Intro

I really like Yanis Varoufakis as a thinker and economist on the left. His insight is almost always invaluable and I aim to read most of his books in that regard (next up will be the Global Minotaur which he briefly summarises in this book). In Technofeudalism, he claims that Capitalism is Dead and is replaced by the eponymous title of the book as a social production system.

Hesiod’s lament

Varoufakis first talks about the Greek poet Hesiod’s famous lament for the arrival of steel/iron and uses this to explain historical materialism in the book’s context. I will probably paraphrase it wrong so here goes nothing: every technological change has a dual nature to it. On one hand these innovations improve our lives radically. On the other, they almost never end up doing good for the many, but rather enslave/damage it a bit more. Some specific examples from the book:

iron → steel: better tools but better weapons, more war and slavery

watt’s engine → better productivity, shorter work hours but more misery to the normal people because of enclosures, way more longer actual working hours for less pay, ie freedom to starve, scales greed

internet / computers → more connectivity, decentralised information but more concentrated power over the network to a few companies / individuals

Each of these changes brought forth a new age and we are now entering or have already entered the age of cloud capital, or rather technofeudalism. So we can say this is a book lamenting about the demise of capitalism at the hands of technofeudalism.

Labour

Since Varoufakis proclaims himself as “an erratic Marxist”, he talks about Labour and its dual nature (or foreground/background in more Hegalian parlance). He uses the terms “experiential labour” which is basically just labour in Marx’s terms and “labour’s exchange value” which is “labouring power” again in the Capital. As Marx himself claims the same, author suggests that in a capitalist society, “surplus” value comes from the difference between the price paid to labour’s exchange value and the real value generated by the experiential labour. A very basic example can be given with the burger chef analogy: Capitalist pays 1000 bucks for the the ingredients, pays 1000 bucks to the burger chef and sells burgers for 3000. According to Marxist thought, the 2000 difference came from the “experiential” labour of the chef. But he is just paid the 1000 dollars as wages. Therefore the remaining 1000 bucks is the “surplus” and is created by the capitalist exploting the chef in this case. This is a highly contested view and I think a more correct explanation is the unpaid or underpaid energy in the production process which is used by machines but that’s probably another blog post or book review. Back to the book, Varoufakis basically this is the source of profits in the capitalist society, unpaid real labour of the working class. We will come to its importance in the next section.

Technofeudalism

After the age of Global Minotaur ended with the financial crisis of 2008, we got to the dawn of Technofeudalism. Matched recession with the austerity measures applied by the stupid governments, the demand of the general public was so low that all the money printed by the central banks of the world went to the only place that showed any real possibility of growth, technology. After 2008, tech startups, scale ups and giants of the tech world got their hands on this pile of cash no one wanted to spend. With this money, they built their cloud capital, ie all the software and hardware infrastructure to process their business, to accumulate even more cloud capital in terms of likes, tweets, photos, ad clicks and so on.

Difference from normal capital

In capitalism, the business cycle requires the capitalists to sell their commodities, make a profit and then re invest some of that profits to either maintain the level of capital goods they have or buy more to scale production. In technofeudalism a big chunk of the cloud capital itself is in the form of software entities that normal people (author calls us “cloud serfs”) generate for the cloud companies. This review I am writing for Goodreads, a tweet, a story in Instagram, a post in Facebook are all items of cloud capital. The beauty is that the more cloud capital a cloud company accumulates, like tweets, the more people are inclined to tweet in that web site which further increases its capital. Varoufakis calls this the experiential labour’s reproduction of the cloud capital without a wage or a fee. This is crucial, as we are generating new capital, willingly and for free for these tech giants.

Difference from profit

In capitalism you have to make a profit, that’s the invariant. In technofeudalism it is not, because central banks keep pumping money into the system which finds its way into the coffers of this feudal kingdoms of software anyway. But there is another crucial difference, the rents are back, although they were never dead during capitalism (which is itself a bad thing that they survived), in technofeudalism, it’s the main mode. Apple started this with their app store, taking 30 percent of everyone’s revenues (also deliberately slowing down their phones so that you have to buy a new one every four to five years, although i am yet to prove this ; )). Amazon can charge whatever they want from each merchant, depending on their revenues and relative importance. Therefore, these cloud giants are like feudal kings, they don’t produce anything (apart from the amazing cloud infrastructure they have), they take rents like kings and they don’t care very much about profits.

New social classes: Cloud Vassals, Proles, Serf

Obviously with this new paradigm shift, we have new classes in the technofeudalistic world. First is the cloud vassals, those are the people and companies that were the capitalists before. They can still be a capitalist outside the cloud, but with cloud capital growing everyday, they need to move inside to these cloud fiefs and serve there. They are the main class whose profits are paying the rent to the cloud kingdoms. Remember Apple’s taking 30 percent from each app developer who sells their apps and services on Apple’s platform. Second is theproleswho work for these cloud giants. This includes everyone from drivers in Uber to delivery people in food apps, to people who earn a bit for the production of the cloud capital they create like influencers, youtubers, to people who actually work for these companies whether in white collar or blue collar jobs. Some of them might have lucrative jobs for now, (they are training AI to replace those people anyway), but most of them are working in horrendous conditions who are driven to exhaustion by their human and AI managers. The final and the most intriguing class is the cloud serfs, which is essentially the majority of us. With each like, subscribe, comment, photo, review, tweet, click we are generating more cloud capital for these giants because Youtube is only valuable if there are people watching and liking those videos, or Twitter/Instagram are only valuable as how many post/story/tweet is created and looked at by others. The lack of coercion is even more compelling in our case and it is replaced by our collective addiction to these cloud platforms. One quick nice reminder that these giants literally rely on us daily for our usage and participation in these cloud kingdoms.

Difference from Capitalism

Technofeudalism looks like Capitalism from the outside initially. But there are some important and solid differences. To summarise

1. Technofeudalism doesn’t pay wages to its reproduction of cloud capital (at least most labour here is free labour, completely exploited in economic terms)
2. Technofeudalism doesn’t make profits, it charges rent from other vassals. Amazon charges rent from Sony to sell its gaming consoles on its platform. Etsy charges rent to the crafts person to sell their artifacts on their system.
3. There is no market anymore: Even though they claim to be “online marketplaces”, there is no guarantee that you can reach all of the sellers in an online platform. Heck there is even no guarantee that two different people see the same price for the same item.

Is there any hope?

That is the question. Varoufakis in this part wants us to read his other book, called “Another Now” which I reviewed before here. They are lofty ideals and I would very much like to live in that parallel world compared to our current one : ). I can’t be sure if this was in his book but he also recommends the global population to do strikes on these websites. It’s similar to all of us refraining to buy anything from Amazon on a specified date, or not logging into Instagram for a day. I heartily would join such a strike. He also suggest putting pressure on our pension funds to divest away from these companies which would heavily affect their stock prices.

My closing thoughts

First of all, this is definitely a brilliant book, Varoufakis can always find a new angle of how things are broken in the society and technofeudalism is such an apt name for the situation we are in. I also really enjoyed the conversational tone he has in the book with his late father, resembling the tone with his earlier book about capitalism (he talked to his daughter in that one :)). But I do have a few objections. First of all, comparing to real feudals back in middle ages, there is no real danger of violence to pay these rents to these companies or reproduce their capitals for them. Back then you would have the soldiers of the fief to force you to pay. In our modern case, no one is forcing us to log into Instagram, Twitter and Amazon (apart from our addictions to these websites). It’s also why it’s very easy to have strikes against these companies. Second objection is about profit, is it really dead? You can claim so but in real life and economy, it feels like profit is alive and kicking and it’s the basis of the real economy. So maybe we could say there is a larger parasitic economy around the real economy which I would very much agree with. Finally I would expect from Varoufakis to talk about these cloud giants’ effects on climate emergency/breakdown as their infrastructure runs on energy just like everything else and they are a big consumer of energy, so that was something missing from the narrative.