© Getty Images

The new economic reality -

"Capitalism is dead. Now we have something much worse." In his new book, 'Technofeudalism,' Greek economist Yanis Varoufakis argues that we're seeing an epic shift. And this isn't just about new tech, it's about the world dealing with a whole new economic system and political power structure.

© Getty Images

From academia to Greece's financial frontline -

In 2015, during the peak of the Greek debt crisis, Varoufakis went from academic anonymity to Greece’s finance minister. He loudly opposed the harsh terms the banks wanted to impose, predicting severe austerity. A majority of Greeks supported him, leading to a tense standoff with the IMF and EU as he refused their terms.

© Getty Images

Tsipras' choice -

Prime Minister Alexis Tsipras, who appointed Varoufakis, ended up accepting the IMF and EU’s terms. Some saw it as the only way to save the country from bankruptcy, while others viewed it as a treacherous betrayal. It all depends on who you ask, of course.

© Getty Images

The "irritating" voice -

Back then, the Financial Times dubbed Varoufakis “the most irritating man in the room” during negotiations, so it's no surprise that his book 'Technofeudalism' is still considered controversial. In 2023, hating on tech was nothing new, but today, questioning Musk's and Bezos's motives and actions has become the usual response to our current predicament.

© Getty Images

The strange new town -

"Imagine stepping into a town from a sci-fi story," Varoufakis writes. "People are trading gadgets, clothes, shoes, books, songs, games, and movies. Everything seems normal at first, until you start noticing something strange."

© Getty Images

A modern feudal story -

Turns out, every shop and building in this town belongs to a guy named Jeff. People walk different streets and see different stores because his algorithm controls everything, dancing to Jeff’s tune. Jeff Bezos (owner of Amazon) doesn’t produce capital; he charges rent. Varoufakis argues this isn’t capitalism: it’s pure feudalism.

© Getty Images

The cloud serfs -

And the people? The people are "cloud serfs," so out of touch with themselves, others, and their class consciousness that they don’t even realize that their tweeting, posting, sharing, and subscribing are actually constantly adding value to these companies. 

© Getty Images

The algorithm's puppet show -

Technofeudalism argues that our preferences are no longer our own, but manufactured by machine networks, or the cloud. This theory suggests the cloud creates a feedback loop that strips us of our agency. We train the algorithm to find what we like, and then the algorithm trains us to like what it offers.

© Getty Images

The web of personalized suggestions -

"When Amazon suggests books, they're usually ones I want to read - same with Spotify or Netflix. They know me well thanks to this dual feedback process between me, you, and the machine," says Varoufakis.

© Getty Images

Capitalism's transformation by cloudalists -

In a nutshell, Yaroufakis believes capitalism has been taken over by cloudalists, who have created new monopolies over markets and desires. These cloud lords started as profit-seeking entrepreneurs but became rentiers, charging rent from vassal capitalists (lower-ranking companies using their platforms), cloud proles (underpaid workers), and cloud serfs (us, giving our data for free).

© Getty Images

Accountability for tech billionaires -

Ethics Centre Fellow Gwilym David Blunt emphasizes the need for policymakers to hold tech billionaires like Jeff Bezos, Elon Musk, and Mark Zuckerberg accountable. He also warns that our deep reliance on cloud technology primarily benefits these tech moguls.

© Getty Images

The modern-day overlords -

"The curious thing about these tech billionaires is that they often identify as 'libertarians,'" says Dr. Blunt. "But they're actually authoritarians, more interested in their own freedom from regulation. They're like modern-day feudal overlords, wanting to be free of constraints, much like the divine right of kings."

© Getty Images

The threat of centralized power -

"Power is slowly centralizing in the hands of a few people," claims Dr. Blunt. "This is undermining democratic society because we're creating a hyper-concentrated source of economic power that can't be checked by the state due to its transnational nature."

© Getty Images

The downfall of capitalism -

The growth of cloudalist empires enriches only the overlords while impoverishing everyone else. It strips away freedoms, reducing them to the meaningless consumerism of buying endless varieties of the same thing. This is, in fact, technofeudalism, and it has already killed capitalism.

© Getty Images

Technofeudalism and military economy -

Varoufakis accurately describes medieval feudalism as a system based on land rents and a captive peasantry. But it was also a self-replicating social-military hierarchy; vassals and serfs had to answer the call to arms, making feudal societies permanent military economies.

© Getty Images

The origins of technofeudalism's infrastructure -

The internet, the backbone of technofeudalism, has an ironic origin. Varoufakis points out that it was designed by the technostructure resulting from President Roosevelt’s wartime deal with American industry. Its purpose was to serve the permanent war economy of the national security state by coordinating the nuclear arsenal efficiently without a central hub.

© Getty Images

Tracing technofeudalism back to WWII -

The roots of technofeudalism stretch back to World War Two codebreaking and the origins of digital computing. It was born out of the 'liberal militarism' of the Anglophone Atlantic powers, with their shared 'pax technologica'—a financial empire supported by high-tech deterrents capable of destroying enemy cities from a safe distance.

© Getty Images

The return to conflict -

In the era of liberal capitalism, war was seen as an aberration and a failure. However, if technofeudalism has indeed replaced capitalism, substituting profit with rent and markets with fiefdoms, we might see it replacing the norm of peace with the expectation of war. Sound familiar?

© Getty Images

The irony of cloud control -

Varoufakis suggests that the only political force capable of keeping cloud capitalists in check and preserving democracy is, ironically, the Chinese Communist Party. President Xi placed strict limits on Chinese cloudalists like Jack Ma, aiming to keep China's cloud finance within bounds deemed acceptable by the party.

© Getty Images

Chinese cloud lords -

The Chinese leader can make Chinese cloud lords disappear. Unlike in America, where corporate barons are protected, in China, their counterparts serve at the pleasure of the despot; President Xi holds a monopoly on the legitimate use of force and the sole authority to decide when and against whom that force can be used.

© Getty Images

Breaking free from cloud-serfdom -

Mr. Varoufakis believes it's not too late to liberate ourselves from our cloud serfdom. "We need social control over the algorithm. The real question isn't what they know about us, but who owns them? And how can a democratic society take control of the algorithms for the benefit of the many?" he said.

© Getty Images

The politics of cloud control -

The question of who controls technology and to what end is less mysterious. The emerging political settlement is actually quite clear; we see the quarrels and agreements between governments and cloud lords. Governments aim to protect their borders, make strategic moves, control resources, police their citizens, and spy on others.

© Getty Images

Power play -

Cloudalists have the technology, expertise, money, and fame, and they clearly want more. In China, it's clear who's in charge, for better or worse. In America, the system is heading for a titanic political contest, as cloud lords have the freedom to align with whomever they choose.

© Getty Images

Cloud sovereigns: the US and China -

Globally, there are two sovereigns of the cloud: the US and China. Their domains are imperial, and all other states play the roles of vassals, mercenaries, or guerrillas. The rivalry between these two cloud sovereigns is obvious and getting more intense every day.

© Shutterstock

The fierce rivalry of cloud sovereigns -

Henry Farrell and Abraham Newman’s 'Underground Empire: How America Weaponized the World Economy' describes the US Treasury as a "non-combatant command." They illustrate how Washington sacrificed core capitalist principles—respect for private property and free movement of capital—for national security priorities.

© Getty Images

The battle for data and chips -

Data, both big and individualized, are today's most strategic and lucrative resource. So too are the machines and infrastructure for processing and transmitting data. Chris Miller's 'Chip Wars: The Fight for the World's Most Critical Technology' explores how the US-China contest over microchips is at the center of both a trade war and an arms race.

© Getty Images

The battle for global communication and space -

The US fight against Huawei aimed to prevent China from establishing a global communication network open to American interception and control. At the higher end, there's also an armed contest for control over space, starting with the satellites essential for digital communications.

© Getty Images

Old politics, new tech -

Technofeudalism is militarized and imperial, hierarchical and extractive. The technologies and techniques are new, but the politics are old. As profit has been subordinated to rent, militarized technofeudalism seems poised to make war the new normal.

© Getty Images

The eternal challenge -

"All political problems have political solutions. The difficulty lies in organizing and turning our collective interest into collective action. But that's been the challenge of politics since the dawn of democracy," concludes Varoufakis. 

Sources: (The Guardian) (World Peace Foundation) (Intelligencer) (The Beautiful Truth) (The Ethics Centre)

See also: AI replacing politicians? Experts share insights on what's to come

© Getty Images