The Rise of Technofeudalism: How Tech Giants are Reshaping the Economy
Former Greek finance minister Yanis Varoufakis argues that tech giants have overthrown capitalism, creating a new economic system he calls “technofeudalism.” In his latest book, “Technofeudalism: What Killed Capitalism,” Varoufakis chronicles the evolution of capitalism and how the rise of “cloud capital” has led to the creation of digital fiefdoms like Amazon and Airbnb, where wealth extraction occurs through rent rather than profit.
The Three Groups Affected by Technofeudalism
Varoufakis identifies three groups of people affected by technofeudalism:
- Vassal capitalists: Companies that sell products on platforms like Amazon or Alibaba, with a significant portion of their profit margin skimmed off by the platform owners in the form of cloud rent.
- Cloud proles or cloud proletarians: Workers in places like Amazon warehouses who are monitored by algorithms.
- Cloud serfs: Users who voluntarily provide free labor by uploading content on platforms like TikTok, Facebook, and Instagram, adding to the capital stock of these companies.
The Consequences of Technofeudalism
Varoufakis argues that technofeudalism has two main consequences:
- From a macroeconomic perspective, a large sum of money is extracted in the form of cloud rent, disappearing from the circular flow of income. This leads to lower investment and fewer quality jobs in the rest of the economy.
- Platforms have discovered that users spend more time producing free cloud capital when they are angry, so algorithms are designed to fuel discord and toxicity, which is detrimental to democracies and civilized society.
The Importance of Understanding Technofeudalism
Varoufakis emphasizes the importance of understanding the causes of discontent in society:
Ordinary people need to know the reasons behind the discontent. The discontented always ask: Why is this happening? Giving them an answer, in a way that makes sense to them, is hugely empowering. This is the foundation of any possibility of democracy.
He argues that if people don’t understand the causes of their discontent, they can easily fall prey to xenophobia, misogyny, and racism, leading to the rise of fascism.
Proposed Solutions to Technofeudalism
Varoufakis proposes several solutions to address the issues created by technofeudalism:
- Introduce a cloud tax, such as taxing Amazon 5% for every transaction on its platform.
- Provide state-issued digital identities to give users property rights over their data.
- Implement interoperability between platforms to prevent users from being locked into a single platform.
While the EU’s Digital Markets Act addresses some of these issues, Varoufakis believes it doesn’t go far enough and that governments are not adequately addressing the problem. Despite his reservations, he remains in politics because he believes there is no alternative to addressing these issues through political means.
3 Comments
Tech overlords ruling the digital kingdom, are we just serfs in their algorithmic fiefdoms?
Sounds like the lords and peasants are just getting Wi-Fi, right?
Tech giants are the new barons, hoarding data as their treasure trove!