Technofeudalism Quotes

Brilliant and flawed, combining rare engineering talents with ridiculous public displays of ostentation, Musk is our era’s Thomas Edison – the man who, you may recall, electrocuted an elephant in order to discredit a rival.

This arrangement, in which users take advantage of services and the company gains all the upside of the data they generate, may sound novel, but it is actually very old. Prior to the rise of capitalism, feudal labor arrangements worked similarly. Lords insulated their serfs from fluctuations in markets and guaranteed them safety and traditional rights to use the land and to keep enough of their crop to survive. In exchange, lords took all the upside of the market return on serfs’ agricultural output. Similarly, today, siren servers provide useful and enjoyable information services, while taking the market value of the data we produce in exchange. We thus refer to this contemporary system as “technofeudalism.

The irony is that the liberal individual was snuffed out neither by fascist Brownshirts nor by Stalinist guards. It was killed off when a new form of capital began to instruct youngsters to do that most liberal of things: be yourself! (and be successful at it!)

The financial press called it an ‘everything rally’. It went on for more than a decade. With shares in companies skyrocketing independently of whether the companies themselves turned a profit or not, the wealthy got immensely wealthier in their sleep. Then came the pandemic, giving the everything rally another almighty boost.

There was another reason why the dollar's hegemony grew: the intentional impoverishment of America's working class. A cynic will tell you quite accurately that large quantities of money are attracted to countries where the profit rate is higher. For Wall Street to exercise fully its magnetic powers over foreign capital, profit margins in the United States had to catch up with profit rates in Germany and Japan. A quick and dirty way to do this was to suppress American wages. Cheaper labour makes for lower costs, makes for larger margins. It is no coincidence that, to this day, American working class earnings languish below their 1974 level. It is also no coincidence that union-busting became a thing in the 1970s, culminating in Ronald Reagan's dismissal of every single unionised air traffic controller. A move emulated by Margaret Thatcher in Britain who pulverised whole industries in order to eliminate the trade unions that inhabited them. And faced with the Minotaur's sucking most of the world's capital into America, the European ruling classes reckoned that they had no alternative but to do the same. Reagan had set the pace. Thatcher had shown the way. But it was in Germany and later across continental Europe that the new class war - you might call it universal austerity - was waged most effectively.

You may well ask: when the bubble finally burst, why did we not let the bankers crash and burn? Why weren't they held accountable for their absurd debts? For two reasons. First because the payment system - the simple means of transferring money from one account to another and on which every transaction relies - is monopolised by the very same bankers who were making the bets. Imagine having gifted your arteries and veins to a gambler. The moment he loses big at the casino, he can blackmail you for anything you have simply by threatening to cut off your circulation. Second, because the financiers' gambles contained deep inside the title deeds to the houses of the majority. A full-scale financial market collapse could therefore lead to mass homelessness and a complete breakdown in the social contract. Don't be surprised that the high and mighty financiers of Wall Street would bother financialising the modest homes of poor people. Having borrowed as much as they could off banks and rich clients in order to place their crazy bets, they craved more since the more they bet, the more they made. So they created more debt from scratch to use as raw materials for more bets. How? By lending to impecunious blue collar worker who dreamed of the security of one day owning their own home. What if these little people could not actually afford their mortgage in the medium term? In contrast to bankers of old, the Jills and the Jacks who actually leant them the money did not care if the repayments were made because they never intended to collect. Instead, having granted the mortgage, they put it into their computerised grinder, chopped it up literally into tiny pieces of debt and repackaged them into one of their labyrinthine derivatives which they would then sell at a profit. By the time the poor homeowner had defaulted and their home was repossessed, the financier who granted the loan in the first place had long since moved on.

Remarkably, as with all historic transformations, no one planned it. No capitalist imagined becoming a cloudalist. No central bankers aimed at funding the cloudalists. No politicians saw the damage cloud capital would inflict upon democratic politics. In the same way that capitalism came about against the will of everyone, including the kings and bishops as well as the peasants, the rise of the cloudalists happened out of sight and behind the back of the vast majority, including the most powerful of historical agents.

If we want to understand why these technology companies behave this way we should listen to the words of those who built them. Peter Thiel, the venture capitalist behind Facebook, Palantir, and Paypal, spoke at length about how he no longer believes “freedom and democracy are compatible.” And in elaborating his views on technology companies, he expanded on how CEOs are the new monarchs in a techno-feudal system of governance. We just don't call them monarchies in public, he said, because “anything that's not democracy makes people uncomfortable.

It was nothing short of a coup. Imagine getting the world's richest capitalist states to print money that alllows you to build a new type of capital stock. Imagine this type of capital stock comes with the inbuilt superpower to get billions of people to reproduce it on your behalf for free. Imagine further that this capital, funded by state monies and reproduced by citizens free labor, intensifies your power to extract surplus value from proletarians who are working for shrinking wages under worsening conditions--but also from capitalists forced to remove their wares from traditional markets and to sell them via your cloud capital. You wouldn't even need to laugh all the way to the bank since you would be much wiser to keep your stupendous gains stowed in some digital wallet with your cloud capital empire rather than in an account with a pathetic banker

the Big Three own, which include America’s major airlines (American, Delta, United Continental), much of Wall Street (JPMorgan Chase, Wells Fargo, Bank of America, Citigroup) and car makers such as Ford and General Motors. Together, the Big Three are the largest single shareholder in almost 90 per cent of firms listed in the New York Stock Exchange, including Apple, Microsoft, ExxonMobil, General Electric and Coca-Cola. As for the dollar value of the Big Three’s shares, it has too many zeros to mean much. At the time of writing, BlackRock manages nearly $10 trillion in investments, Vanguard $8 trillion and State Street $4 trillion. To make sense of these numbers: they are almost exactly the same as the US national income; or the sum of the national incomes of China and Japan; or the sum of the total income of the eurozone, the UK, Australia, Canada and Switzerland.

Parsimony was out and largesse became the new virtue. The Victorian belief that firms should be small and powerless, so that competition could perform its magic of keeping entrepreneurs honest, was replaced by the creed that ‘what is good for Big Business is good for America’.

This sordid exercise has a soothing, if mystifying name: ‘dividend recapitalisation’ – though to call it that would be akin to relabelling a bank robbery as ‘asset redistribution’. The private equity firm that cost Gillian her job has practised straightforward asset-stripping, with financialisation providing the necessary smoke and mirrors. Looters, who have created no new value, have simply ransacked a pre-existing care provider. To use the language of early economists like Adam Smith, it is a classic case of feudal rent defeating capitalist profit; of wealth extraction by those who already have it triumphing over the creation of new wealth by entrepreneurs. And the key point to note is that the success of such a scheme depends on these looters being able to sell subsidiaries like PropCom at high enough prices once the original company has been destroyed.

Alas, Alexa is no serf. It is, rather, a piece of cloud-based command capital which is turning you into a serf, with your aid and by means of your own unpaid labour, in order to further enrich its owners.

The answer is that, some time in the twentieth century, the left traded freedom for other things. In the East (from Russia to China, Cambodia and Vietnam), the quest for emancipation was swapped for a totalitarian egalitarianism. In the West, liberty was left to its enemies, abandoned in exchange for an ill-defined notion of fairness. The moment people believed they had to choose between freedom and fairness, between and iniquitous democracy and miserable state-imposed egalitarianism, it was game over for the left.

turning consumers from sovereign agents into the playthings of algorithms that lie outside of the effective control of markets, governments and perhaps even their inventors.

Their only constraints are the alertness of their clients and the occasional snoopings of a financial regulator. That’s why complexity is the financiers’ friend – for it allows them to disguise cynical gambles as smart financial products. Is it any wonder, then, that from the start financiers loved computers? As described in the previous chapter, from the late

a Faustian deal with their owners.

Every time we go online to enjoy the services of these algorithms, we have no option but to cut a Faustian deal with their owners. To use the personalized services that algorithms provide, we must submit to a business model based on the harvesting of our data, the tracking of our activity, the invisible curating of our content. Once we have submitted to this, the algorithm goes into the business of selling things to us while selling our attention to others. At that point, something more profound kicks in, which gives the algorithm's owners immense power to predict our behaviours, to guide our preferences, to influence our decisions, to change our minds, to thereby reduce us to their unpaid servants whose job is to provide our information, our attention, our identity, and above all, the patterns of behaviour that train their algorithms.

warning us that every new age forged by some revolutionary technology yields a generation ‘who never rest from labour and sorrow by day or from perishing by night’, Hesiod

Assuming, wrongly, that capitalism’s only serious threat was the rise of organised labour, I missed completely the epic transformation of our times: how the privatisation of the internet commons, aided by the 2008 crisis that led central banks to open the floodgates of state money, would beget a new, super-powerful type of capital.

after 2008, and in the name of saving capitalism, central banks snuffed out capitalism’s dynamism and advantage.

with profit-seeking consigned to the aspirant petty bourgeois while the truly rich gleefully whisper to one another that profit is for losers.

The private equity firm that cost Gillian her job has practised straightforward asset-stripping, with financialisation providing the necessary smoke and mirrors. Looters, who have created no new value, have simply ransacked a pre-existing care provider. To

That changed after 2008. With central bank money replacing profit as the fuel of the economy and with the ‘everything rally’ driving the price of PropCom-like subsidiaries ever upwards, private equity could take over and successfully asset-strip as many capitalist firms as it could lay its hands on all at once.

This could not have happened before 2008 because until then the ultra-rich simply did not have access to enough cash with which the Big Three could buy a significant chunk of the New York Stock Exchange.

Big Tech’s workers, in contrast, collect less than 1 per cent of their firms’ revenues. The reason is that paid labour performs only a fraction of the work that Big Tech relies on. Most of the work is performed by billions of people for free.

Enter amazon.com and you have exited capitalism. Despite all the buying and the selling that goes on there, you have entered a realm which can’t be thought of as a market,

kinds of capital, for the cloud metaphor is just that: a metaphor. In reality, it is comprised of vast data warehouses, containing endless rows of servers, connected by a globe-spanning web of sensors and cables.

an environment where profit had become optional, the cloudalists seized upon the central bank money to build a new empire.

intrepid and talented entrepreneurs like Jeff Bezos and Elon Musk were able to build up their super-expensive, ultra-powerful cloud capital without needing to do any of the three things that capitalists traditionally had to do to expand: borrow money from some bank, sell large portions of their business to others, or generate large profits to pay for new capital stock. Why suffer any of this when central bank money was flowing freely?

From a peacock’s feathers to a Roman emperor’s triumphal march to the fashion industry of today, competing for others’ attention is about as old as sexual reproduction. But it wasn’t until the twentieth century that the process of attention-grabbing was commodified. Once again, it was electromagnetism that achieved this revolutionary feat – not by killing an elephant but by allowing for the invention of the radio and, even more importantly, the television

In 2002, thirty years after the Nixon Shock, humanity’s total income approximated $50 trillion. In the same year, financiers around the world had wagered $70 trillion on a variety of bets. I remember your eyes popping out when you heard this outrageous number. Like most people, you refused to wrap your mind around it. Used to thinking of money in terms of things that made sense, like tons of steel or the number of hospitals it could build, you could not see how Earth was large enough to contain that $70 trillion number.

These instruments, known as options, had been available under Bretton Woods, but it was only once Bretton Woods had died that bankers, liberated from their New Deal chains, were allowed to bet on the stock exchange, first with other people’s money and, later, with money – effectively conjured from thin air – lent in astronomical sums by the banks to…themselves.

The controlled disintegration of the old planned system and its replacement with the recalcitrant Minotaur was always going to hurt American workers.

Nevertheless, neoliberalism delivered the necessary ideological veneer to legitimise the assault on organised labour and to promote the so-called ‘deregulation’ that let Wall Street rip.

For Wall Street to exercise fully its magnetic powers over foreign capital, profit margins in the United States had to catch up with profit rates in Germany and Japan. A quick and dirty way to do this was to suppress American wages: cheaper labour makes for lower costs makes for larger margins. It is no coincidence that, to this day, American working-class earnings languish, on average, below their 1974 level.

But once it was gone, the bankers were free to run amok – again.

We are flawed because we want so much more. We are ruined because we get these things and wish for what we had.

The War Economy experiment was an unqualified success. Production quadrupled in less than five years. Inflation was kept on a leash, unlike what had happened during the previous world war. Unemployment disappeared, and was kept at bay even after the soldiers, sailors and airmen returned from the front. To Big Business, it was a dream come true that compensated them handsomely for the subjugation of Big Finance to the government’s plans and strictures. Beneath the surface, however, the heat of war had transformed American capitalism at a molecular level, just as the heat of our fireplace had transformed iron into steel. By the war’s end, American capitalism was unrecognisable. Business and government had become profoundly entwined. Indeed, the revolving doors between government departments and corporations saw to it that the same crowd of mathematicians, scientists, analysts and professional managers populated them both. The heroic entrepreneur at the helm of the corporation and the democratically elected politician at the head of the government had both been usurped by this new private- public decision-making network, whose values and priorities – indeed its survival – boiled down to one thing: the survival and growth of the conglomerates now that the war, with its infinite demand for stuff and technologies, was over.

We evolved on the surface of a planet that is minuscule in comparison to the universe out there. In our limited realm, we can get by quite nicely with our senses’ helpful illusions; for instance, the belief that the grass is green, straight lines exist, or that time is constant and independent of our motion. These beliefs are false and yet helpful to the extent that they enable our architects to design safe buildings and our watches to coordinate our meetings at pre-agreed points in time.

four incredible gifts. First, state guaranteed sales translating into state guaranteed profits. Second, freedom from competition, since prices were fixed by government. Third, huge government-funded scientific research (e.g. the Manhattan Project, jet propulsion) that provided Big Business with wonderful new innovations and a pool of highly skilled scientific personnel to recruit from during and after the war. And fourth, a patriotic aura to help rinse off the stench of corporate greed that clung to them after the crash of 1929 and make them over as heroic enterprises that helped America win the war.