Felix Stalder on Mon, 31 Jan 2022 10:28:08 +0100 (CET)

[Date Prev] [Date Next] [Thread Prev] [Thread Next] [Date Index] [Thread Index]

<nettime> Yanis Varoufakis: What is techno-feudalism?

At the end of a long interview on crypto, conducted by Evgeny Mozorov, Yanis Varoufakis outline, quite succinctly, his argument for rise of "techno-feudalism". It centers around the seeming paradox: "Capital is getting stronger but capitalism is dying."


ecently, you’ve taken up the theme of ‘techno-feudalism’, pointing out that capitalism is no longer what it once was. If I understand your thesis correctly, what makes the current system ‘feudal’ is that A) markets are no longer key to the making of profits (e.g. the QE experience suggests as much), while B) tech platforms have amassed immense political power, which is unprecedented in capitalism. Is it a correct summary of your argument? Are there other important dimensions to ‘techno-feudalism’ that this summary doesn’t capture?

The question is this: Is capitalism undergoing one more of its many metamorphoses, thus warranting nothing more than a new epithet, e.g. rentier capitalism, platform capitalism, hyper-capitalism or xxxxx-capitalism? Or are we witnessing a qualitative transformation of capitalism into a brand new exploitative mode of production? I think the latter. Moreover, this is not just a theoretical issue. If I am right, grasping the radicality of this transformation is crucial to opposing this new systemic exploitation.

Puzzlement is, of course, an understandable reaction to my claim – which needs a great deal of explanation and substantiation. Unable to offer it here in full (Nb. I am dedicating my next book to the subject), here is a flavour:

Capitalism is everywhere we look. Capital is accumulating rapidly and beating labour over the head everywhere and in cruel new ways. So, how come I argue that this is no longer capitalism – but, rather, something worse and distinct? Let me begin by reminding our readers that back in the 1780s, feudalism was everywhere and feudal lords were stronger than ever. However, surreptitiously, capitalism was already infecting feudalism’s roots and a new ruling class (the bourgeoisie) was in the process of taking over.

My claim is that, similarly today, capitalism – like feudalism in the 1780s – is being usurped by a far more exploitative and very distinct new extractive/exploitative system (which I call techno-feudalism), one that is arriving complete with a new ruling class.

Critics of my thesis will point out, correctly, that capitalism has undergone many transformations – from its early competitive phase, to monopoly-oligopoly capitalism (1910–onwards), its Bretton-Woods period (during which finance was kept on a leash with capital controls, etc.), financialised capitalism (from 1980–onwards) and, more recently, rentier capitalism. All these capitalisms were distinct and interestingly different from one another. BUT, they were each a version of capitalism.

What makes a system capitalist? The answer is: It is a system driven by private profits (Nb. not rents) extracted within markets. (To compare and contrast, feudalism was driven by rents extracted outside of markets.) Has that changed? I believe so. What has replaced profit on the one hand and markets on the other? My answer: Central bank money has replaced private profit (as the system’s main fuel and lubricant) and digital fiefdoms/platforms have become the realm in which value and capital are extracted from the majority by a tiny oligarchy.

Let me explain this in greater detail:

Hypothesis 1: Central bank money replaced private profits as the system’s driver

Profitability no longer drives the system-as-a-whole, even though it remains the be-all and end-all for individual entrepreneurs. Consider what happened in London on August 12, 2020. It was the day markets learned that the British economy shrank disastrously – and by far more than analysts had expected (more than 20% of national income had been lost in the first seven months of 2020). Upon hearing the grim news, financiers thought: ‘Great! The Bank of England, panicking, will print even more pounds and channel them to us to buy shares. Time to buy shares!’

This is just one of countless manifestations of a new global reality: In the United States and all over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares – whose prices are thus decoupled from profits. The new barons, as a result, expand their fiefs, courtesy of state money, even if they never earn a dime of profit! Moreover, they dictate terms on the supposed Sovereign – the central banks that keep them ‘liquid’. While the Fed, for example, prides itself over its power and independence, it is today utterly powerless to stop that which it started in 2008: printing money on behalf of bankers and corporates. Even if the Fed suspects that, in keeping the corporate barons liquid, it is precipitating inflation, it knows that ending the money printing will bring the house down. The terror of causing a bad debt and bankruptcy avalanche makes the Fed a hostage to its own decision to print and ensures that it will continue printing to keep the barons liquid. This has never happened before. Powerful central banks, which today keep the system going singlehandedly, have never wielded so little power. Only under feudalism did the Sovereign feel similarly subservient to its barons, while remaining responsible for keeping the whole edifice together.

Hypothesis 2: Digital platforms are replacing markets

Amazon.com, Facebook, etc. are not markets. As you enter them, you leave capitalism behind. Within these platforms, one algorithm (belonging to one person or to very few persons) decides what is on sale, who sees which commodity is available, and how much rent the owner of the platform will keep from the profits of vassal-capitalists allowed to trade within the platform. In short, more and more economic activity is shifting from markets to digital fiefs. And that’s not all.

During the 20th century, and up to this day, workers in large capitalist oligopolistic firms (like General Electric, Exxon-Mobil, or General Motors) received approximately 80% of the company’s income. Big Tech’s workers do not even collect 1% of their employer’s revenues. This is because paid labour performs only a fraction of the work that Big Tech benefits from. Who performs the bulk of the work? Most of the rest of us! For the first time in history, almost everyone produces for free (often enthusiastically), adding to Big Tech’s capital stock (that is what it means to upload stuff on Facebook or move around while linked to Google Maps). And, moreover, this capital takes a new, far more powerful form (see below, where I talk about command capital).

At the same time, firms operating in normal capitalist markets – outside Big Tech and Big Finance – see their profitability collapse anyway, their dependence on central bank money grow exponentially, and their ownership be gobbled up by private equity and SPACs. Ergo, as feudal social relations of production were on the wane (and replaced by capitalist social relations) in the 1780s, today it is capitalist social relations of production that are being replaced by what I call technofeudal social relations.

Summing up:

Capital is getting stronger but capitalism is dying. A new system is taking over in which a new ruling class owns and runs both the state money that lubricates it (instead of profits) and the new non-market realms in which the very, very few make the many work on their behalf. Capitalist profits (in the sense of the entrepreneurial profits as understood by Adam Smith and Marx) are disappearing, while new forms of rent are accumulating in the accounts of the new techno-lords in control of both the state and the digital fiefs, in which unwaged or precarious work is performed by the masses – who begin to resemble techno-peasants.

A common refrain in arguments about the rise of techno-feudalism is that tech platforms are just passive rentiers who are deriving immense profits from user data for which they pay very little. To put this in the most extreme way possible, these are lazy, mostly immaterial rentiers, who, having amassed a lot of IP, are now resting on their laurels. This reading also informs many of the enthusiastic accounts of Web3, which promise to share data wealth with the users who generated it. Yet, if one looks at the balance sheets and earnings statements of these firms, a different picture emerges: they actually invest more – rather than less – in material and tangible assets than non-tech firms (and more than they themselves did a decade ago), all while incurring immense R&D and capital expenditures (e.g. Amazon’s for 2020 was over $40 billion; Alphabet’s was almost $30 billion). This seems to fit rather well with the view of these firms as capitalist enterprises that, while controlling some markets, still compete in others (Google, Facebook, and Amazon in advertising; Google, Microsoft, Amazon, and Alibaba in cloud computing and AI services). Aren’t we running the risk of minimizing the really-existing capitalist dynamics of this tech economy when we emphasize those related to feudalism?

I agree with you in this sense: Jeff Bezos, Elon Musk, et al. invest massively and are nothing like the lazy aristocrats of the original feudal era. But that does not mean that their investment is part of a standard capitalist dynamic. Techno-feudalism is not merely feudalism with gadgets. It is simultaneously much more advanced than capitalism and reminiscent of feudalism.

Let me be more precise. The massive investment of Big Tech that you mention is crucial. Not just because of its size but, primarily, because of what it produces: a new form of capital that I call command capital. What is command capital?

Standard capital comprises produced means of production. Command capital, in contrast, comprises produced means of organising the means of industrial production. Its owners can extract huge new value without owning the means of industrial production; merely by owning the privatised informational networks that embody command capital.

Command capital, to be more precise, lives on privately owned networks/platforms and has the potential to command those who do not own it to do two things: Train the machines/algorithms on which it lives to (A) direct our consumption patterns; and (B) directly manufacture even more command capital on behalf of its owners (e.g. posting stuff on Facebook, a form of labour de-commodification).

In more abstract terms: Standard capital allows capitalists to amass surplus exchange value. Command capital, in contrast, allows techno-lords (i.e. Jeff Bezos, Elon Musk, et al.) to amass surplus command value. Command value? Yes: Any digital commodity has command value to the extent that its buyer can use it to convert expressive everyday human activity into the capacity to train an algorithm to do two things: (A) make us buy stuff, and (B) make us produce command capital for free and for their benefit.

In the language of Marx’s political economy, the magnitude of command value contained in any digital commodity is determined by the sum of: the surplus value of the commodities it makes us buy (see A above) + the labour time socially/technically necessary for us to produce a unit of command capital (under B above), to be appropriated instantly by the techno-lords.

In summary, what Bezos, Musk, et al. are accomplishing through their massive investments cannot be understood in terms of either feudalism or capitalism.

- Feudalism was based on the direct extraction of experiential/use value from peasants.

- Capitalism was based on the extraction of surplus labour from waged labour.

- Technofeudalism is a new system in which the techno-lords are extracting a new power to make the rest of us do things on their behalf. This new power comes from investing in a new form of capital (command capital) that allows them to amass a new type of value (command value) which, in turn, grants them the opportunity to extract surplus value from (i) vassal-capitalists, (ii) the precariat, and (iii) everyone using their platforms to produce on their behalf, unconsciously, even more command capital.

| |||||||||||||||||| http://felix.openflows.com |
| Open PGP | http://felix.openflows.com/pgp.txt |
#  distributed via <nettime>: no commercial use without permission
#  <nettime>  is a moderated mailing list for net criticism,
#  collaborative text filtering and cultural politics of the nets
#  more info: http://mx.kein.org/mailman/listinfo/nettime-l
#  archive: http://www.nettime.org contact: nettime@kein.org
#  @nettime_bot tweets mail w/ sender unless #ANON is in Subject: