Technofeudalism: What Killed Capitalism

by Yanis Varoufakis

As mentioned at the start of the chapter, when the bottom fell out of Wall Street, China stabilised global capitalism by cranking up domestic investment to more than half of China’s national income. It worked, in that Chinese investment took up much of the global slack caused by Western commitment to austerity.[3] China’s international stature rose, and its accumulating dollar surpluses allowed Beijing, in addition to feeding Wall Street, to become a major investor in Africa, Asia, even in Europe through its famed Belt and Road Initiative. (There was a price, of course, for this sparkling new role: to elevate investment to such heights, Chinese workers’ share of the pie had to decline while Chinese rentiers, operating within China’s own FIRE sector, got seriously richer. Specifically, investment rose on the back of loans using as collateral land that China’s local authorities made available to developers. Thus, the post-2008 investment drive went hand in hand with the inflation of house and land prices across China.) In the same way that cloud capital rose in the US on the back of central bank monies from the Fed, so the same occurred in China on the back of Beijing’s investment drive. Silicon Valley’s Big Tech soon discovered a mighty competitor: China’s Big Tech. Westerners underestimate it. We think of Baidu as a Chinese Google knock-off. Of Alibaba as an Amazon imitator. They are much more than that. Indeed, to grasp the enormity and nature of China’s Big Five cloudali...