technofeudalism //

Yanis Varoufakis, the former Greek finance minister and a distinguished economist, stirred the intellectual pot in 2023 with his controversial thesis: capitalism, as we knew it, has died. In its place, he proposed, a new and arguably more dangerous economic system, which he termed "technofeudalism," has emerged. This idea, which builds on Marxist critiques of capitalism, argues that Big Tech firms like Amazon, Meta, and Google no longer operate under the traditional capitalist model of generating profits through commodity production. Instead, they rely on extracting "cloud rents" by controlling access to digital platforms and data. This article explores Varoufakis’s provocative theory, examines its implications, and evaluates the broader context of technofeudalism in today’s digital economy.

From Capitalism to Technofeudalism

Capitalism has historically been defined by its dependence on the production and exchange of commodities, with profits generated through labor exploitation. Under capitalism, as Karl Marx observed, social relationships between people take on the appearance of relations between commodities. In this framework, commodities embody the labor value required to produce them, and money serves as the universal equivalent mediating these exchanges.

Technofeudalism, according to Varoufakis, marks a fundamental shift. The value no longer resides in commodities but in dataa product not of traditional labor but of life itself. By using platforms like Google, Amazon, and Facebook, users actively and passively generate data through their online interactions, preferences, locations, and activities. Unlike commodities, which are tangible and tied to labor, data is produced as a byproduct of everyday life and subsequently monetized by tech giants. These companies, Varoufakis argues, act as "cloud capitalists" who extract rents from this data rather than producing or trading goods themselves.

For instance, food delivery apps such as Zomato or Uber Eats charge restaurants a percentage of their earnings simply to appear on their platforms. This fee is effectively a "cloud rent," enforced through algorithms that determine visibility and ranking. As Madhumita Murgia notes in her book Code Dependent: Living in the Shadow of AI (2024), this transformation from commodity-dependence to code-dependence profoundly alters social and economic relationships. Relationships between people increasingly take the form of interactions between data, mediated by algorithms that hold immense power over visibility, opportunity, and success.

The Human Cost of Code Dependence

Murgia’s work highlights the dark side of this new digital economy. She explores the human toll of "code-dependence," a term she uses to describe our growing reliance on algorithms and data-driven systems. Her book is replete with real-world examples: from gig workers in Nairobi tagging images for AI systems to Facebook moderators in Southeast Asia suffering from PTSD due to their exposure to violent content. The exploitation of workers in the Global South, who train AI systems under poor conditions for minimal pay, underscores the global inequalities perpetuated by technofeudalism.

This system also exacerbates social alienation. Just as labor under capitalism was alienated from its products, life under technofeudalism becomes alienated from its data. The algorithms owned by Big Tech dictate what content we see, what products we buy, and even how we perceive ourselves. Varoufakis’s description of "cloud serfs" captures this dependency. Individuals become tethered to platforms for work, communication, and consumption, with little agency over how their data is used.

The Rise of Cloudalists and Cloud Rents

The dominance of Big Techor "cloudalists," as Varoufakis calls themis facilitated by the concentration of digital infrastructure. Platforms like Amazon and Apple have become the digital equivalents of medieval fiefdoms, controlling access to critical resources. For example, Apple’s App Store charges developers up to 30% of their revenue as a "platform fee," akin to a feudal tithe. Similarly, Amazon extracts significant rents from sellers on its marketplace while controlling the algorithms that decide product visibility.

This business model thrives on network effects: the more users engage with a platform, the more valuable it becomes, creating high switching costs and reinforcing monopolies. Unlike traditional capitalist enterprises, which are subject to market competition, cloud capitalists face little regulatory oversight and enjoy near-unassailable dominance.

Technofeudalism and the State

Governments and central banks, Varoufakis contends, have played a significant role in enabling technofeudalism. The 2008 financial crisis marked a turning point, with central banks flooding markets with cheap capital to stabilize the global economy. This abundance of liquidity, coupled with the privatization of the internet, created fertile ground for tech giants to flourish.

However, the relationship between technofeudalism and the state is fraught with contradictions. On one hand, governments rely on Big Tech for surveillance, digital infrastructure, and data-driven policymaking. Predictive policing algorithms, for example, have been adopted by law enforcement agencies in the U.S. and Europe, often with discriminatory outcomes. On the other hand, states struggle to regulate these companies effectively. Efforts to impose antitrust measures or data privacy regulations have been met with resistance, highlighting the asymmetry of power between cloudalists and democratic institutions.

Critiques and Counterarguments

Not all scholars agree with Varoufakis’s characterization of Big Tech as feudal lords. Critics like Evgeny Morozov argue that tech companies remain fundamentally capitalist, as they invest heavily in research, development, and infrastructure. Morozov points out that monopolistic tendencies are not unique to technofeudalism but are inherent in late-stage capitalism, as Lenin’s theory of monopoly capitalism suggests.

Others contend that technofeudalism oversimplifies the complex dynamics of digital economies. While it is true that Big Tech wields disproportionate power, these companies also drive innovation and create value in ways that traditional feudal systems did not. The comparison to feudalism, they argue, risks obscuring the nuances of platform capitalism and its global impacts.

Pathways to Resistance

Despite these critiques, Varoufakis’s thesis has sparked important conversations about the future of democracy and economic justice. In his vision, the antidote to technofeudalism lies in democratizing control over digital platforms. He proposes a radical reimagining of corporate governance, where employees collectively own and manage companies. Such a model would eliminate the distinction between wages and profits, effectively dismantling the hierarchical structures that sustain technofeudalism.

Additionally, Varoufakis advocates for a "Bill of Digital Rights" to protect individuals from data exploitation. This framework would grant users ownership of their data and enable them to sell it on their terms, disrupting the rent-seeking behavior of cloud capitalists. The introduction of public digital wallets and universal basic income, funded by taxes on corporate revenues, could further empower individuals and reduce economic dependency on Big Tech.

Conclusion

Technofeudalism represents a stark warning about the trajectory of our digital economy. By framing Big Tech’s dominance as a new form of feudalism, Varoufakis challenges us to rethink the relationship between technology, power, and society. While his thesis is not without its critics, it raises urgent questions about the concentration of wealth and influence in the hands of a few tech giants.

As we navigate this new era, the choices we makefrom regulating data ownership to democratizing digital platformswill determine whether technofeudalism solidifies its grip or gives way to a more equitable future. The stakes are high, but so too is the potential for collective action to reclaim the digital commons and redefine the boundaries of economic and political power.

References

1. Varoufakis, Y. (2023). Technofeudalism: What Killed Capitalism. Bodley Head.

2. Murgia, M. (2024). Code Dependent: Living in the Shadow of AI. Picador.

3. Morozov, E. (2019). The Rise of Data Capitalism. The New Republic.

4. Marx, K. (1867). Das Kapital. Volume 1. Progress Publishers.

5. Zuboff, S. (2019). The Age of Surveillance Capitalism. PublicAffairs.