People have been predicting the end of capitalism since at least the early 19th century, but few have had the same mainstream appeal as Yanis Varoufakis.
The academic economist, bestselling author and former Greek finance minister spruiked his new book Technofeudalism: What Killed Capitalism at the National Press Club on Wednesday, with a stark warning about the cost of doing business with the tech oligarchy of Silicon Valley.
Varoufakis said we are entering a “technofeudalist” economic paradigm, where money and power are concentrated in a way that hasn’t been seen since the Gilded Age.
He said the biggest tech companies in the world were using what he calls cloud capital to shift people from a system of ownership of their digital assets to one where everything is either rented or purchased with the involvement of big tech platforms. He said the loop of nudges from the platforms and e-commerce has created a system that looks more like feudalism than capitalism as we’re used to looking at it.
“It’s what lives inside your phone, inside your laptop. It’s an automated means of behavioural modification,” he said.
“Is it any wonder the owners of this capital … have hitherto undreamt of power? They are already a new ruling class.”
Varoufakis’s concern stems from the combination of old ideas about markets and hegemony meeting the efficiency provided by new technology.
The idea users are the raw material for the product being sold by many big tech firms was explored at length by Shoshona Zubhoff in The Age of Surveillance Capitalism before being popularised by the docudrama The Social Dilemma.
Tech giants have grown into international behemoths by building meticulously calculated profiles of users based on their behaviour and auctioning that information to advertisers. Sometimes, it accidentally steers people towards radicalisation but most of the time it’s towards e-commerce.
The seven biggest tech companies in the world — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — are larger and richer than many governments.
Between them, the magnificent seven are more liquid than every single listed company in China, the UK, France and Japan combined.
This level of capital concentration itself is dangerous for the resilience of the global economy, but Varoufakis said he was more concerned about the implications for civil society.
He said governments had an important role to play in offering publicly owned alternatives for people who want to be unshackled from corporations they no longer trust.
“In the same way as it once created the ABC and CSIRO, it is the role of the Australian government to put at the disposal of Australians important new technologies,” he said.
“We need a digital bill of rights so we can own our data, and not only our data, but our digital identities. You and I have no way of proving who we are on the internet unless we ask some conglomerate or bank to vouch for who we are.
“Our states provide us with a driver’s licence or a passport. Online you have to beg Google to testify to who you are. These small changes can make a big difference.”
There are obvious implications for this intervention for the public service. The ICT skills needed to manage systems of the current scale and complexity don’t currently exist within the APS and would need to be developed to manage these complex systems.
A particular target for Australia in responding to the threat of technofeudalism is financial infrastructure. Varoufakis said China — the only country other than the US with its own cloud capital — was years ahead of the rest of the world in creating digital payments infrastructure that removed a lot of the traditional friction of trade and e-commerce.
He floated the idea of the Reserve Bank adopting a consumer-facing wing and providing a free digital wallet to every Australian citizen as a way of helping people take back control of their financial data from banks.
“A free digital chequing account for every resident of this country, based on your tax file number with a PIN. Receiving your deposits there, the interest rate provided by the Reserve Bank of Australia to those whom already have accounts there — the bankers — at the overnight rate,” he said.
“If the Reserve Bank gave you a digital wallet and you could put your salary in there and make free payments to anyone … and you were to receive on your deposits the overnight interest rate … would you say no to that?
“This is a public ledger. You can have the Australian parliament safeguard the anonymity of your payments, safeguard your privacy a lot better than the Commonwealth Bank, NAB — of course, Westpac is excluded today.”
Varoufakis said that while government should be the frontline of defence against the stealthy encroachment of cloud capitalists into citizens’ lives, there are some things governments just aren’t good at.
Rideshare apps like Uber are something the government should probably stay away from, in his view. Instead, he advocated for more worker-owned cooperatives to take over some of these kinds of networked platform roles.
“A cooperative which belongs to the drivers and they have the algorithm. It’s part of the capital of the cooperative. Then you have digitisation of the taxi service without all the money going to the Cayman Islands or the psychological despair of the drivers. It doesn’t exploit your data in the same way that Uber does.
“It’s socialisation of the algorithm — not nationalisation.”
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