A quick takeaways from Yanis Varoufakis’ “Technofeudalism: What Killed Capitalism” (Part II)
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Feudalism 2.0: The Technological Dimension of TechnoFeudalism and Its Global Implications.
This is part II of my three-part summary of Yanis Varoufakis’ “Technofeudalism: What Killed Capitalism.”
… Varoufakis says this new feudalism, i.e., the Techno-Feudalism, is connected to traditional resource-driven conflicts. Varoufakis posits that the geopolitical tensions between the US and China stem from the emergence of Cloud Capital and the clash between American and Chinese techno-feudal realms. The rise of tech conglomerates like TikTok exemplifies this clash, setting the stage for a world divided into distinct spheres of influence.
The Post-1971 Economic Landscape
Varoufakis harks back to 1971, marking the abandonment of the gold standard by Nixon. This pivotal shift in monetary systems laid the groundwork for a model where the US, through dollar hegemony, sucked in goods from global economies. However, the emergence of Cloud Capital now signifies a new power shift, with China emerging as a counterpoint, challenging the dollar’s dominance.
The rise of AI adds a layer to this dynamic, with estimates suggesting an enormous $17 trillion boon to the global economy, primarily concentrated within the US and China. This intensifies the bifurcation of global power, leaving regions like Europe in a tech vacuum, further cementing the techno-feudal divide.
Varoufakis’ thesis challenges conventional notions of socioeconomic progression (among socialists,) painting a picture of a world slipping into an era akin to feudalism — only this time, entrenched in a digital facade. As the landscape evolves, the shadows of a past era loom larger, reshaping the very essence of economic power and global influence.
The ascent of big tech in China, accompanied by its banking sector, reflects a unique power merger. Unlike the US, where tech and finance operate distinctly, China’s fusion of tech giants like Alibaba with banking signifies a new paradigm. Apps like WeChat, blending multiple functions seamlessly, embody this fusion, where free payments bypass traditional banking constraints.
The pivotal year of 1971 marked Nixon’s dissolution of the gold standard. This initiated a centrally planned global economy centered around the US dollar. The US, operating on a trade deficit, ingeniously turned this deficit into a source of dominance, influencing international economics through dollar hegemony.
The Unshackling of Bankers and Monetary Creation
Post-2009, the financial crisis led to the advent of Quantitative Easing (QE), an act where central banks pumped money into the system, replacing capitalist profits. Financialization surged between 2002 and 2007, witnessing an extraordinary escalation in financialized debts, leading to an exponential rise in global financial transactions and bets.
The era of Thatcherism and Reaganism liberated bankers from previous constraints, allowing unchecked financialization. Banks, in essence, create money from thin air through loans, driving excessive financialization. However, this vulnerable house of cards necessitates bailouts, which, post-2008, culminated in an unprecedented $35 trillion injection into the system.
This colossal monetary influx inflated asset prices, without significant investment in the real economy. The resultant mass of Cloud Capital, predominantly sourced from central bank money, flourished, significantly impacting the landscape of techno-feudalism.
The massive accumulation of Cloud Capital, accelerated by central bank injections post-2008, fundamentally shifted power dynamics. Tech entrepreneurs, beneficiaries of this liquidity, harnessed it to build Cloud Capital, influencing the economy at an unprecedented pace.
Conclusion
The evolution from abandoning the gold standard to creating Cloud Capital underlines a narrative of financial feudalism’s resurgence. It reflects a landscape where financial manipulation transcends traditional economic productivity, reshaping the very essence of economic power.
To be continued…
