Yanis Varoufakis, a Greek economist and politician, recalls The Conversation, “briefly Greek finance minister in 2015”. His new book poses the question, “What killed capitalism?” and the title’s first word provides an answer: “Techno-feudalism”.
Varoufakis argues that we no longer live in a capitalist society. He proposes that traditional capitalists have become “vassal capitalists” who are subordinate and dependent on the new breed of “lords” – the Big Tech companies. This new form of algorithmic capital, known as “cloud capital”, has displaced capitalism’s two pillars: markets and profits.
Markets have been replaced by digital trading platforms which mimic markets. The moment users enter Amazon, they enter something resembling a “feudal fief” – a digital world belonging to one man and his algorithm. This algorithm dictates what products users will see, how sellers can sell and which customers they can approach. The terms of interaction, information sharing and trading are determined by the algorithm, which ultimately works for the bottom line of Jeff Bezos.
Access to the “digital fief” comes with the cost of exorbitant rents. For example, many third-party developers on the Apple store pay 30% of their revenues, while Amazon charges its sellers 35% of their revenues. This is analogous to a medieval feudal lord sending round the sheriff to collect a large chunk of his serfs’ produce.
The Big Tech platforms are exempt from free-market competition, and users are unknowingly training their algorithms for them. In this interaction, Varoufakis believes we are all “high-tech ‘cloud serfs'”, generating more wealth and power for Big Tech with every interaction.
In contrast to traditional capitalist conglomerates, where 80% of income goes to salaries and wages, Big Tech’s workers receive less than 1% of their firms’ revenues. Varoufakis states that we are not just living through a tech revolution, but a tech-driven economic revolution. He encourages us to come to terms with what has happened to our economies and societies in the era of Big Tech and Big Finance.