Of Techno-Feudalism and Capitalism

Jayakosh Chidabaran

Yanis Varoufakis, the distinguished economist and former Greek finance minister coined the term techno-feudalism. His book, Techno-Feudalism: What Killed Capitalism, published in 2017, stirred up controversy not only among high priests of capitalism but also among Marxist ideologues. For Marxists, proclaiming the death of capitalism is anathema, which leaves them with no mortal enemy in bourgeois to wage an unending war of liberation.

In the eighteenth century, the commodification of land, labour, and invested capital paved the way for the capitalist modes of social systems. The owners of machinery capital, steamships, steam engines, electricity, and telephone, who assumed risks and controlled the labour force, quickly became the new lords of the present, much more powerful and ruthless than feudal masters of the past.

Karl Marx and Fredrick Engels, in their book, The Communist Manifesto, eulogised the virtues of capitalism in the first three pages. The Manifesto could also be regarded as a brochure for globalisation, where the bourgeois effectively dismantled the Chinese walls of superstitions with the advent of technology and employment of the means of production.

Workers lived in squalid conditions with appalling wages and gross human rights violations. In response, the first libertarian movements, the first trade unionists, sought to truly emancipate the proletariat from the clutches of oppression of the bourgeoisie.

Though Marx was never a ‘statist,’ communist regimes didn’t eschew the domineering state control and operated as bourgeoisie regimes in disguise.

Capitalism required democratic structures and independent secular institutions, and their relationship was more symbiotic. It warranted an educated and healthy workforce, preservation of’ workers’ rights, universal adult suffrage, competition, and efficiency to drive free markets and thwart monopolies. Double-entry book-keeping and joint stock corporations conjured up the two pillars of capitalism, namely markets and profits.

Adam Smith, in his book, The Wealth of Nations, written in 1776, together with ‘The Theory Of Moral Sentiments,’ entrenched capitalism as the predominant social system, extolling its virtues. But, capitalism in its truest form existed only in theory and in the imagination of Adam Smith, citing the baker, the butcher and the brewer analogies.

Capitalism, in practice, has always relegated itself to cronyism and lobbying, which was oligarchic and corrupt. The baker, butcher and brewer were replaced by Ford, GE, Edison and Krupp.

Just as capitalism was brewing under the ethos of feudalism, so was a new phenomenon taking shape in the consolidated democracies of the Americas and Europe. It goes under the moniker techno-feudalism, exacerbated by the 2008 Great Recession and the adoption of extraordinary monetary policies in the form of quantitative easing. Its undercurrents are strong and have feudal undertones. The west coast of the US in Silicon Valley and the east coast of China, which gave rise to China’s Big Tech, were the geographical torchbearers of this revolution that later spilled over into geopolitical frictions.

Software technology companies thrive on network effects; the more subscribers and users are added, the higher their engagement, stickiness to the platform and high switching costs. When Facebook users or X (formerly Twitter) spend inordinate hours on these platforms, they add to these companies’ capital stock by serving paid advertisements or selling subscriptions.

Elon Musk doesn’t pay the users, but users pay for the valuation of his company with their time and user-generated content.

Unprecedented in the history of humanity, the vassals or subscribers/users in the 21st century are producing capital, which, in medieval fiefdoms, those vassals produced agricultural commodities by toiling in pastoral lands.

A digital trading platform like Amazon or Alibaba charges approximately 30-40 percent fees or rent per transaction on their platform. And these software infrastructure companies don’t produce goods and services, similar to traditional brick-and-mortar capitalists. The proliferation of smartphones and quantum advancements in telecommunications and broadband technology have enabled these tech leviathans to harness the massive power of network effects.

Airbnb, Lyft, Uber, Grub Hub, Instacart, and Zomato are software infrastructure companies that don’t own real estate, taxis, or restaurants but capitalise on the power of network effects and digital scaling to extract rents, both from the demand and supply side of the platform for each e-commerce transactions on it.

An antique shop in Mumbai, an Uber driver in Los Angeles, and factories in Dongguan increasingly rely on digital platforms to find customers. By removing a URL, these tech giants have unfettered power to remove any individual or commercial entity from the face of the earth. Community standards and sanitised tech-error are new instruments of control and subservience.

Just as in the nineteenth century, capitalists depended on feudalism for food supply, today; techno-feudalists depend on capitalists to perpetuate a rentier economy. The profits from goods and services produced by capitalists are siphoned off in the form of rents. Yanis calculated the drainage to be in the range of 35-40 percent of the GDP from the circular flow of income, with the consequences of decreased investments, lower incomes, and depressed demand and spending in the economy.

The multiplier effects from high investments spurring higher income and demand are lost in a tidal wave of rent-seeking machinery of techno-feudalism. ‘Cloud Proles’ are another category of people, synonymous with the cloud proletariat, who work in Amazon fulfilment centers and are constantly monitored by CCTV cameras and algorithms, thus curbing their privacy and autonomy.

Perhaps the most harmful effect of this new feudalism is that the entire cloud capital, comprising software programs, data centers, availability zones, servers, and optic fibers, is designed to act as a behavioural modification machine. They aid in democratic recession by spreading disinformation and discontent through the disappearance of quality jobs and reduced economic investments. This failure of the market economy is perceived as a failure of democratic polity, which causes disillusionment among the masses.

The world is fast accelerating towards a ‘technological singularity’ that is cloud-based and algorithm-driven. The unsuspecting masses are the ‘cloud serfs,’ the addicts toiling with their time and attention—manipulated by sophisticated and intelligent software programs—to create massive wealth for the neo-techno-feudal lords, who don’t produce anything, unlike classical capitalists. Time is money under capitalism driven by profits, markets, and competition. But the new techno-feudalists have successfully diverted that time onto their alluring platforms, creating a generation of doom-scrolling, vulnerable and virtual communities.

The real identities of citizens are now defined by and retrogressed into digital identities on these networks.

Little did this generation know that they are caught up in a vicious triad of engagement-behavioural modification-addiction sequences, over which they have lesser and lesser control. Conventional markets are analogous to Hegelian Dialectics of thesis, antithesis and synthesis that, in real life, found expression in understanding one’s true self by being able to deliberate freely for price negotiations and consensually agreeing on terms.

Now, such synthesis is not the result of rational, autonomous thinking but is replaced by algorithms owned by a few powerful individuals. Free choice is subdued. This subjugation has historical precedence, that of feudal lords of the past. The only difference is that if those serfs and vassals in the medieval era were coerced and intimidated into submission, in the 21st century, surrender is voluntary.

[Courtesy: Madras Courier]

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Frontier
Vol 57, No. 4, Jul 21 - 27, 2024