Technofeudalism

By Yanis Varoufakis

Yanis Varoufakis, former Greek finance minister, breaks down the trends leading to what he terms Technofeudalism. An evolution of capitalism, Varoufakis argues that it is potentially even more exploitative and dangerous than capitalism.

The rise of the big tech firms has shifted capitalism to this new state of affairs according to Varoufakis. A set of feudal fiefdoms less geographically based but instead cloud- based. Companies like Amazon, Google and Apple predicted that renting cloud fiefdoms was a huge opportunity that had to be taken advantage of whilst it was available. First, let’s discuss this process that Varoufakis lays out, to understand really what the book is about.

During the financial crisis of 2008, the ‘everything rally’ occurred. Companies knew that so long as the central banks were going to continue printing money, any investment was bound to turn a profit later. Shares in companies were driven up whether they would return a profit or not, because changes were any share was going to be worth it. A lot of rich people became richer, as the value of their companies went up.

The gap that Elon Musk, Jeff Bezos and others took advantage of was that they realized they should quickly turn their paper wealth into cloud capital, whereas many other companies were satisfied with their increased share prices.

This could not have happened before 2008 because until then the ultra-rich simply did not have access to enough cash with which the Big Three could buy a significant chunk of the New York Stock Exchange. After 2008, however, central bank-sponsored socialism for the ultra-rich created more than enough money. Thereafter the rise of the Big Three to such supreme financial power was almost inescapable, ad ow that they are there, the Big Three enjoy two insurmountable advantages: unprecedented monopoly power over entire sectors, from airlines and banking to energy and Silicon Valley; and a capacity to offer the ultra-rich high returns for very low fees. These two advantages allow the Big Three to extort rents at such a scale that would have made Adam Smith weep. (pp.112)

With this shift, the tech companies became feudal lords. Individuals and their data, even other companies, became their serfs.

We have seen how with the enclosure of the internet commons, cloud capital arose, and how it differs from other kinds of capital in its ability to reproduce itself at no expense to its owner, turning all of us into cloud serfs. We have seen how with the shift online, Amazon now operates as a cloud fief, with traditional business paying Jeff Bezos to operate as his vassals. And we have seen how the cloudalists of Big Tech achieved all this: riding on the wave of central bank money that made profits optional. (pp.118)

This is the story of the technofeudalistic world we live in today. Varoufakis excels at explaining these complex financial sections. It takes us through some of the financial history of the US and how it had such a big impact on global markets, charmingly using Don Draper from Mad Men for some of the anecdotes. How they got so big, how they managed to get there and what will happen moving forward. In many ways it is quite pessimistic, but not unrealistic, I would say, and it provides enough detail to give you a solid understanding of what is being discussed. It also mentions the impact of Ukraine, or COVID, and how these trends exacerbated events.

Fiefs & Serfs

Although I don’t agree with much of Varoufakis’s perspective, it’s symptomatic of the main problem I have with the book. It tries to also state Varoufakis’s perspective, but doesn’t give adequate time to laying this out nor dealing with the counter-arguments. There is an appendix, for example that argues some of the levers needed for Marxism to work, but the rest of the book is focussed on laying out why technofeudalism is bad, rather than laying out arguments for why Marxism is good. He did mention his other book, which lays out more of this, but aspects of it seemed shoehorned in here unnecessarily.

The intro tries to give a more personal touch, with Varoufakis and his father used for anecdotes to relate to how he arrived at his Marxist viewpoint, and how it influenced his perspective. I don’t see anything wrong with this, but where it mixes between written from the perspective of talking directly to his father, to using anecdotes from science, then Greek myth, then the next chapter moving to complex financial interactions – it feels quite jarring and unfocussed.

Final score

If you want to understand how we arrived with the tech companies being so large and powerful, this is a decent narrative and explanation for it that I think most people will find readable. But unfortunately, you have to navigate some of the stories – although they’re not all bad – that crop up throughout the book. However, the book IS good when it is covering how austerity, inflation, expenditure, and central bank changes influence and impact things.  I will say that coming from a perspective very different to Varoufakis, this is interesting to hear someone with great finance knowledge explain another side – but this book could have been streamlined somewhat, even though it’s not long in length.

6/10