Technofeudalism: What Killed Capitalism

by Yanis Varoufakis

For Wall Street to exercise fully its magnetic powers over foreign capital, profit margins in the United States had to catch up with profit rates in Germany and Japan. A quick and dirty way to do this was to suppress American wages: cheaper labour makes for lower costs makes for larger margins. It is no coincidence that, to this day, American working-class earnings languish, on average, below their 1974 level. It is also no coincidence that union busting became a thing in the 1970s, culminating in Ronald Reagan’s dismissal of every single unionised air traffic controller – a move emulated by Margaret Thatcher in Britain who pulverised whole industries in order to eliminate the trades unions that inhabited them. And faced with a Minotaur sucking most of the world’s capital into America, the European ruling classes reckoned they had no alternative but to do the same. Reagan had set the pace, Thatcher had shown the way. But it was in Germany, and later across continental Europe, that the new class war – you might call it universal austerity – was waged most effectively. A new era had begun. The post-war détente between capital and labour was now in its death throes. The final straw came in 1991, with the demise of the Soviet Union. Thereafter Russia and more importantly China voluntarily inducted themselves into globalised capitalism. Two billion low-waged workers entered the Minotaur’s realm. Western wages stagnated further. Profits swelled. The torrent of capital rushing to...