Recently, I read Technofeudalism: What Killed Capitalism by Yanis Varoufakis. In this thought-provoking book, Varoufakis analyzes the profound shifts in the global economy and social relations and argues that capitalism has been overtaken by a new system he calls “technofeudalism” — a technologically advanced form of feudalism. But what exactly does he mean by this, and how realistic is his vision?
First, let’s unpack the notion of technofeudalism. Why the “techno” part? In today’s world of AI and Big Tech, that’s fairly clear. The more interesting question is, why “feudalism”? According to Varoufakis, today’s socioeconomic system is no longer driven primarily by profit, as in capitalism, but by rent — much like in the feudal era. This rent comes from the privileged access of a small elite to some limited resource. What kind of resource is it in technofeudalism? It’s digital data and platforms owned by Big Tech.
Instead of functioning as open markets where companies compete to win over customers with better products, we now have digital platforms that operate more like cloud-based fiefdoms. Take Apple inviting third partly developers to use Apple software and program apps for Apple Store – for a 30% commission. Varoufakis calls it “cloud rent”. Or consider Amazon’s delivery platform, which allows companies to sell their products. In this world, Big Tech firms like Apple and Amazon act as the feudal lords, while the companies that rely on their platforms to reach customers function as vassals.
At the bottom of the technofeudal social hierarchy are the “cloud proles” — exploited workers in Amazon warehouses or Uber drivers managed by cloud algorithms. Their ranks are expected to grow, as cloud capital requires far less paid labor than traditional capitalism did, relying on a bunch of programmers to keep things running.
Most people today take on the role of “cloud serfs” — everyday users who generate digital content and hand over personal data to tech companies, all for free. Even owners of luxury cars like Teslas contribute to the cloud capital by supplying their data. But it’s not just that we allow tech giants to have our digital data. Our behaviour is also controlled by algorithms that nudge us to choose specific products or spend more time on their sites.
The idea that capitalism is giving way to a new form of feudalism is not new. Joel Kotkin, for example, uses the term “neo-feudalism”, to draw parallels between today’s oligarchs and medieval lords, and between the modern precariat and the serfs. However, Varoufakis brings a sharper focus on the concepts of cloud rent and cloud capital, following the tradition of historical materialism, which sees history as shaped by the mode of production and economic relations. But if capitalism has indeed been killed, whodunnit? Is technology the only suspect? I believe it’s only part of the picture. Another key factor, for example, is that capitalism has reached its limits – ecologically, demographically and culturally. Its need for growth, which has has historically driven innovation and created opportunities, is constrained by the limited resources. And Big Tech needs a lot of natural resources – from rare earth elements to fossil fuels.
An important question the book leaves unanswered is the role of ideology, or what Marxists would call the superstructure. What values will dominate in this new system? Joel Kotkin in his book on Neo-feudalism has argued that liberal, transnational values will prevail. However, given the current drift of some oligarchs toward “anti-woke” ideologies and their support of right-wing populists, that assumption no longer seems so certain. I would suggest that a likely strategy for the technofeudal elites is to reinforce digital echo chambers, giving everyone the illusion that their views carry weight — a kind of political Matrix. As long as progressives remain absorbed in identity debates accessible mainly to academic circles, and workers focus their frustrations on immigrants and the “woke,” the power of the cloudalists remains unchallenged.
Do recent events in the USA support or challenge Varoufakis’ theory? Donald Trump’s “Liberation Day”, when he imposed tariffs to most imports in the USA, might look like an attempt to revive American industry – the most central and traditional element of capitalism. Big Tech stocks took a sharp hit, but meanwhile, they have mostly recovered. But all this turmoil around tariffs will ultimately create more precarious workers who, facing unemployment, will join the ranks of cloud proles. As the middle class struggles further, the gap between rich and poor will continue to widen, accelerating the concentration of wealth in the hands of Big Tech. At the same time, we are witnessing the erosion of the state and the weakening of once-stable principles like the rule of law — clearing the way for a new order.
It seems that we are indeed in the middle of profound transformations. Varoufakis describes the shift from capitalism to technofeudalism as an evolutionary process, similar to genetic mutations within a species. Over time, these small changes accumulate until a fundamentally new creature emerges. Whether we are witnessing just another phase in capitalism’s evolution or the birth of something entirely alien remains to be seen. Either way, don’t hold your breath for a better life, unless you own a digital platform.
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