Yanis Varoufakis's Blog, page 10
April 1, 2024
Greece, EU elections, Palestine & the International Order – JACOBIN interview with David Broder
Today there are 1.2 million homes being repossessed, in a land of ten million. Let’s say a house was bought for $250,000 before the crisis. Now it’s worth €200,000. It had a loan on it of €150,000, of which €50,000 was repaid. The mortgagee can’t repay the other €100,000 because of the crisis, loss of income, etc. Then a vulture fund registered in Delaware, with a bank account in the Cayman Islands, buys up the loan for €5,000. Even if they sell it for only €100,000, they’ve gained €95,000 on €5,000. I doubt there’s anywhere you can get higher rates of return. This is happening on an industrial scale.
The Greek state is more bankrupt now than in 2010, when it became bankrupt. Today the national debt is higher while national income is down. But now that a series of governments have been good girls and boys for the troika, the international creditors’ community has decided to proclaim Greece no longer insolvent. How come? Everybody knows that the Greek state is bankrupt. But there’s also the European Central Bank [ECB] winking at everyone who has bought Greek debt: don’t worry, we’ll stand behind it. So, why buy German debt when you can buy Greek debt that gives you higher yields?
The Economist has every reason to celebrate Greece as an economic miracle. If you’re a money man, or a vulture fund purchasing distressed loans, Greece is an El Dorado.If you have capital to use in order to extract other people’s wealth, then Greece is the place to come to. But if you’re Greek and you don’t belong to the oligarchy, you’re in serious trouble. For thirteen years your real income has been falling. The social safety net is dismantled, as are any collective bargaining agreements. Then came the cost-of-living crisis, which has hit the Greek working class and underprivileged harder than anywhere else in Europe. Inflation is class-conscious: if you’re on lower incomes, your inflation rate is far higher. So, put all that together and you have this remarkable bifurcation: Greece, the best place in the world to be a vulture fund and the worst if you’re not.
DAVID BRODEROK, but even a decade ago you predicted the likely effects of austerity. And this insight, and these consequences, don’t seem to have had a positive reflection in reviving the anti-austerity movement or building forces to the left of Syriza. Your MeRA25 was in parliament for four years, but didn’t get reelected in last year’s elections. Is this just because of lasting demoralization after defeat in 2015? Or is there something you’re not doing to mobilize support?YANIS VAROUFAKISFull disclosure: we were among the big losers of last year’s elections. Why was that? Why did we all lose, both those of us in the then Syriza government who did not surrender to the troika and those who did?The best explanation was given to me by a taxi driver. He was taking me home from the airport and told me, “You know what? I agree with all that you’re saying. And I like you, but I didn’t vote for you, or for Syriza. I won’t forgive you for giving me hope. I didn’t use to vote. I only went to the polling stations twice. Once in January 2015 to vote for you. And then again in July 2015, in the referendum to say “no” to the creditors. And what happened? You all folded, and we’re back in the same quagmire as before. I don’t care whether you were one of the good guys. Then you came to me in the election last year with a whole program that you can never implement because you’re struggling at 5 percent. So, I’m not voting again.”
On the Left, if we’re lucky, we can get majority support once every fifty years, during the acute phase of a capitalist crisis. If we blow the opportunity, we have to wait another fifty years.On the Left, if we’re lucky, we can get majority support once every fifty years, during the acute phase of a capitalist crisis. If we blow the opportunity, we have to wait another fifty years. That doesn’t mean we stop fighting. MeRA25 keeps doing all that we think needs doing, because in the end, we’re a bit like surfers: you can’t control when the wave comes, but you’d better be ready to catch it when it does.
DAVID BRODERBut was the taxi driver right to think that the initial hope was misplaced? Your series tells us that a small country saying “no” inspired many internationally. But the troika also wanted to demonstrate that you couldn’t say “no,” and then crushed you to prove the point. If this could have been a “David and Goliath” tale, what “catapult” did you have?YANIS VAROUFAKISWe knew they’d try to crush us. In April 2013, while living in Texas, I warned Syriza’s leaders that the Cypriot government and the ECB was a dress rehearsal for what they were going to do to a future Syriza or Podemos government. They were flexing their muscles with little Cyprus to rehearse shutting down the banks to force a capitulation. [Alexis] Tsipras understood and asked me: “OK, so what do we do?”I sat down for six months and devised an action plan. I presented it to the team and they approved it. Then, just before the January 2015 election, Tsipras offered me the finance ministry to implement it. Alas, that action plan can’t be judged, because they didn’t let me implement it. I’m convinced that had we followed it the troika wouldn’t have been able to crush us.
In the ministry which I inherited, I had €50 billion worth of bonds in Greek law, which I could restructure with one signature. I didn’t even need to go through Parliament. And it was in Greek law. They couldn’t take me to New York like they used to take Argentina and so on. That was our nuclear weapon — because had I proceeded to haircut those bonds, the ECB would not be allowed (by Germany’s constitutional court) to save the Italian state by buying its bonds. Mario Draghi was very worried about this weapon of ours, as he told me during our first meeting. But right after that, my own government signaled to him behind my back: “Don’t worry. We won’t let Varoufakis do it.” It was like sending David against Goliath without the catapult.
DAVID BRODERBut why did Tsipras refuse to let you use it?YANIS VAROUFAKISIt’s clear that he had already reached an agreement with Angela Merkel to sign the memorandum to surrender. What’s not clear is when he decided to surrender: before we were elected or after? I don’t think I’ll ever know.Greece was the linchpin, and when Alexis Tsipras sold us down the line, he was also selling the whole European left down the line.What I do know is that those who, after the event, claimed that we were always going to be crushed are profoundly wrong. I am not saying that we would have definitely won. But we did have a good chance — assuming we used our weaponry. In my estimation, it would have cost them more than €1 trillion if they did crush us. That’s serious money for a monetary union that doesn’t have a fiscal union to back its expenditure. I don’t think Merkel would have dared. I think we’d have had a chance, and then Podemos would have had a chance, and then our Italian comrades . . . . So, Greece was the linchpin, and when Tsipras sold us down the line, he was also selling the whole European left down the line.
DAVID BRODERIn the past, you made intelligent arguments about why Grexit was not just unnecessary but a bad idea. You said that you’d end up with an autarkic economy, and that — unlike, say, Argentina unpegging the peso from the dollar — it’d take months to prepare the return to the drachma, effectively offering advance warning of a huge devaluation. Ahead of last year’s elections you proposed a state-backed electronic payments system. But wouldn’t the creditors also have been sure to ensure Grexit failed?YANIS VAROUFAKISHypotheticals and counterfactuals are always hard to work out. My point was simple: capitulating would render Greece unviable — as it now is. Fighting back gave us a chance to break out of our doom loop. The digital payments system would help in any case. By how much, no one knows. But it would help whether we are in the eurozone or after going back to the drachma. Even if there was even a 5 percent possibility that we could have averted extra austerity and privatization within the euro, why not try it? I’m still convinced we could have done it — and that, thus, resistance was the optimal strategy.Today, we have fewer options. One reason is the nonperforming loans (NPLs), mortgages, repossessions, and so on that I mentioned before. In 2015, we had nonperforming loans, but since then, with the Syriza government creating the foundation for it, they created a secondary market for NPLs. This is a gigantic source of rents for the vulture funds. The restructuring of the Greek banks is based on new derivatives that contain these NPLs as a form of capital.
If we ever came anywhere near government again, I’ve no doubt they’d try to crush us with double the energy of 2015. We would need a new nuclear option: an alternative to the euro.So, now we don’t have the nuclear option we did in 2015, and the troika has a greater incentive not to allow us to stop home repossessions. If we ever came anywhere near government again, I’ve no doubt they’d try to crush us with double the energy of 2015. We would need a new nuclear option: an alternative to the euro. The electronic payment mechanism you mention has a dual use: to help create liquidity within the euro and to be the first move — if need be — toward the drachma.
This is, of course, a major reason for proposing it — if they shut down our banks, payments can be transferred to this system — which can, fairly easily, evolve into the new national currency. In 2019 and then in 2023, MeRA25 communicated this plan A, B, C to the public in a transparent way, so that they’d know what they were voting for. Alas, unlike in 2019 when voters gave us nine seats, in 2023, they kept us out of Parliament and voted new fascist parties in.
DAVID BRODERAhead of the EU elections, it seems far-right parties are mobilizing people against the establishment — but also, increasingly, joining the establishment. In the film you say that liberals need these far-right bogeymen just to be able to rally people against something. But if their opposition is so fake, then why such success?YANIS VAROUFAKISAll we need to do is look at the 1920s and 1930s. After their 2008, which of course took place in 1929, the fascists and Nazis managed to harness discontent — even borrowing or stealing from the Left’s criticism of the bankers and so on while directing the people’s anger to the “other,” toward the Jew. And when they got into power, the fascists became the agents of industrial and financial power, of capital.That’s always the case. Think of [Donald] Trump: he told blue-collar workers in the Midwest that he was going to get rid of Goldman Sachs and Wall Street from Washington. Then what’s the first thing he did? He took the CEO of Goldman Sachs and made him head of the US Treasury.
It is a mistake to think that the nationalist, or fascist, international are clashing with a radical center. We should think of them as different sides of the same coin. They are symbiotic. [Emmanuel] Macron would never have become president if [Marine] Le Pen did not threaten the system. And Le Pen would never rise to challenge for the presidency if you didn’t have people like Macron introducing the austerity that causes the discontent that feeds her rise.
The top 0.1 percent, the upper echelons of the ruling class, demand of governments that they pass tax cuts for them and transfer huge quantities of rents to them. But they know that such legislation is extremely unpopular. So, the EU’s right-wing populists incite hatred toward “the system,” the Jew, the Muslim, the other, the foreigner, the migrant, the refugee to gain power. Once in power, they enact this legislation on behalf of the top 0.1 percent.
DAVID BRODERBernie Sanders often says that the Biden administration needs to do more for working-class America to answer the despair that Trump feeds off. What do you think it can do to stop Trump winning?YANIS VAROUFAKISThere’s nothing the Biden administration can do. Firstly, it doesn’t have the numbers. Secondly, it doesn’t have the time before the next election in November. Thirdly, it doesn’t have the will. The Biden administration was sold to Wall Street and to Big Tech and the powers-that-be even before it was formed.Bernie Sanders and I started the Progressive International together in Vermont. However, I’ve been in disagreement with him — a comrade and friend — since 2016. After the then primaries, when the nomination was stolen from him and handed over to Hillary Clinton, Bernie had nine hundred thousand wonderful volunteers all over the country, ready to become the third force in US politics. I thought he should have started a new party. Instead, he let those young activists go to ground — and then disappointed them entirely, four years later, when he sided with [Joe] Biden.
I’m not one to turn on comrades. We can have legitimate disagreements. I understand that, especially given his age, Bernie wanted to make a difference. Not just demonstrating in the streets but from within the corridors of power. He had something of a positive impact on some of the Biden administration’s initial policies during the pandemic. Some people got to eat because Bernie Sanders fought for their corner within the Biden administration. But that doesn’t last.
Now, the whole progressive movement and the DSA [Democratic Socialists of America] have been sidelined, especially with what’s happening in Israel/Palestine and Ukraine. The dynamism of the political revolution that Bernie had started in 2016 dissipated. I’m afraid that the new wave that Bernie energized is not going to survive in a Democratic Party, which like Labour in Britain, is extremely good at destroying all progressive energy within itself.
DAVID BRODEROn the international front: South Africa’s case to the International Court of Justice offered a damning indictment of Israel’s actions but may end up exposing the hollowness of international law. I’m interested in your thoughts on how European countries have reacted to the war, and what effect this has on how people outside Europe see the EU and the “international community.”YANIS VAROUFAKISThey’ve reacted disgracefully. The EU and almost every government will go down in history as aiding and abetting the genocide of the Palestinians. It’s not just complicity but a mode of behavior that is turning our prime ministers and presidents into prospective defendants in the International Criminal Court [ICC]. When Ursula von der Leyen — as it happens, without any authority — went to Israel to cheerlead the IDF [Israel Defense Forces], she deserves not only to be condemned by future historians, but also to be prosecuted by the ICC.This last couple of decades, instead of becoming less reactionary, Europe has become criminal. Once, French president Jacques Chirac, during a visit to the occupied Palestinian territory, confronted the Israeli gendarmes and the IDF. I can’t imagine Macron doing that. Willy Brandt waxed lyrical about Palestinians’ right to their own state. Today, Olaf Scholz is presiding over a regime that is arresting Jewish comrades of ours in Berlin for the crime of carrying a placard saying “As an Israeli and a Jew, stop the genocide in Gaza.” You couldn’t make it up!
DAVID BRODERThe current wars, and the expansion of BRICS, seem to point to a breakdown of the Western-led order. Do you think this is a changing power balance in a re-formed international order or something more like a hardening of regional trade blocs?YANIS VAROUFAKISWe never had an “international order” and there was never an “international rule of law.” Where do we start: Iraq, Afghanistan, Vietnam before that?My concern is that we’re putting too much — but also too little — emphasis on BRICS. It’d be a huge mistake for progressives to do what they used to do with the USSR, to imagine that, whatever its authoritarian aspects, at least it’s the counterweight to the United States. Let’s not think of the BRICS that way.
India’s Narendra Modi is a fascist. Saudi Arabia and the United Arab Emirates, who are edging closer to BRICS, have a currency that is pegged to the US dollar. With BRICS, they are creating a plan B for themselves, not for the world’s dispossessed. The most interesting part of the BRICS is China. It contains the most progressive and the most authoritarian forces on this planet. A huge class struggle is going on there as we speak.
In my recent book Technofeudalism, I offer an analysis of the new Cold War between the US and China. The essence of the new developments lies in what I call “cloud capital.” This is a kind of capital which is algorithmic, based on the internet, on Big Tech. It’s not like a robot that makes cars or a steam engine: for the capital that lives in your laptop or your phone is a produced means of behavioral modification, that grants its owners tremendous power to extract rents from workers, capitalists, and users alike.
That same cloud capital is the foundation for a new kind of payment system. And there are only two bundles of cloud capital. One is to be found in the US, the other is China. Nobody else has cloud capital worth talking about. If my hypothesis holds water, we are seeing a huge rivalry between these two mega cloud fiefdoms. And what really concerns the United States is this: the only reason why the United States has been hegemonic since the late 1960s and early ’70s, after they lost their trade surplus to the rest of the world, is because of the exorbitant privilege of the dollar. The payment system is in dollars, which means that the US faces no trade or budget constraint. Even though it has a huge current account deficit, it continues to buy stuff from the rest of the world because it pays in dollars that it prints — dollars that are recycled back to Wall Street and to American government debt as capitalists from all over the world send their dollars back to the US to buy US government debt, shares, and property.
The dollar payment system hasn’t been challenged so far. But the combination of Chinese cloud capital and Chinese finance, which is separate from US finance, can become an international digital payment system, alternative to the dollar. That’s why Saudi Arabia is interested in China and the BRICS: they want access to that alternative payment system because they saw what happens if you fall foul of Washington. You can have $300 billion confiscated, which is what happened to Russia after they invaded Ukraine. This is the reason why we have a new Cold War: because they are trying to quash the capacity of Chinese cloud capital to antagonize the dollar payment system.
CONTRIBUTORSYanis Varoufakis was Greek finance minister during the first months of the Syriza-led government in 2015. His books include The Global Minotaur and Adults in the Room.David Broder is Jacobin’s Europe editor and a historian of French and Italian communism.The post Greece, EU elections, Palestine & the International Order – JACOBIN interview with David Broder appeared first on Yanis Varoufakis.
Economics is Irredeemably Sexist – Project Syndicate
– B prefers a nice dinner to the cinema and the cinema to the theatre (B: Z>Y>X)
– C is indifferent between the theatre and the cinema but prefers either to the restaurant (C: X=Y>Z)
– D would love to go to dinner but, otherwise, prefers the cinema to the theatre (D: Z>Y>X).The question is: Should they change their minds and, rather than the theater (as originally planned), go to the cinema or perhaps to dinner? Economics has a clear answer. If they switch from the theatre (X) to the restaurant (Z), two of them (A & C) will be worse off, thus violating the Pareto criterion. But if they switch from the theatre (X) to the cinema (Y), no one will be upset and three of them (A, B, and D) will be better off. Thus, economists would conclude that the rational and just decision is to drop the theatre in favor of the cinema.This seems logical. But a closer look exposes the callousness of the whole approach. Note that the recommendation to switch from the theater (X) to the cinema (Y) was motivated solely by their preference rankings. Neither who these people (A, B, C, D) are, nor the reasons behind their preferences (X, Y, Z), played any role in the verdict. To see why this is scandalous, consider a drastically different story yielding precisely the same preference rankings.A sadistic warlord (A) has led his gang to a village where they round up the inhabitants (D) with a view to killing them (outcome X). At that moment, you (B) are trekking in the area and stumble across the village to witness the horrific scene. Meanwhile, a film crew (C) is hidden in the bushes recording everything. The warlord welcomes you with open, menacing arms and makes you an offer: “If you take my gun and kill one of the villagers, at random, I shall spare the rest (outcome Y). If you don’t, I will kill them all (outcome X).”It is highly plausible that the preferences of the four participants (A, B, C, D) over outcomes X, Y, Z are exactly as in the case of the four friends planning a night out: The warlord (A) is eager to make you his accomplice (he prefers outcome Y to X) while never entertaining the possibility of outcome Z (no one dies). The peasants (D) are begging you to do as the warlord says (to help bring about Y over X). The film crew’s members (C) don’t care what happens as long as there is at least one murder to record (X or Y).So, what should you do if you place at the bottom of your rankings the outcome that no villager lives? (B: Z>Y>X) This is the definition of a hard choice: a clash between your ethical objection to killing an innocent and your urge to save lives.Not so for economists, who consider it an easy decision. Structurally unable to differentiate this cruel choice from four friends debating how to spend a night out, economics instructs you to take the warlord’s gun and kill a villager (to switch from X to Y, regardless of whether Y is a cinema or a murder).No room is left to acknowledge that some choices are wrong, whatever the decision-making calculus, and are irreducible to preference satisfaction. Is it any wonder that women, who in patriarchal societies are more in tune with context and unquantifiable reasons for action, disdain economics?It is not just economists’ physics envy, the field’s dearth of female role models, or seminars dominated by testosterone-fueled bullies that deter women from the field. To become the “queen of the social sciences,” economics placed at the center of its models and method a male chauvinist rational idiot. Given that asking economists to drop the model that brought them enormous influence is like asking a tribe to denounce the fake creed that made it dominant, why should women want to enter a field whose philosophical sexism effectively sets them up to be the random villager?
For the Project Syndicate site, click here.
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“It’s hard to read this book and deny its power” – WASHINGTON POST review of TECHNOFEUDALISM
But stagnation, for Varoufakis, would be the least of our problems. He describes the replacement of traditional capital by what he calls “cloud capital,” which no longer focuses on growth, value and profit, but instead on rent extraction and control. The “cloudalists” are the new capitalist bosses, and their influence extends far beyond the workplace to nearly every facet of your app-powered daily life. According to Varoufakis, when we are the product — as we are when our clicks and searches generate profit for massive corporations, when our data is bought and sold — we’ve gone over from the relative freedoms of capitalism to technofeudalism, in which those who control the platforms have direct control over the rest of us, reducing us to the station of “cloud serfs.”
In other words, the rise of Big Tech is not just, as some have called it, the Fourth Industrial Revolution. It is the end of the agreement that dissolved feudalism, from which grew both capitalism and democracy. Capitalism, as Marx pointed out, freed workers by dissolving the bonds of feudalism. The vassal who labored for a lord was bound to that lord and his land. By contrast, capitalist workers were free to exchange work for money, and “free” to starve if they did not. Contrast this to the positive freedoms of democracy: Varoufakis suggests that our digital world effectively destroys these and wipes away the beating heart of capitalism with them. Cloud capital, he tells his firmly Marxist father, creates a mirage that looks like capitalism. But what seems like profit, and what seems like work, in the cloud, is really rent and a new, high-tech form of serfdom.
It’s hard to read this book and deny its power. Cloud-based workers routinely see their accounts suspended, often for reasons that have nothing to do with their own labor — as was the case when platforms pulled out of Russia in 2022 — or even without explanation at all. Varoufakis describes such developments as “sanitised tech-terror.” When work shifts to the cloud, people’s very ability to survive depends on access to platforms, much as it once relied on a lord’s fields. If you’re in the cloud “fief,” you play by its rules, and whatever value is generated goes disproportionately to its lord. If you’re banished from the territory, good luck.
This technofeudalism is global, and Varoufakis provides a compelling — if chilling — account of the emerging “new Cold War” between U.S. and Chinese “cloud fiefs.” He sees the coming finance wars as a result of state-cloud cooperations that simply cannot be defined as “capitalist” in any traditional sense. But is this right? Should we really give up on thinking of global economics as specifically “capitalist”?
[image error]Yanis VaroufakisI’m not convinced. Capitalism isn’t a rigid formula, and the freedom it promises has always been precarious. Marxists have long thought about the problem of what happens outside the factory — and about our cultural values, our daily lives, as they relate to capitalism. Marx himself suggested that capital’s “subsumption” of labor gave everyday life an illusory quality in which it seemed as though commodities were more real than the humans who made them. Digital technologies firmly connect everyday life to capital, changing what it means to be “free” in a state of constant, for-profit tracking. Maybe the question is not whether capitalism can survive the cloud but whether freedom can.
Throughout the book, Varoufakis’s ventriloquized father asks him, in effect: But isn’t this just more capitalism? Varoufakis insists it is not, but I tended to side with his father as I read. Maybe Marxists are simply struggling to articulate what a truly global capitalism looks like, one enabled by the same digital technologies that track and surveil. What is truly valuable in that global economy is obscured by the massive algorithmic machinery that crunches numbers for finance and international trade, obscuring the human problem of what we want and what we need. But that very opacity is what Marx called the “value-form,” the way that “the economy” becomes an abstraction, rather than something humans do. This problem is worse than ever, and to the extent that it is a crucial part of capitalism, we still very much live under the umbrella of that label. The main virtue of Varoufakis’s book is that it poses the problem of global digitally mediated value. This by itself is illuminating, whether we adopt the term “technofeudalism” or not.
Leif Weatherby is an associate professor of German and director of the Digital Theory Lab at New York University.The post “It’s hard to read this book and deny its power” – WASHINGTON POST review of TECHNOFEUDALISM appeared first on Yanis Varoufakis.
TECHNOFEUDALISM reviewed by Geert Lovink
A meme is spreading: capitalism is dead. We’re toiling around in its carcass. Nothing appears as it seems in this zombie state of affairs.But why didn’t we notice? There’s confusion all over. Climate, Covid, Ukraine, Gaza. Is history accelerating, or, rather the opposite, stagnating, even regressing? In his latest book Techno Feudalism, Yanis Varoufakis states that the reason for this is cloud capital. “Due to the unpaid labour of cloud serfs and the cloud rents of the vassal capitalists, surplus value is syphoned off in the form of cloud rent to the cloudalists.” Instead of ‘Make Future Great Again’ we feel we’re thrown back to 1955, or rather, metaphorically speaking, into the 14th century. Technically speaking, capitalism still functions but, it has lost its vital core. What’s the appeal to describe our situation as ‘neo-medieval’?The subtitle of Varoufakis’ book is What Killed Capitalism. What does it mean to say that ‘capitalism is dead’ and that it was replaced by something worse, as McKenzie Wark described in Capital is Dead? It is darkest before dawn, as the Russian saying goes, but sunrise will take its time. To me, the notion of dead capitalism points not so much to a crisis but to the death of its spirit. Where is its Geist? There is no élan vital anymore. Death results in zero dynamics. But the current system is not yet dead, it is lame and weak, and refuses to die. As a result, it turns into a nihilist state. To put it in economic terms: labour, markets and profit still matter but are no longer driving its development. Capital has mutated, Varoufakis explains—but neither the general audience failed to notice, nor did the political economists. I would say in defence that Internet critics, activists, designers and artists have indeed been mapping the poly crises over the past decades, but their insights remained on the fringe.Power is no longer in the hands of those who own machines but stems from cloud capital, the new digital lands. We’re struggling to find the right terms for the new stage we find ourselves in. The materialist in me would focus on the chip wars and the future of computing – in particular the positions of ASML (NL), NVIDIA (USA) and TSMC (Taiwan), rather than this metaphysical entity of ‘the cloud’. But let’s follow Varoufakis’ line of thought here: added value comes from cloud value. This is why cloud firms like Tesla and BYD will dominate the global car market in terms of added value and not Volkswagen, BMW, Mercedes Benz or Audi; the traditional machinery firms that got paralysed by the all-too-German digital anxiety and thus failed to make the crucial transformation to cloud capital.Varoufakis is not interested in academic debates with others who presented similar ideas about neo-feudalism. Nonetheless, it’s good to mention a few here. In her 2020 essay for the Los Angeles Review of Books, Jodi Dean presented a neat summary of the debate. She writes that “non-capitalist dimensions of production — expropriation, domination, and force — have become stronger to such an extent that it no longer makes sense to posit free and equal actors meeting in the labour market even as a governing fiction.”Another contribution to this debate came from Evgene Morozov in this New Left Review 2022 essay
Critique of Techno-Feudal Reason
. In Morozov-fashion he dismisses his opponents without making clear what exactly the political dangers are of using ‘New Middle Age’ concepts. Most of them are renegades. To me, it’s not enough to accuse them of ‘feudal glamour’, ‘hype’ and ‘pop’. Morozov presumes that a rational analysis of capitalism will lead to the right form of organization and, ultimately, power. He writes that “the popularity of feudal-speak is a testament to intellectual weakness, rather than media savviness. It is as if the left’s theoretical framework can no longer make sense of capitalism without mobilising the moral language of corruption and perversion.” Following Neckal, Morozov states that neoliberal modernization is thus to be read as “neither progressive nor regressive, but rather as paradoxical” (thus leading to the question what paradoxical platforms, clouds or infrastructures could be). However, this productive idea remains out there and may be unpacked elsewhere, by others. Morozov concludes that a mere economic analysis will be insufficient and will have to be paired with a political analysis of the role of the state (also in the making and further growth of Silicon Valley in the case of the USA). In short: why not stick to (too) late capitalism? Or platform capitalism, for that matter?Think speed and scaling. In my ‘networks to platform’ understanding, the technical rationale behind hypergrowth towards market dominance lies in the ‘scale-free network’ logic. Start-ups, backed by the deep pockets of venture capital, can reach monopoly status within months, eliminating any further possibility towards techno-diversity. The key is that feudalism is a mode of production in which “the means of surplus extraction are extra-economic, being largely political in nature; goods are expropriated under the threat of violence.” In comparison, the surplus extraction under capitalism is economy, and I would add is increasingly abstract, and invisible. This is the problem of the term ‘vulture capitalism’, an image of capitalists as birds of prey that scavenge on the decaying flesh of dead users. Vulture sounds cruel yet potentially enlightening. However, it is stressing a violent attack of the digital oligarchs on the ‘living dead’ too much, that we, distressed users, do not experience as such.Old-school capitalists have become vassals to a new class of feudal overlords, the owners of cloud capital. Instead of markets, Varoufakis prefers to talk about ‘fiefdom’. Profit has been replaced by rent. He explains that rent must be paid for access to those platforms: cloud rent. The change over the past two decades from networks to platforms largely remains unmentioned here. Instead, Farouvakis uses the ICT term ‘cloud’, a mid-1990s deliberately unclear term. It seems to suggest that the data are ‘nowhere’, stored outside of any geo-political entity, out there on the ocean or some other planet. To end this confusion, a decade ago an ‘infrastructural turn’ took place with the mapping of undersea cables and data centres. While Varoufakis would rather not talk about machinery and buildings, this is precisely where ‘the cloud’ is housed. The cloud is not virtual but material.Let’s dig further into the question of why recent Marxist discussions use backward metaphors instead of looking forward. As Steve Frazer writes in a Jacobin contribution, “Today’s political culture of restoration tacitly acknowledges that the future, in the way that word has customarily been used, is dead. Or if it lives on, it does so on life support.” Where is the ‘commons-futurism’ now that we need it? Instead, we are, terminologically speaking, sent back six or seven centuries ages ago. And why exactly to that period, and not, for instance, to 1770, when Adam Smith discovered the market and industrialization took off? What is the (secret – perhaps unconscious) appeal of the Middle Ages, if not a metaphor for stagnation, misery and decline? Is this dark image used to scare us or is it rather a framework that provides us with useful critical insights? Agreed, we live in a time of crises and conflicts that are driven by contradictory forces such as hypermodernity and primitivism, acceleration and stagnation, extraction and conservation.The first time I came across the idea of a return of—rather than a return to—the Middle Ages, was in the mid-1980s when I read some interrelated works such as Umberto Eco’s In the Name of the Rose, Barbara Tuchman’s A Distant Mirror: The Calamitous 14th Century, Carlo Ginzburg’s The Cheese and the Worms and Le Roy Ladurie’s epos of the French village, Montaillou. The tendency was given the name ‘neo-medievalism’. In my imagination, the ‘new middle ages’ wave built on Johan Huizinga’s Dutch classic The Autumntide of the Middle Ages from 1919, which spoke to me when I read it in my teenage years. To me, it seemed like a never-ending era of superstition, war and fragmented politics, dominated by the ideological power of the church. These works were not written to merely historize a period but utilized style to create a time mirror. What remains of this wave for me is the emphasis on ‘microhistory’ storytelling. This is exactly the style Varoufakis utilized, structuring the argument he develops inside Techno Feudalism inside an imaginary dialogue with his father.In Travels in Hyper-Reality from 1986 the master storyteller Umberto Eco notices pop culture’s obsession with witchcraft and Celtic sagas in comic books and computer games. According to Eco, we are still living under the banner of medieval technology. “Modern languages, merchant cities, capitalistic economy are inventions of medieval society.” Eco writes that “sometimes it is not so medieval to think that the end is coming and the Antichrist, in plainclothes, is knocking at the door.” Much like today, the early 1980s was a dark, apocalyptic period, dominated by the threat of a nuclear war that would wipe out humankind. Will the Russian threat of using nuclear weapons in the Ukraine war unleash a renaissance of apocalyptic pop culture? Take “I want to be with my baby when the bomb comes down” for example; a funky US song from 1983 (available on YouTube), celebrating global nuclear destruction as an orgasmic explosion – creating a circular economy of fears as desires, desires as fear. As Eco writes, “Naturally our medieval parallel must be articulated so as not to fear symmetrically opposed images.” Social media as monastic centres? For sure there are parallels here, as both are places of power where informal information circulates inside its safe walls. And as the Chinese said, to paraphrase Eco here, “May you live in an interesting period”—not the Middle Ages, I hope.After 1989, history-making was back on the agenda and ‘medievalism’ became a forgotten metaphor. But not for long. The globalist renaissance faced its first setback with the 2000 dotcom crash and 9/11, which turned into a permanent slump after the 2008 financial crisis—the moment the author himself entered the world stage as Greek finance minister. Ever since the rise of Orbán, Modi, Putin, Wilders, LePen and countless other right-wing populist politicians, the Digital Dark Age is not merely a hip topic of the post-internet art circles. Backwards acceleration seems to be a compelling motive that is in contraction with the ‘tired’ feeling of being in a slum in which one is not able to move in the first place—neither forwards nor backwards. This is a fertile cultural ground for medieval metaphors to come into place.Slavoj Zizek writes: “We are condemned to domination—the Master is the constitutive ingredient of the very symbolic order, so attempts to overcome domination only new figures of the Master.” The core idea here is the way the medieval Master-Slave dynamic is upgraded to today’s condition. In the 21st century’s cyber regime, the slave is no longer a colonial commodity but a neo-liberal data-producing subject that is confined inside a mirror world of personalized choices. The exploitation of the slave is mainly psychological, leading to exhaustion and depression as there is no end in sight and no way out. The question here then would be how contemporary master-slave relations work if there is no direct physical or psychological violence involved. Is social media use a form of voluntary, free slavery?The dream of the Middle Age that Eco speaks of is a barbaric one – in this case, a nightmare about never-ending exploitation. Mild and abstract but still cruel. For Varoufakis, the medieval trope is one of a stable yet depressed economic order, characterized by extreme inequality and a depletion of anything social, public and communal. What in past was called a ‘walled garden’ turned out to be a confinement, a ghetto that lives off the fear of cyberattacks and the collective protection, offered by the fiefdom aka Google, Microsoft, Meta or Amazon.Users no longer believe in the grandeur of the digital period they inhabit. Liberal ideas of empowerment, freedom and ‘rights’ have been dropped in favour of security, surveillance and extraction. “Technology is used to empower people and make their lives better. Now it only does that for its owners. For everyone else, it lowers the quality of life. This is not the fault of technology. The fault lies with its founders, investors, policymakers and journalists. They are failing us,” ‘Zucked’ author Roger McNamee recently wrote on X/Twitter. In techno-feudalism, the Middle Ages precisely does not feature as a pre-text. It is not a backdrop or dress-up opportunity for role-playing fans. Instead, it is a warning that social relations are freeze-dried, that mental misery is on the rise and that living standards are dropping.Two centuries ago Karl Polanyi’s Great Transformation may have happened: the Western world moved on from feudalism to capitalism. But in the meanwhile it also lost its spirit, refusing to be replaced by something ‘better’. With economic crises turning ‘poly crises’ and becoming endemic, there is a tumbling belief in ‘progress’. The leading motive is ‘disruption without a cause’, lacking any ‘problem-solving capacity’. The passage is blocked. Instead of haute finance, there is techno-libertarian venture capital that aims to bring down both the states and classic corporations. On top of a conservative neo-liberal backlash ironic post-modernism and the real existing exodus of industries such as coal mining, steel and textiles, the question of regression (into what?) is on the table. How will the autumn of capitalism play out?Around the mid-2010s the Western liberal order faced a series of ‘setbacks’ such as Islamist terrorist attacks, military disasters in Irak, Syria and Afghanistan, the rise of the extreme-right, Brexit, Trump and the Russian invasion of Ukraine in 2014, that would echo for at least another decade. A significant theorization of this was brought together in a German publication called The Great Regression, published in 2017 in both German and English. Whereas the analysis of the 15 contributors (including Zizek) was primarily intellectual-political-cultural, the political-economy foundation was missing here (as did the platform-internet angle). This is the gap Farouvakis fixed, six years later.Stuck in liberal conservatism, combined with an exhausting inclusion of an ever-growing corpus of capitalist rites and popular expectations of how to live a modern life, daily life has become a corset of choices without choice. There’s not just a crisis, followed by a recovery. The question the editors of The Great Regression ask is whether “we are witnessing a worldwide rejection of liberal democracy and its replacement by populist authoritarianism?” In his opening essay, Arjun Appadurai speaks of ‘democracy fatigue’. While this at first be qualified as a malaise, a ‘zero growth’ stagnation, in the next stage this starts to feel like a move backwards. What manifested itself as a lack of progress, later on reveals itself as a loss, a decline without end.Spirit—or the lack of it—in this context does not refer to hard work and progress as Max Weber described it back in 1905. There is the late 1990s globalist neo-liberal spirit, so well described by Boltanski and Chiapello, but not much is left of it. What is ‘the spirit of the platform’ anyway? It is pure optimisation. The platform is the unseen. It would rather not like to be noticed. It is not its design or sexiness, even though smooth interfaces, ‘user-friendly’ design and speed matter. What counts here is the social presence, the feeling that others are also virtually present there. It is not just you and the software. This is the social ‘stickiness’ we all fell victim to.Another ‘medieval’ term Varoufakis is using is the fief. A well-known, and much-despised example in the digital art and design world of a ‘cloud fief’ would be Adobe’s subscription-based software platform Creative Cloud (known for PDF and Indesign). While in the past the buyer would download the Creative Suite and be able to use it for an unlimited amount of time, being able to work offline, these days the ‘cloud fiefs’.“In a properly Leninist way, Varoufakis sees that the object of our critical analysis (capitalism) has changed, and we must change with it. Otherwise, we will just be helping capitalism revitalize itself in a new form,” Slavoj Zizek notices. We are confronted with the depressing message that the world will have to choose between the US and Chinese cloud finance as Europe willingly missed the boat, again, as was previously the case with search engines, social media and AI. Varoufakis calls upon us, “cloud serfs,” to stop “putting so much time and energy into building up someone else’s cloud capital.” He describes this process as part of the “shrinking of the global value base,” due to the extreme concentration of surplus in the hands of few and extreme inequality for the rest.In addition to Varoufakis’ grand economic vistas, it is important to keep on focusing on the real existing ‘platform feudalism’. In his 2024 Governable Spaces about the democratic design of online life, Nathan Schneider talks about ‘implicit feudalism’. He’s using the term “metaphorically to describe communities, each subject to a power structure that is absolute and unalterable by those who lack specific permissions.” For many like Schneider and me who have taken the rise of platforms seriously, it is not necessarily a default condition. It is feudalism by design, causing unnecessary limits on possibilities. Possibilities for community governance are constrained. The online world is ruled by self-appointed ‘benevolent dictators’. Yet, this is not merely a story of submission. There is an element of habit here, “a familiar way of doing things, along with the technical debt from past designs, around which business models have grown.” Over time social media affordances deteriorated. Implicit feudalism strengthens the admins’ authority, using ‘dark pattern’ techniques. This is what we could call subconscious feudalism: it is a lock-in effect users are remarkably fast accustomed to, losing the capacity to depart. In the end, we all learnt to accept Robert Michels’ iron laws of oligarchy. How were these oligarchs at the time of Michels removed again? They were not. We still do not know how to get rid of them. And this is why we’re thrown back.Yanis Varoufakis, Techno Feudalism, What Killed Capitalism, Penguin Random House UK, London, 2023.[Download as PDF]Title of a 2024 book by Grace Blakely, https://www.simonandschuster.com/books/Vulture-Capitalism/Grace-Blakeley/9781982180850 on “corporate crimes, backdoor bailouts and the death of freedom.”
https://jacobin.com/2024/03/left-politics-future-history-capitalism-progress.
Slavoj Zizek, Less Than Nothing, Verso, London, 2012, p. 19.
Nathan Schneider, Governable Spaces, University of California Press, Oakland, 2024, p. 18.
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Does Australia know what it is getting into viz. the US-China New Cold War? GUARDIAN AUSTRALIA podcast
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Two reviews of TECHNOFEUDALISM by Conservative Publications ‘Free Beacon’ & ‘The European Conservative’
Varoufakis’s argument for the global economy being post-capitalist is that it no longer principally relies on the pursuit of profits under conditions of market competition but on rent extraction, the way that feudalism did. He sees this as resulting from a recent de facto privatization of the Internet, like a new enclosure of the commons (despite 18th–century enclosures actually inaugurating capitalism).
Large platforms like Amazon, on which the capitalist has to sell his products to be competitive, or social media, where he has to advertise, would be new fiefdoms, and the capitalist paying rent to use them to make money would be a vassal.
And yet, the serfs in this system are precisely not serfs. The latter, after all, were given cradle-to-grave employment in a system without social mobility. What we have today is rather the opposite: what has been described as a precariat (a precariously employed workforce).
True, rent has overtaken profit in a certain sense. Positioning themselves in such a way as to dominate the market and be able to extract rents, even at the cost of short- and medium-term profit, has been the M.O. of many large companies, but far from being anything novel, this is one of the classical criticisms made against capitalist/corporatist oligarchs.
In any case, whether we describe it as techno-feudalist or, more accurately, Cloudist (as in the Cloud), the way this M.O. has played out in recent decades does represent something new, and Varoufakis pinpoints the emergence of this something new to August 12th, 2020, when it was announced that “[As a result of the COVID-19 pandemic] the UK’s national income had fallen by a whopping 20.4%,” but “instead of plummeting in response to the data, the UK stock exchange jumped up by 2.3%.”
This is key.
Varoufakis’s assessment is that such a thing was “utterly at odds” with any variety of capitalism and that, with this 2.3% jump, “the world of money has finally decoupled from the capitalist world.” The City of London had done nothing short of defying “the gravitational laws of capitalism,” and this trend was about to repeat throughout the world.
True, sometimes “share markets do rise in response to bad news … but only when the news is better than anticipated,” In this case, however, the news was quite a bit worse than expected (markets had been predicting a 15% drop in the UK’s national income at most).
What happened was that traders in the City of London had the following realization:
When things are this dismal, the Bank of England panics. And what have panicky central banks been doing since the crash of 2008? They print money and give it to us. And what do we do with all the newly minted money? We buy shares, sending their price up. If prices are destined to go up, only a fool would miss out. … A wall of printed money is on its way to us. Time to buy.
Arguably then, as with the rise of modern industrial capitalism itself, Britain was a kind of ground zero. As Blake wrote, things begin “in Albion’s ancient Druid rocky shore.” But the decoupling of money and capital was about to go global.
Authorities … responded by [doing what they had been doing since 2008] … printing money to give to the financiers [banks] in hopes that it would buttress investment in business, generating stable jobs. … It didn’t. Fearing that run-of-the-mill businesses would not be able to repay them, the financiers lent only to big business. And big business either refused to invest or invested solely in Cloud capital. Conglomerates founded on traditional terrestrial capital, like General Electric and Volkswagen, refused to invest the interest-free central bank money because when they surveyed the ongoing carnage of the pandemic they saw the same thing the banks had seen … masses of little people condemned to low wages, B.S. jobs, and diminished prospects. A sea of people unable to afford new high-value products. So why invest in such stuff? Instead, they would do something riskless, profitable, and stress-free. They used it to buy back their own companies’ shares, boosting their companies’ share price and their own bonuses. Meanwhile, Big Tech was having an even more fabulous pandemic.
While the U.S. economy was shedding jobs, Amazon appeared, in the words of Varoufakis, as a “hybrid of the Red Cross, by delivering parcels to confined citizens, and [by hiring people] Roosevelt’s New Deal.” But the jobs it created were a precarious kind of labour, suited to its ends, and the investment it made was in building Cloud capital.
Thus dawned our present age of Cloudism, about whose staying power Varoufakis makes the following observations:
Whatever economic shocks might come, Cloud capital will likely endure, as will its ability to extract rents. Infrastructure often far outlives the bubble that takes out the actors who built it. Fibre optic cable and server farms, for example, survived the dot-com bubble bursting in 2001.And, in any case, money is still flowing from central banks. If central banks withdraw money, writes Varoufakis, a “vortex of volatility is ready to hit the 24 trillion dollar market for U.S. public debt, [which is] the very bedrock of international banking and finance.” In other words, central bank money will continue to “play the systemic role once played by capitalist profits.”Finally, “Cloud capital is now so well entrenched that it is bolstered and augmented not just by central bank money and its own capacity to amass Cloud rent, but by every new development,” from green energy to demands for cheap online degree programs.We may describe Cloudism, then, as a system in which central banks print money that ends up in the coffers of Big Tech and associated conglomerates, leading to reduced pressure for these entities to pursue profits in a competitive market and so allowing them to focus instead on pursuing the entrenchment of the system that so benefits them.
This they do by trying to capture people’s attention (through adaptive algorithms) and predict their behaviour (through big data). The end point of this central bank/Big Tech nexus of control-seeking is something like China’s WeChat, an ‘everything app’ providing citizens/consumers with everything they need and corralling them into conformity through some kind of social credit score.
The solution? Varoufakis has said that it is easier to imagine nationalising Big Tech than it is to imagine taxing them effectively. Indeed, the idea that certain platforms provide services that really ought to be public utilities has been floating around, including on the political Right, for some years.
This is crucial for any political platform seeking to address current conditions. In addition, we have to consider how to promote and package open source technology, in which context we have the excellent case-study of Stability AI, which is meant (as its founder and CEO, Emad Mostaque, has said) to be like a pizza base, ready to be stacked with local, culturally appropriate or sectional, business-specific ‘toppings.’
With this (and after dismissing his excessively fraught and not all helpful titular “feudalism”), we may take Varoufakis’ analysis of Cloudism onboard.
It should be developed through an analysis of how the attention-capturing, behaviour-predicting project of Cloud-capital-owning corporations ends up manifesting as a cultural and ideological project that is precisely aligned with the aims of the central banks (the states) that fund them.
But this warrants a separate essay.
2. The Washington Free Beacon By Robert BellafioreFor as long as there has been “capitalism,” there have been observers predicting its demise—most famously Karl Marx himself, who helped popularize the term. Nearly a century later, James Burnham foresaw a “managerial revolution,” in which control over production would be taken over by a new class of administrators and technocrats, while Joseph Schumpeter prophesied that capitalism would be undone by its very success as intellectuals and industrialists turn against it. While Marxist writer Fredric Jameson observed that it is easier to imagine the end of the world than the end of capitalism, plenty of thinkers would counter that witnessing the end of capitalism requires not imagination but simple observation of, as Burnham put it, “what is happening in the world.”With Technofeudalism: What Killed Capitalism, Yanis Varoufakis joins this strange canon, arguing that capitalism has disappeared right under our noses. Varoufakis, who rose to global prominence as Greek finance minister during the country’s debt crisis, is a self-proclaimed “libertarian Marxist,” and Technofeudalism is as intriguing and puzzling as his label, though it does not ultimately persuade.
Varoufakis contends that new technologies have over the last decade put an end to capitalism. But, contrary to what conventional Marxists promised, it has managed to be replaced by something even worse. Under capitalism, the owners of capital are supposed to compete with each other, pursuing profits in the market. But markets—the forums in which buyers and sellers directly engage with each other—have been overtaken by digital platforms that control every feature of these previously free transactions; think of Amazon or Apple’s App Store. And this establishment of digital “fiefs” has in turn eliminated profits—the surplus revenue that drives one to beat the competition. Through their intermediation in these digital transactions, fiefs can take a cut from every sale without producing anything themselves. This cut constitutes a “cloud rent,” rents being any money gained through a privileged position that competition would have eliminated.
Together, these two transformations—from markets to digital platforms, and from profits to rents—have moved us beyond capitalism into technofeudalism, with the capitalists replaced by “cloudalists.” These rulers of the cloud constitute a new feudal class, overseeing the many vassal businesses which in turn shape the decisions of everyday serfs—you and me.
It would be easy to dismiss Varoufakis’s high-flying theorizing as a case of an errant economist high on his own supply. But this sort of macroeconomic musing on capitalism’s succession is worth taking seriously, for it pushes the reader to ask whether we’re observing business as usual or something else—and what business as usual even means. In particular, by tying capitalism’s development to the evolution of the internet and the computer, Technofeudalism raises a serious question: How is it that the internet, which so many thought would be a radical tool for decentralization, has come to be dominated by a few corporate behemoths? And why do so many users feel a sense, not of autonomy, but of invasion, in which someone else controls our data and digital identity? Steve Jobs thought that the computer would be a “bicycle for our minds,” empowering free individuals to explore the world. But the internet so often feels instead like a tank rolling over our minds, or perhaps a rollercoaster we can’t get off of.
Varoufakis argues that this dream of a decentralized internet was, however briefly, a reality. The early internet was a “digital commons,” marked by open-source protocols that anyone could copy and modify for free. But an elaborate string of events, including President Richard Nixon’s taking the dollar off gold, central banks’ response to the 2008 financial crisis, and the pandemic, enabled financiers to pump money into Big Tech, which in turn poured its investments into digital infrastructure and the expansion of their cloud serfdoms. The result has been “the conversion of billions of us into willing cloud serfs volunteering to labor for nothing to reproduce cloud capital for the benefit of its owners.”
There is a fascinating story to be told about how software’s seemingly inevitable growth was instead the very contingent result of a complex of political and economic factors, but Varoufakis details the rise of the cloudalists too quickly for it to convince. A more compelling presentation of this history would have given more attention to these details and less to Varoufakis’s opinions on Mad Men and Homer.
Still, Varoufakis’s core point, that capitalism will change as technology does, is surely right, and essential—Adam Smith, for example, famously used the new pin factories of the Industrial Revolution to understand the division of labor. That being said, it’s far from clear that the dramatic identification of a new stage of history is called for. The rent-seeking that Varoufakis puts at the heart of this feudal system has been a bugbear of capitalism’s champions since Smith himself. Businesses have always sought special privileges for themselves that blocked out competitors and boosted their leverage against customers—why wouldn’t they? Apple’s ability to charge a 30 percent commission rate to developers who want their products on the App Store is a genuine obstacle to a more vibrant internet, but feudalism it ain’t. If we need a term for this phenomenon, fellow leftists Rebecca Giblin and Cory Doctorow were closer to the mark when they dubbed it “chokepoint capitalism.”
Varoufakis’s more libertarian praise for competition over cronyism also comes into conflict with his leftist commitments in his criticism of the internet’s privatization. He laments that “our digital identity belongs neither to us nor to the state. Strewn across countless privately owned digital realms, it has many owners, none of whom is us.” Many of us are indeed mystified about what is really “ours” online—consider those incomprehensible terms and conditions agreements and now concerns about artificial intelligence’s replication of our words and images. But if the goal is individual ownership of our digital identities, then the obstacle isn’t privatization, but the lack of it. A more certain sense of ownership and privacy over our data is a worthy goal, but a return to the early “digital commons” would only compound confusion, at users’ expense, about who really owns what online.
Reviving the dream of the freer, purer internet of yesteryear should also prompt a deeper question: Could that “Internet One” ever have turned out otherwise? After all, the internet was itself the product of Cold War military innovation, an irony that Varoufakis calls “history’s greatest ever antinomy”: “a US government-built and -owned, non-commercial computer network that lay outside capitalist markets and imperatives but whose purpose was the defense of the capitalist realm.” And for all his flower-child talk about liberating the individual, it was Steve Jobs himself who thought up the App Store, a “walled garden” locking developers into a centralized system. Perhaps, then, a decentralized digital commons was always going to be an unstable point between more centralized equilibria. In that case, the solution can’t be a libertarian fantasy of using the web to escape the state.
But the second part of Varoufakis’s libertarian Marxism won’t do, either. His proposal for a “cloud rebellion to overthrow technofeudalism” is the weakest part of the book, as he shifts from mind-opening theorizing to dull manifesto-waving. Here, Varoufakis might have learned from his predecessors: What makes Burnham and Schumpeter so engaging is, paradoxically, the very disinterested coldness of their observations. Varoufakis provides some stimulating provocations, but a clearer assessment of capitalism’s metamorphoses will require a greater sobriety than he can provide.
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March 13, 2024
My last waltz on Late Night Live with my friend, the wonderful, Phillip Adams – audio
On 11th March 2024, Phillip Adams invited me to LNL for one last time before he is due to retire. Bittersweet program where we talked about everything that intervened between our first ever encounter on LNL in 1993 to today.Thank you Phillip. On behalf, I believe, of countless souls who will miss your voice, your intelligence and your empathy on the little wireless program.
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Reversing Europe’s and Australia’s slide into irrelevance & insecurity – National Press Club of Australia speech
Thank you very much, thank you ladies and gentlemen. It is with a deep sense of the obligations and dues we owe to the owners of the land on which we meet today, the Ngunnawal people, that I, too, pay my respects to their elders, past, present and future. I also wish to note and acknowledge the special role played by the women of the first nations, not just because last week we marked International Women’s Day, but because of their leading role as custodians of complex knowledge, as community organisers, and as beacons of wisdom especially for those of us afflicted with a masculine condition.Ladies and gentlemen, today I look forward to discussing with you some thoughts, concerns and ideas about Europe and Australia with a view to reclaiming a shared future for our two continents in a world where Europe and Australia are increasingly marginal. And to do so not just as a European politician but also as a proud citizen of Australia.Europe and Australia are facing a common existential threat: a creeping irrelevance caused, on the one hand, by our failure properly to invest and, on the other hand, by our ill-considered slide from a strategic dependence on the United States to a non-strategic, self-defeating servility to Washington’s policy agenda.The three post-war phases that shaped Australia’s and Europe’s habitatOur present moment in Europe and in Australia has been shaped by three distinct postwar phases.The first was the Bretton Woods system. America exited the war as the only surplus, creditor country. Bretton Woods, a remarkable recycling mechanism, was, in effect, a dollar zone built on fixed exchange rates, sustained by capital controls, and erected on the back of America’s trade surplus. With quasi-free trade as part of the deal, Washington dollarised Europe, Japan and Australia to generate aggregate demand for the products of its factories – whose productivity had skyrocketed during the war. Subsequently, the US trade surplus sucked the exported dollars back into America. The result was twenty years of high growth, low unemployment, blissfully boring banking and dwindling inequality. Alas, once the United States lost its trade surplus, Bretton Woods was dead in the water.The second phase was marked by the violent reversal of this recycling mechanism. The United States became the first hegemon to enhance its hegemony by boosting its trade deficit. Operating like a powerful vacuum cleaner, the burgeoning US trade deficit hoovered up the world’s net exports. And how did America pay for them? With dollars which it also hoovered up from the rest of the world as German, Japanese and later Chinese capitalists sent to Wall Street 70% of dollar profits made from their net exports to the US. There, in Wall Street, these foreign capitalists recycled their dollar profits into Treasuries, real estate, shares and derivatives.This audacious inverted recycling system, built on US deficits, required ever increasing American deficits to remain stable. In the process, it gave rise to even higher growth than the Bretton Woods era, but also to macroeconomic and financial imbalances as well as mind-numbing levels of inequality. The new era came complete with an ideology (neoliberalism), a policy of letting finance rip (financialisation), and a false sense of dynamic equilibrium – the infamous Great Moderation built on hugely immoderate imbalances.Almost inevitably, on the back of the perpetual tsunami of capital rushing in from the rest-of-the-world to Wall Street, financiers fashioned gigantic pyramids of complex wagers – Warren Buffet’s infamous Weapons of Mass Financial Destruction. When these crashed, to deliver the Global Financial Crisis, two things saved Wall Street and Western capitalism:The G7 central banks, that printed a total of $35 trillion on behalf of the financiers from 2009 to last year – a peculiar socialism for bankers. And,China, which directed half its national income to investment, thus replacing much of the lost aggregate demand not only domestically but also in Germany, Australia and, of course, in the United States.The third period is more recent. The era of technofeudalism, as I call it, which took root in the mid-2000s but grew strongly after the GFC in conjunction with the rapid technological change that caused capital to mutate into, what I call, cloud capital – the automated means of behavioural modification living inside our phones, apps, tablets and laptops. Consider the six things this cloud capital (which one encounters in Amazon or Alibaba) does all at once:It grabs our attention.It manufactures our desires.It sells to us, directly, outside any actual markets, that which will satiate the desires it made us have.It drives and monitors waged labour inside the workplaces.It elicits massive free labour from us, its cloud-serfs.It provides the potential of blending seamlessly all that with free, digital payments.Is it any wonder that the owners of this cloud capital – I call them cloudalists – have a hitherto undreamt of power to extract? They are, already, a new ruling class: today, the capitalisation of just seven US cloudalist firms is approximately the same as the capitalisation of all listed corporations in the UK, France, Japan, Canada and China taken together!Where did the money for so much cloud capital to accumulate come from, if not from profits? Remember the $35 trillion of central bank monies printed to refloat Western banks? That’s where. For example, 9 out of every 10 dollars that went into creating Facebook came from these central bank monies.So, the issue is not what AI will do to us in the future but what cloud capital has already done to us. And now a question of immense importance to Europe and to Australia: In which countries is cloud capital, and with it the exorbitant extractive power it grants its owners, concentrated? In the United States and in China. Nowhere else! Hold that thought, while I turn to Europe.EuropeMost of you will know me as the ejected finance minister of the most bankrupt European state – though I take solace from hearing that several people here in Canberra, including a government minister or two, knew me first as their Sydney University lecturer. Lest we forget, I was elected to that post because of a catastrophic collapse caused by Europe’s inane handling of an inevitable crisis, hot on the heels of the Global Financial Crisis – with Greece the canary in that mine.The reason Europe was damaged permanently by the GFC was our ludicrous monetary architecture: A monetary union that had a central bank but no federal treasury to have its back. And nineteen state treasuries without a central bank to bankroll the bailouts of their nineteen separate banking systems! In short, even if European governments wanted to emulate the sensible response of the Rudd government to the GFC, we lacked the institutions to do it.The result? Europe’s doom loop between banking losses, stagnation, unpayable public and private debt and an investment strike lasting quarter of a century thus leading, now, to Europe’s and, in particular, Germany’s de-industrialisation. Quarter of a century later, in addition to its deepening North-South divide, Europe now suffers an incurable East-West divide while:the essential fiscal and political union is further away from the horizon than everthe EU’s Green Deal is honoured in the breach, not in the implementationEurope’s industries are falling rapidly behind their competitors in the United States and China in every technological race that matters, in green tech and green energy in particularour continent lacks cloud capital in an age of technofeudalism where power stems from cloud capital, that only the United States and China possess in substantial quantities.Why is there a New Cold War?In my introduction, I said that Europe and Australia are facing irrelevance and marginalisation. Two are the reasons: One, neither Europe nor Australia possess significant cloud capital – it is a little like trying to make our way during the 19th century without steam engines. The second reason is the New Cold War, which is upending our business models, Europe’s and Australia’s.Speaking of the New Cold War, almost a year ago Paul Keating, in this prestigious forum, famously lambasted the Albanese government for making the wrong call in allowing Australia to become complicit in Washington’s pursuit of the New Cold War against its own interests. The one question Mr Keating did not ask, however, was: Why is Washington doing this? Why did President Trump kickstart it with a ban on Huawei and ZTE? And why did President Biden turbocharge it with the microchip ban which was meant explicitly as a declaration of economic war on Beijing?When I ask this question, I get two answers. One is Taiwan. The other is China’s escalating military threat to international trade routes in the South China Sea. Neither will do. Ever since Nixon went to China, and during the long period Washington was pushing Australia to induct China into the WTO and the globalised capitalist world order, the One China policy and Beijing’s determination to maintain sovereignty over Taiwan were, rightly or wrongly, unchallenged givens. As for China’s military threat, on this I am with Malcolm Fraser who opined that nothing short of Chinese navy surveillance ships anchored outside America’s navy bases at San Diego or Norfolk, Virginia can count as provocation. And, please, can someone, anyone, explain why on earth a country so reliant on a trade surplus and imported energy would ever wish to threaten international trade routes? No, the New Cold War is neither due to Taiwan nor to China’s military build-up. The answer lies in cloud capital.America’s hegemony, built on its trade deficit, relies entirely on its capacity to extra rents from the rest of the world courtesy of its monopoly of international payments. But Chinese cloud capital has already achieved something that the dollar system cannot achieve: a seamless integration of cloud capital with a free digital payments system – for example, WeChat, the private App belonging to Tencent, and the public digital currency already offered by China’s Central Bank.Why is there no American equivalent seamlessly blending Big Tech and Big Finance? Because Wall Street refuses to share their financial rents with either US cloudalists or with the Fed. And there is the rub: America maintains its dominance over international payments travelling along a rickety dollar highway, one full of potholes but still the highway of choice for global capitalists. Meanwhile, Chinese cloud capital has built an all-singing-all-dancing payments superhighway, denominated in yuan, that few used. But, this superhighway’s very existence is a clear and present danger to the US monopoly of the dollar payment system on which America’s hegemony rests. Especially after the Ukraine war created jitters amongst oligarchs around the world.In short, the New Cold War has nothing to do with trade routes, Taiwan, or Chinese escalation in the Pacific. It is, rather, the manifestation of a dangerous clash between two technofeudal systems – one denominated in dollars, the other in yuan.What should Australia do domestically?So, the question becomes: What should Australia do in this topsy-turvy, increasingly technofeudal world? At the domestic front,First, ditch the old rentier business model of banking on holes and homes. That’s now a Ponzi scheme whose maintenance will result in a country marred by minimal investment, low productivity, debilitating inequality, high inflation and low wages pushing its talented people into a low innovation sinkhole.Instead, adopt a Green New Deal for Australia as a necessity, rather than a luxury. Europe is about to impose a border-adjustment carbon tax. America will surely follow. Australia must end its dependence on fossil fuels and unrefined minerals and let rip with solar and wind power that produces green hydrogen, not for export but, for powering new factories that will produce, domestically, green copper, green nickel, green cobalt and green steel for export to South East Asia and to China where they will be used to produce the electric cars and the cloud capital that Europe will then purchase tariff-free. To achieve this, this country needs a massive public investment project, a latter-day version of the 1950s Snowy Scheme.Second, acknowledge that never before has it been so dismal to be young in Australia.Reverse the absurdity of the Australian government collecting more money from HECS than it does from the Petroleum Resource Rent Tax.Tax rents properly to make higher education free again.End negative gearing and, especially, the inane capital gains exemption on real estate investments. Tax those with concentrated power to set prices and rents through the nose and, instead of inefficient tax cuts that just inflame house prices and consumer price inflation, build social housing that benefit not only those who live in them but suppresses private house price inflation.Third, since Australian capitalists cannot compete with America’s and China’s cloudalists, it is the role of the Australian government, in the same way it once created the ABC, or the CSIRO, to put at the disposal of Australians important new technologies; to build up public cloud capital – beginning with a digital Australian dollar, essentially a free checking account for every resident using only a tax file number and a pin which would allow for free transactions and pay interest on deposits equal at the Reserve Bank’s overnight rate.What should Australia do internationally?What about internationally?First, Australia must restore a reputation tainted by blindly following America into lethal adventures in Iraq, Afghanistan and, today, via its active and crucial complicity in Israel’s deliberate war crimes in Gaza, East Jerusalem and the West Bank.Children are not starving in Gaza today. No, they are being deliberately starved. Without hesitation or remorse. The famine in Gaza is no collateral damage. It is an intentional policy of starving to death thousands until the rest agree to leave their ancestral homeland.By lending credence to the notion that Israel is exercising the right to self-defence and by de-funding, on the basis of unsubstantiated Israeli accusations, the only agency that can ameliorate the starvation, Australia damaged its already wounded reputation. Reversing this decision is now too-little-too-late for the Australian government to wipe clean its complicity in ethnic cleansing by weaponised, designer-hunger. It will take a great deal more than that.Just as there was a bipartisan campaign, led by Malcolm Fraser and Bob Hawke, to end South African apartheid when Washington was supporting it, the Australian political class needs to lead a campaign to end apartheid in Israel-Palestine. This is Australia’s duty for another reason: Because of the sorry history of terra nullius, the white settlers’ ideological cover for the genocide of native populations, which has been transferred from Australia to the land of Palestine under the banner of “A Land Without a People for a People Without A Land”.Second, Australia has a duty to de-escalate the New Cold War. To understand that this can only be done if Australia ends its servility to a United States’ actively creating the threats that they then make us pay through the nose to protect us from.Imagine an Australia that helps bring a just Peace in Ukraine, as opposed to a mindless forever war. A non-aligned Australia that is never neutral in the face of injustice but, also, not automatically aligned with every warmongering adventure decided in Washington.Imagine an Australia which, having re-established its credentials as a country that thinks and acts for itself, engages with China in the spirit of peaceful cooperation – a far better way of addressing Beijing’s increasing authoritarianism toward its own peoples than buying useless, hyper-expensive submarines that only succeed in forcing China’s political class to close ranks around a more authoritarian core.Imagine a truly patriotic Australian Prime Minister who tells the American President to cease and desist from the slow murder of Julian Assange for the crime of journalism – for exposing American war crimes perpetrated behind the back of US citizens in their name.In the end, American powerbrokers will appreciate such an Australia better – in the same way you appreciate better a friend who tells you when you are wrong compared to a yes-man who never opposes you directly but whinges behind your back.ConclusionTo conclude, if Europe and Australia are to escape gross irrelevance, we need separate but well-coordinated European and Australian Green New Deals. This will prove pie in the sky in a world buffeted by an uncontrollable New Cold War that threatens the green transition necessary to preserve our viability as a species. To have a future, Europe and Australia must end our mindless slide from strategic dependence on the United States to improvised-impulsive-inexpedient servitude to the United States.DiEM25, our paneuropean movement, is working toward this goal. In the last fortnight, during this visit, I was thrilled to discover that there are talented people and effective organisations dedicated to the same cause. Optimism is perhaps not yet empirically justified. But hope burns strongly.Thank you.For a pdf of the above speech, click here.
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March 6, 2024
Πώς το καρτέλ της ΕΕ ένωσε τους τσιφλικάδες του Βορρά με τους αγρότες του Νότου | 247 News
*Το άρθρο δημοσιεύτηκε στην ιστοσελίδα UnHerd
The post Πώς το καρτέλ της ΕΕ ένωσε τους τσιφλικάδες του Βορρά με τους αγρότες του Νότου | 247 News appeared first on Yanis Varoufakis.
March 4, 2024
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