The big idea: has the digital economy killed capitalism? - The Guardian

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“Enter Amazon and you have exited capitalism. Despite all the buying and the selling that goes on there, you have entered a realm that can’t be thought of as a market, not even a digital one.” When I say this to people, which I frequently do in lectures and debates, they look at me as they would a madman. But once I start explaining what I mean, their fear for my sanity soon turns into fear for us all.

Imagine the following scene, straight out of the science-fiction storybook. You are beamed into a town full of people going about their business, trading in gadgets, clothes, shoes, books, songs, games and movies. At first, everything looks normal. Then you begin to notice something odd. It turns out that all the shops, indeed every building, belong to a chap called Jeff. He may not own the factories that produce the stuff sold in his shops, but he owns an algorithm that takes a cut for each sale and he gets to decide what can be sold and what cannot.

If that were all, the scene would evoke an old western in which a lonesome cowboy rides into town to discover that a podgy strongman is in charge of the saloon bar, the grocery store, the post office, the railway, the bank and, naturally, the sheriff. Except that isn’t all. Jeff owns more than the shops and the public buildings. He also owns the dirt you walk on, the bench you sit on, even the air you breathe. In fact, in this weird town everything you see (and don’t see) is regulated by Jeff’s algorithm: you and I may be walking next to each other, our eyes trained in the same direction, but the view provided to us by the algorithm is entirely bespoke, carefully curated according to Jeff’s priorities. Everyone navigating their way around Amazon – except Jeff – is wandering in algorithmically constructed isolation.

This is no market town. It is not even some form of hypercapitalist digital market. Even the ugliest of markets are meeting places where people can interact and exchange information reasonably freely. In fact, it’s even worse than a totally monopolised market – there, at least, the buyers can talk to each other, form associations, perhaps organise a consumer boycott to force the monopolist to reduce prices or improve quality. Not so in Jeff’s realm, where everything and everyone is subject not to the disinterested invisible hand of the market but to an algorithm that works for Jeff’s bottom line and dances exclusively to his tune.

If this isn’t scary enough, recall that it is the same algorithm that, via Alexa, has trained us to train it to manufacture our desires. The mind rebels at the extent of the hubris. The same algorithm that we help train in real time to know us inside out, both modifies our preferences and administers the selection and delivery of commodities that will satisfy these preferences. It is as if a subliminal advertising guru could not only implant in us desires for specific products, but had attained the superpower instantly to deliver said products to our doorstep, bypassing any potential competitor, all in the interest of bolstering the wealth and power of a chap called Jeff.

Such concentrated power should scare the living daylights out of the liberally minded. Anyone committed to the idea of the market (not to mention the autonomous self) should recognise that what we’re witnessing is its death knell. It should also shake market sceptics, socialists in particular, out of the complacent assumption that Amazon is bad because it is a capitalist market gone berserk. Actually, it’s something worse than that.

“If it ain’t a capitalist market, what in the sweet Lord’s name are we stepping into when we enter Amazon.com?” a student at the University of Texas once asked me. “A type of digital fief,” I replied. “A post‑capitalist one, whose historical roots remain in feudal Europe.”

Under feudalism, the overlord would grant so-called fiefs to subordinates called vassals. These fiefs gave the vassals the formal right to exploit economically a part of the overlord’s realm – to plant crops on it, for example, or graze cattle – in exchange for a portion of the produce. The overlord would then unleash his sheriff to police the fief’s operation and collect what he was owed. Jeff’s relationship with the vendors on Amazon is not too dissimilar. He grants them digital fiefs, for a fee, and then leaves his algo-sheriff to police and collect.

Amazon was just the start. Alibaba has applied the same techniques to create a similar digital fief in China. Copycat e-commerce platforms, offering variations on the Amazon theme, are springing up everywhere, in the global south as well as the global north. More significantly, other industrial sectors are turning into digital fiefs too. Take for example Tesla, Elon Musk’s electric car company. One reason financiers value it so much more highly than Ford or Toyota is that its cars’ every circuit is wired into the cloud. Besides giving Tesla the power to switch off one of its cars remotely, if for instance the driver fails to service it as the company wishes, merely by driving around Tesla owners are uploading real-time information (including what music they are listening to) that enriches the company’s cloud-based capital. They may not think of themselves as serfs but, alas, that’s precisely what the proud owners of new, wonderfully aerodynamically gleaming Teslas are.

It took mind-bending scientific breakthroughs, fantastical-sounding neural networks and imagination-defying AI programs to accomplish what? To turn workers toiling in warehouses, driving cabs and delivering food into digital proles. To create a world where markets are increasingly replaced by digital fiefs. To force businesses into the role of vassals. And to turn all of us into digital serfs, glued to our smartphones and tablets, eagerly producing the capital that keeps our new overlords on cloud nine.

Technofeudalism erects great barriers to mobilisation against it. But it also bestows new power on those who dare dream of a way to topple it – a capacity to build coalitions, organise and take action via the cloud: what I call cloud mobilisation. None of this is either easy or inevitable, but is it harder or less likely than what the miners, the seamstresses and the dockworkers envisioned and sacrificed their lives to achieve in the 19th century? The cloud takes – but the cloud also gives to those who want to reclaim freedom and democracy. It is up to us to prove which is greater.

Technofeudalism: What Killed Capitalism by Yanis Varoufakis is published by Bodley Head (£22). To support the Guardian and the Observer order your copy at guardianbookshop.com. Delivery charges may apply.

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The big idea: has the digital economy killed capitalism? - The Guardian

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