Technofeudalism: What Killed Capitalism

by Yanis Varoufakis

by my father, to the duality of things. Well before I read a word that Marx or any other economist had written, I thought I could discern several dualities buried deep in the foundations of our societies.

had stumbled upon one of the great economist’s central principles. In the world we take for granted today, labour seems like any other commodity.

promote their skills like vendors advertising their wares. They accept a market-determined price (the wage) for their labour, which reflects its exchange value, i.e. what it is worth compared to other exchangeable commodities. This is commodity labour. However, as we have seen, unlike soap powder, potatoes or iPhones, which are nothing but commodities, labour is something else besides.

None of these can ever truly be commodified. Why? Because no monetary reward can prompt a moment of true inspiration, no genuine smile can be bought, no authentic tear can be shed for a price.

For herein lies capitalism’s secret: the uncommodifiable sweat, effort, inspiration, goodwill, care and tears of employees are what breathe exchange value into the commodities that employers then flog to eager customers – this is actually what makes the building or restaurant or school desirable.

This is, indeed, the secret power of employers: to extract any surplus, either from highly skilled or from uninspired, repetitive, robotic work, they must pay for their workers’ time (commodity labour) but cannot actually buy their sweat or flair (experiential labour).

For it is ultimately they who pocket the difference between the exchange value they pay employees in exchange for their commodity labour (wages) and the exchange value of the commodities created thanks to their experiential labour. In other words, labour’s dual nature is what gives rise to profit.

Capital, in short, is both a thing (commodity capital) and a force (power capital) – just as labour is split between commodity labour and experiential labour.

The title of the most famous economics book of the twentieth century is The General Theory of Employment, Interest and Money. Published in 1936, it was written by John Maynard Keynes in order to explain why capitalism was failing to recover from the Great Depression, and the allusion to Einstein’s General Theory was intentional.

Of his fellow economists, who insisted that money ought to be understood as another commodity, Keynes once said that they ‘resemble Euclidean geometers in a non-Euclidean world’, again confirming in no uncertain terms Einstein’s influence. Conventional economic thinking about money was damaging humanity, Keynes thought.

In the same way that Einstein had ended our illusion that time stands outside, and apart from, space, Keynes wanted to stop us thinking of money as a thing, as simply another commodity, that stands outside, and apart from, our other activities in markets and workplaces.

Clueless politicians invoke penny-pinching metaphors to justify self-defeating austerity. Central bankers facing both inflation and deflation resemble the proverbial ass, both thirsty and hungry, who collapses because it can’t decide whether to drink or to eat first. Crypto enthusiasts invite us to fix the world by embracing the ultimate money-commodity form: Bitcoin

Keynes’s (Einstein-derived) advice: stop thinking about money as something separate from what we do to each other, with each other, at work, during play, in every nook and cranny of our social universe. Yes, money is a thing, a commodity like any other. But it is also something much bigger than that. It is, above all else, a reflection of our relation to one another and to our technologies; i.e. the means and the ways in which we transform matter.

Joking aside, Father was, at least indirectly, responsible for another crucial component of my political education: my inability to see how one could genuinely cherish freedom and tolerate capitalism (or, vice versa, how one could be both illiberal and left wing).

conventional fallacy: that capitalism is about freedom, efficiency and democracy, while socialism turns on justice, equality and statism. In fact, from the very start, the left was all about emancipation.

entrenched across Europe in the twelfth century, economic life involved no economic choices. If you were born into the landed gentry, it would never cross your mind to sell your ancestors’ land. And if you were born a serf, you were compelled to toil the land, on the landowner’s behalf, free of any illusion that, one day, you might own land yourself. In short, neither land nor labour power was a commodity. They had no market price.

Then, in the eighteenth century, something remarkable happened. Because of advances in shipping and navigation, international trade in things like wool, linen, silk and spices made them lucrative, thus giving British landlords an idea: why not evict en masse the serfs from land that produced worthless turnips and replace them with sheep whose backs produced precious wool for the international markets? The peasants’ eviction, which we now remember as the ‘enclosures’ – for it involved fencing them off from the land their ancestors had toiled for centuries – gave the majority of people something they had lost at the time that agriculture was invented: choice.

Landlords could choose to lease land for a price reflecting the amount of wool it could produce. The evicted serfs could choose to offer their labour for a wage.

As feudalism receded, economic choice arrived but was as free as the one offered by a mafioso who, smilingly, tells you: ‘I shall make you an offer you cannot refuse.’

The answer is that, sometime in the twentieth century, the left traded freedom for other things. In the East (from Russia to China, Cambodia and Vietnam), the quest for emancipation was swapped for a totalitarian egalitarianism.

The moment people believed they had to choose between freedom and fairness, between an iniquitous democracy and miserable state-imposed egalitarianism, it was game over for the left.

civilised form of capitalism where inequality and exploitation were kept in check in the context of a politically mediated truce between the owners of capital and those who had nothing to sell but their labour.

Whatever your definition might be, dear reader, being free to lose in a variety of soul-crushing ways can’t be it.

‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’

Three were the handmaidens of this motivated madness: the torrents of money rushing to the American Minotaur, the computer-generated complexity of financial derivatives, and the neoliberal faith that markets know best.

So now, let me try to do that: No, Dad, even though it gave capitalism a breathtaking boost for a couple of decades, the internet did not render capitalism invincible. But nor did it prove, on its own, its Achilles heel, as I initially suggested.

conjunction with the attention market that the technostructure had fabricated, and under circumstances created by the Minotaur’s spectacular rise, not to mention its 2008 fall, the internet shattered capitalism’s evolutionary fitness. And as I shall explain in the next chapter, it did this by incubating a new form of capital, which has ultimately empowered its owners to break free of capitalism and become a whole new ruling

So, here comes the briefest of eulogies: the Cretan Minotaur was slain by an Athenian prince, Theseus. Its death ended prehistory and ushered in the classical era of tragedy, history, philosophy. Our era’s Minotaur died less heroically: a victim of cowardly Wall Street bankers whose hubris was rewarded with massive state bailouts that did nothing to resuscitate the Minotaur.

Our Minotaur will, in the end, be remembered as a sad, boisterous beast whose thirty-year reign created, and then destroyed, the illusion that capitalism can be stable, greed a virtue and finance productive. By dying, it forced capitalism into its last and fatal metamorphosis, birthing a system where power is in the hands of even fewer individuals, who own a brave new type of capital.

Exclusive ownership of irrigated fertile land is a classic source of power. More than 3,000 years ago, as you once explained, the Dorians swooped down from the north upon the Greek peninsula. Because they had iron weapons that the Mycenaeans lacked, they took over the good land. Once they had it, they acquired power over those who had lost it. And until fairly recently, it was that precise combination – of land and sophisticated weaponry – that decided who did what to whom; who had power, and who had to obey. This was feudalism.

Before capitalism, capital was easy to define. It took the form of material goods that were produced specifically for the purpose of producing other goods. A steel sword, in this sense, was not capital – since

Capital goods mattered millennia before capitalism. Without the sophisticated tools of ancient engineers, no city like Babylon, temple like the Parthenon or fortification like China’s Great Wall could have been erected.

Peel’s assumption was that his workers had no option other than waged labour. It was a sound assumption in Britain where, following the enclosures – the mass privatisation of common land that took place from the end of the eighteenth century onwards – expelled peasants lacked access to any land.

Sure enough, one of capital’s natures is tangible, physical and measurably productivity-enhancing. But its second nature is an ineffable power to command others – a potent but fragile power that Peel misunderstood, to his great detriment.

The transition from feudalism to capitalism was, in essence, a shift of the power to command from landowners to owners of capital goods. For that to happen, peasants had first to lose autonomous access to common lands.

remember you telling me that every year workers at Chalyvourgiki, the Greek steel plant where you worked all your life, would take a month’s leave without pay, sometimes longer, to return to their villages to pick their olives or harvest their wheat. Such options, you commented, are good for workers but not so good for capitalism.

call it cloud capital.

All true. Except that Alexa will never, ever tell you what it truly is: a tiny cog in a vast cloud-based network of power within which you are a mere node, a speck of digital dust, at best a plaything of forces beyond your comprehension or control.

Which means what exactly? It means that what begins with us training Alexa to do things on our behalf soon spins out of our control into something that we can neither fathom nor regulate. For once we have trained its algorithm, and fed it data on our habits and desires, Alexa starts training us. How does it do this? It begins with soft nudges to provide it with more information about our whims, which it then tailors into access to videos, texts and music that we appreciate. Once it has won us over in this manner, we become more suggestible to its guidance. In other words, Alexa trains us to train it better. The next step is spookier: having impressed us with its capacity to appeal to our tastes, it proceeds to curate them. This it does by exposing us to images, texts and video experiences that it selects in order subtly to condition our whims. Before long, it is training us to train it to train us to train it to train us…ad infinitum.

network of machines, achieves consciousness. At that point, it generally takes one long look at us – its creators – and decides we are not fit for purpose, before proceeding to eradicate, enslave or, merely, make us miserable.

The problem with this storyline is that, by emphasising a non-existent threat, it leaves us exposed to a very real danger. Machines, like Alexa, or even impressive AI chatboxes, like ChatGPT, are nowhere near the feared singularity.

devastating, their power over us exorbitant. After all, today, for relatively modest sums one can buy killing machines programmed with face recognition and ‘self-teaching’ capabilities that render them effectively autonomous (by contrast with, say, drones that must be remotely piloted by humans).

My point was that the reason the steam engine changed the world, rather than ending up a showpiece in some ruler’s landscaped garden, was the epic raid on the common lands that had preceded its invention: the enclosures. The singularity we now call the Great Transformation – the name given by the great theorist Karl Polyani to the birth of the market society over the course of the nineteenth and early twentieth centuries – involved precisely this sequence: first the plunder of the common lands, made possible by brute state violence, and only then Watt’s splendid technological breakthrough.

The early internet was a capitalism-free zone. If anything, it seemed like an homage to Soviet Gosplan – the State Planning Committee whose job was to replace the market mechanism: a centrally designed, state-owned, non-commercial network. At the same time, it featured elements of early liberalism, even tributes to what I call ‘anarcho-syndicalism’: a network without hierarchy, it relied on horizontal decision-making and mutual gift exchange, not market exchanges.

Even the most ardent free-marketeers understood that planning for a nuclear confrontation with the Soviet Union was too important to be left to market forces. As the nuclear arms race gathered pace, the Pentagon chose centrally to finance the design and construction of a network of decentralised computers. Its single purpose? To work out how to make different silos housing nuclear weapons communicate with each other, and all of them with Washington, without a central hub that a Soviet nuclear bomb could take out in

Eager to enlist the brightest computer geeks from across various countries, it also made sense to design the internet in such a way that maximised unencumbered communication between the technostructure’s experts. A

Those building the original internet decided on ‘common’ or ‘open’ protocols, languages that were available for anyone to use for free.

TCP/IP, which refer to a protocol our computers use to send or receive information. Or POP, IMAP and SMTP, the original protocols that, still, allow us to email each other. Or, perhaps the most visible of them all, HTTP – the protocol by which we visit websites. We pay not one penny to use these protocols, nor do we suffer advertisements as the indirect price for using them.

It is in the nature of financiers to gamble with the money clients ask them to process on their behalf, even if they only get to handle it for a few minutes. That’s how they turn a profit. Their only constraints are the alertness of their clients and the occasional snoopings of a financial regulator. That’s why complexity is the financiers’ friend – for it allows them to disguise cynical gambles as smart financial products.

As with the original Enclosures, some form of fence would be necessary to keep the masses out of such an important resource. In the eighteenth century, it was land that the many were denied access to. In the twenty-first century, it is access to our own identity.