Dismissing the notion that we are still living under capitalism, Yanis Varoufakis argues that the true measure of 21st-century power is the extraction of cloud rent.
Yanis Varoufakis argues that cloud capital has ended the two pillars of capitalism, i.e., markets and profits (p x). This is because digital platforms have replaced markets and cloud rent has displaced profits to allow access to those platforms (p xi). Thus, power has shifted from traditional capitalists to cloud owning techno-feudalists, as techno-feudalism supersedes capitalism (pp xi, 27). He argues that techno-feudalism is based on shaping consumer behaviour, extracting free labour from them as cloud serfs, and charging cloud rent from vassal capitalists that want to sell their goods (p 137).
Varoufakis argues that the power of techno-feudalists arises when they extract human data to shape our preferences, as in the case of Alexa that collects our data, turns us into unpaid cloud serfs, and enriches the algorithm owners (p 81). Likewise, he mentions cloud proles who are waged workers that live precarious, stressful lives, as they are pushed to their human limits by cloud algorithms (pp 84, 88). Thus, he argues that under techno-feudalism, cloud algorithms command both consumers and workers, which is different from automation that only replaces workers with robots or machines (p 93). Moreover, cloudalists are not threatened by cloud proles or cloud serfs, as the former are not unionised whereas the latter do not consider themselves as producers (p 185).
Varoufakis argues that only a small fraction of the Wall Street bailout in the aftermath of the 2008 financial crisis was invested in tangible factories, as it merely bid up share prices of Big Tech corporations (pp 59, 139). He adds that central bank money was lent to Big Business that invested in cloud capital instead of businesses that invest and create stable jobs (p 97). Thus, he argues that Big Tech achieved cloud fiefs due to central bank money (p 121).
Waged workers, or cloud proles, are subjected to precarious and stressful lives under cloud algorithms that push them to their human limits, representing a new form of command
Varoufakis states that profit stopped driving investment and company shares skyrocketed independent of profit, as central bank money incentivised cloud capital (pp 108, 110). He adds that rent took over profit through “consumer gouging” and “financialised asset-stripping” and argues that “profit is vulnerable to market competition, rent is not” (pp 113, 124). He argues that cloudalists are free from competitive pressures to produce cheaper and better goods or the threat of losing market share (p 134). Thus, cloudalists like Facebook, Apple, and Google do not sell goods to maximise profits but extract rents from vassal capitalists (p 135).
Varoufakis illustrates that companies like Amazon target vassal capitalists, who know that they would lose business with the removal of their link from the cloud (pp 130, 131). Similarly, companies like Apple and Google earn cloud rents by collecting a fixed cut from the wealth created by third party developers, just as companies like Uber and Lyft earn cloud rent by exploiting the precariat by collecting a fixed cut of their earnings (pp 129, 130).
On addressing techno-feudalism, Varoufakis argues for replacing the market for shares with employee ownership of companies, which would destroy financialisation and private equity (p 200). He adds that a one employee one share system would democratise the workplace and reduce the size of Big Business (p 205). On cloud serfs, he argues that consumer data should be bought from consenting users instead of being freely extracted (p 202). Moreover, he argues against “behavioural modification algorithms” (p 207).
On cloud proles, he argues that instead of companies like Uber and Lyft, driver owners and public transportation staff should control the algorithms (p 207). Finally, he calls for cloud mobilisation where cloud serfs and cloud proles unite against companies with large carbon footprints or poor working conditions through collective action like not visiting company websites for a day or withholding pension contributions in pension funds that have shares in such companies (pp 212-214).
Overall, Varoufakis argues that capitalism is destroyed by techno-feudalism, as cloud rents replace profits, cloudalists exploit cloud serfs, cloud proles, and vassal capitalists, and algorithms shape consumer preferences. He explains that central bank money abetted the rise of cloudalists and that the solution is employee ownership of companies, consumer data protection, and collective action that limits cloud rent.