Has Big Tech replaced capitalism with a new, even more exploitative system, “cloudalism”? That’s what former Greek finance minister Yanis Varoufakis claims in his book Technofeudalism: What Killed Capitalism.1
According to Varoufakis, the cloudalists—big tech companies such as Meta, Amazon, Apple, Alphabet, etc.—have amassed huge amounts of cloud capital that can no longer be defined by capitalist relations. Who are we in this system? How is it that the internet, which so many thought was a radical instrument of decentralization, is now dominated by a few corporate giants? How did it come about that taxpayers have to bear so much burden for so little in return and for the benefit of so few—moreso than ever before in our history?
A Relapse into Feudalism?
In attempting to answer such questions, Varoufakis explains that the two main pillars of capitalism—free markets and profits—no longer have their original function. Even though they may look the same, “Markets, the medium of capitalism, have been replaced by digital trading platforms that look like markets but are not markets, but rather fiefdoms. And profit, the engine of capitalism, has been replaced by its feudal predecessor: rent. More specifically, it is a form of rent that must be paid for access to these platforms and to the cloud more broadly. I call it cloud rent.”2
Varoufakis thus argues that this shift is driven by rent-seeking behavior rather than traditional profit-seeking, with users paying rent, i.e., algorithmic capital, for access to digital infrastructure. Most of the profit margin for this enterprise is siphoned off by the owners rather than owning capital themselves.
Landlords, Serfs, Lords and Overlords
Varoufakis compares tech giants, such as Facebook, Instagram, Tiktok, X, or Amazon, to medieval lords of the manor: every time you post on Instagram, you “slave” on Meta’s estate/fiefdom (i.e., on the platform) like a medieval serf. Meta does not pay you. But your free “work” finances Meta.
Technofeudalism, as he describes it, affects three groups of people. The company that manufactures the electric bikes sold on Alibaba or Amazon is a vassal capitalist. Wage laborers driven to their physical limits by cloud-based algorithms are the cloud proles or cloud proletarians. And the third group is you and me, the cloud workers: we actually produce the capital. There is yet another group, the overlords—the asset managers (Blackrock, Vanguard, State Street, etc.) who own all the companies that seem to compete with each other.
Other Fundamental Changes
Cloudalism thus represents a shift from a productive economy to one in which wealth is accumulated through control and access rather than through the creation of new value. This shift undermines the principles of a competitive market economy and leads to a more unequal and less dynamic economic system. The criticism of rent is, therefore, based on its role in perpetuating economic inequalities and reducing the potential for real innovation and growth.
Furthermore, the monstrous sums of money that were supposed to get our economies back on track after the financial crisis and the pandemic have resulted in Big Tech gaining an even greater influence on all aspects of the economy.
Transforming the Hierarchy
In his final chapter, Varoufakis proposes ways in which we can democratize cloudalism by introducing a cloud tax. He recommends taxing Amazon, for example, at five percent for every transaction that takes place on the platform. He also advocates abolishing “free services”—free for the serf, not the vassal—and replacing them with a universal micropayment model to ensure fair remuneration for digital services, and introducing a digital rights law. Other suggestions include democratizing companies and money itself, nationalizing big tech, promoting open-source technologies, developing a framework for digital identities, regulating intellectual property, strengthening antitrust measures, and promoting a decentralized internet.
Becoming Aware
Some of these questions are also being discussed within the threefold movement and are sometimes controversial: Varoufakis advocates a universal basic income, a democratized digital central bank currency, and a cashless society based on the model of WeChat in China. Overall, even if his metaphors, such as “classic flow of goods” and “exchange” or his differentiation between “experience”3 in the qualities of value, capital, and labor have weaknesses, Varoufakis rightly warns that we are at the beginning of a new era. For him, it is most important to become aware of both the positive and potentially threatening aspects of the emerging “cloudalist” power that will fundamentally change the structure of our society.
Translation Laura Liska
Image Yanis Varoufakis in Berlin, 2015. Photo: Jörg Rüger, CC BY-SA 3.0
Footnotes
- Yanis Varoufakis, Technofeudalism: What Killed Capitalism, Melville House, 2024.
- From the preface. Varoufakis claims that the markets and profits of capitalism have been replaced by the platforms and rents of Big Tech. For example, the Apple Store can retain 30 percent of profits through a commission fee.
- By distinguishing such qualities, he tacitly acknowledges that work, for example, does not (only) belong in the category of economic life, an essential aspect of the threefold structure. However, he hardly dares to take any further steps in this direction.
