Technofeudalism: what killed capitalism

tags

Political Economy

Notes

Preface

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capitalism is now dead, in the sense that its dynamics no longer govern our economies. In that role it has been replaced by something fundamentally different, which I call technofeudalism.

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What caused this to happen? Two main developments: the privatisation of the internet by America’s and China’s Big Tech. And the manner in which Western governments and central banks responded to the 2008 great financial crisis.

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cloud capital has demolished capitalism’s two pillars: markets and profits.

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Markets, the medium of capitalism, have been replaced by digital trading platforms which look like, but are not, markets, and are better understood as fiefdoms. And profit, the engine of capitalism, has been replaced with its feudal predecessor: rent.

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1: Hesiod’s Lament

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My father was the only leftie I know who failed to understand why calling Maggie Thatcher ‘The Iron Lady’ was somehow derogatory. And I must have been the only child raised to believe that gold was iron’s poorer cousin.

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Father’s friends

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A child’s introduction to historical materialism

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Bronze Age communities that did not learn how to baptise iron perished, he insisted.

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communities that mustered the techne, the art, of ‘steeling’ iron thrived

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Iron’s magic underpinned the new role of technology as the driving force that led to civilisation and its discontents.

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But, still, history was counted in the millennia. To be counted in the centuries, we had to discover the magic of iron.

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Henry Bessemer, who invented a technique for producing large quantities of steel cheaply by blowing air through molten pig iron to burn off the impurities. It was then, according to Dad, that history accelerated to speeds with which we are familiar today.

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‘historical materialism’ – the method of understanding history as a constant feedback loop between, on the one hand, the way humans transform matter and, on the other, the manner in which human thinking and social relations are transformed in return.

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According to Hesiod, iron hardened not only our ploughs but also our souls.

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From heat to light

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A most peculiar introduction to capitalism

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None of these can ever truly be commodified. Why? Because no monetary reward can prompt a moment of true inspiration, no genuine smile can be bought, no authentic tear can be shed for a price.

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What I call experiential labour, the part which can never be sold, Marx called simply labour. And what I have labelled commodity labour, Marx defined as labouring power. But the idea is the same: ‘What the working man sells is not directly his Labour, but his Labouring Power, the temporary disposal of which he makes over to the capitalist.’

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labour’s dual nature is what gives rise to profit.

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An equally odd introduction to money

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In our limited realm, we can get by quite nicely with our senses’ helpful illusions; for instance, the belief that the grass is green, straight lines exist, or that time is constant and independent of our motion. These beliefs are false and yet helpful

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Keynes wanted to stop us thinking of money as a thing, as simply another commodity, that stands outside, and apart from, our other activities in markets and workplaces.

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Big Tech is creating its own digital money with which to lure us deeper into its poisonous web of platforms.

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Free to choose? Or to lose?

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They were baffled by my claim to be a libertarian Marxist

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what has become, sadly, conventional fallacy: that capitalism is about freedom, efficiency and democracy, while socialism turns on justice, equality and statism. In fact, from the very start, the left was all about emancipation.

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During the feudal era, which became properly entrenched across Europe in the twelfth century, economic life involved no economic choices.

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giving British landlords an idea: why not evict en masse the serfs from land that produced worthless turnips and replace them with sheep whose backs produced precious wool for the international markets? The peasants’ eviction, which we now remember as the ‘enclosures’ – for it involved fencing them off from the land their ancestors had toiled for centuries – gave the majority of people something they had lost at the time that agriculture was invented: choice.

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sometime in the twentieth century, the left traded freedom for other things. In the East (from Russia to China, Cambodia and Vietnam), the quest for emancipation was swapped for a totalitarian egalitarianism. In the West, liberty was left to its enemies, abandoned in exchange for an ill-defined notion of fairness.

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Father’s question

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there was a brief moment in the mid to late 1940s when the end of capitalism seemed only a matter of a few years if not months away.

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the killer question that ultimately inspired this book: ‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’

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2: Capitalism’s Metamorphoses

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Retrieving the irretrievable

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Efficiently manufacturing things that people craved was no longer enough. Capitalism now involved the skilful manufacture of desire.

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experiential value’s resistance has not been in vain. Each time the onslaught of exchange value has overcome its defences, experiential value has gone underground into the catacombs of our psyche.

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to grasp, and to confront, the paradox of commodification. Yes, capitalism must commodify everything it touches. But at the same time, high exchange value, and thus serious profits, depends on failing to do so fully.

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Technostructure

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What changed that meant a character like Draper could become an icon of our enterprise culture? I think you will like my answer, Dad: electromagnetism!

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electricity and telegraph grids that ultimately begat the networked, top-down, mega-corporations we know today – pushing the bakers, butchers and brewers of early capitalism to the sidelines. The problem was that none of capitalism’s early institutions – specifically, its banks and share markets – were ready for such corporate empires. Simply put, the banks were too small and too fragile and the share markets too thin, too illiquid,

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The New Deal’s public works projects, its social welfare programmes and, above all, its public finance instruments, together with stringent controls over what bankers could get away with, constituted a full-on dress rehearsal for the War Economy.

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American capitalism was run according to Soviet planning principles, with the important exception that the networked factories remained under the private ownership of Big Business.

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The War Economy experiment was an unqualified success. Production quadrupled in less than five years.

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the heat of war had transformed American capitalism at a molecular level, just as the heat of our fireplace had transformed iron into steel. By the war’s end, American capitalism was unrecognisable. Business and government had become profoundly entwined.

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the survival and growth of the conglomerates now that the war, with its infinite demand for stuff and technologies, was over. Galbraith called this nexus the technostructure.

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profit was no longer their top priority. As with all bureaucracies, their primary goal was to keep their underlings employed and busy.

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Attention markets and the Soviets’ revenge

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however much you loved watching I Love Lucy on television, and even if you were prepared to pay good money to watch it, no one had the capacity to make you pay for it (at least not before cable TV was introduced). But this stopped being a problem once they realised that the programme was not the commodity: it was the attention of the people watching it.

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the rise of the technostructure transformed American capitalism from a decentralised market society into a centralised economy-with-markets. It was precisely what the Soviet planners had always hoped to achieve, but failed.

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America’s industrial capacity had grown so much during the war that, to keep its factories busy and its workers in jobs, they had to produce a lot more stuff than Americans alone could absorb.

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The audacious Global Plan

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The financial project of the Bretton Woods system was bold: to ‘dollarise’ the currencies of Europe and Japan by linking European currencies and the yen to the dollar with fixed exchange rates

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a global currency union based on the US dollar.

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capital controls: restrictions in the movement of money from one currency to another. They made the life of bankers wonderfully boring

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Having been burned by the 1929 catastrophe, the New Dealers wanted bankers to live in a straitjacket of capital controls and almost fixed interest rates,

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capitalism’s Golden Age. From the war’s end until 1971, America, Europe and Japan enjoyed low unemployment, low inflation, high growth and massively diminished inequality.

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But all this relied on one crucial factor. For the dollar to be the apple of everyone’s eye, at the fixed exchange rates the Bretton Woods system guaranteed, America had to be a surplus-amassing country

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ensured that the dollars printed by the Federal Reserve (America’s central bank) and given to the Europeans and to the Japanese (either as loans or aid) would ultimately find their way back to the United States in return for US goods.

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by the late 1960s, the Bretton Woods system was dead in the water. The reason? Three developments which caused America to lose its trade surplus and become a chronically deficit economy.

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Mad numbers

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Used to thinking of money in terms of things that made sense, like tons of steel or the number of hospitals it could build, you could not see how Earth was large enough to contain that $70 trillion number.

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it was only once Bretton Woods had died that bankers, liberated from their New Deal chains, were allowed to bet on the stock exchange,

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Conjured from thin air? To be clear, yes.

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it is in the nature of banks to accommodate too many Jacks eager to borrow increasing amounts to keep paying each other more and more, while the banks collect huge profits from funding such a giant Ponzi scheme. Inevitably, this financial house of cards collapses

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If you and I are clever enough to recognise the inherent instability of their financial house of cards, surely the bankers recognised it too? So why were they not terrified

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The risk had been shared and dispersed and thus minimised, they believed.

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But by producing more and more debt, splicing it up in smaller and smaller pieces, and dispersing it across the planet, they were not minimising the risk, they were compounding it.

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The fearless Global Minotaur

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they had to pay in dollars. The United States was, therefore, the only country in the world whose currency was in demand even by people who did not want to buy anything from it.

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a magic trick for the ages: the country going deeper and deeper into the red was the country whose currency, the dollar, was becoming more and more hegemonic.

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there was another reason why the dollar’s hegemony grew: the intentional impoverishment of America’s working class.

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From uncontrollable discontent to controlled disintegration

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having created desires and expectations that ultimately its consumer products could not actually satisfy, and well before its economic foundation was trampled upon by the rampaging Minotaur, the technostructure was facing a backlash indicative of a society- wide spiritual crisis.

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why did America’s and Europe’s youth rise up in the mid to late sixties, at a time of full employment, sharply diminished inequality, new public universities and all the trappings of an expanding welfare state?

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[B]alancing the requirements of a stable international system against the desirability of retaining freedom of action for national policy, a number of countries, including the United States, opted for the latter … Where once stood the most stable global capitalist system ever, folks like Volcker were enthusiastically erecting the most unstable international system possible,

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The Minotaur’s favourite handmaidens: neoliberalism and the computer

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Neither new nor liberal, neoliberalism was an uninteresting hodgepodge of older political philosophies. As a piece of theory, it had as much to do with really-existing capitalism as Marxism had to do with really-existing communism: nothing! Nevertheless, neoliberalism delivered the necessary ideological veneer

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Computers allowed financiers to complicate their gambles immensely.

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Complexity thus became a great excuse not to delve into the derivatives that one bought.

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just as the early generation of computers saved no paper, since we tended to print anything important out (often twice!), so too they did little to boost industrial output.

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Back to your question

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Yes, capital still exists and flourishes, even though capitalism does not.

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only a small fraction of the monies rushing to Wall Street returned in the form of tangible investments into factories, technologies, agriculture. Most of the world’s money rushed to Wall Street to stay in Wall Street. There, it sloshed around doing nothing useful.

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3: Cloud Capital

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until fairly recently, it was that precise combination – of land and sophisticated weaponry – that decided who did what to whom; who had power, and who had to obey. This was feudalism.

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Peel’s undoing came when something unexpected happened: his workers abandoned him en masse, an Antipodean nineteenth- century version of the Great Resignation. They simply moved on, got themselves plots of land in the surrounding area, and went into business for themselves.

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Peel’s assumption was that his workers had no option other than waged labour. It was a sound assumption in Britain where, following the enclosures

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the hapless Mr Peel was left with splendid, Made in England capital goods, money in hand, but no power to command his workers.

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The transition from feudalism to capitalism was, in essence, a shift of the power to command from landowners to owners of capital goods. For that to happen, peasants had first to lose autonomous access to common lands. That’s why the enclosures in Britain were essential for capitalism’s birth: they denied British labour the opportunities Peel’s workers discovered in Western Australia.

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From Don to Alexa

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with Don at least we had a fighting chance. It was his wits against ours. With Alexa we stand no chance: its power to command is systemic, overwhelming, galactic.

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once we have trained its algorithm, and fed it data on our habits and desires, Alexa starts training us.

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Singularities

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even if they are themselves stupider than a wet tea towel, their effect can be devastating, their power over us exorbitant.

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required a comprehensive plunder of a commons, a complicit political class, and only then a marvellous technological breakthrough.

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The birth of the internet commons

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The early internet was a capitalism-free zone.

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Even the most ardent free-marketeers understood that planning for a nuclear confrontation with the Soviet Union was too important to be left to market forces.

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a US government-built and -owned, non-commercial computer network that lay outside capitalist markets and imperatives but whose purpose was the defence of the capitalist realm.

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Or, perhaps the most visible of them all, HTTP – the protocol by which we visit websites. We pay not one penny to use these protocols,

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The New Enclosures

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complexity is the financiers’ friend – for it allows them to disguise cynical gambles as smart financial products. Is it any wonder, then, that from the start financiers loved computers?

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In the eighteenth century, it was land that the many were denied access to. In the twenty-first century, it is access to our own identity.

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With every day that passes, some cloud- based corporation, whose owners you will never care to know, owns another aspect of your identity.

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resistance is becoming futile except for people ready to turn into modern-day hermits.

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To do anything in what used to be our digital commons, we must now plead with Big Tech and Big Finance for the ability to use some of the data about us that they own outright.

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Cloud capital: beginnings

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By surveying the reaction of millions of people to their prompts billions of times every hour, they could train themselves at lightning speeds not only to influence us but, also, to pull off the fascinating new trick that Alexa and her ilk, as we saw earlier, are now capable of: to be influenced by the way they influence us;

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There is nothing new here, however: remember how the financial engineers of the 1990s and 2000s used algorithms to create derivatives of such enormous complexity that they themselves had no way of knowing what was inside

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Cloud capital, in contrast, can reproduce itself in ways that involve no waged labour. How? By commanding almost the whole of humanity to chip in to its reproduction – for free!

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Cloud proles

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Cloud proles – my term for waged workers driven to their physical limits by cloud-based algorithms – suffer at work in ways that would be instantly recognised by whole generations of earlier proletarians.

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‘Piece-wages become … the most fruitful source of reductions in wages and of frauds committed by the capitalists.’ Precarious piecework, Marx added, is ‘the most appropriate to the capitalist mode of production’.

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workers forced to work for these algorithms find themselves in a modernist nightmare: some non-corporeal entity that not only lacks but is actually incapable of human empathy allocates them work at a rate of its choosing before monitoring their response times.

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Cloud serfs

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Workers employed by General Electric, Exxon-Mobil, General Motors or any other major conglomerate collect in salaries and wages approximately 80 per cent of the company’s income. This proportion grows larger in smaller firms. Big Tech’s workers, in contrast, collect less than 1 per cent of their firms’ revenues. The reason is that paid labour performs only a fraction of the work that Big Tech relies on. Most of the work is performed by billions of people for free.

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Cloud capital’s singular achievement, a feat far superior to either of these, is the way it has revolutionised its own reproduction. The true revolution cloud capital has inflicted on humanity is the conversion of billions of us into willing cloud serfs volunteering to labour for nothing to reproduce cloud capital for the benefit of its owners.

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Wither markets, hello cloud fiefs

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‘Enter amazon.com and you have exited capitalism.

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Jeff owns more than the shops and the public buildings. He also owns the dirt you walk on, the bench you sit on, even the air you breathe. In fact, in this weird town everything you see (and don’t see) is regulated by Jeff’s algorithm: you and I may be walking next to each other, our eyes trained in the same direction, but the view provided to us by the algorithm is entirely bespoke, carefully curated according to Jeff’s priorities. Everyone navigating their way around amazon.com – except Jeff – is wandering in algorithmically constructed isolation.

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Take for example Tesla, Elon Musk’s successful electric car company. One reason financiers value it so much higher than Ford or Toyota is that its cars’ every circuit is wired into cloud capital.

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Back to your question

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It is why I wanted to talk to you about cloud capital. Because you would know how to admire and detest it at once.

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Previously, to exercise capital’s power to command and make other humans work faster and consume more, capitalists required two types of professionals: managers and marketeers.

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No, the truly historic disruption was to automate capital’s power to command people outside the factory, the shop or the office

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In your youth, you dreamed of a time when labour would shake off the yoke of the capitalist market. So did I. Alas, something more like the opposite happened: it is capital that has shaken off the yoke of the capitalist market! And while capital is taking its victory lap, capitalism itself is receding.

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4: The Rise of the Cloudalists and the Demise of Profit

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the UK’s national income had fallen by a whopping 20.4 per cent,

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Instead of plummeting in response to the data, the London Stock Exchange jumped up by 2.3 per cent!

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the world of money has, finally, decoupled from the capitalist world.’

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‘When things are this dismal, the Bank of England panics. And what have panicky central banks been doing since the crash of 2008? They print money and give it to us. And what do we do with all the freshly minted dough from the central bank? We buy shares, sending their price up. And if prices are destined to go up, only a fool would miss out on the action. A wall of printed money is surely on its way to us. Time to buy!’

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Fearing that run- of-the-mill businesses would not be able to repay them, the financiers lent the central bank money only to Big Business. And Big Business either refused to invest or invested solely in cloud capital.

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it was in the wake of the crash of 2008 that state money began to be printed en masse by the world’s central banks and started to have its strange and counter-intuitive effect on profit.

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The secret of the new ruling class

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I have become more sceptical of narratives that place too much emphasis on technology and not enough on how powerful groups seize and manipulate it

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The pressing question is: how did the cloudalists finance all this?

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The cloudalists did something subtler and more impressive: they helped themselves to the rivers of cash that were being printed by the central banks of developed capitalist states.

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you would be much wiser to keep your stupendous gains stowed in some digital wallet within your cloud capital empire

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2008’s unintended consequences

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What was preposterous was that, in addition to saving the failed banks, they bailed out the quasi-criminal bankers responsible for their failure, along with their lethal practices. And far worse, in addition to practising socialism for the bankers, they subjected workers and the middle class to vicious austerity.

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Austerity is not just bad for workers and people in need of state support during tough times, it also murders investment. In any economy, what we spend collectively translates automatically into what we earn collectively.

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Seeing that the vast majority were likely to be stuck in poverty and precarity for the foreseeable future, Big Business went on history’s deepest and longest investment strike, while spending large sums on things like real estate deals that gentrified neighbourhoods and deepened divides.

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Poisoned money, gilded stagnation

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under capitalism, money also acquired a distinct market price: the rate of interest you must pay in order to lease a pile of cash for a given period.

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overall interest rates are determined, as with any market, by the overall supply of and demand for money.

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But when it comes to money, something different happens. When its price – the interest rate – drops fast, capitalists panic. Instead of rejoicing that they can now borrow more cheaply, they think: ‘Sure, it is a good thing that I can borrow for next to nothing. But for the central bank to allow interest rates to drop so much, things must be looking grim! I won’t invest even if they hand me the money.’ That’s the reason investment refused to recover, even after central bankers cut money’s official price to almost zero.

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How profits became optional for the cloudalists

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‘People on the right of politics believe that hard work aimed at private profit is the surest route to a wealthy and good society. People on the left don’t.’

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profit ceased to be the fuel that fired the global economy’s engine, driving investment and innovation. That role, of fuelling the economy, was taken over by central bank money.

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between 2010 and 2021, the paper wealth of these two men – meaning the total price of their shares – rose from less than $10,000 million to around $200,000 billion apiece.

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As long as the central bank was trapped into producing new money, they knew that the trashiest piece of paper would sell for more tomorrow than it fetched yesterday.

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With shares in companies skyrocketing independently of whether the companies themselves turned a profit or not, the wealthy got immensely wealthier in their sleep.

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Both knew that profit was irrelevant. What mattered was seizing the opportunity to establish total market dominance.

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Private inequities

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straightforward asset-stripping, with financialisation providing the necessary smoke and mirrors.

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classic case of feudal rent defeating capitalist profit; of wealth extraction by those who already have it triumphing over the creation of new wealth by entrepreneurs.

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Before 2008, when capitalism still relied on profit as its motive power, it would not have been possible for such a scheme to be generalised – if it were and too many of the various PropComs went on sale at the same time, their value would fall. This is what gave Adam Smith his optimism about capitalism: his faith that capitalist profit would continue to triumph over feudal rent. In reality, since Smith wrote his famous lines in the 1770s, rent has survived and even prospered under capitalism.

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rent survived only parasitically on, and in the shadows of, profit. That changed after 2008.

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BlackRock, Vanguard and State Street. These three firms, the Big Three as they are known in financial circles, effectively own American capitalism. No, I am not exaggerating.

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the Big Three are the largest single shareholder in almost 90 per cent of firms listed in the New York Stock Exchange,

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To service their need for safe, mindless share purchases, the Big Three take the money of the seriously wealthy and buy literally everything

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allow the Big Three to extort rents at a scale that would have made Adam Smith weep.

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profit-seeking consigned to the aspirant petty bourgeois while the truly rich gleefully whisper to one another that profit is for losers.

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Back to your question

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Hesiod challenged humanity with a hard question, one that is as pertinent to us as it was to the Iron Age generation: can the cloud-dwelling aristocracy’s power ever be claimed by the mortals? Would we mortals know what to do with it if we got hold of it?

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5: What’s in a Word?

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So what, in essence, has changed? What in the simplest possible terms distinguishes this world from the previous one, demanding that we discard the word capitalism and replace it with technofeudalism? As I touched on at the end of the last chapter, it is very simply this: the triumph of rent over profit.

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Rent’s revenge: how profit succumbed to cloud rent

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the heartbreak of authentic left- wingers worldwide: good people, dedicated to your vision, who ended up in gulags guarded by former comrades or, even worse, in positions of the sort of power that their own ideology detested.

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Rosa Luxemburg’s devastating question ‘Socialism or barbarism?’ was not rhetorical. Its answer could easily be barbarism

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profit is vulnerable to market competition, rent is not.

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Rent flows from privileged access to things in fixed supply,

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Profit, in contrast, flows into the pockets of entrepreneurial people who have invested in things that would not have otherwise existed

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In contrast, market competition is the rentier’s friend. If Jack owns a building in a neighbourhood that is being gentrified as a result of what others do, Jack’s rents will increase even if he does nothing – he, literally, gets wealthier in his sleep. The more enterprising Jack’s neighbours are, and the more they invest in the area, the larger his rents.

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Capitalism prevailed when profit overwhelmed rent,

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Whereas rent reeked of vulgar exploitation, profit claimed moral superiority as a just reward to brave entrepreneurs

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some rentiers not only survived but, in fact, flourished by feeding on the generous scraps left in profit’s wake. Oil companies, for example, have raked in gargantuan ground rents

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What all these mega-rentiers have in common is a strong motive to legitimise their rents by disguising them as profits – something akin to profit-washing their rents.

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The stroke of genius that unlocked cloud rent for Steve Jobs was his radical idea to invite ‘third-party developers’

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Even if an Apple competitor, say Nokia, Sony or Blackberry, had managed to respond quickly by manufacturing a smarter, faster, cheaper and more beautiful phone, it would not matter: only an iPhone opened the gates to the Apple Store. Why didn’t Nokia, Sony or Blackberry build their own store? Because it was too late:

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To be competitive, Apple’s unwaged third-party developers, mainly partnerships or small capitalist firms, had no choice but to operate via the Apple Store. The price? A 30 per cent ground rent, paid to Apple on all their revenues. Thus a vassal capitalist class grew from the fertile soil of the first cloud fief: the Apple Store.

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The result was a global smartphone industry with two dominant cloudalist corporations, Apple and Google, with the bulk of their wealth being produced by unwaged third-party developers, from whose sales they extracted a fixed cut. This is not profit. It is cloud rent, the digital equivalent of ground rent.

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vassal capitalists are by definition dependent to a greater or lesser extent on selling their wares via an ecommerce site, whether Amazon or eBay or Alibaba, with a sizeable portion of their net earnings being skimmed

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It is progress, of sorts. Gone is the time when, to collect their rent, feudal lords employed thugs to break their vassals’ knees or spill their blood. The cloudalists don’t need to deploy bailiffs to confiscate or to evict. Instead, every vassal capitalist knows that with the removal of a link from their cloud vassal’s site they could lose access to the bulk of their customers. And with the removal of a link or two from Google’s search engine or from a couple of ecommerce and social media sites, they could disappear from the online world altogether. A sanitised tech-terror is the bedrock of technofeudalism.

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Capitalism on steroids?

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what exactly did they invest in? And what came of their investments?

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they aren’t selling them as commodities. These gadgets are leased or sold cheaply not for the negligible (often negative) profit they make on them but to gain access to our homes and, via them, to more of our attention.

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Ultimately, the cloudalist’s investment is aimed not at competing within a capitalist market but in getting us to exit capitalist markets altogether.

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cloudalists are now becoming fabulously wealthy without needing to organise the production of any commodity.

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we should not confuse rivalry between fiefs with market-based competition.

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TikTok created a new cloud fief for cloud serfs in search of a different online experience to migrate to.

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The Great Transformation, from feudalism to capitalism, was predicated on the usurpation of rent by profit as the driving force of our socio-economic system. That was why the word capitalism proved so much more useful and insightful than a term like market feudalism. It is this fundamental fact – that we have entered a socio- economic system powered not by profit but by rent – that demands we use a new term to describe it. To think of it as hyper-capitalism or rentier capitalism would be to miss this essential, defining principle. And to reflect the return of rent to its central role, I can think of no better name than technofeudalism.

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The technofeudal method to Elon Musk’s Twitter madness

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there was a logic to his purchase of Twitter: a technofeudal logic that elucidates much more than Musk’s mindset.

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Musk was keeping his eye on the ball. In a revealing tweet, he admitted his ambition to turn Twitter into an ‘everything app’. What did he mean by an ‘everything app’? He meant nothing less than a gateway to technofeudalism, one that would allow him to attract users’ attention, modify their consumer behaviour, extract free labour from them as cloud serfs and, last but not least, charge vendors cloud rent

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The technofeudal underpinnings of the Great Inflation

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the Great Inflation and cost-of-living crisis that have followed the recent pandemic cannot be properly understood outside the context of technofeudalism.

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Wages get spent by the many struggling to make ends meet. Profits get invested in capital goods to maintain the capitalists’ capacity to profit. But rent is stashed away in property (mansions, yachts, art, cryptocurrencies, etc.) and stubbornly refuses to enter circulation, stimulate investment into useful things, and revive flaccid capitalist societies.

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a social power game is afoot in which everyone attempts to suss out their bargaining power.

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it is power that matters above all. If capital dominates labour, inflation ends when workers accept a permanent reduction in their wage share of total income.

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the less obvious but more interesting repercussion of the Great Inflation, in a world going through its early technofeudalist phase, is subtler and woven into society’s productive fabric: traditional capital is further displaced by new cloud capital, hastening and strengthening technofeudalism’s super-arching reach.

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The case of German cars and green energy

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Electric vehicles are mechanically much simpler to engineer. Most of their surplus value – and the profit they afford – derives from the software that runs them and connects the car to the cloud and the data that derives in turn from that. The Great Inflation, in other words, is forcing German industry to produce goods that rely a lot more on cloud capital than traditional capital.

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German capitalists failed to realise soon enough the benefits of investing in cloud capital – of becoming cloudalists – and lag far behind in this new game. In practical terms, they are manufacturing themselves out of a competitive position. Unable to collect sufficient cloud rents, German surpluses will suffer

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cloud-based green energy is growing – and, with it, so is the relative power of cloudalists.

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by enhancing the scope of cloud capital, the Great Inflation will ultimately be bad for labour’s political power, as it turns more of us into cloud proles.

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Back to your question: is capitalism not back on track?

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those torrents of central bank money have already built cloud capital up to critical mass. It is here to stay – and to dominate – because its immense structural power, to extract vast cloud rents from every society on Earth, remains completely undiminished. This would not be the first time a bubble has built up capital that endures after the bubble’s bursting.

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if they dare withdraw the trillions they have pumped into the North Atlantic economies, a vortex of volatility is ready to hit the $24 trillion market for the United States’ public debt – the very bedrock of international banking and finance.

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central bank money is here to stay and will continue to play the systemic role once held by capitalist profits.

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6: Technofeudalism’s Global Impact: the New Cold War

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told Beijing: the United States will crush your dreams of building a technologically advanced economy.

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there was a run on America’s gold. To prevent losing it all, on 15 August 1971, Nixon told the world that they would no longer exchange foreign-held dollars for gold at that fixed price. In other words: no more gold for you from our vaults. Our dollars are now your problem. Non-American central banks suddenly had no alternative than to use dollars instead of gold as reserves to back the value of their currency. The dollar began to resemble an … IOU.

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with cloud capital dominating terrestrial capital, the maintenance of US hegemony requires more than preventing foreign capitalists from buying up US capitalist conglomerates, like Boeing and General Electric. In a world where cloud capital is borderless, global, capable of siphoning cloud rents from anywhere, the maintenance of US hegemony demands a direct confrontation with the only cloudalist class to have emerged as a threat to their own: China’s.

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Technofeudalism with Chinese characteristics

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True hegemons prevail not by force but by offering hard-to-resist Faustian bargains.

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in the small print of this pact between America’s and East Asia’s ruling classes was written misery for workers on both sides of the Pacific.

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Chinese investment took up much of the global slack caused by Western commitment to austerity.

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Chinese rentiers, operating within China’s own FIRE sector, got seriously richer.

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the post-2008 investment drive went hand in hand with the inflation of house and land prices across China.)

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Unlike Silicon Valley’s Big Tech, China’s is directly bound into government agencies

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Chinese cloudalists have accumulated cloud capital beyond the wildest dreams of their Silicon Valley competitors who, by comparison, enjoy far less power per capita to accumulate cloud rent.

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China’s cloudalists have already acquired a power that US cloudalists are struggling to emulate: the power stemming from a successful merger of cloud capital and finance – or cloud finance.

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Technofeudal geopolitics: The emerging ‘threat’ of China’s cloud finance

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the dollar’s reign has suited most countries, including China, just fine.

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Without the dollar’s global role, Chinese, Japanese, Korean or German capitalists would never have been able to extract such colossal surplus value from their workers and then stash it away somewhere safe.

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the one population who stand to gain the most from the abolition of the dollar’s global role are working- and middle-class Americans.

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In short, for the said ton of aluminium to ship from China to some port on America’s west coast, two things are necessary: the dollar’s exorbitant privilege and the red ink all over America’s trade balance with China.

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TikTok, in contrast, has no need for additional dollars from American customers in order to produce new products for its US market.

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TikTok can, therefore, syphon cloud rents from the US market into China without relying on either America’s trade deficit or the dollar’s supremacy.

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Power, thus, is shifting in a way that reduces the value of the Dark Deal to America’s ruling class and state.

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As Chinese cloud capital grows in relation to terrestrial capital, China’s rich and powerful find themselves less and less subject to the US authorities’ power to regulate Chinese goods passing through their ports.

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concern for the threat to Wall Street and Silicon Valley posed by the rise of Chinese cloud finance, which tilts the comparative advantages of the Dark Deal away from America’s and towards China’s ruling class. Compared to the original Cold War, the New Cold War has little politics behind it. Just naked technofeudal class interests.

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Technofeudal geopolitics: How Ukraine helped divide the world into two super cloud fiefs

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Huawei and ZTE, licked their significant wounds and set about creating their own operating system and platform software. Despite the great costs involved, China’s rulers understood that their future relied on not handing over their cloud capital, and of course their cloud finance, to America.

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the Federal Reserve froze hundreds of billions of dollars that belonged to Russia’s central bank but kept within the dollar- payment circuit that the US controls fully. It was the first time in capitalist history that a major central bank’s money had been, effectively, confiscated by another central bank.

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Everyone knew that the US government could confiscate the lot at any time, but no one believed Washington would ever dare to, because such a move would deter anyone from ever stashing their wealth within the US-controlled dollar payments system again.

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Would you still be comfortable with trillions of dollars’ worth of your assets in US hands? But what could you do?

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this is a problem for Chinese capitalists but not so much for Chinese cloudalists (like TikTok) who had already built cloud finance up into an alternative global payment system. With it in hand, what is a serious problem for Chinese capitalists – i.e. the possible end of the dollar’s reign – poses no threat to Chinese cloudalists.

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On 14 August 2020, a revolution took place inside the walls of the People’s Bank of China. Following six years of painstaking research, Beijing’s central bank rolled out a digital yuan

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What China had created was digital money issued directly by a central bank, cutting out these middlemen, the private bankers.

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Is there a reason why such an unwieldy process has survived the wonders of the digital age? Of course there is: its clunkiness and mind-boggling inefficiency is a source of rent

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Jürgen would pick up his smartphone, open the digital yuan app, send a sum of digital yuan to Xiu who would receive it instantaneously and at zero cost. End of story! Think of all the middlemen the digital yuan cuts out: Jürgen’s German bank, the Bundesbank, the European Central Bank and, crucially, the international money transfer conduit which is fully under the thumb of US authorities. It is nothing less than Washington’s, and the private bankers’, worst nightmare.

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Many in Washington felt that, if they failed to clip the wings of China’s Big Tech quickly, before its cloud finance and digital state money achieved critical mass, the exorbitant power of American rentier capitalists was in jeopardy.

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As we speak, Chinese cloud rents accumulate, further overshadow Chinese capitalist profits, accelerate China’s transition to technofeudalism and, crucially, weaken the Dark Deal between the world’s two superpowers.

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The spectre of technofeudalism over Europe, the Global South, the planet

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Every such crisis left Europe weaker, more divided, more reactionary.

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they have no actual desire to be free of their pact with the US, which allows European capitalists to profit from the demand generated by America’s trade deficit and to turn these profits into US assets.

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Europe is in deep trouble. Because Europe is not China. It lacks a single Big Tech company that can compete with those of Silicon Valley and its financial systems are wholly reliant on Wall Street.

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The rising price of food and fuel caused by the Great Inflation has pushed the Global South into a debt crisis as gruesome as that of the 1970s and 80s.

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The less obvious obstacle technofeudalism throws in the path of any green transition are the so-called electricity ‘markets’.

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Back to your question: who wins and who loses?

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Peace is the obvious victim of this process but not the only one: given the magnitude and the nature of the power wielded by the very small band of cloudalists on both sides of the Pacific, anything resembling actual democracy seems increasingly far-fetched.

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the only political force that can do anything to keep the cloudalists in check and thus the hope of democracy alive is the Chinese Communist Party.

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7: Escape from Technofeudalism

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The death of the liberal individual

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Still, even we, capitalism’s harshest critics, appreciated the limited self-ownership it granted us. For young people in today’s world, even this small mercy has been taken away. Curating an identity online is not optional, and so their personal lives have become some of the most important work they do.

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they are taught implicitly to see themselves as a brand, yet one that will be judged according to its perceived authenticity.

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Every choice, witnessed or otherwise, becomes an act in the curation of an identity.

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We have not become weak-willed. No, our focus has been stolen.

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If fascism taught us anything, it is our susceptibility to demonising stereotypes and the ugly attraction of emotions like righteousness, fear, envy and loathing that they arouse in us. In our technofeudal world, the internet brings the feared and loathed ‘other’ closer, right in your face.

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Comment moderators and hate-speech regulation can’t stop this because it is intrinsic to cloud capital, whose algorithms optimise for cloud rents, which flow more copiously from hatred and discontent.

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The impossibility of social democracy

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They know they can treat their users however they like – when did anyone last decline the terms and conditions of a software update? – because of the hostages they are holding: our contacts, friends, chat histories, photos, music, videos, all of which we lose if we switch to a competing cloud fief.

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Even worse, they see that the ideological tide favours them. When you were still a young man, the political left maintained a belief in objective truth and a commitment to constructing new institutions

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once the red flag was lowered over the Kremlin in 1991, signalling the defeat of the global left, the tables turned entirely. Suddenly, it was the right that embraced unalloyed truths and non-negotiable virtues:

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Underlying this transformation of the left was, of course, the West’s de-industrialisation, which fragmented the labouring classes, a process that technofeudalism continues to this day.

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On this new political stage, social democracy is impossible.

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we must discard the myth that the old left–right distinction is obsolete. As long as we live in an Empire of Capital that rules over, and ruthlessly exploits, humans and the planet, there can be no democratic politics that is not rooted in a leftist agenda of overthrowing it.

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Crypto’s false promise

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in contrast to the madness that begins the moment you pay for anything using a bank-issued card, the blockchain-based transaction seems like democracy-in-action.

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Their ideological contempt for fiat, or state-created, money turned out to be a ruse for issuing their own fiat money.

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Betrayal of its early emancipatory promise was hard-wired into the nature of cryptocurrencies.

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to engineer the scarcity that he believed was necessary to give Bitcoin value, Nakamoto built into the Bitcoin code a fixed upper limit in the total number of Bitcoins

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It was inevitable that the moment a cryptocurrency began to succeed as a currency it would stop working like a currency and would turn instead into a pyramid scheme,

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Imagining Another Now

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Today, we know from both the Soviet and the Western European experience with social democracy that this was wishful thinking: a bottom-up socialist blueprint has simply not transpired, anywhere.

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Democratised companies

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Democratised money

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The cloud and the land as a commons

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A cloud rebellion to overthrow technofeudalism

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Back to your question, one last time

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our condition under capitalism as one of ‘alienation’, owing to our having no ownership of the products of our labour, to our having no say in how things get done. Under technofeudalism, we no longer own our minds.

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Appendix 1: The Political Economy of Technofeudalism

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Appendix 2: The Madness of Derivatives

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the ‘thing’ that was being insured stopped being a thing (like wheat) and became a bet, a wager, a gamble.

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When auditors entered the bankrupted General Motors in 2009, after this financialisation bubble had burst, they discovered that a company famed for producing cars and trucks had been transformed into a hedge fund buying and selling options – with some car production on the side to keep up appearances.

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Influences, Readings and Acknowledgements

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Notes

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Index

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