“Enter amazon.com and you have exited capitalism. Despite all the buying and the selling that goes on here, you have entered a realm which can’t be thought of as a market, not even a digital one.”
This is the core contention in Yanis Varoufakis’s new book, Technofeudalism: What Killed Capitalism. Varoufakis insists that the digital platforms have become so powerful, so ubiquitous, so fundamental to the working of the global economy that they have effectively replaced capitalism as it has long been understood.
The “cloudalists,” as he calls them, have more in common with feudal lords than captains of industry. Their businesses focus on rent capture, rather than competition for profits. Their interests run counter to the digital proletariat (tech workers) and digital serfs (platform users). With this book, he attempts to activate the class consciousness of those of us toiling in the Facebook and Twitter fields, providing free content from which the cloudalists capture rent.
It is a provocative argument but also an ultimately unpersuasive one. Varoufakis insists that there is simply no parallel to Amazon’s marketplace or Apple’s App Store under 20th-century capitalism, and that we must reach back to the feudal era to find an appropriate analog. But the rent-seeking he describes does not sound so alien to me. It sounds a lot like that forgotten 20th-century technology, the mall.
Malls charge rents to their vendors. They take a cut of sales. They create conditions that attract customers and keep them there, shopping and socializing, for longer. They display advertisements and hold community events. When the Mall of America opened in 1992, it was criticized not as a return to feudal domination, but as a prime example of the excesses of capitalist consumer culture.
Amazon and the other big tech platforms are not precisely like a mall. In many ways, as Varoufakis underlines, they’re worse. But the reasons why are instructive. If a mall took up to 30 percent out of every sale that its vendors made, as Apple’s App Store does, then the vendors would likely close up shop and move to a nearby strip mall. If the mall prevented that competitive behavior by, say, buying up all nearby land, then those competitors would probably file a lawsuit, accusing the mall owners of anticompetitive behavior.
The intuitive remedy to the problems posed by an unregulated-monopolist-mall would be to enforce existing regulations or pass some new ones. We need not forge a revolutionary new class consciousness among shoppers in order to make a difference.
I presume Varoufakis would reject this comparison. But I cannot say for sure, because Technofeudalism does not consider possibilities outside its own sphere of argument. Varoufakis is a gifted prose stylist, and has, for the better part of a decade, been one of global capitalism’s sharpest critics. He composes this book as an extended letter to his deceased father, who was a devout Marxist, an artisan, and a technophile. This rhetorical choice has some considerable benefits—the argument is engaging, readable, and oftentimes entertaining. But it also turns the book into an argument by a Marxist-leftist, for Marxist-leftists. A preexisting fondness for and deep familiarity with the classic works of Karl Marx are something of a prerequisite. Alternate explanations and counterarguments are never broached. The imagined audience is there to delight at Varoufakis’s chosen metaphors, without pushing too hard on its boundaries or evaluating alternate explanations.
The book can be frustratingly uneven at times. Varoufakis draws strong connections between the aftermath of the 2008 financial crisis and the unchecked accrual of power and capital by tech billionaires in the years to follow. He is at his best when making this argument.
But he also exhibits a tendency toward what the scholar Lee Vinsel terms “criti-hype,” wherein tech critics accept and amplify the marketing hype of tech companies, declaring that they pose an existential threat to society rather than questioning their limitations. Varoufakis treats these cloud companies as all-powerful, seeding our preferences and desires through algorithmic manipulation while throwing so much capital at governments that there is no hope of reining them in. Only a mass uprising of cloud proles and cloud serfs, we are told, can ever hope to unseat them.
What of the successful 2022 union drive among Amazon warehouse workers in New York? It merits no mention. What of the Epic Games v. Apple lawsuit, which challenged the legality of Apple’s App Store practices? What of the European Union’s Digital Markets Act, which has forced Apple to create avenues for developers to avoid the App Store’s exorbitant rents? Varoufakis mentions neither.
Far from being impregnable digital fiefdoms, all of the major digital platforms are currently facing significant legal and regulatory challenges. Lina Khan offered one of the sharpest critiques of Amazon’s monopoly power in 2017, when she was still a law student. She is now chair of the Federal Trade Commission. Varoufakis may be skeptical that these reformist efforts will be up to the task. But he does the book a disservice by ignoring them entirely.
And in trying to prop these cloudalists up as a unique, defining force in the global economic order, the argument at times loses its bearings. The weakest passage in the book comes when Varoufakis attempts to fit Elon Musk’s acquisition of Twitter into a technofeudal explanatory framework:
“Musk is our era’s Thomas Edison (…) Having revolutionized industries that are normally the graveyard of upstarts, from car manufacturing to space travel and even brain-computer interfaces, Musk proceeded to spend tens of billions of dollars on buying Twitter, risking in the process everything he had achieved as a manufacturer and engineer. (…) We should not be surprised. (…) For all his success as manufacturer, and despite attaining richest-man-in-the-world status, neither his achievements nor his wealth granted him entry into the new ruling class.”
There are indeed a plethora of explanations for why Musk purchased Twitter. The simplest among them is that he had abundant cash on hand, having just sold a large chunk of Tesla stock. He was looking to buy something, and Twitter was his favorite distraction, and he lacks impulse control. So he impulsively spent $44 billion and then the Delaware Court of Chancery refused to let him backtrack on the deal when he had second thoughts. Varoufakis stands alone in suggesting that Musk was not already a member of the new ruling class.
Musk travels in the same social circles as Varoufakis’s cloudalists. The nest egg that Musk invested in Tesla and SpaceX was earned from the sale of PayPal, a company that charges transaction fees on digital payments. He competes (successfully!) with Jeff Bezos in the billionaire space race. A key moment in the early history of OpenAI occurred when Musk was at a party with Google’s Larry Page and got into a heated argument over a thought experiment concerning AI. It strains credulity to suggest that the world’s richest man, the very archetype of the modern tech baron, was somehow not a member of the new ruling class until he bought and failed to back out of acquiring Twitter.
I am convinced that there is something decidedly off about present-day capitalism. I’m just not sure that this book correctly diagnoses the ailment. It often appears to me as though the marketplace’s invisible hand is less concerned with connecting supply to demand than with flipping a digital coin that rewards gamblers for correctly guessing heads or tails. Trump Media & Technology Group (the company behind Truth Social) is valued at between $3 billion and $6 billion on the public markets. It had $4 million in 2023 revenue and operates at a net loss. But many investors have bet that many other investors (some foreign, some domestic) will want to own a piece of the former U.S. president’s latest venture.
Bitcoin has quietly recovered from the 2022 crypto crash. We still don’t have any clear use-cases for blockchain technology, but it has proved to be an enduring speculative vehicle. Musk wealth surged in 2020, based not on some major breakthrough in electric car sales or rocket launches, but on the strength of Tesla as a meme stock. Judging companies based on the strength of their market fundamentals has become a sucker’s bet.
There has always been a casino element to capitalist economies, but this seems new. If 20th-century capitalism was a large, mostly regulated marketplace with a small back-alley casino, then 21st-century capitalism is an opulent Vegas casino with a small marketplace gift shop attached. The proportions have gotten out of whack. A system where wealth is created not through creating new value but by inventing new speculative opportunities does indeed seem like a departure from capitalism as it is idealized.
But it doesn’t seem much like feudalism, either. The dominant economic arrangement under feudalism is that the serfs do all the work and the landed gentry sustains its creature comforts by extracting rents from that labor.
The element of Technofeudalism that I find least compelling is the claim that social media users, busying ourselves watching YouTube clips and sharing pet pictures on Instagram, must adopt a radical new class consciousness as digital serfs if we are to make any impact. I do not toil in Facebook’s field. I, perhaps, hang out with some friends in Facebook’s mall. The first step in political mobilization is meeting people where they are. And we aren’t toiling in anyone’s fields when we socialize for free on ad-supported digital platforms. The analogy strains until it collapses.
It is also, notably, an unnecessary analogy. Reading Technofeudalism brings to mind another recent book, Brian Merchant’s Blood in the Machine. Merchant takes a different route and arrives at a more trenchant critique. His book explores, in lucid detail, the original 19th-century Luddite movement. It makes the compelling case, backed up by meticulous historical research, that the Luddites were not anti-technology, but instead were a proto-labor movement. They made collective claims on how and to whom the gains from new technologies ought to be distributed. The book draws strong parallels to contemporary events—Amazon labor actions, resistance to regulatory capture, and monopoly power. It offers the most damning critique of today’s tech barons that I have seen in recent years, and it does so without resorting to criti-hype.
Big tech is already facing resistance. Labor unions are on the rise in Silicon Valley. Legislators are no longer asleep at the wheel. Speculative finance only reigns until regulators choose to intervene. Perhaps it will not be enough. Perhaps nothing will, in fact, change until the cloud proles and cloud serfs unite to throw off their chains. But the possibility deserves more attention than Varoufakis gives it, if for no other reason than to provide the reader with something more practical to work toward.
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