Capitalism is dead. And technology has killed it. What is taking its place is a reversion to feudalism. So argues Greek economist Yanis Varoufakis in his book Technofeudalism: What Killed Capitalism.
Leif Weatherby sums up his argument in the Washington Post. The tipping point, according to this analysis, was not simply the new information technology but the rise and dominance of the Big Tech companies. Google, Facebook/Meta, Apple, Amazon, and the rest of them do not make profit in the conventional capitalist sense. Rather, they extract rent.
Weatherby explains:
Rent is not profit. The distinction is subtle but crucial: As Varoufakis points out, Apple has been known to take a cut as large as a third from those selling apps in the App Store, effectively charging rent for being in one of the two spaces — the other is Google Play — that all but dominate the mobile market. If I design an app that offers a simple game, for example, I have labored to bring a commodity to market, in the hopes of making a profit as others find the game entertaining and worth a few dollars. Apple has contributed nothing to the effort of actually producing the program I sell, yet it will receive a significant portion of every dollar that my consumers pay. As thinkers of the Industrial Revolution like Adam Smith and David Ricardo might put it, Apple’s revenue on the platform is merely passive, which is what makes it rent, unlike profit, which has to be actively earned. The problem is that, if the balance shifts away from genuine profit, no growth can occur. The value that labor puts into commodities is added to the economy and becomes profit. Rent is finite: If the economy starts to run on rent, it will stall.
But stagnation, for Varoufakis, would be the least of our problems. He describes the replacement of traditional capital by what he calls “cloud capital,” which no longer focuses on growth, value and profit, but instead on rent extraction and control. The “cloudalists” are the new capitalist bosses, and their influence extends far beyond the workplace to nearly every facet of your app-powered daily life. According to Varoufakis, when we are the product — as we are when our clicks and searches generate profit for massive corporations, when our data is bought and sold — we’ve gone over from the relative freedoms of capitalism to technofeudalism, in which those who control the platforms have direct control over the rest of us, reducing us to the station of “cloud serfs.”
I disagree that capitalism is “dead” and that technology and the big tech companies have killed it, at least not yet. Elon Musk is more of an old-fashioned capitalist entrepreneur who actually produces innovative tangible products: cars (have you ever ridden in a Tesla?), tunneling equipment, space ships. Apple manufactures computers and cell phones, which make up more of its bottom line than rent-seeking does. And Amazon, which started as a bookstore and now sells just about everything, is above all a retailer, though the huge cut it demands from its suppliers may be reminiscent of the tribute demanded by the feudal lords.
But still, Varoufakis makes some valid points, and who knows where we are headed? His analysis reminds us that change is not always in the direction of an upward progress into something brand new, but that change can also go in the opposite direction, as a regression into how we were in the past. His thesis would be in line with what Marshall McLuhan said about technology turning the world into a “global village” and making us more like our pre-literate ancestors. And if our socio-economic system is switching us back to a network of techno-feudal lords and serfs, that would go along with the reaction against liberal democracy that we have been chronicling on this blog.
To be sure, regressions can be good as well as bad. Christianity and the Church played a major role in the feudal society of the past, though this was not necessarily good for the Church. What Varoufakis is describing is not returning to the past, but rather reverting to past structures garbed in the highest technology. I wonder what a technoChristianity and a technoChurch would look like under technofeudalism. I’m sure it would be in need of a technoReformation.
Illustration: “Reeve and Serfs” (1310) by anonymous (Queen Mary Master), Public domain, via Wikimedia Commons
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