Joe: Here’s a thought that might break your brain: the last time you bought something on Amazon, you weren't participating in capitalism. According to our book today, you were actually taking part in its funeral. Lewis: Hold on, its funeral? That’s a pretty dramatic statement. I definitely paid for my new headphones. That feels like capitalism to me. What are you talking about? Joe: That wild idea comes from Technofeudalism: What Killed Capitalism by Yanis Varoufakis. And he argues that the system we think we're living in, the one driven by markets and profit, is already a ghost. Lewis: Ah, Varoufakis. The economist who was Greece's Finance Minister during their debt crisis, right? The guy who went head-to-head with the EU. He's not exactly known for pulling his punches. Joe: Exactly. And this book is no exception. It's been called a 'Best Book of the Year' by the Financial Times, but it's also deeply controversial, with some critics finding his style a bit erratic. He argues that the system we're living in now isn't just an advanced form of capitalism—it's something else entirely. Something that looks a lot more like the Middle Ages. Lewis: Okay, but capitalism is dead? Come on, that's a bold claim. Companies are bigger and more profitable than ever. How can it be dead?

Joe: This is his central point. He says we need to distinguish between a market and a platform. A traditional market, say, a farmers' market, is a decentralized place. Lots of sellers, lots of buyers, all interacting. No one owns the market itself. Lewis: Right, a level playing field, more or less. Joe: Precisely. Now think about Amazon. Varoufakis has this killer line: "Enter amazon.com and you have exited capitalism." Because Amazon isn't a market. It's a fiefdom. Lewis: A fiefdom? Like with a castle and a moat? Joe: Metaphorically, yes. Think about it. Jeff Bezos, or the Amazon algorithm, doesn't just sell things in the marketplace. He owns the entire digital town square. He owns the roads, the buildings, the air itself. Every vendor on the platform is just a tenant. Lewis: So it's like a digital landlord who owns the whole mall, and every shopkeeper has to pay him rent just to exist there? Joe: Exactly! And it's not just rent. He controls the algorithm that decides which shops you even get to see. He can promote his own products over his tenants'. And he takes a cut of every single transaction. Varoufakis calls this "cloud rent." The vendors aren't really capitalists competing in a free market anymore. They're vassals, paying tribute to the lord of the fief. Lewis: But wait, there's still competition, right? TikTok is eating Facebook's lunch. Disney+ is competing with Netflix. Isn't that just capitalism on steroids? Joe: That’s a great question, and it’s one Varoufakis tackles head-on. He argues that this isn't market competition. People didn't flee Facebook for TikTok because TikTok offered a lower price—both are free. They left for a different experience. It's a battle between rival fiefdoms for our attention. It’s less like two shoe companies competing on price and quality, and more like two feudal lords trying to get peasants to move to their land by promising a better harvest or more festivals. Lewis: Huh. So the product isn't the thing being sold, the product is the experience, or our attention itself. Joe: You've got it. It reminds me of the story from the book about Don Draper's Hershey pitch in Mad Men. He says you don't buy a Hershey bar for the chocolate; you buy it to recapture the feeling of being loved by your father. Capitalism already started shifting from making things to manufacturing desire. Technofeudalism just perfected it by building digital kingdoms where that desire is the main currency.

Lewis: Okay, I'm starting to see the 'feudalism' part. It’s a bit chilling. But how did we get here? How did these tech lords get so powerful that they could overthrow capitalism? It seems like it happened overnight. Joe: Well, this is the most mind-bending part of the book. The new feudalism wasn't the result of a master plan. It was an accident. And the godfathers of this new system were the very people trying to save the old one: central bankers. Lewis: The Federal Reserve? The European Central Bank? How? Joe: After the 2008 financial crash, the global banking system was on the verge of collapse. To prevent another Great Depression, central banks started printing money on an unimaginable scale. Trillions of dollars. Lewis: Right, quantitative easing. But that money was for the banks, to keep them from failing. It wasn't for Jeff Bezos or Elon Musk, was it? Joe: Not directly. But here’s the twist. The banks were flooded with this cheap, what Varoufakis calls "poisoned," money. They were supposed to lend it out to businesses to stimulate the economy. But at the same time, governments were imposing austerity, cutting spending, and squeezing wages. So, ordinary people had no money to spend. Lewis: So businesses had no reason to invest in new factories or products, because no one could afford to buy them. Joe: Exactly. So what did they do with all that cheap money? They bought back their own shares to boost their stock price. But a small group of people, the "cloudalists" as Varoufakis calls them, saw an opportunity. They said, "Give us that cheap money. We'll build things." And they did. They built cloud capital. Lewis: So Amazon and Tesla could afford to lose money for years and years because they were essentially being funded by this endless river of free money from the central banks? Joe: Precisely. Profit became optional. Their goal wasn't to make a profit next quarter; it was to achieve total market dominance. To build the biggest fiefdom. It got so absurd that Goldman Sachs, the investment bank, actually created something called a "Non-Profitable Technology Index." It tracked the stock value of tech companies that were losing money. And between 2017 and the pandemic, its value shot up by 200%. During the pandemic, it exploded to 500%. Lewis: Wow. So in trying to save capitalism, the central banks created a monster that ate it. That's some serious Frankenstein stuff. Joe: It's the ultimate historical irony. They were the unwitting financiers of a revolution that dethroned the very system they were sworn to protect.

Lewis: That’s a powerful story. But what does this mean for regular people? This all feels very abstract, very high-level. Joe: This is where it gets deeply personal. Varoufakis argues this new system has created two new classes of people. First, you have the "cloud proles." Think of an Amazon warehouse worker. Their every move, every second, is tracked and dictated by an algorithm. They are cogs in a machine, but a digital one. This is an old story, just made hyper-efficient. Lewis: Okay, I can picture that. But what's the other class? Joe: The other class is the "cloud serfs." And that, my friend, is us. Lewis: Me? I'm a serf? I have a job, I pay my bills. How am I a serf? Joe: Think about it. What did a medieval serf do? They worked the lord's land for free, and in return, they got to live on a small plot of their own. Their labor enriched the lord. Varoufakis argues we do the same thing. Every time you write a review on Amazon, you are creating value for Jeff Bezos, for free. Every time you 'like' a photo on Instagram or share a post, you are training their algorithm, making their platform more valuable. You are performing unpaid digital labor. Lewis: So my scrolling is actually work. That's a depressing thought for my morning commute. Joe: It is. You are producing the most valuable commodity for them—data and attention—and you're not paid a cent. Your free labor builds their cloud capital, which then gives them the power to command you, to shape your desires, and to extract cloud rent from the vassal capitalists who want your attention. We are all serfs, tilling the digital fields of the cloudalists. Lewis: That's a really bleak picture. And it doesn't just stop at the individual level, does it? Joe: Not at all. This is now the engine of global geopolitics. Varoufakis argues the New Cold War between the United States and China isn't about ideology anymore. It's not communism versus capitalism. It's a turf war between two super cloud fiefs. Lewis: The American fief versus the Chinese fief. Joe: Exactly. The American fief is built around the dollar and companies like Google, Amazon, and Meta. The Chinese fief is built around the yuan and super-apps like WeChat and Alibaba. The whole battle over banning TikTok in the US? He says it was never really about national security or spying. It was about who gets to collect the cloud rent from American teenagers. Washington saw a rival lord setting up shop in their territory and tried to kick him out.

Lewis: Okay, let me see if I can put this all together. The internet, which we thought would perfect capitalism, instead created a new, more powerful form of capital—cloud capital. This new capital, accidentally supercharged by central bank money after 2008, was so powerful it broke the old system. It replaced profit with rent, and markets with digital fiefdoms. And in the process, it turned us, the users, into digital serfs. Joe: That's the core of it. And the implications are profound. It's not just an economic shift; it's a social and political one. Varoufakis calls it the "death of the liberal individual." The idea that you have a private self, separate from your public or work life, is vanishing. Your online persona, your data, your very attention—it's all being commodified and asset-stripped by these new lords. Lewis: It really makes you think... what does it mean to be free in a world where our attention and our data are the new forms of property, and we don't own them? It's a huge question. Joe: A huge question indeed. And Varoufakis argues that unless we recognize we're not in a capitalist world anymore, we can't even begin to answer it or fight back. We're using the wrong map for a completely new territory. Lewis: It's a challenging and, honestly, pretty unsettling idea. But it does explain a lot about how the world feels right now. Joe: It does. We'd love to hear what you think. Does this idea of technofeudalism feel true to your experience online? Let us know your thoughts. We're always curious to hear from our community. Lewis: This is Aibrary, signing off.