An End to Markets?

Varoufakis’s account of recent economic and financial history is often commendable despite these errors. Key in his view to the rise of cloud capital is central bank policy. With money flowing freely from central banks, firms like Amazon focused on cornering “total market dominance” rather than profit, growing while hemorrhaging money. Varoufakis’s synthesis of internet and monetary events accessibly captures the flaws of our broken financialized world.

For instance, the fourth chapter’s opening anecdote mentions City of London traders in summer 2022 celebrating dismal economic news because they knew the Bank of England would respond with economic stimulus measures they would benefit from. This inverted, profits-last capitalism is genuinely weird and worthy of the consideration Varoufakis gives it. But the broader narrative of economic change that he attempts to justify through this narrative is decidedly unconvincing.

By failing to attend to the actual movement of value within the firms he is discussing, Varoufakis misrepresents the shift they embody in the economy more broadly. He argues that we are entering — indeed, already in — a feudal world of rent-seeking fiefs powered by evolving cloud capital, not a profit-seeking world of markets anymore.

In his account, cloud capital’s “power over our attention” enables it to charge commodity-producers rent — which he helpfully distinguishes from profit by defining rent as “not vulnerable to markets.” But the central business of cloud capital, advertising, is entirely vulnerable to markets and in fact itself constitutes a market.

Varoufakis’s defense against the obvious objection that cloud capital continues to engage in market competition is to characterize this as feudal conflict instead. All his examples suggest otherwise. He tells us that “TikTok’s success at stealing the attention of users away from other social media sites is not due to the lower prices it offers or higher quality of the ‘friendships’ or associations it enables,” and that it instead “created a new cloud fief for cloud serfs in search of a different online experience to migrate to.”

But the defining feature of serfs is that they do not freely migrate, and the very reason users migrated to TikTok was famously because of its eerily effective algorithm — in other words, because it competed effectively in the market. Varoufakis tells us that Disney Plus has competed with Netflix only by offering different movies and is thus engaged in feudal rather than capitalist conflict.

Yet competing on content is no less market competition than competing on price. By this standard, Coca-Cola and Pepsi would be feudal, simply because they too have a monopoly on their own intellectual property. Likewise, Varoufakis is wrong when he says “search results are not produced to be sold” — they are, literally, sold to advertisers. There are interesting historical parallels in the world of cloud capital, but like enclosure they aren’t feudal — Roblox Corporation, for instance, has resurrected the company scrip of the nineteenth-century mining town.

Competition and Command

Technofeudalism reflects the ambitions of elites better than their real capacities. This is clear in Varoufakis’s account of Elon Musk’s Twitter purchase, which he presents as the best possible example of the insights the term offers us. Varoufakis takes seriously Musk’s interest in a WeChat-like “everything app” and argues Twitter’s purchase to that end was an obvious choice, from a techno-feudal perspective: Musk had an earthly business empire, but wanted a cloud fiefdom.

Notwithstanding  the competing explanations about Musk’s ego or addiction to his own platform, this may well explain his goals. But it is increasingly looking like Twitter will either be taken by the banks or rely on a kind of reverse-rent situation, in which Musk props up his techno-feudal failure with his capitalist successes.

Twitter is no outlier, either: better-capitalized efforts to leverage cloud capital into an infinitely monetizable “metaverse” world have proven dismal failures. Mark Zuckerberg’s Metaverse literally had no legs until recently and still has virtually no users, while Epic Games has laid off hundreds of staff and is currently making money in a decidedly terrestrial way — shilling for Big Oil. We have every reason to assume Musk’s decidedly more mismanaged effort will fare even worse.

Capitalists have long attempted to reach escape velocity and become immune to market competition; they have also long failed. Social networks continue to compete for our attention, and cloud “content” must compete for our time. It would be easy to continue listing examples from Varoufakis’s account and explaining exactly how they rely on markets and profits rather than feudal rents. What matters is this: from ads to share prices, the imperative to compete is as foundational for cloud capital as other capital.

Of course, the contours of this competition and its implications for society have changed drastically, and at its best, Varoufakis’s book offers insights into the how and why of these changes. He is both convincing and enlightening in demonstrating that the economy of the 2020s is not the economy of the 1990s — but capitalism has a long history. By insisting that we are seeing an end to capitalism, Varoufakis misses what is ultimately another shift in capitalism — one that his engaging and often compelling narrative otherwise could have helped us grapple with. Everything that he explains so well, his central term and framework obscures.

Suffusing Varoufakis’s account of declining competition, and the book more broadly, is a sense that market competition is good, perhaps an impression meant to help win over less socialist readers (an important and necessary audience!). We are clearly meant to see “techno-feudalism” as worse than capitalism in part because of the loss of market competition, which at least can produce innovative new technologies and lower prices while allowing for challengers to emerge.

But markets are the very basis of capitalist class domination. Competition over consumers and investors, not feudal avarice or conquering vision, compels capitalists to extract ever-increasing value from workers, whether in the factory or on the internet.

By presenting a (supposed) departure from market competition as an intensification of class domination, Varoufakis mischaracterizes capitalism past and present. When he claims capital has the power to command, or that the Big Three institutional investors (BlackRock, State Street, and Vanguard) “effectively own American capitalism,” he is being imprecise. Capital and those who hold it can command only insofar as they command greater profit or at least the perception of future profit — as Karl Marx put it, “The capitalist only holds power as the personification of capital.”

Instructive, here, is the Big Three’s largely empty gesture at “environmental, social, and governance” concerns, or ESG. At best simply an effort to consider long-term economic issues and not just immediate returns, it has disappointed investors — sustainable investments still struggle to compete with fossil fuels — and prompted a vicious reaction from the Right, specifically red-state pension managers. BlackRock’s CEO abandoned the term this year, while American asset managers have begun to downplay climate concerns.

ESG’s biggest impact so far has probably been forcing far too many of us to become aware of Vivek Ramaswamy. Up against the profit imperatives of the market, capitalists who manage impossibly vast wealth could not manage even a mild, reasonable, and long-term profitable shift in investment thinking. The market dynamics of capital — not the not the rent dreams of capitalists — are still driving today’s economy.

Cloud Politics vs. Class Politics

Cloud capital’s technologies are disturbing because they intensify market competition, systematically enclosing pockets of time and space that have not yet been commodified. This has important implications for how we meet the challenges of the present. Yet, Varoufakis’s misdiagnosis of our political economy leads to a confused and unhelpful theory of social change.

He argues politics is no longer defined by conflict between labor and capital. Instead, we have identity politics, which in his view favors cloud capital across the political spectrum: the “alt-right” receives algorithm-magnified white supremacy while the Left receives class-blind Diversity, Equality and Inclusion lectures. Useful critiques of identity politics like Olúfẹ́mi O. Táíwò’s have emphasized the ways its radical potential is often undermined by capitalism. Since Varoufakis pronounces capitalism dead, we instead receive a confused mischaracterization of the contemporary political landscape, featuring gripes about left-wing “relativism.”

We also get an unnecessary (and, speaking as a nonbinary person, upsetting) parting shot at the Left’s “civil war on the definition of a ‘woman,’ which feels inconsistent with Varoufakis’s own clear defenses of trans rights elsewhere. Thankfully, Varoufakis does not take this kind of analysis to its more typical Compact magazine–style red-brownist conclusion, nor does his death certificate for capitalism motivate an abandonment of left politics.

Instead he proposes that we “fundamentally reconfigure” it. Because markets are dead and identity politics are divisive, Varoufakis encourages a new coalition based around shared experiences of techno-feudal exploitation connecting “cloud proles,” “cloud serfs,” and “at least some vassal capitalists.” Together they could engage in “cloud mobilization” for democracy and economic equality.

As an example of anti-techno-feudal action, Varoufakis suggests a super Panama Papers–style leak exposing “the hidden digital connections between cloudalists, government agencies, and bad actors like fossil fuel companies.” I suspect he is overestimating the number, magnitude, and significance of hidden connections here due again to his dismissal of capitalism. “Cloudalists” and capitalists in general are a class that exploits primarily through market power, not individuals who rule by conspiracy — no matter how much corruption and malice is involved in class domination.

More importantly, working people are not one trip to Bohemian Grove away from socialism. Plenty of people recognize that elites are corrupt and vicious. The reason many Americans responded to the East Palestine train disaster with conspiracy theories instead of calls for railway nationalization is because of how this animus is directed. Anti-capitalist class politics can help us understand and challenge ruling-class power. Anti-techno-feudal cloud politics instead mystifies it. Class solidarity and class politics work because they connect people through real shared interests and experiences. Cloud solidarity does not.

In fact, Varoufakis’s proposed coalition with “vassal capitalists” threatens something worse than a political dead end. Consider another example of cloud capital from the video game industry: Valve Corporation, ironically Varoufakis’s former employer, uses the market dominance of its Steam PC gaming platform to take a whopping 30 percent cut of all sales from vassal capitalist gaming companies. The largest of these firms still rake in billions, while forcing many of their underpaid workers into mandatory “crunch” overtime. A traditional left analysis of capitalism suggests an alliance with these workers, starting with helping them unionize. A techno-feudal analysis would instead point toward an alliance with their bosses.

This is damning, particularly because of the markets and profits Varoufakis downplays. Exploited workers produce cheaper goods, which consumers benefit from; this is one reason the firms Varoufakis is concerned with can evade American antitrust law, as the judiciary currently focuses narrowly on monopolies’ often-beneficial price effects.

If a political formation connecting consumer-user cloud serfs and vassal capitalists is at all viable, it would likely emphasize these shared market interests, to the detriment of class solidarity. Such a politics based around consumer-user interests and identity would probably look more like the Bud Light boycott or movie and video game review-bombing than a socialist revolution.

The few concrete suggestions Varoufakis offers for “cloud mobilization” further indicate the limits of consumer action. Outside of the aforementioned super-leak, all of them are market-based actions. He proposes a hypothetical one-day boycott of Amazon that would “push Amazon’s share price down in ways that no traditional labor action could achieve.”

This would invariably fail due to the same market competition Varoufakis tells us is dead: Amazon’s market dominance is dependent on its exploitation of warehouse and delivery workers, which drives down costs and delivery times. Any competitor would use an increase in its own market share and investment to rise to, and then exceed, Amazon’s current level of worker exploitation. This is the terror of capitalism: whatever the worst person in the world is willing to do and able to get away with, markets encourage. Whenever anyone, executive or worker, says no to any kind of exploitation, the profit imperative empowers someone else who will say yes. Boycott strategies based upon shifting who we say yes to cannot liberate us.

In theory, an incredibly well-coordinated assembly of many market actions might achieve change, and Varoufakis does suggest more targeted and thus potentially more viable boycotts over specific environmental or workplace injustices. But these are at best mitigatory actions, not a means to change the world as he suggests. The same goes for his other proposals: pension fund contribution boycotts — if the Big Three’s managers could not make ESG happen, how would we? — and utility payment strikes. What Varoufakis fails to understand is this: markets are not a realm for contesting domination. Under capitalism, they are domination.

Rejecting capitalism will require us to reject market power and imagine a world without it. Varoufakis’s preferred future, presented here via adaptation from his 2020 book, Another Now, instead embraces them, advocating an economy of “democratized companies” that enable “truly competitive product markets.”

While socialists can and should disagree over the proper role of markets in organizing economic activity, that debate is useless if it begins from a mistaken idealization of “true” competition. Varoufakis wants a commons, where human beings make decisions instead of algorithms — a world where decisions like the Greek people’s 2015 rejection of EU-imposed austerity can matter. We all should and we can be grateful to have a comrade like him. But the opposite of a commons is still a market.