Re: <nettime> Yanis Varoufakis: What is techno-feudalism?

Amazon.com, Facebook, etc. are not markets. As you enter them, you leave
capitalism behind. Within these platforms, one algorithm (belonging to
one person or to very few persons) decides what is on sale, who sees
which commodity is available, and how much rent the owner of the
platform will keep from the profits of vassal-capitalists allowed to

trade within the platform.

This is incorrect and shows the risk of an economist/politician doing media analysis. There is not 'one algorithm' running Amazon or Facebook. In fact, many contemporary platforms employ hundreds of microservices, with teams assigned to one or more of these services, often in different coding languages or frameworks. Yes, the platform-owner exerts a significant degree of control over the conditions within it. But this does not annihilate pushback from producers (e.g. eBay lowering fees after protests from sellers, Uber being forced to class freelancers as employees in certain jurisdictions, etc). Yanis's analysis also erases any competition between platforms (e.g. Netflix vs Hulu vs HBO etc). Platforms don't 'leave capitalism behind' - sure they introduce new conditions but also rely heavily on conventional aspects of capitalism (e.g. Uber beholden to investors, Google's revenue coming from advertising).

Big Tech’s workers do not even collect 1% of their employer’s revenues. This is
because paid labour performs only a fraction of the work that Big Tech
benefits from. Who performs the bulk of the work? Most of the rest of
us! For the first time in history, almost everyone produces for free
(often enthusiastically)

Also incorrect. In my PhD on Uber, Airbnb, and other platforms, cost of labor actually consumed a huge amount of the bottom line each year. Indeed, these frustratingly high costs were what fueled Uber's self-driving car pilot programs, and drove pundit speculation that human labor would soon be replaced. Of course, this turned into a nightmare and Uber stopped that program in 2020 I believe.

This analysis not only erases the visible pool of working class labor that fuels platforms like Deliveroo, Uber, etc, but it also ignores the hidden labor that many platforms benefit from. Gray and Suri call this 'ghost work'. We can think of content moderators forced to suffer through traumatic content day in and day out. Technically they work for third party companies that contract to Big Tech, neatly severing much of the responsibility for workers. There's also a raft of other IT services (e.g. data labelling, microtasks, crowd-work etc), with much of this hidden labor sourced from the Global South, with poor pay and precarious conditions.

Sure, platforms also benefit from free labor in the form of reviews (although there's also a black market for these). But the danger here is that Yanis suggests that the problem is naive young Westerners doing free labor because we've reached some shiny and unprecedented new form of capitalism. The reality is that platform labor looks very much like older forms of labor - racialized, gendered, leveraging colonial disparities, etc.

Command capital, in contrast, comprises produced means of organising the means
of industrial production. Its owners can extract huge new value without
owning the means of industrial production; merely by owning the
privatised informational networks that embody command capital.

Yes, but other commentators have picked up on this years ago. There's the widely used Tom Goodwin quote: "Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate." His book came out in 2018. In fact, my own book from 2018 basically focuses on how platforms 'exhaust' or extract this labor rather than 'using' it in the traditional sense. That's not to say more attention and research on this isn't useful and needed - it is. But the implicit claim throughout the interview that no one else has recognized or diagnosed these conditions (that he terms techno-feudalism) is a little too much.

Ngā mihi / best, Luke

On Mon, 31 Jan 2022 at 22:30, Felix Stalder <felix@openflows.com> wrote:

At the end of a long interview on crypto, conducted by Evgeny Mozorov,
Yanis Varoufakis outline, quite succinctly, his argument for rise of
"techno-feudalism". It centers around the seeming paradox: "Capital is
getting stronger but capitalism is dying."

https://the-crypto-syllabus.com/yanis-varoufakis-on-techno-feudalism/

__Q:
ecently, you’ve taken up the theme of ‘techno-feudalism’, pointing out
that capitalism is no longer what it once was. If I understand your
thesis correctly, what makes the current system ‘feudal’ is that A)
markets are no longer key to the making of profits (e.g. the QE
experience suggests as much), while B) tech platforms have amassed
immense political power, which is unprecedented in capitalism. Is it a
correct summary of your argument? Are there other important dimensions
to ‘techno-feudalism’ that this summary doesn’t capture?

__A:
The question is this: Is capitalism undergoing one more of its many
metamorphoses, thus warranting nothing more than a new epithet, e.g.
rentier capitalism, platform capitalism, hyper-capitalism or
xxxxx-capitalism? Or are we witnessing a qualitative transformation of
capitalism into a brand new exploitative mode of production? I think the
latter. Moreover, this is not just a theoretical issue. If I am right,
grasping the radicality of this transformation is crucial to opposing
this new systemic exploitation.

Puzzlement is, of course, an understandable reaction to my claim – which
needs a great deal of explanation and substantiation. Unable to offer it
here in full (Nb. I am dedicating my next book to the subject), here is
a flavour:

Capitalism is everywhere we look. Capital is accumulating rapidly and
beating labour over the head everywhere and in cruel new ways. So, how
come I argue that this is no longer capitalism – but, rather, something
worse and distinct? Let me begin by reminding our readers that back in
the 1780s, feudalism was everywhere and feudal lords were stronger than
ever. However, surreptitiously, capitalism was already infecting
feudalism’s roots and a new ruling class (the bourgeoisie) was in the
process of taking over.

My claim is that, similarly today, capitalism – like feudalism in the
1780s – is being usurped by a far more exploitative and very distinct
new extractive/exploitative system (which I call techno-feudalism), one
that is arriving complete with a new ruling class.

Critics of my thesis will point out, correctly, that capitalism has
undergone many transformations – from its early competitive phase, to
monopoly-oligopoly capitalism (1910–onwards), its Bretton-Woods period
(during which finance was kept on a leash with capital controls, etc.),
financialised capitalism (from 1980–onwards) and, more recently, rentier
capitalism. All these capitalisms were distinct and interestingly
different from one another. BUT, they were each a version of capitalism.

What makes a system capitalist? The answer is: It is a system driven by
private profits (Nb. not rents) extracted within markets. (To compare
and contrast, feudalism was driven by rents extracted outside of
markets.) Has that changed? I believe so. What has replaced profit on
the one hand and markets on the other? My answer: Central bank money has
replaced private profit (as the system’s main fuel and lubricant) and
digital fiefdoms/platforms have become the realm in which value and
capital are extracted from the majority by a tiny oligarchy.

Let me explain this in greater detail:

Hypothesis 1: Central bank money replaced private profits as the
system’s driver

Profitability no longer drives the system-as-a-whole, even though it
remains the be-all and end-all for individual entrepreneurs. Consider
what happened in London on August 12, 2020. It was the day markets
learned that the British economy shrank disastrously – and by far more
than analysts had expected (more than 20% of national income had been
lost in the first seven months of 2020). Upon hearing the grim news,
financiers thought: ‘Great! The Bank of England, panicking, will print
even more pounds and channel them to us to buy shares. Time to buy shares!’

This is just one of countless manifestations of a new global reality: In
the United States and all over the West, central banks print money that
financiers lend to corporations, which then use it to buy back their
shares – whose prices are thus decoupled from profits. The new barons,
as a result, expand their fiefs, courtesy of state money, even if they
never earn a dime of profit! Moreover, they dictate terms on the
supposed Sovereign – the central banks that keep them ‘liquid’. While
the Fed, for example, prides itself over its power and independence, it
is today utterly powerless to stop that which it started in 2008:
printing money on behalf of bankers and corporates. Even if the Fed
suspects that, in keeping the corporate barons liquid, it is
precipitating inflation, it knows that ending the money printing will
bring the house down. The terror of causing a bad debt and bankruptcy
avalanche makes the Fed a hostage to its own decision to print and
ensures that it will continue printing to keep the barons liquid. This
has never happened before. Powerful central banks, which today keep the
system going singlehandedly, have never wielded so little power. Only
under feudalism did the Sovereign feel similarly subservient to its
barons, while remaining responsible for keeping the whole edifice together.

Hypothesis 2: Digital platforms are replacing markets

Amazon.com, Facebook, etc. are not markets. As you enter them, you leave
capitalism behind. Within these platforms, one algorithm (belonging to
one person or to very few persons) decides what is on sale, who sees
which commodity is available, and how much rent the owner of the
platform will keep from the profits of vassal-capitalists allowed to
trade within the platform. In short, more and more economic activity is
shifting from markets to digital fiefs. And that’s not all.

During the 20th century, and up to this day, workers in large capitalist
oligopolistic firms (like General Electric, Exxon-Mobil, or General
Motors) received approximately 80% of the company’s income. Big Tech’s
workers do not even collect 1% of their employer’s revenues. This is
because paid labour performs only a fraction of the work that Big Tech
benefits from. Who performs the bulk of the work? Most of the rest of
us! For the first time in history, almost everyone produces for free
(often enthusiastically), adding to Big Tech’s capital stock (that is
what it means to upload stuff on Facebook or move around while linked to
Google Maps). And, moreover, this capital takes a new, far more powerful
form (see below, where I talk about command capital).

At the same time, firms operating in normal capitalist markets – outside
Big Tech and Big Finance – see their profitability collapse anyway,
their dependence on central bank money grow exponentially, and their
ownership be gobbled up by private equity and SPACs. Ergo, as feudal
social relations of production were on the wane (and replaced by
capitalist social relations) in the 1780s, today it is capitalist social
relations of production that are being replaced by what I call
technofeudal social relations.

Summing up:

Capital is getting stronger but capitalism is dying. A new system is
taking over in which a new ruling class owns and runs both the state
money that lubricates it (instead of profits) and the new non-market
realms in which the very, very few make the many work on their behalf.
Capitalist profits (in the sense of the entrepreneurial profits as
understood by Adam Smith and Marx) are disappearing, while new forms of
rent are accumulating in the accounts of the new techno-lords in control
of both the state and the digital fiefs, in which unwaged or precarious
work is performed by the masses – who begin to resemble techno-peasants.

__Q:
A common refrain in arguments about the rise of techno-feudalism is that
tech platforms are just passive rentiers who are deriving immense
profits from user data for which they pay very little. To put this in
the most extreme way possible, these are lazy, mostly immaterial
rentiers, who, having amassed a lot of IP, are now resting on their
laurels. This reading also informs many of the enthusiastic accounts of
Web3, which promise to share data wealth with the users who generated
it. Yet, if one looks at the balance sheets and earnings statements of
these firms, a different picture emerges: they actually invest more –
rather than less – in material and tangible assets than non-tech firms
(and more than they themselves did a decade ago), all while incurring
immense R&D and capital expenditures (e.g. Amazon’s for 2020 was over
$40 billion; Alphabet’s was almost $30 billion). This seems to fit
rather well with the view of these firms as capitalist enterprises that,
while controlling some markets, still compete in others (Google,
Facebook, and Amazon in advertising; Google, Microsoft, Amazon, and
Alibaba in cloud computing and AI services). Aren’t we running the risk
of minimizing the really-existing capitalist dynamics of this tech
economy when we emphasize those related to feudalism?

__A:
I agree with you in this sense: Jeff Bezos, Elon Musk, et al. invest
massively and are nothing like the lazy aristocrats of the original
feudal era. But that does not mean that their investment is part of a
standard capitalist dynamic. Techno-feudalism is not merely feudalism
with gadgets. It is simultaneously much more advanced than capitalism
and reminiscent of feudalism.

Let me be more precise. The massive investment of Big Tech that you
mention is crucial. Not just because of its size but, primarily, because
of what it produces: a new form of capital that I call command capital.
What is command capital?

Standard capital comprises produced means of production. Command
capital, in contrast, comprises produced means of organising the means
of industrial production. Its owners can extract huge new value without
owning the means of industrial production; merely by owning the
privatised informational networks that embody command capital.

Command capital, to be more precise, lives on privately owned
networks/platforms and has the potential to command those who do not own
it to do two things: Train the machines/algorithms on which it lives to
(A) direct our consumption patterns; and (B) directly manufacture even
more command capital on behalf of its owners (e.g. posting stuff on
Facebook, a form of labour de-commodification).

In more abstract terms: Standard capital allows capitalists to amass
surplus exchange value. Command capital, in contrast, allows
techno-lords (i.e. Jeff Bezos, Elon Musk, et al.) to amass surplus
command value. Command value? Yes: Any digital commodity has command
value to the extent that its buyer can use it to convert expressive
everyday human activity into the capacity to train an algorithm to do
two things: (A) make us buy stuff, and (B) make us produce command
capital for free and for their benefit.

In the language of Marx’s political economy, the magnitude of command
value contained in any digital commodity is determined by the sum of:
the surplus value of the commodities it makes us buy (see A above) + the
labour time socially/technically necessary for us to produce a unit of
command capital (under B above), to be appropriated instantly by the
techno-lords.

In summary, what Bezos, Musk, et al. are accomplishing through their
massive investments cannot be understood in terms of either feudalism or
capitalism.

- Feudalism was based on the direct extraction of experiential/use value
from peasants.

- Capitalism was based on the extraction of surplus labour from waged
labour.

- Technofeudalism is a new system in which the techno-lords are
extracting a new power to make the rest of us do things on their behalf.
This new power comes from investing in a new form of capital (command
capital) that allows them to amass a new type of value (command value)
which, in turn, grants them the opportunity to extract surplus value
from (i) vassal-capitalists, (ii) the precariat, and (iii) everyone
using their platforms to produce on their behalf, unconsciously, even
more command capital.

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