Technofeudalism: What Killed Capitalism (w/ Yanis Varoufakis) | The Chris Hedges Report

This interview is also available on podcast platforms and Rumble.

The year 2008 signaled to many the weak foundations of modern capitalism in the hands of the greedy, untethered financial sector—the “vampire squid” investment banks as journalist Matt Taibbi called them. Rising from the ashes of the crash, these banks used government money—”socialism for the bankers”—to enrich themselves and Big Business. This money never got to the masses. Instead shares were bought back in traditional capitalist industries and an emerging powerful bloc—the Jeff Bezos’s, the Microsoft’s, the Google’s of the world—invested in what guest Yanis Varoufakis calls, “cloud capital.”

Former member of the Greek parliament and Minister of Finance Yanis Varoufakis joins host Chris Hedges on this episode of The Chris Hedges Report to explain how capitalism is dead and a new form of capital, the title of his new book, “Technofeudalism,” has arisen and holds power akin to the feudal lords of medieval times.

Varoufakis argues that the two pillars of capitalism, markets and profits, have now been replaced and a familiar system of fiefdoms and serfs has emerged. “Markets have been replaced by these digital platforms that look like markets but are not markets. They're more like digital or cloud fiefdoms like Amazon.com or Alibaba, where you have a digital fence keeping within it producers, consumers, artisans, intellectuals, and we are all essentially producing value for the owner of that digital fiefdom, Jeff Bezos in this particular case, in the case of Amazon, who charges ground rent, but of course it's cloud rent,” Varoufakis tells Hedges.

The huge amount of investment in phones, laptops, cell towers, server farms and thousands of miles of optical fiber cables has brought about a system that now dominates all parts of life, including even behavior modification in individual people. The most common platforms used today—Instagram, Google, Amazon, etc.—use their automated systems to produce “tailor-made advertisements which are in a dialectical relationship with us,” Varoufakis says. “We train them to train us, to train them to train us, to convince us that we want something.”

Varoufakis discusses this and more, including how private equity companies like BlackRock, State Street and Vanguard also tap into this system of rentier capitalism and do away with competition, parasitically exploiting working people and traditional capitalists alike.

---

---

Host:

Chris Hedges

Producer:

Max Jones

Intro:

Diego Ramos

Crew:

Diego Ramos, Sofia Menemenlis and Thomas Hedges

Transcript:

Diego Ramos

---

---

Transcript

Chris Hedges

Yanis Varoufakis, a former member of the Greek parliament and Minister of Finance, argues in his new book Technofeudalism: What Killed Capitalism that capitalism, rather than undergoing one of its many metamorphoses, is dead. He argues that its dynamics no longer govern our economics. It has been replaced by what he terms technofeudalism. Technofeudalism is a new form of capital, a mutation of it that has arisen in the last two decades. It is a product of the two forced – the privatization of the internet by China’s and America’s Big Tech and the manner in which Western governments and central banks responded to the 2008 financial crisis. He argues that what he calls cloud capital has demolished the two central pillars of capitalism: markets and profits. 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. Profit, the engine of capitalism, has been replaced with its feudal predecessor: rent. Specifically, he writes, it is a form of rent that must be paid to access to those platforms and to the cloud more broadly, or what he calls cloud rent. Power today resides not with the owners of traditional capital, such as machinery, buildings, railway and phone networks. It has shifted to the owners of cloud capital. We, in this process, have returned to our former status as serfs, contributing to the wealth and power of the new ruling class with our unpaid labor in addition to the waged labor we perform. This change, he warns, has imperiled our autonomy and perhaps our freedom. Joining me to discuss his book Technofeudalism: What Killed Capitalism is Yanis Varaoufakis.

Let's begin with defining cloud capital, how it came into being, which you explain in the book and what it is.

Yanis Varoufakis

Capital has always been around, even before capitalism. It's not a new thing. A fishing rod is a capital good in the sense that it was produced in order to produce something else: a catch of fish. A tractor was produced not in order to be driven around, but in order to produce corn or wheat. So in that sense, well before, you know, thousands of years before we had capitalism, we had capital as a produced means of production. But what lives inside here, inside our phones, in our laptops, in the cell towers, the server farms, the thousands of miles of optical fiber cables, what I call cloud capital, is a produced means, is an automated network made up of machinery, just like a railway network, but it is not a means of production.

It is a produced means of something different, of behavioral modification. So when you have Siri on your iPhone or Google Assistant or Amazon's Alexa, essentially this is an interface between you and the cloud capital owned by these conglomerates, by Jeff Bezos, for instance, in case of Alexa. And what happens there is quite magical and disturbingly novel, because essentially you're training the machine to know you. And you are training it, as it gets to know you, to train you to get it to know you better. And at some point it knows you so well that it gives you good advice, like when Amazon recommends books, it's usually spot on, or when Spotify recommends music. And we are gullible human beings, understandably, and it makes sense if anything, anyone, gives you good recommendations, you start taking them seriously, you start trusting them. And then at some point it can impute desires and preferences into your mind, your heart. And—and this is the most fascinating aspect of it—once you want this electric bicycle, for instance, that it has convinced you you want, it sells it to you directly, bypassing every market, every shopping mall you can imagine.

Meanwhile, you, by training it, by uploading music, photographs, video and so on, you're adding to that cloud capital. And that has never happened before. So two things have never happened before in the history of humankind in capitalism and before capitalism: The first is that you have an automated system which modifies your behavior, an automated system, not some philosopher, some crank, some preacher but an automated machine that modifies your behavior without any human being entering in this behavioral modification exercise. And the second thing that happens is—beyond the fact that it sells to you things directly bypassing capitalist markets—you are helping the owner of that cloud capital accumulate more cloud capital through your free voluntary labor. Ladies and gentlemen, as I like to say, welcome to technofeudalism. This is no longer capitalism because capitalism, however you see it from a left-wing point of view, right-wing point of view, it has two pillars. It's got markets and profit. That's the essence of capitalism. But now markets have been replaced by these digital platforms that look like markets but are not markets.

They're more like digital or cloud fiefdoms like Amazon.com or Alibaba, where you have a digital fence keeping within it producers, consumers, artisans, intellectuals, and we are all essentially producing value for the owner of that digital fiefdom, Jeff Bezos in this particular case, in the case of Amazon, who charges ground rent, but of course it's cloud rent, it's not ground rent. And therefore profits that are created by the old-fashioned traditional capitalist sector are siphoned off by the Bezos’s of the world as cloud capital. And that is of profound importance, not only in the way that we live and in the way we produce and reproduce our material and intellectual conditions, but also it's of profound significance when it comes to our macroeconomy. Because Chris, when about 20, 30 percent, this is my estimation, of GDP, of value produced in our advanced economies is siphoned off—the circular flow of income—by the owners of cloud capital, that creates a massive further reduction in aggregate demand and that creates pressures on the Fed to produce more money against the edicts of the anti-inflationary process. It creates huge political clashes between the United States and China because they are, effectively, the only two owners of large-scale cloud capital. So, as I was thinking of that, I was thinking, this is no longer capitalism, folks. It's something far worse.

Chris Hedges

You talk about in the book about how the usual processes by which goods are produced, shipped, put in a retail, so all of that vanishes and that has tremendous consequences within the economy in particular for people who depend on wages.

Yanis Varoufakis

It does indeed, for a number of reasons. Allow me just to mention two for brevity. The first is, if you are a proletarian, if you work in an Amazon warehouse or in a Tesla or a General Motors factory floor, these days you will have seen if you walk around, if you are allowed to walk around an Amazon warehouse, you will see that workers have one of these attached to their wrist here and this machine is connected to the same algorithm that is running Amazon.com, [A]WS [Amazon Web Services] and all that. And this thing monitors at every nanosecond where the worker is. It instructs the worker, you go to that aisle, pick up that box, bring it here. It knows how long you spent in the toilet. And remarkably, it uses the same reinforcement learning algorithms that brilliant scientists are using in our great research centers in order to design snazzy antibiotics that kill bacteria, that human design has not managed to produce yet. It uses exactly the same AI kind of designer tools in order to predict, to prognosticate in which warehouse, which worker is going to have a higher likelihood, propensity towards forming a union and fires them before they even think of creating a union. So that changes the life of people who work in traditional wage labor settings. But it has a far broader effect. As I said before, when you've got this very large chunk of value taken out of the circular flow of income, and let me be a bit more precise on this.

In traditional capitalist sectors, since the Second World War, if you take General Electric or Boeing, any of the large capitalist manufacturers, you know around 80 % of their revenue was used in order to pay salaries and wages, from the janitor all the way to the CEO, 80%. In the case of Facebook, it's 1%. The rest is siphoned off, goes to the Cayman Islands, through Ireland, through Holland, through Luxembourg, the circuitous pathways that accountants are very good at creating on behalf of the billionaires, of the oligarchs. So once you take all this money out, the quality of jobs available for a wage diminishes substantially because aggregate demand is depressed. So even if you don't have a phone, there are Luddites, people, I have friends who refuse to have a smartphone and they want to be disconnected from the internet and so on. You can't be disconnected because even if you work in manual labor and you have an old Nokia phone that is not connected to the internet, okay, still you are living in this environment in which the quality of jobs is depleted and where power is immensely concentrated in the hands of the very few who live off cloud rent and who are simply not eligible to any kind of control. I mean, Elon Musk is just very much in the news today because he went into bed with Donald Trump in a rather unsavoury set of circumstances. But we're missing the point that it's not Elon Musk. It's Google, it's Microsoft, it's Alibaba, it's Tencent in China. It is the form of cloud capital which creates a new regime, essentially. And it's not a personal matter, it's not a matter of personal preference.

Chris Hedges

Two points. One, of course, with companies like Boeing, I know because my brother works in robotics, they've all become automated. So where you might have had hundreds, maybe thousands of workers and car factories, everything else, so at the same time, there's an assault on traditional manufacturing. And then a really interesting point you made in your book, which I didn't know until I read it, was that you talked about Tesla cars being connected to the cloud and being instruments, the same kind of instruments; the car itself functions as a kind of cloud machine to scoop up where we drive and our habits and what music we listen to and everything else.

Yanis Varoufakis

Well, think of a Tesla or indeed the Chinese version, BYD, equally good car, think of it as an iPad on wheels. That's what it is. Both technologically speaking, but also as part of cloud capital. And, you know, that explains to a large extent, if you look at what happened to the Tesla capitalization to the New York Stock Exchange after Donald Trump's victory, you'll find that the bump in its capitalization, the increase in its capitalization, not its total capitalization, the increase in its capitalization was greater than the total capitalization of the five traditional car manufacturers. That gives you an idea of the power of cloud capital. And exactly as you said, I mean, thank you for mentioning it. The first time I got an inkling that Tesla's and BYD's are very different to Volkswagen's and General Motors cars, very different, even though they may look similar was when I found out that Elon Musk can switch off your Tesla from his iPhone, from his Samsung, whatever he has. I don't want to advertise a particular phone company. Did people know that? That Tesla can switch off your car through the cloud?

So, and this has happened because some people who tried to buy Tesla cars second hand or third hand and didn't want to have them serviced at Tesla, Tesla switched them off for them. So the next step, of course, is that Tesla managed not, I mean, they're not using this too much in order to exert power of you, but they could. It's a scary thought that you could be driving around and suddenly your car is switched off by Elon. But the most interesting thing is what you mentioned, that very soon Tesla will be making more money from you playing the role of cloud surf while you're driving, or being driven in it if it is an autonomously driven vehicle, because it knows what music you're listening to as you're visiting your mother-in-law, right? What did you purchase exactly from the supermarket just before you arrived at your mother's in law, what music did you listen to on the way back home and what kind of conversations were you having where you mentioned particular products or companies that you may have bought shares in, in the morning when you went to work. This is immense power because essentially what you're doing when you're speaking and listening to music and going places in your Tesla is you are using the Tesla in the same way that you can use your Alexa or be used by it to be precise, in order to upload onto the cloud more cloud capital for the owner of cloud capital. And that, I think, should concentrate our mind onto the major transformation that we have experienced as a society over the last 15 years or so.

Chris Hedges

Right, well my 12 year old daughter uses my Spotify, so Spotify recommends all sorts of music I don't want to listen to. I want to talk about experiential labor, because you said that's something they can't replicate. Explain what it is and why it's important.

Yanis Varoufakis

Labor that can be automated ceases to be human labor. From time immemorial, this is not a new thing. So, for instance, even back during the early stages of the Industrial Revolution, take a textile factory in Manchester, in England. The jobs that could be done individually by workers, especially women, who would be given a sewing machine, and say, look, you produce these pieces of cloth. Any such job that could be individuated essentially was shipped out of the factory. These women were asked to stay at home. They were given a sewing machine at home, and they were asked to produce them at home. And then they were being paid as contractors, they were being paid piece rates per item. They weren't being paid wages. They weren't being paid vacation time. They were not being given any health cover, they were being shipped out and treated like individual producers, individuated producers. So all jobs that can be atomized and individuated essentially drop out of the wage labor process. With cloud capital, this is now growing exponentially. What happens is, for instance, I don't know whether you are familiar with that—I mentioned that this is the book—it is quite terrifying. There is a website owned by Amazon called the Mechanical Turk. As we speak today, I checked it—hundred million people worked on it, actually labored on it. So what happens is you log on and the algorithm matches you with particular jobs, not employers, but jobs. Employers dish out these jobs that can be done at home. It can be accounting jobs or counting the number of cars in a deck of cards and separating them like an idiotic machine from buses or writing reports, giving data or doing data analytics. And you get paid by the job. And these people, of course, have absolutely no social security cover. They can be all over the world. Sometimes they're being paid in Amazon tokens, so they can buy stuff from Amazon.com so they're not even being paid in wages.

Chris Hedges

It's like script, it's like the miners used to get script, where they could only shop at the overpriced company store.

Yanis Varoufakis

It's exactly what it is. Indeed, it's exactly what it is. So this is one example. But jobs that require brainstorming, that require inspiration. So for instance, let's say you have an architect's office and you have five, 10 highly qualified architects and the office is competing for a large project to build the airport somewhere or a new modern art museum somewhere. And they need to brainstorm there. Well, that is what I call experiential labor. It's labor which is, in William Morris's terms, fulfilling labor. It is creative labor. That cannot be replaced yet by artificial intelligence, algorithms, and that is maintained as part of the wage labor that remains within the broader kernel of technofeudalism.

Chris Hedges

Although, as you point out, it's not valued or compensated.

Yanis Varoufakis

It depends on the bargaining power between the owners of the architectural office and the architects.

Chris Hedges

Well, you do talk about Mad Men, about that. I haven't watched it, but you talk about this character in Mad Men who apparently is drunk half the day, but he's brilliant as a kind of example of that experiential quality, that ability, that inspiration, that kind of vision. And so what happened? Talk about that bifurcation because you need it, don't you? I mean, isn't it essential, experiential labor?

Yanis Varoufakis

Less and less. I use Mad Men, the serial, featuring the fictional Don Draper, he represents the great advertisers of yesteryear, of the 1950s and 60s, those men, and they were men mostly, some very few women, who sat around and drank their bourbon and eventually would come up with brilliant advertising campaigns for Coca-Cola, for Bethlehem Steel, for McDonald's, for whatever. And those ads were necessary at the time after the Second World War, when you had the massive corporations that emerged from the Second World War as part of the war economy, America's war economy, and they had a remarkable productive capacity because factories became exceptionally efficient during the war. And then with the conversion of the arms industry into civilian industry, the problem the United States had in the late ‘40s, early ‘50s, late ‘50s, was that those factories could produce a lot more than what the American public wanted to or could consume. So these corporations needed people like Don Draper because they needed to produce the stuff and the demand for the stuff through advertising, through using the new medium of television back then.

The great billboards on the motorways, on the highways and so on. But two things have happened since then. Well, the first thing is that through the creation of cloud capital, the Don Draper’s of the world, those haphazard and erratic, brilliant opinion makers and advertising geniuses, they became automated. So today, you've got bots doing their job. Today, with the decline of the television audience and the immersion of society into cloud capital, whether it is Instagram or TikTok or whatever, Facebook, Snapchat and so on and so forth, the Don Draper’s are being replaced by bots that do highly targeted campaigns. Each one of us at different points of the day get tailor-made advertisements which are in a dialectical relationship with us. We train them to train us, to train them to train us, to convince us that we want something. Don Draper couldn't do that at this level of, you know, granular level of dialectical interactivity with each one of us, not each one of us, but every mood that we might find ourselves in. So the Don Draper’s, the experiential labor of the Don Draper’s is increasingly a thing of the past. And at the same time, the great conglomerates that I mentioned, you know, the Coca-Cola's, the Ford's, the General Motors, the General Electric and so on, they're becoming a miniscule, miniscule power in our society.

If you look at this New York Stock Exchange today, Chris, and you take out the cloud capital from it, you know, the magnificent seven, as you Americans like to call them, what's left? Pretty miniscule amount of value. These large corporations, I mean, yesterday I was looking at the numbers, I was astounded to find that Palantir, Peter Thiel's genocidal company of waging war through AI and drones and apps, has a higher capitalization in the New York Stock Exchange than Lockheed Martin. I mean, that is a thing. I don't need to say more.

Chris Hedges

Well, you also point out, which I didn't know until I read in your book, that about 80% of the New York Stock Exchange is owned by a handful of companies like BlackRock. And you say that you see BlackRock, but then you list all the companies they own, United, you know, on and on and on. I didn't know it was that consolidated.

Yanis Varoufakis

Yes, to be precise, what happens is there are three companies: BlackRock, State Street and Vanguard. Between them, they control—doesn't mean they have majority ownership, but you don't need to have majority ownership with a large corporation. If you own 15% of a large corporation, you control it. But they control more than 80% of all the companies in the New York Stock Exchange. And that means that effectively, I mean, what kind of competition do you expect between two airlines owned by the same people? Why are they going to compete if they are owned by the same people? And you just say that Blackrock doesn't interfere with the board of directors, it's just to fly in the face of reality. Of course they interfere with the board of directors. So essentially competition goes away. The idea that Adam Smith had that, you know, greed can be harnessed in the interests of humanity as long as the greedy capitalists compete against one another. Well, they don't compete against one another because they're a cartel now. And so essentially, those companies now, increasingly the profits that they report and the dividends that they dish out to their shareholders are a form of rent. They are not a form of capitalist profit, which is a result of entrepreneurship. And the other component of this, which I think is really very important, is to think of all this—forget the stock exchange, look at private equity that is capital, traditional money capital, money, which is purchasing companies outside the listed public ledger of stock exchanges.

When private equity buys a formerly nationalized public utility, let's say Yorkshire Water or the London Water Company, Thames Water Company or here in Greece they came and they purchased our former publicly owned electricity grid or they buy a school, a private school, they buy a clinic and what they do there, they're not interested in the profitability of these enterprises they purchase. The first thing they do is they buy an old-fashioned capitalist enterprise, they create two companies, one owns the assets—the buildings, for instance, primarily the real estate, and another one owns the employment contracts of the workers. And then they go through this accounting trick of making the company that owns the workers and the customers pay rent to the company that owns the real estate. And you know what, six months later, they do two things: Firstly, they get a lot of loans, they saddle with debt, the company that owns the real estate, using the real estate as collateral. And then they make the other company that doesn't own anything except workers to pay a higher rent to the first company. And once they have all the debt that they've taken on board goes to the pockets of the shareholders of these private equity asset managers. And then at some point they just get rid of these companies, they bankrupt them. Now, that again is not capitalism.

You and I are of a generation when we remember the great clashes between the left and the right, where it was a discussion between pro-capitalists who believed that the jungle that is the market through a Darwinian process of natural selection, selects for the best and creates through the profit motive a more efficient society. And we of the left, or I of the left, used to say that central planning is more efficient and more consistent with the public interest. That's all gone. There's no such debate anymore. This is something of the past because now what we have is a kind of feudalism, call it “technofeudalism,” which is founded on a predatory state because it is a state that is backing the power of the cloud capital owners and the private equity companies and BlackRock and Vanguard and State Street effectively to act as a massive parasite, sponging onto not only the working class, but the traditional capitalist class who are still trying to make things in the traditional way.

Chris Hedges

Getting off on the left, I want to read a passage from your book and have you comment. You said,

“Sometime in the 20th century the left traded freedom for other things. In the East, from Russia to China to Cambodia and Vietnam, the quest for emancipation was swapped for a totalitarian egalitarianism. In the West, liberty was left to its enemies, abandoned and exchanged for an ill-defined notion of fairness. The moment people believed they had to choose between freedom and fairness, between an iniquitous democracy and miserable state-imposed egalitarianism, it was game over for the left.”

Explain what you mean by that.

Yanis Varoufakis

I'm saying this as a leftist, by the way, right? This is [inaudible].

Chris Hedges

Yeah, well, me too. So we're in the same club.

Yanis Varoufakis
When the left began kicking and screaming against capitalism, not the very beginning, it was an emancipatory project. I mean, Marx and the Marxists and the trade unionists were all about liberating. Liberating workers from the tyranny of exploitation. It was about liberation. It wasn't about equality, it wasn't about fairness. I mean, maybe they had a lot of those slogans as well, a fair wage for a fair day's work. But Marx, who for me was an eye-opener, was actually against the idea of equality. You know, he would ask pertinent questions such as equality of what? You know, if you have a disabled person, a disabled person needs more resources in order to have the standard of life that we have. So you can’t ask for—equality is not the issue. Liberation from constraints, liberation from exploitation, from the extractive power of the powerful. That's what the left should be all about. So the criticism of the left initially waged against capitalism was that capitalism restricts the freedom not just of the workers but also of the capitalists. There is a beautiful, wonderful piece in this text in Marx's “Grundrisse,” where he's waxing lyrical about the poor capitalist, how the capitalist goes to bed at night unable to sleep because he's worried about bankruptcy. And even if he's a good man, he has to exploit his workers because if he doesn't squeeze the living daylights out of them, then he will become like them.

So this is a tragedy for the capitalist class. So it's a purely humanist liberation movement. That's what the left used to be. Even when you look at it from the perspective of the feminists, of feminism. Feminism, remember what it used to be called—women's lib, women's liberation. It wasn't about quotas that the CIA torturers in Guantanamo Bay had to be 50% men, 50% women, or that they should be transgender toilets in Guantanamo Bay. That was never the issue for the women's liberation, the gay and lesbian liberation movement. So we of the left used to be all about liberty. And then we got stuck around the First World War, around the First World War, 1912, 1913, 1914. The Great War split the left between those who were supporting the Soviet system and the social democrats. The social democrats became effectively ethnonationalists, especially in places like Germany. They took the side of the bourgeoisie in that crazy trench warfare that was pathetic and pointless. The Soviet side, very soon after 1917, lost the verve, the urge to liberate workers from the tyranny of some boss.

Chris Hedges

Well, but there was that brief period with the Soviets where they achieved it.

Yanis Varoufakis

Two years.

Chris Hedges

And then, of course, the Bolsheviks destroyed it, which is why Chomsky calls the Bolsheviks counterrevolutionaries. But they did achieve it. That's the tragedy.

Yanis Varoufakis

Yes, for two years, for two years. And this is exactly what Noam says, that for two years, there were worker councils and there was—the idea was that now workers will have democratically to control their work, their workplace. They would elect their foremen and forewomen and they would—and then after that, of course, it all became top down. And in the end, allow me to bring it back to my book. If you look at Gosplan, the ministry of economic planning in Moscow. What it tried to do, Chris, and this fascinates me and horrifies me and excites me and at the same time depresses me, is what Gosplan tried to do, it tried to do what the algorithm of Jeff Bezos is doing in Amazon.com. Essentially, the idea behind Gosplan, which was a very fascinating project if you look at it from a technical point of view, from a mathematical point of view, and I spent quite a few years when I was a young man studying it. What Gosplan tried to do was to replace the market by matching consumers with producers and from the center, Moscow, sending signals to a factory producing shoes, you will produce so many shoes at that price and trying to match those shoes with the demand from consumers.

But Amazon does this perfectly well. Back then, they didn't have the old singing, old dancing algorithm that now Amazon has. So in a sense, Amazon and central planning in the Soviet Union have a great deal of commonality. The difference is, of course, in the case of Amazon, it's owned by Jeff Bezos and it is optimized. The code, the computer program, the algorithm is optimized in order to maximize his cloud rent. Whereas in the case of the Soviet Union, it was there to optimize according to the will of the central committee. So once we justified the death of the work councils, of the liberation of workers from not being the decision makers as the left, that's what happened in the communist East. In the West, we also ditched freedom because the Social Democrats, who became quite significant and even won governments in places like Germany, Austria and Britain in the 1960s and ‘70s, again they replaced liberty with the concept of social justice, of taking some of the surplus value accumulated by the capitalists and giving it to the workers. But they accepted the tyranny of capitalism, of the marketplace, of the capitalist marketplace. So we of the left, whether we were communists or social democrats, in the end, did away with the concept of liberation. And who picked it up? The libertarians for whom it is the freedom of the conglomerate, of capital that is identified with the freedom of humanity, which of course is one of the greatest distortions of liberalism. So, you know, I think that we of the left, we need to re-espouse freedom as our number one motivation.

Chris Hedges

You write in the book how this new paradigm is playing out both politically and in terms of the constriction of individual freedom. You write,

“Our digital identity belongs neither to us nor to the state. Strewed across countless privately owned digital realms, it has many owners, none of which is us. A private bank owns your ID codes and your entire purchasing record. Facebook is intimately familiar with whom or what you like. Twitter remembers every little thought that caught your attention, every opinion that you agreed with that made you furious that you lingered over idly before scrolling on. Apple and Google know better than you do what you watch, read, buy; whom you meet, when and where. Spotify owns a record of your musical preferences more complete than the ones stored in your conscious memory and behind them are countless others invisibly gathering, monitoring, sifting, and trading your activity for information about you. With everyday that passes, some cloud-based corporation whose owners you will never care to know owns another aspect of your identity.”

Let's talk about how this plays out. Number one in terms of politics; we're watching the rise of Trump and a kind of rapacious oligarchic elite dismantle what's left of a very anemic state, and then talk about the consequences for us. You say that we're essentially being pushed back into the role of serfdom.

Yanis Varoufakis

You know, back then in the ‘70s when these interesting debates were taking place between the Marxist left and the libertarian right, one of the defining concepts of the right was the concept of the liberal individual, the autonomous sovereign agent who likes what he does—was usually he—and does what he likes, homo economicus. So, you know, students of economics are still being taught this model. The idea is that you are a bundle of preferences which are your design, completely your realm. You choose what you like, you may like stupid things, but it's your right. Nobody has a right to tell you that it's a stupid thing. There's no such thing as a stupid preference. There is just a preference. So you are a liberal individual. That liberal individual transacts with others through markets. This is the main modus of interaction with other people. You sell them apples, you get back from them oranges, or you sell capital and you get labor or labor and you get capital. That's the right-wing perception of the good capitalist society, of the enterprise culture, of the market society. That's gone. Because when you have Alexa and you are training it to train you to train it to put preferences to your head, there's no such thing as the autonomous individual anymore, right?

You are in a constant dialectical relationship with a machine or a network of machines owned by the 0.00001% not even the 0.1% that tells you what you want. So suddenly you are in the matrix. You are not in the realm of freedom, of Friedrich von Hackeck or Milton Friedman. Right? That's point number one. Point number two, the other loss of the liberal individual or decline of the liberal individual has to do with the separation between work and play. In the traditional liberal mind or libertarian mind, even in homo economicus, if you look at every textbook that has ever been written about consumer choices, if you look at the way that the labor market is described by Nobel Prize winners, the idea there is that work is something that gives you disutility, disutility. So you suffer while you're working, you get tired, you get bored, whatever, but you do it, it's the price you have to pay to get your wage, which then secures a degree of autonomy for you during your leisure time, or leisure as you would say in America. So for there to be a liberal individual, there has to be a separation between work time and play time. But now cloud capital has eradicated that borderline, that fence between work time and play time. It's not just because you're taking home your work, your emails and, you know, working from home. There is that. But this is actually something far worse, which I first noticed amongst my students before I got into politics in 2013, 2014. I actually noticed that when I lived in the United States. I noticed how angst-ridden youngsters were about social media.

And it was a kind of subconscious angst because, when you know that your social media profile is on the public record and you know that in a year's time, five years time, when you apply for a job that you really crave at Google or Microsoft or one of the big snazzy cloudalists, you know that before you are given the chance for an interview, some bot—not even a human being—is going to go through your social media profile. So it's midnight, you're in bed, you're thinking of posting something on Instagram, deep down, you know that this is going to be part of your CV, your digital CV, five years hence. So, especially if you're not totally conscious of this, this works in your subconscious, at that moment you're trying to curate yourself on behalf of some employer. Gone is the liberal individual who during his or her free time just before going to bed at midnight expresses himself or herself by posting a video on Instagram. So there is a—I could be talking for hours about the manner in which the very concept of the liberal individual which is at the heart of right-wing philosophy is now not fit for purpose anymore.

Chris Hedges

When that scandal broke about Ashley Madison, the website for people who wanted to carry on affairs outside of their marriages, it turned out that most of the men or many of the men who were communicating—they thought they were communicating with women and apparently you had to pay according to the time you were on the site—were just communicating with bots. They were being fleeced of thousands of dollars by bots.

Yanis Varoufakis

Indeed, indeed.

Chris Hedges

I want to ask about the central bankers printing money. This is an important part of your book because 2008, you cite this as a pivotal point. You say in the 15 years since capitalism's near-death experience, central bankers have been printing monies and channeling them to the financiers entirely over their own accord. In their minds, they have been saving capitalism. In reality, they have been upending it by helping to finance the emergence of cloud capital. But that's how history arrives on the coattails of unintended consequences. Explain what happened.

Yanis Varoufakis

Well, we all know what happened in 2007, 2008. A 20 year period of irrational exuberance, which was essentially Wall Street printing its own money to cut a long story short, to keep it very technically minimal. Essentially, they were printing their own money. Why did they do that? Because after 1971, after the United States became a deficit country, went from a trade surplus to trade deficit and with the Nixon shock in 1971, essentially what every government in Washington did was to increase, intentionally boost the trade deficit. And the trade deficit became a remarkable tool for the United States of enhancing American hegemony, which is crazy. It sounds crazy because never before has a deficit enhanced the hegemonic power of the hegemon, it has done the opposite. It brought down the Roman Empire, the Dutch Empire, the British Empire. But in the case of the American Empire of the United States, it enhances hegemony. But how did it do it? The trade deficit sucked into the United States, the net exports of the Germans, of the Japanese, later of the Chinese. And then what did these capitalists, non-American capitalists do with the dollars that they were paid? They took it to New York.

So there was a tsunami of capital from the 1970s all the way to today coming into New York City, into Wall Street. And of course, if you give a Wall Street financier a few billion to play with every day, even if it's only for 10 minutes, they find ways to financialize it, you know, to build bets on that money—derivatives, CDOs, CDO squares, CDSs and so on. And so effectively they were minting their own money, but they overdid it. Between, you know, after the Clinton administration effectively unleashed them completely from all the impediments and the shackles that the New Deal and the 1960s Bretton Woods system had imposed on the bankers that went through Larry Summers and Tim Geithner and appointed by, who else, Barack Obama. So they went crazy. They went berserk. To give our audience an example, in the year 2001, total planetary income was around 50. Forget the zeros because I had 50 trillion. It's around 50 in 2000, 2001, 50. The derivative trades were 70. Okay, that's in 2000. By 2007, total income, planetary income, went from 50 to 70. And the derivative trade went from 70 to 780. So there wasn't enough room on planet Earth. So they came crashing down.

In a complete state of panic, the leaders of the West—presidents, prime ministers and their central bankers—gathered in London in April of 2009, if you remember, and they all agreed to refinance, to refinance, to refloat finance, essentially socialism for the bankers. At the same time, every single Western jurisdiction imposed austerity on its people. So you have this combination of austerity for the many, depressing demand for goods and services and lots of money for big capital. Because this, you know, all the money that the central banks were printing and giving to the bankers of Wall Street, of Frankfurt, of London, of Paris and so on, was flowing to big business. Now, traditional big businesses like General Motors, General Electric, Volkswagen and so on, they looked outside the window of their skyscrapers and they saw impecunious masses. These people have no money. As if I'm going to invest in production lines that would produce, you know, snazzy new expensive products, they won't be able to afford it, the many. But they still took the money from the central bank and rushed to the stock exchanges to buy back their own shares. So, if you are Volkswagen, you don't want to produce expensive cars because the many can’t afford them. But the central bank gives you free money. So what do you do? You buy Volkswagen shares. Similar in the United States. That creates no investment, no good quality jobs, but it creates a very nice little earner for the capitalists. And here is the cracks. The only capitalist who actually took this money and invested it in machines, were the Jeff Bezos’, the Elon Musk's, the Google's, the Microsoft's, the Nvidia's, the Intel's of the world. Nine out of every $10 that they've invested in cloud capital, in Meta, in Google and so on, nine out of every $10 has come from money that was printed by the Fed, by the US Bank.

Chris Hedges

And as you point out in the book, they didn't make profits.

Yanis Varoufakis

They didn't need to make profits.

Chris Hedges

[Laughing] Yeah.

Yanis Varoufakis

Because it's all rent. Yeah, that's the thesis in my book. So essentially society paid for the cloud capital of the new masters of the universe, who are no longer the bankers so much, but they are the owners of cloud capital, whom I have decided to call cloudalists because I like the term, it comes from Star Trek, but that's another story.

Chris Hedges

Yeah, you do have Star Trek in there. What do you have, you have the Borg in there, right?

Yanis Varoufakis

I'm a Trekkie, what can I do?

Chris Hedges

I would put my wife on. She's a total Trekkie. Okay. I want to talk about how you end the book about how we're going to fight back. You have kind of on the ground experience as the finance minister with Syriza when the international banking system decided to strangle Greece and actually accelerate the selling off of assets and everything else. I mean, it was a horrible story, which is another show. But how do we, I mean, these monoliths are global. They've completely intruded on every level, as you point out in your book, into our lives. How do we recapture our own autonomy and control over the economy?

Yanis Varoufakis

Through combining traditional collective action with cloud capital. We need to use the weapons, the tools of the enemy. We always did. The Marxist left was never about destroying the machines, it was always about taking over them. So let me give you a very, very practical example, because you mentioned Greece being squeezed and squashed and effectively put into debtor's prison by the international financial community, if you can call them a community, mafia, I will call them. So I only spent five and a half months in the Ministry of Finance. My number one priority was to prepare for the clash, for the rupture. And technically speaking, that took the form of preparing a parallel payment system, a digital payment system using our own home-produced cloud capital so that we can use the tax office. The idea was, since the central bank was not ours, it belonged to them. Our central bank was not ours, it belonged to Frankfurt, it was working against the Greek people. Imagine having a central bank that works against your people as an occupying force. But I control the finance ministry, well, in principle, in theory, not in reality.

But anyway, the idea was, imagine if one day you wake up and your tax file number is also a digital bank account, a digital wallet which you can download from the App Store, the Apple Store or Google Play or whatever. And you get a PIN number and you can make payments from one tax file number to another. Suddenly, you have a parallel payment system that the bankers cannot control. So that was what I was working day and night to produce to have it ready for the moment of the rupture. So this is an example of how you can use cloud capital and to combine it with a public system that belongs to the demos; in other words, that can be, it is not necessarily, but it can be democratized. That's one strand of my answer to your question. The other one is when it comes to collective action in the traditional industrial action sense, Chris, ever since I was very young, I was in awe of the trade unionists in the United States, in Britain, in Greece, around the world of the 19th century because they were heroes and amazing heroes to think about it. To unionize back then meant a very high probability of being beaten up or being killed. And even if you weren't beaten up or killed physically, then, you know, during the strike, your family was starving.

Chris Hedges

Yeah.

Yanis Varoufakis

Because it was a hand-to-mouth existence. No wages, no food on the table. And yet, and despite the fact that the probability of personal gain from going on strike was tiny and even worse, you are facing the strike breakers, the scabs as we call them in England, right? Who were working with the employer to break your strike. And if you manage to secure a 5%, 10% pay rise from your employer, the scabs would get it too. So in terms of cost benefit analysis, it is just a miracle that there was ever a single union ever or a single strike. That's what I was feeling always. So this cost benefit analysis has to change. You know, it has to be rebalanced. Instead of having maximum personal sacrifice with very iffy, miniscule personal gain from collective action, we need to use cloud capital in order to rebalance that so that the working class, the cloud serfs, the people without power can actually gain some power. So one thing that I always believed, especially while I was writing this book, and I tried to articulate this in the last chapter, plus in a novel that I wrote before publishing Technofeudalism, it's called “Another Now.” Look, I plugged it.

The idea there is to combine traditional forms of industrial action with consumer boycotts and even attacks at the financial instruments of the cloudalists, of the capitalists, of the private equity, particularly private equity owners of the big corporations. So let me give you a simple example. For some time I was looking at the way in which private equity, remember how I was saying that they would buy a water authority or an electricity company and then saddle it with debt and try to squeeze payments out of workers, out of customers in order to repay those debts because the money that they borrowed all went into the pockets of the shareholders. Now, the way they do it through financial engineering is they place these debts inside financial derivatives. If you can unpick those financial derivatives, if we had a team of 50, 100, 200 progressive lefty financial engineers, and these people exist, these people exist, I've met a lot of them, they would love to be part of a movement, you know, to redeem their soul, if anything else, for everything they've been doing all these years. And you could unpick and find out which of these derivatives are vulnerable in the marketplace if you reduce the payments that go from the workers or from the customers to repay chunks of the debt within those financial derivatives. And you can do this by either having a strike or having, let's say, consumer boycott or a payment strike.

The people of Yorkshire do not pay their water bill for a month because we organize them along with workers that strike. That combination of traditional collective action with new financial measures or campaigns and consumer boycotts that can be organized through Instagram, through Facebook, through Twitter, whatever, that can redress this awful cost benefit in favor of the weaker forces in society. But that takes a lot. So in other words, we need to become experts in cloud capital, in financial engineering. It's not enough to be experts at organizing auto workers.

Chris Hedges

Great. Thanks, Yanis. That was Yanis Varoufakis on his book, “Technofeudalism: What Killed Capitalism.” I want to thank Sofia [Menemenlis], Diego [Ramos], Thomas [Hedges], and Max [Jones], who produced the show. You can find me at ChrisHedges.Substack.com.

---

Photos

Picture Credits

Thumbnail background picture:

Multicolored data - stock photo, Digital generated image of multi coloured data against black background.

Technofeudalism: What Killed Capitalism Cover

US President Barack Obama shakes hands w

US President Barack Obama shakes hands with Chairman of the Board and Chief Executive Officer of JPMorgan Chase, James Dimon, after speaking at the Business Roundtable March 12, 2009 at a hotel in Washington, DC. Obama called on G20 nations to ensure they made "robust" efforts to stimulate their economies but said financial market reforms should not lead to a new "super-regulator." AFP PHOTO/Mandel NGAN (Photo credit should read MANDEL NGAN/AFP via Getty Images)

Woman shopping on a vintage clothes app from home - stock photo (Getty Images)

Workers Laying Railroad Tracks

Chinese and Filipino workers lay track for the Burlington Railroad (formerly the Great Northern Railway) at Stevens Pass. (Photo by �� Josef Scaylea/CORBIS/Corbis via Getty Images)

The Inauguration Of Donald J. Trump As The 47th President

WASHINGTON, DC - JANUARY 20: Guests including Mark Zuckerberg, Lauren Sanchez, Jeff Bezos, Sundar Pichai and Elon Musk attend the Inauguration of Donald J. Trump in the U.S. Capitol Rotunda on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States. (Photo by Julia Demaree Nikhinson - Pool/Getty Images)

TOPSHOT-SWEDEN-FACEBOOK-DATA-CENTER-SERVERS

TOPSHOT - Joel Kjellgren, Data Center Manager walks in one of the server rooms at the new Facebook Data Center, its first outside the US on November 7, 2013 in Lulea, in Swedish Lapland. The company began construction on the facility in October 2011 and went live on June 12, 2013 and are 100% run on hydro power. AFP PHOTO/JONATHAN NACKSTRAND (Photo by JONATHAN NACKSTRAND / AFP) (Photo by JONATHAN NACKSTRAND/AFP via Getty Images)

Abstract cloud technology circuit board. Large data center concept. modern cloud storage technology innovation concept background - stock photo

Abstract cloud technology circuit board. Large data center concept. modern cloud storage technology innovation concept background

Sunset BLVD Broadway Opening Night

NEW YORK, NEW YORK - OCTOBER 20: Lauren Sanchez and Jeff Bezos attend the opening night of "Sunset BLVD" at St James Theater on October 20, 2024 in New York City. (Photo by Bruce Glikas/WireImage)

Amazon Warehouse Operates On Cyber Monday

ORLANDO, FLORIDA DECEMBER 2: Amazon employees work to fulfill same-day orders during Cyber Monday, one of the company busiest days of the year. The fulfillment center, one of Amazon largest for same-day deliveries, saw more than 200 workers sorting, packing and shipping items throughout Central Florida. On any given day, this location processes more than 20,000 packages, but during the holiday season, that number jumps to more than 80,000. (Photo by Miguel J. Rodriguez Carrillo/Getty Images)

Amazon Warehouse Operates On Cyber Monday

ORLANDO, FLORIDA DECEMBER 2: An Amazon employee works to fulfill same-day orders during Cyber Monday, one of the company's busiest days at an Amazon fulfillment center on December 2, 2024 in Orlando, Florida. The fulfillment center, one of Amazon's largest for same-day deliveries, saw more than 200 workers sorting, packing, and shipping items throughout Central Florida. This location processes more than 20,000 packages on any given day, but during the holiday season, that number jumps to more than 80,000. (Photo by Miguel J. Rodriguez Carrillo/Getty Images)

Spain's Amazon workers call two-day strike

MADRID, SPAIN - MARCH 21 : Amazon workers go on a strike after company aims to block salary increases, cut wages and reduce payments for those working weekends or holidays as part of a new contract agreement on March 21, 2018 in Madrid, Spain. Amazon's logistic warehouse workers in Torrejon de Ardoz, located 20 km east of the city of Madrid, also take part in the strike. (Photo by Burak Akbulut/Anadolu Agency/Getty Images)

UFC 309: Ruffy v Llontop

NEW YORK, NEW YORK - NOVEMBER 16: President-elect Donald Trump and Elon Musk pose for a photo during the UFC 309 event at Madison Square Garden on November 16, 2024 in New York City. (Photo by Jeff Bottari/Zuffa LLC)

Hongqi Factory In Changchun

CHANGCHUN, CHINA - JULY 05: Car bodies on the assembly line of new energy vehicles (NEVs) at a workshop of China FAW Group's Hongqi Fanrong Plant on July 5, 2023 in Changchun, Jilin Province of China. (Photo by Zhang Yao/China News Service/VCG via Getty Images)

98th European Motor Show

BRUSSELS, BELGIUM - JANUARY 09: Tesla Model 3 compact full electric car interior with a large touch screen on the dashboard on display at Brussels Expo on JANUARY 09, 2020 in Brussels, Belgium. The Model 3 is fitted with a full self-driving system. (Photo by Sjoerd van der Wal/Getty Images)

Machine Room in a Steam Sewing Factory, 1854. Artist: Anon

Machine Room in a Steam Sewing Factory, 1854. This view is of Holloway, Crowe & Holloway's clothing factory, Stroud, Gloucestershire, England. Twenty sewing machines were installed, powered by steam through belt and shafting under the workbench. The female operatives controlled the machines by means of individual foot levers. Holloways, one of the principal employers in Stroud, introduced division of labour in their factory and one pair of trousers passed through 16 pairs of hands, each operative carrying out a specific task. From The Illustrated London News. (London, 16 December 1854). (Photo by Ann Ronan Pictures/Print Collector/Getty Images)

Portrait of Sir Edward Burne-Jones and William Morris

Portrait of Sir Edward Burne-Jones and William Morris (Photo by © Historical Picture Archive/CORBIS/Corbis via Getty Images)

Mad Men

Pete Campbell, from left, Don Draper and Roger Sterling are shown during (Flickr)

York cigarettes

LOS ANGELES – 1962: York Cigarette with an elegant man in a brown suit holding a cigarette between his index fingers in 1962 in Los Angeles, California. York cigarette billboard from the 1950's (Photo by Gary Leonard/Corbis via Getty Images)

Pepsi Cola Sign In Times Square Area

(Original Caption) 10/7/1955-New York, New York-Broadway Signs: Pepsi Cola sign, Broadway between 44th and 45th street.

Bitcoin 2022 Conference Draws Cryptocurrency Industry Professionals And Investors To Miami

MIAMI, FLORIDA - APRIL 7: Peter Thiel, co-founder of PayPal, Palantir Technologies, and Founders Fund, holds hundred dollar bills as he speaks during the Bitcoin 2022 Conference at Miami Beach Convention Center on April 7, 2022 in Miami, Florida. The worlds largest bitcoin conference runs from April 6-9, expecting over 30,000 people in attendance and over 7 million live stream viewers worldwide.(Photo by Marco Bello/Getty Images)

Revolutionaries with Red Flag

(Original Caption) The Red Flag is seen here, as it is unfurled in Moscow.

Linguist Avram Noam Chomsky

(GERMANY OUT) Avram Noam Chomsky, Professor für Linguistik am Massachusetts Institute of Technology (MIT), gastiert mit einer Rede mit dem Thema "A Roadmap to a Just World - People Reanimating Democracy" beim "global media forum" im Plenarsaal des ehemaligen Deutschen Bundestages in Bonn (Photo by Brill/ullstein bild via Getty Images)

TOPSHOT-US-VOTE-POLITICS-TRUMP

TOPSHOT - Tesla and SpaceX CEO Elon Musk gestures as he steps on stage during a rally for former US President and Republican presidential candidate Donald Trump at Madison Square Garden in New York, October 27, 2024. (Photo by ANGELA WEISS / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

Amazon Echo Dot (5th generation)

https://www.trustedreviews.com/best/best-amazon-echo-4247459

Monthly Foreclosures Up 55 Percent Compared To July Of Last Year

RICHMOND, CA - AUGUST 14: A sign is posted in front of a bank owned home that is for sale August 14, 2008 in Richmond, California. According to a report by RealtyTrac, home foreclosure filings surged 55 percent in July compared to a year ago as borrowers continue to default on home loans. (Photo by Justin Sullivan/Getty Images)

New York Stock Exchange

Traders on the floor at the New York Stock Exchange, New York City, USA, 2nd June 1981. (Photo by Barbara Alper/Getty Images)

Sanford Weil

4/6/98, New York City, New York, United States: Travelers Group Chief Executive Officer Sanford Weil announces merger between Traveleres and Citycorp. Citicorp CEO John Reed. (Photo by Najlah Feanny/Corbis via Getty Images)

USA - 2008 Presidential Election - Obama Meets with Economic Advisors

Democratic presidential candidate Senator Barack Obama, greets former Treasury Secretary Lawrence (Larry) Summers during a meeting with his economic advisors, in Washington DC, as Robert Reich (C), former Labor Secretary under Clinton, looks on. (Photo by Brooks Kraft LLC/Corbis via Getty Images)

TOPSHOT-BRITAIN-FINANCE-ECONOMY-G20

TOPSHOT - G20 leaders (Photo by ERIC FEFERBERG/AFP via Getty Images)

United Auto Workers Hold Limited Strikes As Contract Negotiations Expire

DETROIT, MICHIGAN - SEPTEMBER 15: Striking Blue Cross Blue Shield workers show their support for UAW members at a march through downtown Detroit held in support of United Auto Workers members as they strike the Big Three auto makers on September 15, 2023 in Detroit, Michigan. This is the first time in history that the UAW is striking all three of the Big Three auto makers, Ford, General Motors, and Stellantis, at the same time. (Photo by Bill Pugliano/Getty Images)