Technofeudalism: What Killed Capitalism

by Yanis Varoufakis

During this same decade, Amazon perfected its own formula for selling physical goods via a global supply chain through its own cloud fief – amazon.com – whose dynamics we have already examined. Thanks to Amazon’s algorithmically driven ecommerce formula, cloud rent was no longer confined to the digital world. Funded by central bank money, bolstered by private equity, these cloudalists extended their cloud fiefs across the globe, extracting gargantuan cloud rents from vassal capitalists and cloud serfs alike. In a paradoxical twist, the number of capitalists relying on good old-fashioned profit grew even while their profit margins and power declined. Likewise, these vassal capitalists have continued to enjoy the power to command labour from the majority who are reliant on wages, and they continue to own at least some of their means of production: their computers, their cars and vans, perhaps an office, warehouse or factory. Indeed, not all vassal capitalists are small-scale artisans, some are large capitalist manufacturers. But large or small, powerful or otherwise, all vassal capitalists are by definition dependent to a greater or lesser extent on selling their wares via an ecommerce site, whether Amazon or eBay or Alibaba, with a sizeable portion of their net earnings being skimmed off by the cloudalists they depend on.

From factory owners in America’s Midwest to poets struggling to sell their latest anthology, from London Uber drivers to Indonesian street hawkers, all are now dependent on some cloud fief for access to customers. It is progress, of sorts. Gone is the time when, to collect their rent, feudal lords employed thugs to break their vassals’ knees or spill their blood. The cloudalists don’t need to deploy bailiffs to confiscate or to evict. Instead, every vassal capitalist knows that with the removal of a link from their cloud vassal’s site they could lose access to the bulk of their customers. And with the removal of a link or two from Google’s search engine or from a couple of ecommerce and social media sites, they could disappear from the online world altogether. A sanitised tech-terror is the bedrock of technofeudalism.

Cloudalists like Steve Jobs, Jeff Bezos, Mark Zuckerberg, Sergei Brin do, I admit, have some things in common with Edison, Ford and Westinghouse: big egos, oversized companies, and a readiness to break things, including existing markets and state institutions, in order to shore up their dominance. But those captains of early-twentieth-century Big Business were all focused squarely on achieving profit by monopolising markets and deploying the capital of factories and production lines. They would be the first to see that the cloudalists are now becoming fabulously wealthy without needing to organise the production of any commodity. Not only that, they are free from the pressure of a market to produce cheaper, better commodities or indeed the constant fear that a competitor might come up with a product that steals their market share altogether.

Many hoped that the inflation resulting from blockages in the supply chain would be mild. The expectation that inflation would be ‘transitory’ had a logic to it: workers’ bargaining power in the 2020s was a shadow of its former self, when in the 1970s mighty trades unions could push for wage rises above the inflation rate. It followed that with only limp wage rises to support them once government furlough schemes and income support came to an end, the purchasing power of the masses would simply be depleted by rising prices, demand for goods would ebb and prices would fall. It hasn’t panned out that way. Inflation is never just a monetary phenomenon – just as money is never just a token of exchange value. When, for whatever reason, prices surge across the board, a social power game is afoot in which everyone attempts to suss out their bargaining power. Business managers try to work out how far they can raise prices – if not to profit then, at least, to recoup their own rising costs. Rentiers, both traditional and cloudalist, test the water with rent hikes. Workers assess the extent to which they can push for a pay rise – at least to compensate for the higher bills they must meet. Governments play the game too: do they intervene by using the greater income and VAT tax receipts flowing from the rising prices to assist weaker citizens being crushed by inflation? Or do they subsidise Big Business as it is squeezed by high energy prices? Or do they do nothing much? Until these q...

The kernel of German capital’s power and success is high-precision mechanical and electrical engineering. German car makers, in particular, have profited by building high-quality internal combustion engines and all the parts that are necessary to convey motion from such engines to a car’s wheels: the gear-boxes, axles, differentials and so on. Electric vehicles are mechanically much simpler to engineer. Most of their surplus value – and the profit they afford – derives from the software that runs them and connects the car to the cloud and the data that derives in turn from that. The Great Inflation, in other words, is forcing German industry to produce goods that rely a lot more on cloud capital than traditional capital. The problem, then, is this: compared to their American and Chinese counterparts, German capitalists failed to realise soon enough the benefits of investing in cloud capital – of becoming cloudalists – and lag far behind in this new game. In practical terms, they are manufacturing themselves out of a competitive position. Unable to collect sufficient cloud rents, German surpluses will suffer and so will the economy of a European Union – and its citizenry – reliant on German surpluses.

Well, I’m sorry to say, there will be no return to the good old bad old days. First, those torrents of central bank money have already built cloud capital up to critical mass. It is here to stay – and to dominate – because its immense structural power, to extract vast cloud rents from every society on Earth, remains completely undiminished. This would not be the first time a bubble has built up capital that endures after the bubble’s bursting. America owes its railways to precisely this pattern: that bubble burst in the nineteenth century but not before tracks were laid down that are still in place, from Boston and New York to Los Angeles and San Diego. More recently, when the dot.com bubble burst in 2001, bankrupting early internet-based companies whose stock market valuations had reached ridiculous levels, it left behind the network of fibre optic cables and servers which provided the infrastructure underpinning Internet Two and Big Tech. Second, the central bank money has not actually run dry. It is still flowing, albeit at a slower pace which nonetheless suffices to keep technofeudalism buoyant. Central banks can’t afford to stem their flow completely, even if this is what they must do to defeat the Great Inflation. Recent bank failures in California and Switzerland reminded America’s and Europe’s central banks that, if they dare withdraw the trillions they have pumped into the North Atlantic economies, a vortex of volatility is ready to hit the $24 trillion market for...

On 15 May 2019, President Donald Trump issued a decree which, in effect, banned Google from allowing use of its Android operating system on smartphones made by Huawei, the Chinese telecommunications conglomerate. Trump was effectively evicting Huawei from Google’s global cloud fief. Washington also told European governments to suspend their plan to involve Huawei in the roll-out of 5G mobile networks across Europe. It was much more than Trumpist folly. When Joe Biden moved into the White House, the New Cold War with China that Trump had kick-started moved up a gear – especially in October 2022 when, according to the New York Times, ‘The White House issued sweeping restrictions on selling semiconductors and chip-making equipment to China, an attempt to curb the country’s access to critical technologies.’ In essence, Biden told Beijing: the United States will crush your dreams of building a technologically advanced economy.

Recall how until the Nixon Shock of 1971, any non-American with large quantities of dollars could exchange them at will for gold owned by the US government at a fixed price of $35 per ounce. For as long as America sold more stuff to Europe and Asia than it imported from them, as it did between the war’s end and 1965, this trade surplus meant that every time America sold a jet or refrigerator in France or Japan, the foreign-held dollars that paid for them would be repatriated and America’s gold reserves would remain untouched. However, by the mid-sixties the United States had turned into a deficit country, buying goods of greater dollar value from foreigners than it sold to them. This led to a torrent of dollars leaving America for Europe and Asia and not coming back. And the larger the US trade deficit, the more claims foreigners had over America’s gold. In time, they grew anxious that the US government did not have enough gold to match their dollars and there was a run on America’s gold. To prevent losing it all, on 15 August 1971, Nixon told the world that they would no longer exchange foreign-held dollars for gold at that fixed price. In other words: no more gold for you from our vaults. Our dollars are now your problem.

So how does this relate to the New Cold War between America and China? From 1971 onwards, any non-American capitalist with massive dollar wealth faced the same problem: what to do with dollars in a country where they could not spend dollars? The only option was to take them back to America to invest them there. However, foreign capitalists soon discovered that the US government was not like other governments. In Britain, Greece or Spain, rich foreigners could buy whatever they pleased. In no uncertain terms, Washington made it clear to German, Japanese, and (later) Chinese capitalists: in our country, the United States of America, you can buy real estate. You can buy our government debt. You can buy small, insignificant companies, bankrupted factories in our rust belts and, of course, Wall Street’s labyrinthine derivatives. But keep your grubby hands off our Boeing, our General Electric, our Big Tech, our Big Pharma and, of course, our banks.

Which brings us back to Trump’s ban on Huawei and Biden’s declaration of economic war on Chinese tech companies. The underlying logic of these prohibitions was a straightforward extension of the same thinking, adapted to the circumstances of a post-2008 technofeudal world: with cloud capital dominating terrestrial capital, the maintenance of US hegemony requires more than preventing foreign capitalists from buying up US capitalist conglomerates, like Boeing and General Electric. In a world where cloud capital is borderless, global, capable of siphoning cloud rents from anywhere, the maintenance of US hegemony demands a direct confrontation with the only cloudalist class to have emerged as a threat to their own: China’s.

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.

That was the East-meets-West aspect of globalisation. Then there was, of course, the Global South – deficit countries in Asia, Africa and Latin America with weak economies constantly agonising over a shortage of dollars which they had to borrow from Wall Street to import medicines, energy and the raw materials necessary to produce their own exports, which they needed to earn the requisite dollars to repay Wall Street. Inevitably, every now and then, they ran out. At that point, the West would send in the bailiffs – the International Monetary Fund – which would lend the missing dollars on condition that the debtor government handed over the country’s water, land, ports, airports, electricity and telephone networks, even its schools and hospitals, to the local and international oligarchs who would, once in control of these companies and assets, have no alternative but to channel their earnings into Wall Street.

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...

People often ask when the dollar’s reign will end – and whether it might even be replaced by the Chinese yuan as the world’s reserve currency. But this question neglects a crucial fact: the dollar’s reign has suited most countries, including China, just fine. It has allowed countries with large trade surpluses, like China and Germany, to convert their excess production – their net exports – into property and rents in the United States: real estate, US government bonds, and any companies that Washington allowed them to own. Without the dollar’s global role, Chinese, Japanese, Korean or German capitalists would never have been able to extract such colossal surplus value from their workers and then stash it away somewhere safe. Michael Pettis, an economist who has been working and teaching in Beijing for many years, put it brilliantly: While the US dollar may create an exorbitant privilege for certain American constituencies, this status creates an exorbitant burden for the US economy overall, especially for the vast majority of Americans who must pay for the corresponding trade deficits either with higher unemployment, more household debt, or greater fiscal deficits.

It is a fallacy, therefore, to think that the dollar’s only defender is the US. Anyone who tried to end the dollar’s reign would be equally resisted by German industrialists, Saudi sheikhs and European bankers. The last thing French and Dutch exporters would want to see is the elevation of the euro to the dollar’s throne. The only governments who have ever truly desired the dollar’s demise are those directly threatened by Washington’s attempts at regime change.[7] As for the people, the one population who stand to gain the most from the abolition of the dollar’s global role are working- and middle-class Americans.

The fact that the Dark Deal between the US and China relied entirely on the dollar’s ongoing status meant that Washington had no reason to feel threatened by China’s rise. If anything, American officials saw it as functional to US hegemony. As long as Chinese capitalists needed the dollar in order to extract surplus value from Chinese workers, even the Chinese Communist Party was considered an ally, albeit an unsafe one. However, the rise of cloud capital changed everything. Compare a ton of aluminium shipped from Shanghai to Los Angeles with the targeted advertisements shown to Americans on the Chinese-owned social medium TikTok. Both yield dollars for a Chinese company. The difference is that the first bundle of dollars depends on a lump of metal produced in China physically migrating to America whereas the dollars earned by TikTok on US soil require no such physical migration.

Given the limited sales of US goods to China, that American customer would not be forthcoming if the US did not have a trade deficit with China. Additionally, America would not be able to maintain this trade deficit without the dollar’s global dominance. In short, for the said ton of aluminium to ship from China to some port on America’s west coast, two things are necessary: the dollar’s exorbitant privilege and the red ink all over America’s trade balance with China. TikTok, in contrast, has no need for additional dollars from American customers in order to produce new products for its US market. With its servers, algorithms and fibre optic cables already in place, produced and maintained by domestic Chinese monies, throwing one more viral video to its American customer base comes at zero additional (or marginal) cost. This is crucial: TikTok can, therefore, syphon cloud rents from the US market into China without relying on either America’s trade deficit or the dollar’s supremacy. Without a need for dollars to create its cloud capital, TikTok uses it to rake in its dollar-denominated cloud rents directly, seamlessly and at the speed of light. Power, thus, is shifting in a way that reduces the value of the Dark Deal to America’s ruling class and state.

As Chinese cloud capital grows in relation to terrestrial capital, China’s rich and powerful find themselves less and less subject to the US authorities’ power to regulate Chinese goods passing through their ports. So it was only a matter of time before Washington would attempt to restore the Dark Deal’s waning benefits for US business and government. The Trump administration crossed the Rubicon with its almost total ban on technology companies Huawei and ZTE as well as a move effectively to Americanise TikTok by banning its availability for further download from US app stores.[8] Its motivation was only very thinly disguised with the usual invocation of ‘national security’ concerns. Scratch the surface and the real motivation emerges: a serious – and not illogical – concern for the threat to Wall Street and Silicon Valley posed by the rise of Chinese cloud finance, which tilts the comparative advantages of the Dark Deal away from America’s and towards China’s ruling class. Compared to the original Cold War, the New Cold War has little politics behind it. Just naked technofeudal class interests.

In a way, Trump was trying to do to China what Reagan had done to Japan in 1985 under the so-called Plaza Accord, which forced it to devalue the yen massively and, thus, to limit the capacity of Japanese exporters to profit from American sales and, more broadly, from the US trade deficit. The Japanese government’s acquiescence had been swift and silent, leading Japanese capitalism into a permanent slump from which it never truly recovered.

As Trump was to find out, China was no Japan. Being outside of America’s defence umbrella, its soil free of giant US army bases like the one in Okinawa, Beijing felt none of the need to defer to Washington that Tokyo revealed in 1985. Crucially, China also had its own Big Tech to bolster its position, especially its impressive cloud finance capabilities. Unsurprisingly, faced with Trump’s aggressive move, China held its own within the Dark Deal and continued to recycle Chinese profits into American assets. Not only did Beijing not succumb to pressure to revalue the yuan (as Japan had ruinously agreed to do with the yen), its Big Tech conglomerates, like Huawei and ZTE, licked their significant wounds and set about creating their own operating system and platform software. Despite the great costs involved, China’s rulers understood that their future relied on not handing over their cloud capital, and of course their cloud finance, to America.

Then Vladimir Putin invaded Ukraine and in response America did something that changed the whole equation. In retaliation to Putin’s aggression, the Federal Reserve froze hundreds of billions of dollars that belonged to Russia’s central bank but kept within the dollar-payment circuit that the US controls fully. It was the first time in capitalist history that a major central bank’s money had been, effectively, confiscated by another central bank.[10] Even during the Crimean War of the 1850s, as Russian and British soldiers were slaughtering each other, the Bank of England continued to honour financial commitments to the Czar’s central bank and Russian debtors kept paying their loan instalments to English bankers.

Try putting yourself in the shoes of Chinese capitalists, or China’s finance minister, whose savings are in the form of dollar assets worth trillions: US Treasury Bills (i.e. loans to the American government), real estate in California, shares and derivatives in the New York money markets. Everyone knew that the US government could confiscate the lot at any time, but no one believed Washington would ever dare to, because such a move would deter anyone from ever stashing their wealth within the US-controlled dollar payments system again. Then the inconceivable happened: four days after Putin’s troops invaded Ukraine, Washington seized more than $300 billion belonging to Russia’s central bank and evicted anyone transacting through Russia’s central bank from all international payment systems.[11] Would you still be comfortable with trillions of dollars’ worth of your assets in US hands? But what could you do?

On 14 August 2020, a revolution took place inside the walls of the People’s Bank of China. Following six years of painstaking research, Beijing’s central bank rolled out a digital yuan – in experimental form but with serious intent. For the first time, anywhere, a state had issued a fully digital currency.

When you pay for your coffee or train ticket using a smartphone app or a microchip-equipped debit card, these conventional digital payments go through the infrastructure of private banks. What China had created was digital money issued directly by a central bank, cutting out these middlemen, the private bankers.

To wire payment for his raw materials to Xiu, Jürgen visits his German bank’s website, fills out the necessary digital form and presses Enter. The specified number of euros leaves his bank for the Bundesbank, Germany’s central bank, before passing through to the European Central Bank in Frankfurt. The European Central Bank then converts Jürgen’s euros to US dollars which it subsequently channels to the People’s Bank of China via a US-controlled international circuit. Once at the People’s Bank of China, its functionaries convert the money into yuan and wire it to Xiu’s bank. Finally, Xiu’s bank credits his account.

Compare this with what would happen if Jürgen, Xiu and Ai were to obtain the new digital wallets now on offer by the People’s Bank of China: Jürgen would pick up his smartphone, open the digital yuan app, send a sum of digital yuan to Xiu who would receive it instantaneously and at zero cost. End of story! Think of all the middlemen the digital yuan cuts out: Jürgen’s German bank, the Bundesbank, the European Central Bank and, crucially, the international money transfer conduit which is fully under the thumb of US authorities. It is nothing less than Washington’s, and the private bankers’, worst nightmare.[12] Before 2022, Chinese cloud finance and the digital yuan resembled a brand-new road with little traffic. Why would the ultra-wealthy of the world direct their money through a yuan-paved road, policed by the People’s Bank of China, when they could use the existing, albeit bumpy, dollar-built superhighway? A good reason appeared soon after the first explosions over Kyiv, Kharkiv and Mariupol: the aforementioned seizure by America of hundreds of billions of dollars belonging to Russia’s central bank.

Blocked from the dollar superhighway, Russian money began to use the under-utilised, glistening Chinese alternative. And it was not just Russian money that chose this new route. Many wealthy non-Russians, too, felt reluctant to continue letting their money race down the dollar freeway. They began to question the wisdom of relying entirely on the kindness of Washington’s dollar-traffic rangers, who could pull them over any time. Little by little, they began diversifying, like trucking companies redirecting some of their trucks from an older highway through a new one. In this way, Chinese cloud finance began little by little to establish itself as a viable alternative to the dollar-based international payments system.

And so it was that on 7 October 2022, under the guise of national security concerns over China’s development of sophisticated weaponry, President Biden declared a total export ban on anything that might help China develop top-notch microchips. Since microchips are the building blocks of any advanced economy, and the ban on selling chips to China extended to non-American companies that wanted to do business with American ones, Biden’s ban amounted to total economic war.

It is not the first time that war has sped up, but also skewed, historic transformations. The Second World War paved the way to the dollar taking over from the British pound the dominant role in international payments (Arab oil, for example, was swiftly re-denominated from pounds to dollars). The war in Ukraine prompted the United States to make moves which diverted considerable money flows from the dollar-based payments system to a yuan-based system run by Chinese cloud capital. As we speak, Chinese cloud rents accumulate, further overshadow Chinese capitalist profits, accelerate China’s transition to technofeudalism and, crucially, weaken the Dark Deal between the world’s two superpowers.

Focusing out of our present circumstances for a moment, so as to grasp the larger picture, it is worth recalling how, soon after it was born, and despite its youth and vibrancy, capitalism demonstrated an inherent inability to generate domestic markets sizeable enough to absorb all of the goods that local capitalist industries were producing.[13] The result was aggressive expansion overseas – a new type of imperialism motivated not so much by an urge to plunder faraway lands but to secure and corner faraway markets for the commodities produced domestically. As several capitalist nations competed for the same turf, in Africa, Asia and the Americas, these neocolonialist conflicts led to the repulsive blood-letting of the late nineteenth-century in Europe and ultimately, in the first half of the twentieth, to two world wars. Capitalism’s rise, in short, inspired industrial-scale carnage at a planetary scale.

After 1971, American capitalism generated successive crises: the oil crises of 1973 and 1979, the global debt crisis after Fed chairman Paul Volcker pushed US interest rates above 20 per cent in 1981, the 1991 crisis following the bursting of several bubbles in US financial networks, the 2001 dot.com debacle and, last but not least, the crash of 2008.[14] It was in the nature of the beast – the Minotaur, that is – which was diverting to America more than 70 per cent of European and Asian capitalists’ profits.

Could anything worse afflict a Europe dependent on the Dark Deal than the Dark Deal’s demise? Yes, there is something even worse: the gradual, worldwide shift of money and power from the capitalist to the cloudalist sphere. If my hypothesis is right, that cloud capital is overpowering terrestrial capital, sucking cloud rent increasingly out of the global value chain, then Europe is in deep trouble. Because Europe is not China. It lacks a single Big Tech company that can compete with those of Silicon Valley and its financial systems are wholly reliant on Wall Street. Europe’s lack of cloud capital means that the New Cold War, along with the energy shock[17] that the war in Ukraine inflicted upon its manufacturers, has already rendered Europe geostrategically irrelevant.

At least Europe is still rich and, in theory, able to look after its weaker citizens. The same cannot be said for Sri Lanka, Lebanon, Pakistan, India, most of Asia and the whole of Africa and Latin America. The rising price of food and fuel caused by the Great Inflation has pushed the Global South into a debt crisis as gruesome as that of the 1970s and 80s. Having been encouraged for decades to borrow dollars to import raw materials in order to produce goods for export (and also to facilitate the conversion of their oligarchs’ domestic profits into US assets), the governments of the Global South are now being bankrupted by the vastly increased cost of servicing their dollar debts.[19] The Global South faces an appalling choice. Default on their dollar debts, which means they won’t be able to buy the energy, food and raw materials they need to feed their people, run their factories and plough their fields. Or get another dollar loan from, say, the International Monetary Fund with which they can pretend to repay their existing dollar loans under two inhuman conditions: first, by handing over control of their essential sectors, such as water, electricity, to oligarchs masquerading as ‘investors’; second, by pushing domestic fuel and food prices up so high that their people will go hungry. Either way, these so-called developing countries are being forced to surrender to the dynamic of underdevelopment.

But this is not the only dreadful choice that Global South governments must make. With the world dividing into two super cloud fiefs, one dollar-based and another yuan-based, they are being forced to choose which feudal lord to submit to. Gone are the days when their oligarchs could borrow from China, or collect profits from selling grain in Shanghai, and use the money to buy properties in California or derivatives in Wall Street. Their new debt crisis is forcing the Global South’s ruling classes to pick a side. To which cloud fief will they commit future earnings from the selling of their rare earths and other raw materials? Will they still rely on Wall Street? Or will they channel their profits and rents through China’s cloud finance? Either way, the Global South is being divided, escalating the New Cold War further.

Speaking of miracles: given capitalism’s inherent tendency to deplete the commons, it was always going to take an enormous one for our species to escape climate catastrophe. Technofeudalism’s advance makes this miracle even more improbable. The Age of Cloud Capital erects two obstacles in the path of climate change amelioration. One obstacle operates at the level of politics and is obvious. A grand deal between the United States, the European Union, China (not to mention Brazil, Russia, India and South Africa) is a prerequisite for limiting climate warming to levels consistent with our species’ survival. In the shadow of this New Cold War, the best we can now hope for are two separate green transitions, one in each super cloud fief – a bifurcation of the global green agenda which, I fear, will play into the hands of fossil fuel conglomerates who will find ways to play one off against the other, allowing them to keep drilling.

After 1991, two things globalised: financial capital, which could jump continents at the push of a button, and production lines, or chains, which made it possible for American iPhones, engineered by Indian developers in San Francisco, and built by a Taiwanese company in Zhengzhou, to be sold in Philadelphia. Around two and a half billion labourers, mainly from China, India and the formerly communist countries, joined this international value chain, lifting many of them out of poverty. But the headline-generating rises in measurable incomes were often bought at the price of sheer grief.[22] Chinese migrant labourers, working sixteen-hour shifts in abominable sweatshops to produce iPhones, saw their incomes quadruple but became almost as suicidal as Indian farmers whose livelihoods were destroyed when their crops became dependent on Bayer-Monsanto’s genetically engineered seeds.[23] Even in America, the greatest beneficiary of globalisation, millions succumbed to deaths of despair.[24] These contradictions were the direct consequence of the Dark Deal. By mobilising America’s trade deficit to turn China into a capitalist powerhouse, enriching capitalists and rentiers worldwide, underinvestment-induced misery migrated to the Global North while overinvestment-induced wealth migrated to the Global South.

Think of those billions of cloud serfs who are, at this very moment, putting so much time and energy into building up someone else’s cloud capital. Their unpaid labour produces extractive power and cloud rent for very few cloudalists, money that will never re-enter the wider circulation of income, while earning them no income themselves. Allow me to describe this as the shrinking of the global value base. Add to this the wage squeeze that cloud capital also imposes on waged workers, as it increasingly turns them into cloud proles. The result is a substantial reduction in the incomes that the masses can mobilise to buy commodities. This secular drop in effective, or aggregate, demand means more and deeper economic crises.

The peak of globalisation, between 2005 and 2020, saw large fault lines develop within the world’s major trading blocks. One such fault line increasingly divided the European Union’s deficit countries in its south from its surplus countries in the north. Another fault line split America’s coastal economies from the rust belts in its middle. China’s booming coastal regions were divided from the interior of the mainland by an economic Berlin Wall. Are these fault lines subsiding now that globalisation is on the wane? Quite the opposite. Previous fault lines remain while new ones emerge, between the East and West of Europe, for example, and between Americans connected to cloudalist power and the rest.

The great challenge for Xi, however, is that the party’s authority relies on economic growth, which has for so long been generated by the enrichment of its capitalists via the Dark Deal. In theory, and in a very roundabout way, Xi has declared a class war in the name of Chinese workers, not only on the cloudalists but on Chinese capitalists, too. In August 2021, he announced curbs on ‘excessive incomes’ and, crucially, a new policy to shrink aggregate investment from 50 per cent of Chinese national income to 30 per cent – something that can only happen if Chinese capitalist profits from net exports to the United States are reduced massively while domestic wages rise.

Liberals once feared people like you and me – leftists craving a socialist transformation. When the left was defeated, liberals were relieved but continued to rail against the power of the state: in their eyes, powerful states, even bourgeois liberal ones, are what pave the road to serfdom. Is it not delectably shocking how, in the end, a global superhighway to serfdom has been constructed not because Western states were too powerful but because they were too weak? Too weak, that is, to prevent the cloud capital they birthed from taking over, disestablishing capitalism and facilitating technofeudalism.

If fascism taught us anything, it is our susceptibility to demonising stereotypes and the ugly attraction of emotions like righteousness, fear, envy and loathing that they arouse in us. In our technofeudal world, the internet brings the feared and loathed ‘other’ closer, right in your face. And because online violence seems bloodless and anodyne, we are more likely to respond to this ‘other’ online with taunting, inhuman language and bile. Bigotry is technofeudalism’s emotional compensation for the frustrations and anxieties we experience in relation to identity and focus. Comment moderators and hate-speech regulation can’t stop this because it is intrinsic to cloud capital, whose algorithms optimise for cloud rents, which flow more copiously from hatred and discontent.

Social democrats were able to make a difference during a time when power was vested in old-fashioned industrial capital. They acted as referees between organised labour and the captains of manufacturing industry, metaphorically (and occasionally literally) sitting them around a table, forcing them to compromise. The result was, on the one hand, improved wages and conditions for the workers and, on the other hand, the diversion of a chunk of industry’s profits to pensions, hospitals, schools, unemployment insurance and the arts. But as power shifted from industry to finance after the death of Bretton Woods in 1971, European social democrats and American Democrats alike were lured into a Faustian bargain with the bankers of Wall Street, the City of London, Frankfurt and Paris. The bargain was crude and simple: social democrats in government freed bankers from the shackles of regulation: ‘Go crazy! Regulate yourselves,’ they told them. In return, financiers agreed to hand over the crumbs from their substantial table, in the form of a small portion of their gargantuan gains from rabid financialisation, to fund the welfare state.