Quantity to quality

by YANIS VAROUFAKIS

You are one of several theorists, along with Cédric Durand, Jodi Dean, Mariana Mazzucato and others, who have speculated that the hegemony of Big Tech – using algorithms to build data empires that function as a seemingly limitless source of value – may be pushing beyond capitalism’s frontiers. In your 2023 book Technofeudalism you claim that, just as the early modern period saw land supplanted by productive capital as the dominant factor in production, the early twenty-first century has seen productive capital replaced by ‘cloud capital’, signalling a shift to a new accumulation regime. Why, in your view, is cloud capital qualitatively distinct from other forms of capital? What was its historical evolution?

First, allow me a short preface. Technofeudalism is not a post-Marxist analysis of a post-capitalist system. It is a fully Marxist analysis of the workings of contemporary capital, which tries to explain why it has undergone a fundamental mutation. Of course, over the previous centuries the character of fixed capital has evolved from fishing rods and simple tools to complex industrial machinery, but all these shared a basic feature: they were produced as means of production. Now, we have capital goods that were not created in order to produce, but in order to manipulate behaviour. This occurs through a dialectical process in which Big Tech incites billions of people to perform unpaid labour, often without their even knowing it, to replenish its cloud capital’s stock. That is an essentially different type of social relation.

How did it come about? As always, through steady, gradual, quantitative changes in technology, which at a certain point yielded a larger qualitative change. The preconditions were twofold. One was the privatization of the internet, the original ‘internet commons’. There came a moment when, in order to transact online, you had to get either your bank or a platform like Google or Facebook to verify who you are. That was a hugely significant form of enclosure, marketizing the cybersphere and creating newly privatized digital identities. Another factor was the 2008 financial crisis. To deal with its fallout, capitalist states printed $35 trillion between 2009 and 2023, giving rise to a dynamic of monetary expansion in which central banks, rather than the private sector, became a driving force. States also imposed universal austerity across the West, which depressed not only consumption but also productive investment. Investors responded by buying up real estate assets and pouring money into Big Tech. So, naturally, the latter became the only sector that was able to turn that torrent of central-bank cash into capital goods. Their stock became so substantial, and gave its owners so much power to influence behaviour and extract rents, that it ruptured the traditional functioning of the capitalist system. And this happened entirely accidentally: a classic case of unintended consequences, without the intention of even the tech companies themselves.

Of course, whether or not we are entering a post-capitalist era depends on our conception of capitalism. It has been argued that Robert Brenner’s definition, which views capitalism as a system in which the coercion of labour, and therefore also capital accumulation, is mediated principally by economic forces, leads to defining the current situation as ‘technofeudalism’ or ‘political capitalism’, given the prominence of ‘extra-economic’ coercion – whether it’s blunt political power protecting monopolies and channelling profits upwards or forms of algorithmic control – within the current model of accumulation. But others, for example Morozov, would reject this as too narrow, since capitalism has always involved a complex interplay between economic and extra-economic realms. How would you respond to this?

I’m not a Brennerite. My understanding of capitalism comes straight from Marx, who sees it as predicated upon two major transformations: the transfer of power from the owners of land to the owners of machines following the enclosures, and the switch from wealth accumulation in the form of rent to the accumulation of profit. The first unleashes a seemingly endless process of commodification, a perpetual expansion of the market into all areas of life. The second enshrines surplus value – the sum that the capitalist can extract from labour after rent, interest and so on have been paid off – as the primary aim of investment. My conviction that we have moved beyond capitalism developed out of a very simple observation: if you look at Amazon.com, you notice that it is not a market. It is a digital or cloud fiefdom. It shares certain characteristics with the fiefdoms of old: there are fortifications around it, there is one ‘Lord’ who owns it, and so on. But unlike these premodern structures involving land and simple fences, cloud fiefs are built on cloud capital and operated by a sophisticated system of economic planning – an algorithm that would have been the wet dream of Gosplan, the Soviet planning ministry.

Remember that cybernetics were developed in the Soviet Union. They used the term ‘algorithm’ to refer to a cybernetic mechanism that would replace markets with a different method of matching needs with means. If Gosplan had had the technological sophistication of, say, the Amazon algorithm, then the USSR may well have been a long-term success story. Today, though, algorithms are not used for planning on behalf of society at large; they are used to maximize the cloud rents of their owners. The reproduction of cloud capital, and the cloud fiefs it erects, destroys not just market competition but entire markets as well. Then the residual surplus value produced in the conventional capitalist sector (factories and the like) is appropriated as cloud rent by the owners of cloud capital. Thus, profit is marginalized and wealth accumulation relies increasingly on cloud rent extraction.

You write that while capitalism commodified labour, technofeudalism is decommodifying it. That is to say, Big Tech relies on exploitation that occurs outside the labour market, substituting data harvesting for waged work. But wouldn’t social reproduction theorists say that capitalism has always done something similar, in extracting value from unmonetized forms of labour?

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