Technofeudalism: What Killed Capitalism

by Yanis Varoufakis

Ever since the Nixon Shock turned the dollar into a glorified IOU, Americans had been buying more or less everything that Japan’s factories could produce, paying in dollars that Japanese capitalists had no alternative but to invest in American FIRE. Following Nixon’s famous visit to Beijing in 1972, signalling America’s strategy to push a wedge between China and the USSR by establishing relations with the People’s Republic, following decades of non-communication and even war, America’s smart money envisioned China as a Japan-writ-large – a vision that Deng Xiaoping eventually indulged by opening up China to the West. Japanese electronics, Chinese clothes and Korean television sets flooded Walmart while the profits netted by Japan’s, China’s and Korea’s capitalists bought them US Treasuries, golf courses, skyscrapers and Wall Street’s derivatives. From the 1970s onwards, globalised capitalism was founded on this fascinating recycling of, mainly, Asian manufacturing profits into American rents, which in turn sustained the American imports that provided Asian factories with sufficient demand.