It is always great to read Yanis Varoufakis. His thought processes lead him to such revealing and faraway places that he needs to use his daughter, or in this case, his father, to make his position and his findings accessible to all. In Technofeudalism, an adventure is well underway in post capitalism that has turned out to be if anything, far worse than what it replaces. The book solves a number of mysteries along the way.

Tech and the Federal Reserve Bank (the Fed) have teamed up to produce a system that laps capitalism and leaves it in its dust. The thing about tech is that it rarely produces anything real. It provides services instead. This allows it to employ far fewer people, avoid most manufacturing and distribution, and turn all the world into rent-payers and free labor. The thing about the Fed is that it keeps delivering truckloads of money to the extremely wealthy, who pump up these massive tech companies, giving them the power to rearrange the economy in their image.

Today, instead of buying real products, we license them, we subscribe to them, we store virtual link/copies, or we use them and pay with our labor. This is a service economy like we’ve never experienced. From Uber to medium, from Microsoft to Facebook, we no longer take ownership. Apple may sell iPhones, but its real moneymaker is apps, for which it gets 30% of the revenues from all the entrepreneurs who offer them in its store. We use Windows at the pleasure of Microsoft, and it can withdraw its use from us at any time.

The price of gold or oil or real estate don’t figure in tech’s books. This is cloud capital and it is bigger than anything we’ve ever seen. It has been nurtured by the printers at the Fed, and pumped by the extremely rich, who invest in the shares of them, driving them to TRILLION dollar valuations. That, and loans that have been essentially interest-free since 2008 have meant oceans of money loaned, hedged, leveraged and margined to ten times the total income of the whole world.

America’s gigantic trade deficits show up as the credits and profits of the manufacturing countries like Japan and China. America feared they would buy it out with all their newly acquired dollars. So it restricted them to FIRE – finance, insurance and real estate. No more corporate takeovers. Maybe the occasional football team.

That inbound flood of overseas dollars, looking for someplace to land decently safe (sometimes just getting it out of their country), means the huge investment fund houses of Wall Street have so much money on their hands, they have to invest in literally everything, Varoufakis says. Their assets now count in the trillions, and if you wonder why the stock of companies like Tesla kept soaring despite bad quarter after bad quarter, it’s because repatriated dollars needed a home, and Tesla had the tech profile, the intrinsic value proposition and the daily volume of trades to make those investments feasible. That explains a lot.

Then consider crypto. It was an amusing diversion for about a decade, and then suddenly, things got serious when China said it was considering a digital yuan. Alarm bells went off all over Wall Street. As Varoufakis explains, there is a long line of middlemen waiting for every little currency transaction. It starts with the client’s bank, then the central bank of that country, Swift, Wall Street’s financial message system of record, the Fed, and the local bank where money finally ends up. Every one of them takes its cut. It can take days.

With crypto, customers tap their digital wallets and move currency into someone else’s account in an instant. This is an existential threat to American global finance, and had to be stopped at all costs. That is why (to everyone’s great puzzlement) the Fed announced it was looking to create a digital dollar. But why, everyone asked. The dollar is already king. It can already be sent electronically. It can already be changed into any other currency. Well this is why. Wall Street likes currency inefficient, cumbersome, unaccountable, opaque and a constant source of expensive valueless fees. That’s the way the world has worked for a couple of centuries, and no little crypto fad is going to block the trough. The pressure is on the Fed to save the currency Bros, just like it always saves the bank Bros. This is why the USA has suddenly banned the export of the most powerful computer chips to China – where the USA has them made for it! That explains a lot.

Varoufakis says it all fits the age-old fallacy we keep pushing: “Capitalism is about freedom, efficiency and democracy; socialism turns on justice, equality and statism. In fact, from the very start, the left was all about emancipation.” And Varoufakis is a living testament to that, having served as the economy minister in the leftist government of Greece that was going to go its own way, and avoid crippling austerity living under the thumb of the IMF. But the government caved, and Varoufakis rode off on his motorcycle. Greece has been a basket case ever since.

This movable cloud capital resulted in major changes of its own. Most lamentably, the world has provided Big Tech companies with free labor, technoserfs, who create content, from videos to (ahem!) book reviews that they leverage to attract more eyeballs and more free labor. Serfs snitch on family and friends, help refine advertising campaigns, political campaigns, and scams. Influencers provide marketing. Trolls keep up the temperature. Varoufakis, says this is the major difference: where capitalism demonstrated its power to control people in the workplace, technofeudalism demonstrates its even stronger control outside the workplace. Unremunerated pay in the service of cloud capital, “unremediated by any market,” for services that can be offered anywhere at no additional cost.

Feudalism also had vassals. Technovassals are small businesspeople who fork over large portions of their revenue to the Lord Amazon or Alibaba. These are the lords of platforms, where everyone pays stiff rent or doesn’t get to play at all. Restaurant prices soared not so much from the pandemic, as suddenly having to pay 30% for online reservation services. It is feudalism via electrons.

He says Europe is complicit. It will not strengthen the euro and complete its monetary union with new rules making it a potential reserve currency, because European bankers are enjoying repatriating dollars to the USA in the form of those insanely profitable FIRE investments. Who needs the burden of managing a global reserve currency when you can get rich from someone else doing it? So it shall remain. That explains a lot.

This has also had the heretofore bizarre effect of trillions of dollars rushing to the USA every time the dollar comes under pressure for a bad economic or political report. Normally, the dollar would fall, but bankers wanting the gravy train to keep running, flood the financial system buying up dollars, actually boosting it, even, if not especially, in times of terrible news. That explains a lot.

As for our free and competitive markets, they are not even real markets, just platforms, Varoufakis says. There is no jostling among buyers, no negotiating with sellers. Everyone deals completely in isolation of everyone else, and platform owners keep all the data to themselves. It is way beyond the death of capitalism, which was supposedly about freedom, efficiency and democracy, he says. Today’s 99% vs 1% has worse inequality than in feudal times.

Varoufakis takes readers on a grand tour from the Nixon administration to the present. Nixon unhitched the dollar from gold, so the Fed could print as much money as it wanted and not have to pay for it. The gold standard was holding the whole world hostage because there is simply not enough gold on the planet to satisfy the demand for money. And capitalism must continually expand – or die. Distortions appeared everywhere as the US went from net producing to net consuming, and consequently into swelling deficits. So money had to be unleashed.

All these factors meant US dollars came flooding back, inflating Wall Street to silly heights. In 1970 the Dow Jones Industrial Average was stuck at 900-1000, not much higher than it had been (300-400) in 1929. Today, it ranges from 31,000-35,000 (Though after the Fed announcement in December 2023, it finally broke out to the 37,000 level). That explains a lot.

By directing its deficit spending back round to finance, America has ensured the very rich will get richer, while the rest get poorer. He says it was “socialism for bankers and austerity for the rest.” Exporting all the manufacturing processes overseas has left millions underemployed at home, in debt, and unable to progress in their careers. Decent jobs evaporated, replaced by what Varoufakis calls cloud proles, those slaving away on computers for little or no money. They work for pennies offered by Amazon’s Mechanical Turk, or 60 hour weeks at X, (fka twitter). Or gig workers, delivery bikers or affiliate professors. The pressure is on them to never take a break, lest they lose their posts altogether. This is the new feudalism in action, cloud-based and vastly more profitable than actually having to make something real.

America had to make returns attractive to those overseas dollars. Varoufakis says the result was the “intentional impoverishment” of America’s working classes. It is no secret that the 99% have seen their incomes fall well below inflation since the mid 1970s, that labor unions have been all but banished, that benefits and pensions have vaporized for the working classes. Meanwhile, finance has grown out of all proportion. Coincidence? Nothing on this scale, where trillions of dollars are waiting, is coincidence. Bankers needed to improve the bottom lines of their client corporations, so they bled the middle classes. Here’s how: Big Tech’s workforce collects less than 1% of corporate revenues, while under capitalism, that figure was typically 35%. Meta (Facebook), for example, makes $600,000 profit from each staffer.

Varoufakis compares the Enclosure laws in Britain, which threw the peasants off the land and made them tenants, to our access to our own identities. They are owned and exploited by the technostructure, and we do not even have access to them. They record every comment we make, every show we watch, every step we take, every call we make, every trip we take. Between them, they know everyone far better than individuals do themselves. Stores know the very aisles we walk, the shelves we stop at, the clothes we try on – everything, thanks to the monitor we carry with us so they can collect all that data – the free app we downloaded so we could get the occasional 10% off. With data like that, free markets are totally redundant. They make the demand (aka overconsumption in the USA).

And this is the value of the book. Here are answers to why things work backwards today. Why nothing makes sense, and why things are not getting better. This is the basis for how the country actually works, and it is not free and competitive markets. They left the building with the 2008 financial crisis.

The book goes to great lengths to be accessible. Varoufakis structures it as answers to longstanding questions from his father, who represents a left that never had to deal with anything like this. He also repeatedly uses the character Don Draper, of Mad Men, to hang all the evils of capitalism on. He shows how the dissolute, hard-drinking and corrupt fraud Don Draper reshaped consumer sentiment again and again, making the old new again, instilling desires the middle classes never had on their own, and living the high life while the working classes – even in his own firm – slaved away. He was the ideal capitalist. Then too, in Technofeudalism there are no mathematical formulas, just a revelatory alternate history of the end of capitalism and the silent takeover by cloud capital. And it’s a helluva tale.

Nonetheless, Varoufakis says a lot of things I would argue with: “The rise of the technostructure transformed American capitalism from a decentralized market society into a centralized economy-with-markets. It was precisely what the Soviet planners had always hoped to achieve, but failed.” The centralization he talks about is not mandated by the federal government, but implemented by financialization and the constant merging of giant companies that leave consumers no choice, and which give makers a complete view of the market. With their all-seeing heft, they can plan and produce to satisfy the all but totally predictable demand. It is capitalism on steroids, not the centralized command and control of the USSR, but more a blatant, monopoly system.

As anyone who reads me regularly knows, I have long been on the record that giant global corporations are taking over from capitalism, in a transition that becomes more obvious every day. That those corporations can and do shape the policies and even the activities of governments is repugnant. Varoufakis is saying a lot of the same things, but he has the resources to organize and prove them. He has done a thrilling job of explaining it in ways readers will not merely understand, but acknowledge that they feel themselves. Technofeudalism is a powerful and necessary achievement.

David Wineberg ( )