Not even capitalism – Yanis Varoufakis: Technofeudalism

In this book, Former Greek finance minister Yanis Varoufakis looks at the way the advent of internet business have changed the economy – and he comes to a surprising and polemic conclusion: Capitalism is dead.

And unfortunately for socialists like Varoufakis (and myself) it has been replaced with something even worse.

Let me start by confessing that I’m by no means an expert in the field of economics – and Varoufakis is equally quick to admit that economic theories don’t qualify as exact science. But he does an impressive job of explaining the history and workings of capitalism leading up to our current tech economy and his extraordinary claim.

To get the whole story, you need to read the book for yourself, but here are some of his most important arguments:

The profit motive is gone. Capitalism (in the Marxian sense) was based on business owners employing people doing wage labour, producing goods – and then profiting off the surplus value when selling it. Today, many businesses are driven by free content: When you write on Facebook or X/Twitter or post photos on Instagram or videos on TikTok, you’re providing the content that is in fact the core value of those companies.

Profit has been replaced by rent. Previous capitalists used their profit to invest in more and better “means of production” to produce more goods and services to sell for profit. Landlords making profit just from renting out real estate they owned were scorned upon by many capitalist economists (like Adam Smith). But today, a company like Amazon functions more like a landlord – or as Varoufakis puts it, a feudal lord granting certain rights for a price. Amazon hardly needs to produce anything anymore – it provides a portal where any business can sell their goods – but the reach that Amazon provides comes at a price in the form of fees. Again, sellers technically work for free for Amazon – and Amazon charges them for the privilege.

Many other subjects are discussed in this well-written book: How the entire world economy became linked to the dollars (even as the US became a trade deficit economy) – and how the promise of “social democracy” took a beating as the Eastern Bloc collapses in 1989. The latter sound incongruous to a Danish citizen like myself (the social democrat party has figured heavily in Danish politics both before and after the Cold War), but it’s certainly true – as Varoufakis points out – that their attitude to modern finance capitalism is notably more subservient than would be expected of a “workers’ party” (Tony Blair’s notorious “third way”).

So – after reading the book, am I convinced that “capitalism” as we know it is dead? I’m not sure – classic, profit-based capitalist companies definitely still exist. But Varoufakis’ coining of the word “technofeudalism” is certainly helpful – because the rules of the game are changing – and the future is about to look very different.

Recommended reading for anyone who thinks the global economy has become a bit weird lately.