Technofeudalism Replaced Capitalism
Varoufakis argues that we no longer live in a capitalist society and that while capitalist relations remain intact, they are dominated by techno-feudal ties.
Traditional capitalists, he claimed, had become “subordinate capitalists,” subservient and dependent on the new generation of “masters.” These frontrunners are large technology companies that are making huge profits from new digital platforms.
He said a new form of algorithmic capital had emerged – what Varoufakis called “cloud capital” – and had “replaced the two pillars of capitalism: markets and profits.”
Markets have been “replaced by digital trading platforms that look like markets but are not.”
Varoufakis says that when a user visits amazon.com, they “leave capitalism behind” and enter “feudal territory,” a digital world owned by one man and his algorithm.
This man determines what products you will see. If you are a seller, the platform determines how you sell and which customers you can target. The conditions under which you interact, share and exchange information are determined by “algorithms” that “work for the benefit of Jeff Bezos.”
Access to “digital strongholds” comes with enormous costs. Varoufakis points out that many third-party developers, for example, pay a third of their total sales to the Apple Store, while Amazon takes “35% of sales” from sellers.
He argued that it was like a medieval feudal lord sending a sheriff to collect most of the produce from his serfs because he owned the land and everything on it.
Another problem is that large technology companies are excluded from free competition in the market.
Users unknowingly train Big Tech's algorithms, turning everyone into high-tech "cloud servants"...
The “capital cloud” we continue to create for them increases their ability to create more wealth and thereby increases their power – something we have only just begun to realize.
According to Varoufakis, around 80% of the revenues of traditional capitalist corporations go to salaries, while Big Tech employees receive less than 1% of their companies' revenues.
For Varoufakis, we are witnessing a technological revolution and an economic process driven by technology. This requires us to think about what is happening to our economy and society in the age of big technology and big finance.