DIGITAL LIFE

Technofeudalism: understand the theory that declared the end of capitalism and compared big techs to feudal lords

Capitalism is dead — and has been replaced by something worse. This is the theory of economist Yanis Varoufakis, author of “Technofeudalism,” which will be released in Brazil in April by the Crítica imprint of Planeta publishing house. Raised to pop star status for his disruptive ideas, the former Greek Minister of Economy highlights a term that has been the talk of the town in recent months, with the election of Donald Trump and the strong influence on his government of technology billionaires such as Elon Musk and Peter Thiel.

The concept of technofeudalism is used by theorists to explain the monopoly of digital conglomerates and their ability to control social activities. For supporters of the term (popularized by French thinker Cedrid Durand), the economic system around big techs is increasingly similar to that which prevailed in Europe in the Middle Ages. In his book, Varoufakis claims that markets have been replaced by digital trading platforms that, in practice, operate like the old fiefdoms. Digital users would become “serfs,” while the holders of traditional capital (machinery, telephone networks, industrial robots) would be limited to the role of “vassals.” And profit, the driving force of capitalism, would have been replaced by its feudal predecessor: income.

Digital dystopia...For the former minister, the new economic logic reveals not only our subservient relationship with big tech, but also helps to understand both the downfall of liberal democracies and the new Cold War between the United States and China — including Elon Musk’s purchase of X.

“Over the last 20,000 years, there have been many technological innovations, but capital has always remained a means of production,” says Varoufakis, in a video conference. “With the emergence of big tech and the algorithms that “live” in our cell phones, capital is now changing our behavior. This mutation transformed capitalism into another socioeconomic mode of production.

The diagnosis would be a harsh reality check for those who had focused their hopes on digital utopias. At the beginning of the millennium, the possibilities of the internet led theorists to predict an era of decentralization, collaboration and autonomy. Twenty-five years later, researchers warn of an opposite scenario.

According to Varoufakis, companies such as Google, Amazon, Meta and Microsoft have concentrated power and verticalized the digital space. The economist created a concept to define the dynamic: cloud capital. This new capital would have destroyed two pillars of capitalism, markets and profit, and replaced them with the extraction of resources from users.

Territorial dominance...Instead of profiting from the sale of goods and services, the author writes, platforms accumulate wealth by charging for access to their virtual territories. They impose their technological infrastructures (clouds, networks and algorithms) and charge “rent” for their use, creating user dependence.

Our daily activities on these media generate valuable data and interactions for platforms, but we are not directly remunerated for this. Even large industrial corporations depend on digital platforms to reach their customers.

— Platforms not only mediate markets, but also dominate them — says David Nemer, a professor at the University of Virginia. — Companies do not operate on a purely market logic. There is a lot of control and extraction. Users are not customers in the classic sense, but servants who generate data and need these platforms to access information, work and essential services.

Researchers point to two moments for the rise of big techs. During the 2008 financial crisis, they became cheaper and less risky trading alternatives for scared investors. The pandemic, between 2020 and 2022, reinforced our dependence on digital platforms, with technology companies accumulating more wealth while the rest suffered losses. — When we talk about technofeudalism, there is a geographical association with these digital territories, which today have a population of five billion — observes Kenneth Corrêa, MBA professor at FGV. — Given the amount of attention people dedicate to this world, it can be said that their lives are controlled. The information we receive is selected through algorithms and we depend on their tools to communicate. We are subjugated by the dominance and control of these companies.

Researcher at the Brazilian Institute of Information in Science and Technology (Ibict), Arthur Coelho Bezerra agrees that we are experiencing a “revamp of the medieval order”.

— With the excessive concentration of power in a few agencies, capitalism has become so savage that it has regressed — says Bezerra, author of the book “Miséria da informação: dilemas ético da era digital” (Editora Garamond). — If in the past we had the church and the aristocracy, today we have these companies with a market value of around a trillion. Economic concentration is so great that they are now investing in political concentration, making governments like the United States their puppets.

Bezerra is referring to the influence of big tech on Donald Trump’s presidency. Owner of X, Elon Musk is seen by many as the “real” head of state of the United States. As head of the Department of Government Efficiency, he has cut federal agencies and employees and accessed data from several agencies, including those of his own commercial competitors. In light of this, a temporary restraining order was requested by a group of 14 Democratic state attorneys general - which was quickly rejected by a federal judge.

Regulation...For David Nemer, the concentration of power of big techs will continue as long as there is no stricter regulation, in Brazil and around the world.

— These companies create their own rules, charging “tolls” in different sectors of the economy — says Nemer. — This reconfigures the relationship of economic power, placing platforms as arbiters of entire markets, from e-commerce to media and labor.

According to the researcher, the accelerated technofeudalism of the Trump Era may aggravate issues such as digital colonization (exercised through control, collection and use of digital data), the manipulation of information and the erosion of formal work (with the model based on app services replacing stable jobs with precarious and intermittent work).

— The impact on Brazil will be very bad — laments Nemer. — The country already suffers from technological dependence and the lack of digital sovereignty. If the US consolidates a technofeudal model, Brazil could become even more hostage to big tech, whether due to its dependence on its services or the political influence that these platforms exert in the manipulation of information and electoral dynamics.

Counterpoint...The parallels with medieval economic systems bother some historians. Professor of the History and International Relations Department at UFFRJ, Clínio de Oliveira Amaral points out that the very concept of "feudalism" did not exist in the Middle Ages. For him, economists like Yanis Varoufakis had their vision of the period formed by the economic understanding of 18th and 19th century thinkers.

— Feudalism is an invention of the 19th century at a time when capitalism was expanding and, to that end, had chosen “feudal anarchy” as an obstacle to its development — says the historian. — Technofeudalism makes simplistic comparisons with the contemporary context, disregarding the way in which capitalism mobilized the Middle Ages to legitimize itself. At that moment in history, the evil to be fought was the feudal remnants.

Reporter: Bolívar Torres