The tech giants have overthrown capitalism. That’s the argument made by former Greek finance minister Yanis Varoufakis, who rose to fame trying to defend indebted Greece from its German creditors. Varoufakis never quite regained the level of popularity he had in 2015. But he has remained a prominent left-wing voice. After a failed election campaign for a seat in the European Parliament in 2019, he wants to run again in June. This time neither Berlin nor the banks are his opponent. He accuses the technology companies of distorting the economy while at the same time turning people against each other.
Courtesy of Penguin Random House
Varoufakis is also a prolific author; his 17th book, written as a letter to his father, who was interested in technology, describes the development of capitalism from the advertising boom of the 1960s to Wall Street in the 1980s to the 2008 financial crisis and the pandemic. In its most captivating sections Technofeudalism argues that Apple, Facebook and Amazon have changed the economy so much that it now resembles Europe’s medieval feudal system. The tech giants are the masters, while everyone else is farmers working their land for little in return.
For Varoufakis: Every time you click on Musk doesn’t pay you. But your free work pays him in some way by increasing the value of his company. The more active users there are on X, the more people can be shown advertising or sold subscriptions. With Google Maps, he argues, users improve the product by alerting the system to traffic jams on their route.
The feudal comparison is not new. But Technofeudalism tries to introduce the idea to a wider audience. The publication in the USA, which came a month before the simultaneous initiation of antitrust measures against Apple by regulators in the USA and the European Union, was also impeccably timed.
Over Zoom, I spoke with Varoufakis from his home near Athens about how the tech giants have changed the economy — and why we should care.
This interview has been edited for length and clarity.
WIRED: This word, Technofeudalism, What does that mean? What significance does the feudal system have here?
Yanis Varoufakis: Profit drives capitalism, rent drives feudalism. Now we have moved [from one system to the other] because of this new form of supreme, all-singing, all-dancing capital: cloud capital, algorithmic capital. If I’m right, this will create new digital empires like Amazon.com or Airbnb, where the main method of generating wealth is not in the form of profit but in the form of rent.
Take the Apple Store. If you produce an app, Apple can keep 30 percent of your profits [through a commission fee]. This is a rental. It’s like a ground rent. It’s a bit like the Apple Store is a fiefdom. It’s a cloud fiefdom, and Apple earns a rent just like in feudalism. So my argument is not that we have returned from capitalism to feudalism. My argument is that we have evolved into a new system that has many of the characteristics of feudalism, but is one step ahead of capitalism. To signal this, I added the word Techno.