Yanis Varoufakis's new book argues capitalism has mutated into technofeudalism

The former Greek finance minister explains how 'capital has mutated into cloud capital', demolishing profit and markets

Yanis Varoufakis says, in some ways, medieval peasants had it better than modern Amazon workers. Photo: Yanis Varoufakis

When Yanis Varoufakis wrote a book about capitalism, addressing it to his daughter, then 12, he forced himself to keep the language simple. "If you can't keep it simple, it means you do not understand what you are saying," he says.

His latest book Technofeudalism: What Killed Capitalism is again addressed to a family member, this time as a letter to his late father, George Varoufakis. "When he was dying two years ago, I didn’t get the chance to explain my theory to him because he was 96 and very close to the end, but I thought I will honour my dad, and pretend that I am talking to him about technofeudalism," says the former Greek finance minister.

Technofeudalism is the term Varoufakis, a leading economist, uses to describe the system he believes has replaced global capitalism. "Over the last few years I have been shocked to realise that, without us noticing, it is not socialism that replaced capitalism, it is something else. Something more predatory than capitalism has replaced capitalism," he says.

Similar to a virus mutating into a new virus, he argues "capital has mutated into cloud capital", as typified by companies such as Amazon, Facebook, Alibaba and Tencent. This emergence of "cloud capital" has demolished the two pillars of capitalism – profit and markets – and replaced them with a new system where companies such as Amazon charge manufacturers a percentage of what they produce, which he terms "cloud rent".

Painting from Breviarium Grimani depicts late 15th-century peasants working outside a town. Getty Images

The 2008 financial crisis "massively" accelerated the advent of technofeudalism. Varoufakis says the crisis became "stabilised" by printing money, but never really went away, terming it "socialism for the bankers, and austerity for everybody else". The central bank’s continued intervention in the markets since 2008 has been popular among the very rich: "It was like having an ATM in their living room, keeps churning money out, without them being charged, that is what it was. At the very same time, in order to prevent inflation, they practised austerity on the majority of the people."

Modern serfdom

Varoufakis stresses certain key distinctions between historic feudalism and modern technofeudalim. For one, unlike feudal lords, entrepreneurs such as Mark Zuckerberg worked hard to build their wealth, rather than being born "with a silver spoon in their mouth". At the same time, he argues, unlike Uber and Deliveroo drivers or Amazon warehouse workers, 16th-century peasants were at least out in the clean air.

"They had their own culture, they had their own access to the land, they could grow their own food in addition to what the lord took. So it is not necessarily an improvement, what you have now," he says.

Varoufakis says 'capital has mutated into cloud capital', as typified by firms like Amazon. PA

What about users who now get paid for their content on YouTube, or the recent monetisation introduced by X, formerly Twitter?

"Feudalism is not all bad. There were market towns, there was a lot of trading, I mean think of the fantastic artworks that came out of feudalism. There were artisans who got paid, Michelangelo got very well paid by the feudal lords in order to do his masterpieces. That doesn't mean it wasn't feudalism."

Would large cloud-firms be directly hit if the central banks stop injecting money into the markets? "Well, I think history has already answered that because once the pandemic started waning, we had inflation," he says, pointing out that for the first time since 2008, some of the printed money went to the masses during the lockdown "to keep them alive".

But inflation and the Ukraine war made matters worse, and central banks stopped printing money and increased interest rates.

Yanis Varoufakis's latest book, Technofeudalism: What Killed Capitalism. Photo: Bodley Head

"Then Bezos lost a third of his wealth, Zuckerberg lost 60 per cent of his wealth overnight. But meanwhile they had already built up their cloud capital, they had the machinery, it was in place. We had paid for it, and they continued to extract rents from that." The central banks also got really very "panicky", he says, "from printing money to not printing money, suddenly all those banks started failing in the United States, Italy nearly went bankrupt. So behind the scenes they started printing again, to prevent insolvencies."

‘My politicisation came early’

It was Varoufakis’s father who introduced him to capitalism at a very young age. A metallurgist who wrote a lot about ancient technologies, he was a "monumental influence" on him, along with other family members. The elder Varoufakis was born and raised in Cairo, Egypt, before moving to Greece in the 1940s. While a student at the University of Athens he was arrested by the secret police and spent several years imprisoned for refusing to sign a declaration denouncing communism.

"My father was imprisoned in the late 1940s. Then he got out, struggled, managed to make a life for himself. Then when I was six, in 1967 we had a coup d'etat, right-wing dictatorship. My father was arrested again, just because he had a record with the police, so they picked him up. Because he was on the list."

Yanis Varoufakis, pictured after his resignation as Greek finance minister in 2015, says his father introduced him to capitalism at an early age. AP

Then his maternal uncle, a businessman and "quite right wing", turned against the regime and was tortured and imprisoned. As a young boy, Varoufakis found himself in and out of prison visiting members of his family. "That was a good way of starting early, when it comes to trying to understand what on Earth is going on here. My politicisation came early, but I have to say that these were very happy years."

He recalls it being "fascinating" going to prison. "My father was very angry with me for not being sad. But I thought it was an adventure. My father was a very strange man, in the nicest possible way. He was the opposite of a fanatic. He always managed to see the weaknesses, demerits, and the failings of his own side."

Although his father was on the left, Varoufakis recalls he was very critical of it. "In the 1970s, when he was still voting for the Communist Party, he said: 'You know what Yanis, if we had won the civil war, I would be in the same prison with different guards. So beware of that. Our side are not angels.' This capacity to be nuanced, and see both sides of the story, on whatever matter, is always very important. And he taught me that."