trillion-dollar investments to develop, manufacture, install and update. In this sense, sprawling conglomerates like Alphabet, Microsoft, Meta, Apple et al are capitalist enterprises driven as ruthlessly as Edison, Westinghouse and Ford once were.

So, why is this not just digital capitalism,3 hypercapitalism, 4 computerised capitalism,5 rentier capitalism,6 platform capitalism,7 or surveillance capitalism?8 Before answering, it is helpful to return to the rich vein of insights on capitalism’s dalliance with economic rent, rent-seeking and other forms of wealth accrual that fall outside pure capitalist market competition.

2. Rents are endemic to capitalism

Capitalism never existed, and could not have done so, in the pure form we encounter in the neoclassical textbooks or in the writings of Adam Smith. Like our bodies, that rely on residual serpent DNA to function, capitalism’s genotype needed remnants of feudalism to replicate. Early on, David Ricardo9 warned that, as markets expand and capital accumulates, ground rent not only survives profit’s triumphant march but, indeed, grows dangerously fast, gobbling up increasing portions of an economy’s surplus. In time, rent not only grew in magnitude but also divided and multiplied, spawning different types—all part and parcel of capitalism’s dynamically expanding domain. In short, from its inception, actually existing capitalism was rentier capitalism.10

When capitalism’s monopoly phase arrived on the coattails of electromagnetism, resulting in the networked conglomerates of the early 20th century, ground rent was overshadowed by what Paul Baran and Paul Sweezy termed monopoly surplus,11 a form of rent accruing to concentrated industrial capital. Instead of a steady collection of rents on static assets (e.g., land or patents), the entire profit-generating process of conglomerates like Ford, General Electric, Boeing and Walmart had augmented surplus value extraction with a vast rent-seeking enterprise founded on three capacities: restricting output; generating new demand via marketing and advertising, the so-called attention economy; and, enlisting an army of bureaucrats, marketeers, scientists and engineers comprising what Galbraith called the Technostructure.

Bred during the War Economy, and fledged fully during the Bretton Woods era, this broad cross-sector professional class blurred the lines between government and corporate officials. It moved through a “revolving door” to create a symbiotic network that directed state power—through defence contracts, favourable regulations, and intellectual property (IP) law—to protect and subsidise the market dominance of conglomerates. Thus, the accumulation of massive monopoly rents, on top of economic profits, was not merely a market phenomenon; it was the result of a collaborative, planned effort between the corporate branch of the Technostructure and its apparatchiks within the state apparatus.

In Marxist terms, along with the development of the attention economy, the Technostructure empowered big business to obtain substantial surplus value produced by smaller firms elsewhere in the economy. Monopoly power, Marx explains in Capital, Vol. III, creates barriers that restrict the free flow of capital into its sphere. These barriers take very different forms (for instance, patents, intellectual property, network effects, advertising or sheer economies of scale) but their effect is the same: to extract surplus that does not correspond to value created on their premises.

In Marx’s own account, this extra net revenue is a “transfer” or a “deduction” from two sources: first, from the surplus value of other capitalists operating in more competitive sectors (who must, also, pay inflated prices for inputs); and second, from the suppression of workers” real wages (when the good produced by the monopoly is a consumption necessity). In short, big business uses its market power to prevent the equalisation of the rate of profit across the economy and to accumulate surplus value produced elsewhere at the expense both of other capitalists and the working class.13

Once Bretton Woods was jettisoned, as it had to be after the United States became a deficit economy, financialisation became inevitable and neoliberalism emerged as its ideological cover.14 Thus mountainous financial rents were grafted on to pre-existing forms of rent (ground, IP, monopoly etc.), to the point that it became not just legitimate but urgent to speak of dispossession as almost overwhelming accumulation15 of the overshadowing of productive capital by what Marx defined as fictitious capital,16 of the finance curse;17 of asset-manager autocracy;18 and so on.

But, if rent’s growth and proliferation, along with its profound impact on the nature and character of capitalism, is not reason enough to look beyond capitalism in order to understand the world we live in, then what is? Some suggest that our data has become the new privatised, fenced-off, land out of which a new feudal power has sprung. I am not one of them.

3. Data is not the new land!

The use of insider information and propaganda to enrich oneself at others” expense is as ancient as Homo Sapiens. But it was under capitalism’s monopoly phase that networked machines weaponised information to secure additional monopoly rents. Free-to-air radio and television were the first to subvert the conventional commodification process: they de-commodified shows (produced at great expense to be given away for free) in order to commodify our attention (secure access to our eyeballs and ears and immediately sell this access to advertisers).

The technofeudal hypothesis never implied that history had gone into reverse, heading backwards towards a technologically advanced version of our medieval past whence capitalism emerged.

The advent of cable television threatened to erode all this by replacing advertising revenues with subscription fees. However, the privatisation of the original internet commons in the mid-1990s disrupted this disruption, giving a momentous boost to the attention market. Tech became Big Tech by moving rapidly on from the commodification of the attention of an amorphous, heterogeneous audience to the commodification of targeted information flows built upon individual data that it harvested directly.

Facebook, Google and so on could now offer advertisers a virtual guarantee that particular sets of eyeballs would be attracted to particular wares. Additionally, they could provide real-time information on what users bought, at what time of the day or night they bought it, etc. Through intense surveillance which allowed them to sell to corporations the power to manufacture tailor-made demand and real-time information flows, Big Tech became the force it is today. In turn, that new power gave conglomerates new scope to pinch more of the surplus value produced in other capitalists” workplaces.

All that novel power, and the rents it generated, were founded on Big Tech’s capacity to harvest personal data. This intensive surveillance made a mockery of liberal notions of personal autonomy. Understandably, liberal critics19 protested the violation of our customary rights over our data and spoke of surveillance capitalism. Some went further by warning that something like a feudal logic of expropriation was making a comeback.20

However, the incontrovertible fact that personal data is harvested by stealth, making propaganda far more effective in shaping demand and shifting surplus value more violently across different sectors (further preventing the equalisation of profit rates), is not suggestive of new modes of value production “but modes (in some cases not particularly new) of participation in the pool of surplus value.”21

Despite startlingly new exploitation-enhancing strategies that digital technologies made possible, Marxists had good cause to reject claims that something fundamental about capitalism had changed just because our data was now stolen systematically by corporations“ intent on extending the reach of their advertisements (Google, Meta etc.) or intermediation (Uber, Airbnb etc.). Evgeny Morozov rightly quips that ‘[i]n pathologising the ongoing extractive side of contemporary digital capitalism,’22 such a critique (e.g. Zuboff ”s Age of Surveillance Capitalism), “…completely normalises its non-extractive dimension.”

Put differently, surveillance capitalism would dissolve, if only legislation was passed that granted us full property rights over our data. Any alleged “transformation” of capitalism that evaporates the moment the bourgeois state discovers the courage to enact a Bill of Digital Rights could not have been that transformative!23 Data, to conclude, is not the new land conjuring up feudal-like powers that monopoly capital did not already possess since the early 1900s. Nevertheless, the algorithmic manipulation of pilfered data and information flows does create new powers which neither the notion of surveillance capitalism nor data fetishism (the conviction that data is the new land) help us fully grasp.

Consider traditional advertisers and marketeers who worked as agents of, or service providers to, Coca-Cola, McDonalds and Unilever. Their interests were fully aligned with those of monopoly capital. But that’s not so with Alphabet, Meta, and such like. Big Tech’s interests, unlike those of an advertising firm, are no longer aligned with the interests of traditional capitalists extracting surplus values in the analogue world (even if they, too, use digital tools). Cory Doctorow demonstrates this difference well.24 Once we, the users, have been locked into one of its platforms (such as Facebook, YouTube, and TikTok), and our data is harvested and sold to capitalist vendors, the latter become increasingly dependent on that platform for their revenues. Business users getting as little as 10 percent of their revenue from, say, Google, discover that the costs of switching away from it are unfathomable. Google, immediately, exploits this, pushing them down its search lists and demanding a ransom to bring them up again.

In short, Big Tech is doing more than merely harvesting consumer data in the interests of big business: it uses its power over information flows to create extractive realms from which—for different reasons—both consumers and capitalists find it costly to escape. Thus, unlike advertising companies that were paid by capitalist conglomerates to enhance their monopoly power, Big Tech has found ways to enhance conventional capital’s monopoly power while, at once, creating for itself monopsonistic power over conventional capital.

While this realisation brings us closer to the notion of digital platforms as akin to cloud fiefs,25 Foley is right in saying that, to make sense of Big Tech’s role, we need ”…a clear understanding of the origin of value in the expenditure of productive labour and of surplus value in the exploitation of productive labour’26—in short, an advance in Marxist analysis is needed. Morozov is also right to argue that such an advance would need “to make sense of the digital economy—of what, exactly, is produced and how.”27

And there’s the rub. In Morozov’s next sentence he states that “[i]f one accepts that Google is in the business of producing search-result commodities—a process that does require massive capital investment—there is no great difficulty in treating it as a regular capitalist firm, engaged in normal capitalist production.”

Quite: except that Google’s search results, and most of Big Tech’s significant products, are not commodities.

4. Cloud capital: unproductive but all-powerful

Marx defines commodities as goods or services produced, not to be used or gifted by their producers, but to be exchanged in some market (Capital, Vol. I, Chapter One). Capital goods, in the same vein, are produced means of commodity production (PMCP) and markets are decentralised trading sites,28 or “spheres of circulation,” where commodity values turn into money29 and surplus values (once rent and interest are paid) transform into profits. This is the context in which Marxists must ask: What is a Google Search result? What type of capital good is involved in its “production”? Is amazon.com a market? Is Uber just an oligopsonistic capitalist intermediary between drivers and passengers?

When Google charges you money for watching a film on YouTube, or Amazon Web Services (AWS) rents you server space, or OpenAI and Netflix sell you subscriptions, they are acting as commodity suppliers utilising sophisticated digital machinery as standard produced means of commodity production (PMCP). But, when the same machinery provides you with, say, a Google search result, or YouTube invites you to upload your video for free, or Amazon’s Alexa helps you choose a book or electric bicycle, Marx is emphatic: however pleased you may be with their service, these are not commodities.30

But if they are not commodities, then what are they? It is easy, but wrong, to surmise that these services are nothing more than the Internet-based equivalent of a free-to-air TV station broadcasting a football match to capture our attention in order to sell us, say, burgers. Indeed, there is a key difference between McDonalds convincing us to buy a burger via a TV ad shown during the Superbowl half-time interval and Google’s Assistant or Amazon’s Alexa convincing us to buy a particular electric bicycle.

When they are not selling us their in-house-produced commodities, Big Tech’s machines do something radically novel: something that free-to-air TV stations could never do in the context of the original attention economy. They engage us in a one-on-one, two-way, real-time dialogue with a view to automating what human propagandists, advertisers and marketeers used to do: influence our desires, modify our behaviour and guide our choices. In that guise, these are dialectical machines producing nothing, except a direct power to modify our behaviour.

These machines surely do harvest information to get a leg up on us; yet, their ambitions go well beyond pilfering our data to target advertisements more effectively, or to charge us different prices depending on our willingness to pay.31 What is this higher aim, for which Big Tech’s machines are optimised? Nothing short of gaining our trust through a never-ending, one-on-one dialogue. For once they succeed in building up, in real time, a dialectical relationship with each one of us separately, complete with the subliminal bonds of trust, they gain unprecedented powers to modify our behaviour. Suddenly, these machines are no long conventional capital goods (PMCP) but have crossed the Rubicon into what I call cloud capital: machines that function as produced means of behavioural modification (PMBM).

To illustrate this, let us examine Amazon’s Alexa, Google’s Assistant, Apple’s Siri etc. While we treat them as servants (“turn off the lights,” “buy me some milk,” “suggest a good movie”), these devices (linked to enormous networks of cloud capital) are primed to engage us as follows. First, they train us to train them to know us better, so as to be able to give us helpful advice and thus gain our trust. Once trust has been established, they guide us to particular commodities which they offer to procure with the click of a button. The moment we click it, cloud capital has sold us a commodity (that cloud capital played no role in producing) outside any market, netting its owner (a fellow like Jeff Bezos) up to forty per cent of the price we just paid—a “commission” that is clearly a form of absolute rent, which I call cloud rent.32

Big Tech is doing more than merely harvesting consumer data in the interests of big business: it uses its power over information flows to create extractive realms from which—for different reasons—both consumers and capitalists find it costly to escape.

Conventional capital, Marx taught us, has a dual nature: it is a produced means of commodity production (PMCP), but it is also a social power that its owners exercise over their waged workers to extract surplus value.33 Cloud capital, in contrast, comprises dialectical machines that are, in Marxist terms, unproductive (that is, they produce no commodities). What they do produce, however, is three new types of social power: over consumers (or users), over waged labourers and, lastly, over conventional capitalist producers. Exploiting these powers, cloud capital replaces markets and siphons off as cloud rent large portions of surplus value produced by waged labour operating conventional capital. That’s the key to understanding cloud capital as PMBM.

But I hear you ask: “Isn’t amazon.com a market? Isn’t Uber a capitalist intermediary between passengers and owner-drivers? Is Instacart not a hyper-efficient consumer surplus extraction machine—every capitalist’s dream? Are TikTok, Instagram and YouTube creators not entrepreneurs in business for themselves? Are Alibaba and Amazon not capitalist competitors? Are we not free, as opposed to cloud-serfs, when we can freely move to another platform?” Perhaps, but not if you’re looking at these phenomena through a Marxist prism."

(https://www.savageminds.co/p/technofeudalism-and-the-future-of?)