[Plura-list] Yanis Varoufakis's "Technofeudalism: What Killed Capitalism?"

[Cory Doctorow]

Read today's issue online at: https://pluralistic.net/2023/09/28/cloudalists/

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Monday (October 2), I'll be in Boise to host an event with VE Schwab:

https://www.thecabinidaho.org/all-events/ve-schwab

On October 7-8, I'm in Milan to keynote Wired Nextfest:

https://eventi.wired.it/nextfest23-milano

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Today's links

* Yanis Varoufakis's "Technofeudalism: What Killed Capitalism?": Socialism or barbarism.

* Hey look at this: Delights to delectate.

* This day in history: 2013, 2018, 2022

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

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🧛🏼‍♂️ Yanis Varoufakis's "Technofeudalism: What Killed Capitalism?"

Socialists have been hotly anticipating the end of capitalism since at least 1848, when Marx and Engels published *The Communist Manifesto* - but the *Manifesto* also reminds us that capitalism is only too happy to reinvent itself during its crises, coming back in new forms, over and over again:

https://www.nytimes.com/2022/10/31/books/review/a-spectre-haunting-china-mieville.html

Now, in *Technofeudalism: What Killed Capitalism,* Yanis Varoufakis - the "libertarian Marxist" former finance minister of Greece - makes an excellent case that capitalism died a decade ago, turning into a new form of feudalism: technofeudalism:

https://www.penguin.co.uk/books/451795/technofeudalism-by-varoufakis-yanis/9781847927279

To understand where Varoufakis is coming from, you need to go beyond the colloquial meanings of "capitalism" and "feudalism." Capitalism isn't just "a system where we buy and sell things." It's a system where *capital* rules the roost: the richest, most powerful people are those who coerce workers into using their capital (factories, tools, vehicles, etc) to create income in the form of *profits*.

By contrast, a *feudal* society is one organized around people who *own* things, charging others to use them to produce goods and services. In a feudal society, the most important form of income isn't *profit*, it's *rent*. To quote Varoufakis: "rent flows from privileged access to things in fixed supply" (land, fossil fuels, etc). Profit comes from "entrepreneurial people who have invested in things that wouldn't have otherwise existed."

This distinction is subtle, but important: "Profit is vulnerable to market competition, rent is not." If you have a coffee shop, then every other coffee shop that opens on your block is a competitive threat that could erode your margins. But if you own the building the coffee shop owner rents, then every other coffee shop that opens on the block raises the property values and the amount of rent you can charge.

The capitalist revolution - extolled and condemned in the *Manifesto* - was led by people who valorized profits as the heroic returns for making something new in this world, and who condemned rents as a parasitic drain on the true producers whose entrepreneurial spirits would enrich us all. The "free markets" extolled by Adam Smith weren't free from *regulation* - they were free from *rents*:

https://locusmag.com/2021/03/cory-doctorow-free-markets/

But rents, Varoufakis writes, "survived only parasitically on, and in the shadows of, profit." That is, rentiers (people whose wealth comes from rents) were a small rump of the economy, slightly suspect and on the periphery of any consideration of how to organize our society. But all that changed in 2008, when the world's central banks addressed the Great Financial Crisis by bailing out not just the *banks*, but the *bankers*, funneling trillions to the people whose reckless behavior brought the world to the brink of economic ruin.

Suddenly, these wealthy people, and their banks, experienced enormous wealth-gains *without* profits. Their businesses lost billions in *profits* (the cost of offering the business's products and services vastly exceeded the money people spent on those products and services). But the business still had billions more at the end of the year than they'd had at the start: billions in public money, funneled to them by central banks.

This kicked off the "everything rally" in which every kind of asset - real estate, art, stocks, bonds, even monkey JPEGs - ballooned in value. That's exactly what you'd expect from an economy where rents dominate over profits. Feudal rentiers don't need to invest to keep making money - remember, their wealth comes from *owning* things that *other people* invest in to make money.

Rents are not vulnerable to competition, so rentiers don't need to plow their rents into new technology to keep the money coming in. The capitalist that leases the oil field needs to invest in new pumps and refining to stay competitive with other oil companies. But the rentier of the oil field doesn't have to do anything: either the capitalist tenant will invest in more capital and make the field more valuable, or they will lose out to another capitalist who'll replace them. Either way, the rentier gets more rent.

So when capitalists get richer, they spend some of that money on new capital, but when rentiers get richer, them spend money on more assets they can rent to capitalists. The "everything rally" made all kinds of capital more valuable, and companies that were transitioning to a feudal footing turned around and handed that money to their investors in stock buybacks and dividends, rather than spending the money on R&D, or new plants, or new technology.

The tech companies, though, were the exception. They invested in "cloud capital" - the servers, lines, and services that everyone else would have to pay rent on in order to practice capitalism.

Think of Amazon: Varoufakis likens shopping on Amazon to visiting a bustling city center filled with shops run by independent capitalists. However, all of those capitalists are subservient to a feudal lord: Jeff Bezos, who takes 51 cents out of every dollar they bring in, and furthermore gets to decide which products they can sell and how those products must be displayed:

https://pluralistic.net/2022/11/28/enshittification/#relentless-payola

The postcapitalist, technofeudal world isn't a world without capitalism, then. It's a world where capitalists are subservient to feudalists ("cloudalists" in Varoufakis's thesis), as are the rest of us the cloud peons, from the social media users and performers who fill the technofuedalists' siloes with "content" to the regular users whose media diet is dictated by the cloudalists' recommendation systems:

https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys

A defining feature of cloudalism is the ability of the rentier lord to destroy any capitalist vassal's business with the click of a mouse. If Google kicks your business out of the search index, or if Facebook blocks your publication, or if Twitter shadowbans mentions of your product, or if Apple pulls your app from the store, you're toast.

Capitalists "still have the power to command labor from the majority who are reliant on wages," but they are still mere vassals to the cloudalists. Even the most energetic capitalist can't escape paying rent, thanks in large part to "IP," which I claim is best understood as "laws that let a company reach beyond its walls to dictate the conduct of competitors, critics and customers":

https://locusmag.com/2020/09/cory-doctorow-ip/

Varoufakis points to ways that the cloudalists can cement their gains: for example, "green" energy doesn't rely on land-leases (like fossil fuels), but it *does* rely on networked grids and data-protocols that can be loaded up with IP, either or both of which can be turned into chokepoints for feudal rent-extraction.
   
To make things worse, Varoufakis argues that cloudalists won't be able to muster the degree of coordination and patience needed to actually resolve the climate emergency - they'll not only extract rent from every source of renewables, but they'll also silo them in ways that make them incapable of doing the things we need them to do.

Energy is just one of the technofeudal implications that Varoufakis explores in this book: there are also lengthy and fascinating sections on geopolitics, monetary policy, and the New Cold War. Technofeudalism - and the struggle to produce a dominant fiefdom - is a very useful lens for understanding US/Chinese tech wars.

Though Varoufakis is laying out a technical and even esoteric argument here, he takes great pains to make it accessible. The book is structured as a long open letter to his father, a chemical engineer and leftist who was a political prisoner during the fascist takeover of Greece. The framing device works very well, especially if you've read *Talking To My Daughter About the Economy*, Varoufakis's 2018 radical economics primer in the form of a letter to his young daughter:

https://us.macmillan.com/books/9780374538491/talkingtomydaughterabouttheeconomy

At the very end of the book, Varoufakis calls for "a cloud rebellion to overthrow technofeudalism." This section is very short - and short on details. That's not a knock against the book: there are plenty of very good books that consist primarily or entirely of analysis of the problems with a system, without having to lay out a detailed program for solving those problems.

But for what it's worth, I think there *is* a way to plan and execute a "cloud rebellion" - a way to use laws, technology, reverse-engineering and human rights frameworks to shatter the platforms and seize the means of computation. I lay out that program in *The Internet Con: How the Seize the Means of Computation*, a book I published with Verso Books a couple weeks ago:

https://www.versobooks.com/products/3035-the-internet-con

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🧛🏼‍♂️ Hey look at this

* FCC to reintroduce rules protecting net neutrality https://www.cnn.com/2023/09/26/tech/fcc-net-neutrality-internet-providers/index.html (h/t Boing Boing)

* Consumer Surveillance and Financial Fraud https://www.nber.org/papers/w31692 (h/t Naked Capitalism)

* FTC and 17 states sue Amazon in long-awaited lawsuit targeting monopoly power https://arstechnica.com/tech-policy/2023/09/ftc-files-the-big-one-a-lawsuit-alleging-amazon-illegally-maintains-monopoly/

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🧛🏼‍♂️ This day in history

#10yrsago FBI: We know you’re innocent, but you’re not getting off the No-Fly list unless you rat out your friends https://www.aclu.org/news/national-security/no-fly-list-where-fbi-goes-fishing-informants

#10yrsago EFF racks up another courtroom victory over the NSA: damning docs to follow https://www.eff.org/deeplinks/2013/09/after-nsa-court-hearing-government-must-unseal-documents-december-20

#10yrsago How Miss Teen USA’s sextortionist got caught https://arstechnica.com/tech-policy/2013/09/miss-teen-usas-webcam-spy-called-himself-cutefuzzypuppy/

#10yrsago Judge requires patent troll to explain its “Mr Sham” business https://www.techdirt.com/2013/09/26/judge-takes-patent-troll-with-sham-employee-forces-troll-to-defend-practice-before-jury/

#5yrsago Modern Monetary Theory: why government spending isn’t like household checkbooks https://www.npr.org/sections/money/2018/09/26/651948323/episode-866-modern-monetary-theory

#5yrsago Defcon Voting Village report shows that hacking voting machines takes less time than voting https://defcon.org/images/defcon-26/DEF CON 26 voting village report.pdf

#1yrago Maintaining monopolies with the cloud: Microsoft, Oracle and other cloud giants use their terms of service to prevent competition https://pluralistic.net/2022/09/28/other-peoples-computers/#clouded-over

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🧛🏼‍♂️ Colophon

Today's top sources:

Currently writing:

* A Little Brother short story about DIY insulin PLANNING

* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS JAN 2025

* The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FORTHCOMING TOR BOOKS FEB 2024

* Vigilant, Little Brother short story about remote invigilation. FORTHCOMING ON TOR.COM

* Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

* Spill, a Little Brother short story about pipeline protests. FORTHCOMING ON TOR.COM

Latest podcast: How To Think About Scraping https://craphound.com/news/2023/09/24/how-to-think-about-scraping/

Upcoming appearances:

* An Evening with VE Schwab (Boise), Oct 2
https://www.thecabinidaho.org/all-events/ve-schwab

* Wired Nextfest (Milano), Oct 7-8
https://eventi.wired.it/nextfest23-milano

* The Internet Con at Moon Palace Books (Minneapolis), Oct 15
https://moonpalacebooks.com/events/30127

* 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing keynote (Minneapolis), Oct 16
https://cscw.acm.org/2023/index.php/keynotes/

* 41st annual McCreight Lecture in the Humanities (Charleston, WV), Oct 19
https://festivallcharleston.com/venue/university-of-charleston/

* Seizing the Means of Computation (Edinburgh Futures Institute), Oct 25
https://efi.ed.ac.uk/event/seizing-the-means-of-computation-with-cory-doctorow/

Recent appearances:

* Seize the Means of Computation (Movement Memos)
https://open.spotify.com/episode/3OXPCnbiZHdIxUf8UTFnnu

* How to Seize the Means of Computation (rHatchery)
https://www.podpage.com/rhatcherylive/how-to-seize-the-means-of-computation/

* Give Them An Argument
https://www.youtube.com/watch?v=yhTphllBUEM



Latest books:

* "The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245).

* "Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.

* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com

* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.

Upcoming books:

* The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

* The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books, February 2024

* Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025

* Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025

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