On Technofeudalism

This is an excellent book — in short, a crash course on the unholy alliance between finance and big tech. It’s approachable enough that almost anyone can pick it up and learn something, and there are nice appendices on the political economy of technofeudalism in the back; they aren’t especially rigorous, but they add a layer for anyone who wants a little more. It’s on some level the sequel to Talking to My Daughter About the Economy, framed as a conversation with Varoufakis’s father — an old libertarian Marxist sent to a work camp under the military junta in the 1950s and ’60s — and it sets out to answer a question the father posed in the early 1990s: whether the internet would wipe capitalism away or strengthen it beyond recognition. Varoufakis argues for the former, though the end of capitalism turns out to be far less triumphant, for us mortals, than his father would ever have imagined.

My man Yanis opens with an overview of how the Federal Reserve and finance capital came to have a stranglehold on the global economy — what he calls the “Global Minotaur.” For any international transaction, whatever the countries involved, the American Federal Reserve served as the clearinghouse; since the funds were received as US dollars, recipients reinvested them in finance, investments, and real estate (FIRE), turning Wall Street into a kind of Las Vegas strip servicing the whole world. The catch was that a lot of those investments were bullshit, with bankers gambling on other people’s home loans, and the result was a disaster — except that the financial fucks learned that in any crisis the central banks would simply hand them more money to play with, so that macroeconomic conditions and the investment markets came apart. Varoufakis offers a striking example: a few months into the Covid-19 pandemic, when the scale of the economic devastation was clear, the S&P went up.

Meanwhile the new technology companies began building platforms (he doesn’t find Platform Capitalism a particularly convincing book on this). Rather than a new form of capitalism, the platforms are more like fiefs run by feudal lords — Facebook, Apple, Google, Uber, Grubhub. They don’t generate profit from the platforms, since profit is the surplus-value left as the difference between a good’s exchange-value and the labor-power and materials that made it; instead they charge rent, to capitalists (who make the digital or material products) and to serfs (who hand over their data for access). Feudal relations were never entirely abolished as capitalism spread — exploitative industries like oil generate vast rents — but now they’ve moved online, and both the pandemic and de-dollarization have fueled their rapid growth. So rather than a class conflict between labor and the capitalist class, Varoufakis sees one between the technofeudal lords and the capitalists, and it seems the technofeudalists are winning. There’s fascinating material here on China and the US, with the argument that the once-close relations between them served both countries’ capitalist classes, even as the rising technofeudal lords in each gradually take control — and it’s hard to say which country has consolidated the technofeudal mode of production further.

The book got me thinking about Hegelian dialectics. Hegel held that each historical moment has a thesis, its main thrust, and an antithesis, and that the contradictions between them resolve into a new synthesis; Marx took that as a material explanation of history, each category standing for a class at a given moment. Writing when he did, Marx assumed capitalism was the dominant mode of production across most of Europe and would spread outward, sowing the seeds of its own destruction in the working class, whose conflict with the capitalist class would yield a new synthesis — Communism. But what if Marx was both right and wrong? What if, rather than capitalism being hegemonic and the primary contradiction running between capital and labor, the engine of history is still powered by the contradiction between feudalism and capitalism? Varoufakis’s own solution is very solarpunk — it wouldn’t be out of place in A Psalm for the Wild-Built: workers holding equal, non-transferable shares in their companies, with special commercial and social zones built by city governments, the commercial zones financing or subsidizing the social ones. It’s genuinely smart, but there’s always the unresolved question of how we get from our technofeudal dystopia to cool solarpunk communism. I still think Marx’s view of history is essentially right — capitalism and feudalism both plant the seeds of their own demise — but they’re currently too strong to take on by direct action (see Capitalist Realism). I suppose the only way out is through.