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The Chris Hedges Report
Technofeudalism: What Killed Capitalism (w/ Yanis Varoufakis) | The Chris Hedges Report
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- [00:10]
Chris Hedges
Yannis Varoufakis, a former member of the Greek parliament and Minister of finance, argues in his new book, Techno Feudalism, what Killed Capitalism? That capitalism, rather than undergoing one of its many metamorphoses, is dead. He argues that its dynamics no longer govern our economics. It has been replaced by what he terms techno feudalism. Techno feudalism is a new form of capital, a mutation of it, that has arisen in the last two decades. It is a product of two forces, the privatization of the Internet by China's and America's big Tech, and the manner in which Western governments and central banks responded to the 2008 financial crisis. He argues that what he calls cloud capital has demolished the two central pillars of capitalism, markets and profits. Markets, the medium of capitalism, have been replaced by digital trading platforms, which look like but are not markets and are better understood as fiefdoms. Profit, the engine of capitalism, has been replaced with its feudal predecessor, rent. Specifically, he writes, it is a form of rent that must be paid to access those platforms. And the cloud more broadly, are what he calls cloud rent. Power today resides not with the owners of traditional capital, such as machinery, buildings, railway and phone networks. It has shifted to the owners of cloud capital. We, in this process, have returned to our former status as serfs, contributing to the wealth and power of the new ruling class with our unpaid labor in addition to the waged labor we perform. This change, he warns, has imperiled our autonomy and perhaps our freedom. Joining me to discuss his book Techno what Killed Capitalism is Yannis Varoufakis. Let's begin with defining cloud capital, how it came into being, which you explain in the book, and what it is.
- [02:15]
Yannis Varoufakis
Capital has always been around, even before capitalism. It's not a new thing. A fishing rod is a capital good in the sense that it was produced in order to produce something else. A catch of fish, tractor was produced not in order to be driven around, but in order to produce corn or wheat. So in that sense, well, before, you know, thousands of years before we had capitalism, we had capital as a produced means of production. But what lives inside here, inside our phones, in our laptops, in the cell towers, the server farms, the thousands of miles of optical fiber cables? What I call cloud capital is a produced means. It's an automated network made up of machinery, just like a railway network. But it is not a means of production. It is a produced means of something different, of behavioral modification. So when you have Siri on your iPhone, or Google Assistant or Amazon's Alexa, essentially this is an interface between you and the Cloud capital owned by these conglomerates, by Jeff Bezos, for instance, in the case of Alexa. And what happens there is quite magical and disturbingly novel because essentially you're training the machine to know you, and you are training it as it gets to know you, to train you, to get it, to know you better. And at some point it knows you so well that it gives you good advice. Like, you know, when Amazon recommends books, it's usually spot on, or when Spotify recommends music. And you know, and we are gullible human beings, understandably, and makes sense, if anything, anyone gives you good recommendations, you start taking them seriously, you start trusting them, and then at some point it can impute desires and preferences into your mind, your heart. And this is the most fascinating aspect of it. Once you want this electric bicycle, for instance, that it has convinced you you want it, sells it to you directly, bypassing every market, every shopping mall you can imagine. Meanwhile, you, by training it, by uploading music, photographs, video and so on, you're adding to that cloud capital. And that has never happened before. So two things have never happened before in the history of humankind, in capitalism and before capitalism. The first is that you have an automated system which modifies your behavior. An automated system, not some philosopher, some crank, some preacher, but an automated machine that modifies your behavior without any human being entering in this behavioral modification exercise. And the second thing that happens is, beyond the fact that it sells to you things directly, bypassing capitalist markets, you are helping the owner of that cloud capital accumulate more cloud capital through your free voluntary labor. Ladies and gentlemen, as I like to say, welcome to technofeudalism. This is no longer capitalism, because capitalism, however you see it from a left wing point of view, a right wing point of view, it has two pillars. It's got markets and profit. That's the essence of capitalism. But now markets have been replaced by these digital platforms that look like markets but are not markets. They're more like digital or cloud fiefdoms, like Amazon.com or Alibaba, where you have a digital fence keeping within it producers, consumers, artisans, intellectuals, and we are all essentially producing value for the owner of that digital fiefdom, Jeff Bezos, in this particular case, in the case of Amazon, who charges ground rent, but of course it's cloud rent, it's not ground rent. And therefore profits that are created by the old fashioned traditional capitalist sector are siphoned off by the basis of the world as cloud capital. And, and that is of profound importance not only in the way that we live and in the way we produce and reproduce our material and intellectual conditions. But also it's of profound significance when it comes to our macro economy. Because Chris, when about 20, 30%, this is my estimation of GDP of value produced in our advanced economies is siphoned off the circular flow of income by the owners of cloud capital. That creates a massive further reduction in aggregate demand and that creates pressures on the Fed to produce more money against the edicts of the anti inflationary process. It creates huge political clashes between the United States and China because they are the effectively the only two owners of large scale cloud capital. So as I was thinking all that, I was thinking, this is no longer capitalism, folks. It's something far worse.
- [07:46]
Chris Hedges
You talk about in the book about how the usual processes by which goods are produced, shipped, put in a retail store, all of that vanishes. And that has tremendous consequences within the economy, in particular for people who depend on wages.
- [08:09]
Yannis Varoufakis
It does indeed, for a number of reasons. Allow me just to mention two for brevity. The first is if you are a proletarian, if you work in an Amazon warehouse or in a Tesla or General Motors factory floor these days, you will have seen, if you walk around, if you are allowed to walk around an Amazon warehouse, you will see that workers have one of these attached to their wrist here. And this machine is connected to the same algorithm that is running Amazon.com ws and all that. And this thing monitors at every nanosecond where the worker is. It instructs the worker, you know, you go, go to that aisle, pick up that box, bring it here. It knows how long you spent in the toilet. And remarkably, it uses the same reinforcement learning algorithms that brilliant scientists are using in our great research centers in order to design snazzy antibiotics that kill bacteria that human design has not managed to produce yet. It uses exactly the same AI kind of designer tools in order to predict, to prognosticate in which warehouse which worker is going to have a higher likelihood propensity towards forming a union and fires them before they even think of creating a union. Now so that changes the life of people who work in traditional wage labor settings, but it has a far broader effect. As I said before, working when you've got this very large chunk of value taken out of the circular flow of income. And let me be a bit more precise on this, in traditional capital sectors since the Second World War, if you take General Electric or Boeing, any of the large manufacturers, capitalist manufacturers, around 80% of their revenue was used in order to pay salaries and wages from the janitor. All the way to the CEO, 80%. In the case of Facebook, it's 1%. 1%. The rest is Syphontof goes to the Cayman Islands, through Ireland, through Holland, through Luxembourg. You know, the circuitous pathways that accountants are very good at creating on behalf of the billionaires of the oligarchs. So once you take all this money out, the quality of jobs available for a wage diminishes substantially because aggregate demand is depressed. So even if you don't have a phone, you know, there are Luddites, people, I have friends who refuse to have a smartphone and they want to be disconnected from the Internet. So on, you can't be disconnected because even if you work in a manual labor and you have an old Nokia phone that is not connected to the Internet, okay, Still, you are living in this environment in which the quality of jobs is depleted and where power is immensely concentrated in the hands of the very few who live off cloud rent and who are simply not eligible to any kind of control. I mean, Elon Musk is just very much in the news today because he went into bed with Donald Trump in a rather unsavory set of circumstances. But we are missing the point that it's not Elon Musk. It's, you know, it's Google, it's Microsoft, it's Alibaba, it's Tencent in China. It is the form of cloud capital, which creates a new regime, essentially. And it's not a personal matter. It's not a matter of personal preferences.
- [12:11]
Chris Hedges
Two points. One, of course, with companies like Boeing, I know because my brother works in robotics, they've all become automated, so where you might have had hundreds, maybe thousands of workers and car factories, everything else. So at the same time, there's an assault on traditional manufacturing. And then a really interesting point you made in your book, which I didn't know until I read it, was that you talked about Tesla cars being connected to the cloud and, and being instruments, the same kind of instruments. The car itself functions as a kind of cloud machine to scoop up where we drive and our habits and what music we listen to and everything else.
- [12:53]
Yannis Varoufakis
Well, think of a Tesla, or indeed the Chinese version, byd, Equally good car. Think of it as an iPad on wheels. That's what it is, both technologically speaking, but also as part of cloud capital. And, you know, that explains to a large extent, if you, if you look at what happened to the Tesla capitalization at the New York Stock Exchange after Donald Trump's victory, you'll find that the bump in its capitalization the increase in its capitalization, not its total capitalization. The increase in capitalization was greater than the total capitalization of the five traditional car manufacturers. That gives you an idea of the power of cloud capital and exactly as you said. I mean, thank you for mentioning it. You know, the first time I got an inkling that Teslas and BYDs are very different Volkswagens and, and General Motors cars, very different even though they may look similar, was when I, when I found out that, you know, Elon Musk can switch off your Tesla from his iPhone, from his Samsung, whatever he has. I don't want to, you know, advertise a particular phone company. Did you, did people know that, that Tesla can switch off your car through the cloud? So, and this has happened because some people, people who tried to buy Tesla cars secondhand or third hand and didn't want to have them serviced at Tesla, Tesla switched them off for them. So the next step of course is that Tesla managed not, I mean they're not using this too much in order to exert power of you, but they could. It's a scary thought that you could be driving around and suddenly your car is switched off by Ellen. But the most interesting thing is what you mentioned, that very soon Tesla will be making more money from you playing the role of cloud surf while you're driving or being driven in it, if it is an autonomously driven vehicle because it knows what music you're listening to as you are visiting your mother in law. Right? What did you purchase exactly from the supermarket just before you arrived at your mothers in law? What music did you listen to on the way back home? And what kind of conversations were you having where you mentioned particular products or companies that you may have bought shares in in the morning when you went to work? This is immense power because essentially what you're doing when you're speaking and listening to music and going places in your Tesla is you are using the Tesla in the same way that you can use your Alexa or be used by it to be precise, in order to upload onto the cloud more cloud capital for the owner of cloud capital. And that I think should concentrate our mind onto the major transformation that we have experienced as a society over the last 15 years or so.
- [16:08]
Chris Hedges
Right? Well, my 12 year old daughter uses my Spotify. So Spotify recommends all sorts of music I don't want to listen to. I want to talk about experiential labor because you said that's something they can't replicate. Explain what it is and why it's important.
- [16:30]
Yannis Varoufakis
Labor that can be automated, ceases to be human labor from time immemorial. This is not a new thing. So, for instance, even back during the early stages of the Industrial revolution, take a textile factory in Manchester in England, the jobs that could be done individually by workers, especially women, who would be given a sewing machine and say, look, you produce these pieces of cloth. Any such job that could be individuated essentially was shipped out of the factory. These women were asked to stay at home. They were given a machine, a sewing machine at home, and they were asked to produce them at home. And then they were being paid as contractors. They were being paid piece rates per item. They weren't being paid wages. They were being paid vacation time. They were not being given any health cover. They were being shipped out and treated like individual producers, individuated producers. So all jobs that can be atomized and individuated essentially drop out of the waged labor process. With cloud capital, this is now growing exponentially. What happens is, for instance, I don't know whether you are familiar with that. I mentioned this in the book. It is quite terrifying. There is a website owned by Amazon called the Mechanical Turk. As we speak today. I checked it. 100 million people worked on it, actually labored on it. So what happens is you log on and the algorithm matches you with particular jobs. Not employers, but jobs. Employers dish out these jobs that can be done at home. It can be accounting jobs or counting, you know, the number of cars in a deck of cards and separating them like an idiotic machine from buses or, you know, writing reports, given data or doing data analytics. And you get paid by the. By, by the job. And these people, of course, have absolutely no Social Security cover. They can be all over the world. Sometimes they're being paid in, in Amazon tokens so they can buy stuff from Amazon.com so they're not even being paid in wages.
- [19:03]
Chris Hedges
It's like script. It's like the miners used to get script. It's exactly where they could only shop at the overpriced company store.
- [19:11]
Yannis Varoufakis
Indeed, indeed, this is exactly what it is. So this is one example. But jobs that require brainstorming, that require inspiration. So for instance, let's say you have an architect's office and you have five, 10 highly qualified architects, and the office is competing for a large project to build the airport somewhere or a new modern art museum somewhere, and they need to brainstorm there. Well, that is what I call experiential labor. It's labor which is, in William Morris's terms, fulfilling labor. It is creative labor that cannot be replaced yet by artificial intelligence, by algorithms, and that is maintained as part of the wage labor that remains within the broader kernel of techno feudalism.
- [20:19]
Chris Hedges
Although, as you point out, it's not valued or compensated.
- [20:23]
Yannis Varoufakis
It depends on the bargaining power between the owners of the architectural office and the architects.
- [20:29]
Chris Hedges
Well, you do talk about madmen about that. I haven't watched it. But you talk about this character Madman, who apparently, like, is drunk half the day, but he's brilliant, as a kind of example of that, you know, experiential quality, that ability, that inspiration, that kind of vision. And so what happened? Talk about that bifurcation, because you need it, don't you? I mean, isn't it essential experiential labor?
- [21:02]
Yannis Varoufakis
Less and less. I, I use Madman, the serial featuring the fictional Don Draper, who is a. He's a. He represents the great advertisers of Yesterday, of the 1950s and 60s, those men, and they were men mostly, some very few women who sat around and drank their bourbon and eventually would come up with brilliant advertising campaigns for Coca Cola, for Bethlehem Steel, for McDonald's, for whatever. And that would, you know, those ads were necessary at the time, after the second World war, when you had the massive corporations that emerged from the second World War as part of the war economy, America's war economy. And they had a remarkable productive capacity because factories became exceptionally efficient during the war. And then with the conversion of the arms industry into civilian industry. The problem the United States had in the late 40s, early 50s, late 50s, was that those factors could produce a lot more than what the American public wanted to or could consume. So these corporations needed people like Don Draper because they needed to produce the stuff and the demand for the stuff through advertising, through using the new medium of television back then, the great billboards on the motorways, on the highways and so on. But two things have happened since then. Well, the first thing is that through the creation of cloud capital, the dawn Drapers of the world, those haphazard and erratic, brilliant opinion makers and advertising geniuses, they became automated. So today you've got bots doing their job. Today, with the decline of the television audience and the immersion of society into cloud capital, whether it is Instagram or TikTok or whatever, Facebook, Snapchat and so on and so forth, the Dawn Drapers are being replaced by bots that do highly targeted campaigns. Each one of us at different points of the day get tailor made advertisements. We which are in a dialectical relationship with us, we train them to train us to train them to train us, to convince us that we want something. Don Draper couldn't do that at this level of, you know, granular level of dialectical interactivity with each one of us, not each one of us, but every mood that we might find ourselves in. So the Dawn Drapers, the experiential labor of the Dom Drapers, is increasingly a thing of the past. And at the same time, the great conglomerates that I mentioned, you know, the Coca Colas, the Fords, the General Motors, the General Electrics and so on, they're becoming a minuscule power in our society. If you look at this New York Stock Exchange today, Chris, and you take out the cloud capital from it, you know, the Magnificent Seven, as you Americans like to call them, what's left, pretty, you know, minuscule amount of value. These large corporations. I mean, you know, yesterday I was looking at the numbers, I was astounded to find that Palantir, Peter Thiel's genocidal company of waging war through AI and drones and apps has a higher capitalization in the New York Stock Exchange than Lockheed Martin. I mean, that is a thing I don't need to say more.
- [25:09]
Chris Hedges
Well, you also point out, which I didn't know until I read it in your book, that about 80% of the new York Stock Exchange is owned by a handful of companies like BlackRock.
- [25:17]
Yannis Varoufakis
Yes.
- [25:19]
Chris Hedges
And you say that you see BlackRock, but then you list all the companies they own, you know, United, Arab, you know, on and on and on. I didn't know it was that consolidated.
- [25:29]
Yannis Varoufakis
Yes, it's. To be precise, what happens, there are three companies, BlackRock, State, State street and Vanguard between them. They control. Doesn't mean they have majority ownership. But you don't need to have majority ownership with a large corporation. You know, if you own 15% of a large corporation, you control it. But they control More than 80% of all the companies in the New York Stock Exchange. And that means that effectively, I mean, what kind of competition do you expect between two airlines owned by the same people? Why are they going to compete if they are owned by the same people? And they say that BlackRock doesn't interfere with the board of directors. It's just to fly in the face of reality. Of course, they interfere with the board of directors. So essentially, competition goes away. The idea that Adam Smith had that, you know, greed can be harnessed in the interests of humanity as long as the greedy capitalists compete against one another. Well, they don't compete against one another because they are a cartel now. And so essentially, those companies now increasingly, the profits that they report and the dividends that they dish out to their shareholders are a form of rent. They are not a form of capitalist profit which is a result of entrepreneurship. And the other component of this, which I think is really very important is to think of all this. Forget the stock exchange. Look at private equity, that is capital, traditional money, capital money, which is purchasing companies outside the listed public ledger of stock exchanges. When private equity buys a formerly nationalized public utility, let's say Yorkshire Water or the London Water Company, Thames Water Company, or here in Greece they came and they purchased our former publicly owned electricity grid, or they buy a school, a private school, they buy a clinic. And what they do there, they're not interested in the profitability of these, of these enterprises they purchase. The first thing they do is they buy an old fashioned capitalist enterprise. They create two companies. One owns the assets, the buildings, for instance, primarily the real estate. And another one owns, owns, owns the employment contracts of the workers. And then they go through this accounting trick of making the company that owns the workers and the customers pay rent to the company that owns the real estate. And you know what, six months later they do two things. Firstly, they get a lot of loans. They saddle with debt the company that owns the real estate using the real estate as collateral, and then they make the other company that doesn't own anything except workers to pay a higher rent to the first company. And once they have, and you know, all the debt that they've taken on board goes to the pockets of the shareholders of these private private equity asset managers. And then at some point they just get rid of these companies, they, they bankrupt them. Now that again is not capitalism. If you, you know, you and I are of a generation when we remember the great clashes between the left and the right where it was a discussion between, you know, pro capitalists who believed that the jungle that is the market, through a Darwinian process of natural selection, selects for the best and creates through the profit motive a more efficient society. And we of the left, or I of the left, used to say that central planning is more efficient and more consistent with the public interest. That's all gone. There's no such debate anymore. This is something of the past because now what we have is a kind of feudalism, I call it techno feudalism, which is founded on a predatory state because it is a state that is backing the power of the cloud capital owners and the private Equity Companies and BlackRock and Vanguard and State street effectively to act as a massive parasite sponging onto not Only the working class, but the traditional capitalist class who are still trying, you know, to make things in the traditional way.
- [29:57]
Chris Hedges
Getting off on the Left. I want to read a passage from your book and have you comment. You said Sometime in the 20th century, the left traded freedom for other things. In the east, from Russia to China, Cambodia and Vietnam, the quest for emancipation was swapped for a totalitarian egalitarianism. In the west, liberty was left to its enemies, abandoned in exchange for an ill defined notion of fairness. The moment people believed they had to choose between freedom and fairness, between an iniquitous democracy and miserable state imposed egalitarianism was game over for the Left. Explain what you mean by that.
- [30:36]
Yannis Varoufakis
Well, I'm saying this as a leftist, by the way. Right. This is.
- [30:38]
Chris Hedges
Yeah, well, me too. So we're, we're in the same box.
- [30:44]
Yannis Varoufakis
When the left began kicking and screaming against capitalism at the very beginning, it was an emancipatory project. I mean, Marx and the Marxists and the trades unionists were all about liberating, liberating workers from the tyranny of exploitation. It was about liberation. It wasn't about equality, it wasn't about fairness. I mean, maybe they had a lot of those slogans as well. A fair day's wage for a fair day's work. But Marx, who for me was an eye opener, was actually against the idea of equality. You know, he would ask pertinent questions, such as equality of what? You know, if you have a disabled person, a disabled person needs more resources in order to have the standard of life that we have. So you can't ask. Equality is not the issue. Liberation from constraints, liberation from exploitation, from the extractive power of the powerful. That's what the left should be all about. So the criticism of the left initially waged against capitalism was that capitalism restricts the freedom not just of the workers, but also the capitalists. There is a beautiful, wonderful piece in text in Marxist Grundrisse where he's waxing lyrical about the poor capitalist. How the capitalist goes to bed at night unable to sleep because he's worried about bankruptcy. And even if he's a good man, he has to exploit his workers because if he doesn't squeeze the living daylights out of them, then he will become like them. So this is a tragedy for the capitalist cloud. So it's a purely humanistic liberation movement. That's what the left used to be. Even when you look at it from the perspective of the feminists of feminism. Feminism, remember what it was used to be called, Women's Lib. Women's liberation. It wasn't about quotas, that the CIA torturers in Guantanamo Bay had to be 50% men, 50% women, or that there should be, you know, transgender toilets in Guantanamo Bay. That was never the issue for the women's liberation, the gay and lesbian liberation movement. So we of the left used to be all about liberty and then we got stuck around the First World War, around the First War in 1912, 1913, 1914, the Great War split the left between those who were supporting the Soviet system and. And the Social Democrats. The Social Democrats became effectively ethno nationalists, especially in places like Germany. They took the side of the bourgeoisie in that crazy trench warfare that was pathetic and pointless. The Soviet side, very soon after 1917, lost the verve, the urge to liberate workers from the tyranny of some boss.
- [33:57]
Chris Hedges
But there was that brief period with the Soviets where they achieved it.
- [34:03]
Yannis Varoufakis
Two years.
- [34:03]
Chris Hedges
And then of course, the. Yeah, then the Bolsheviks destroyed it, which is why Chomsky calls the Bolsheviks counter revolutionaries. But they did achieve it. That's the tragedy.
- [34:12]
Yannis Varoufakis
For two years. For two years. And this is exactly what Norm says, that for two years there were worker councils and there was. And the idea was that now workers will have democratically to control their work, their workplace. They would elect their foremen and four women. And then after that, of course, it all became top down. And in the end, allow me to bring it back to my book. If you look at Gosplan, the Ministry of Planning, of Economic Planning in Moscow, what they tried to do, Chris, and this fascinates me and horrifies me and excites me and at the same time depresses me, is what Gospel tried to do. He tried to do. What the algorithm of Jeff Bezos is doing in Amazon.com essentially the idea behind Gospel, which was a very fascinating project if you look at it from a technical point of view, from a mathematical point of view, and I spent quite a few years when I was a young man studying it. What Gospel and tried to do was to replace the market by matching consumers with producers and from the center, from Moscow, sending signals to a factory producing shoes. You will produce so many shoes at that price and trying to match those shoes with the demand from consumers. But Amazon does this perfectly well. Back then, they didn't have the old singing, old dancing algorithm that now Amazon has. So in a sense, Amazon and central planning in the Soviet Union have a great deal of commonality. The difference is, of course, that in the case of Amazon, it's owned by Jeff Bezos and it is optimized. The code, the computer program, the algorithm is optimized in order to maximize his cloud rent, whereas in the case of the Soviet Union, was there to optimize according to the will of the Central Committee. So once we justified the death of the work councils, of the liberation of workers from not being the decision makers as the left, that's what happened in the communist East. In the west, we also ditched freedom because the social democrats who became quite significant and even won governments in places like Germany, Austria and Britain in the 1960s and 70s, again they replaced liberty with the concept of social justice, of taking some of the surplus value accumulated by the capitalists and giving it to the workers. But they accepted the tyranny of capitalism, of the marketplace, of the capitalist marketplace. So we of the left, whether we were communists or social democrats, in the end did away with the concept of liberation. And who picked it up? The libertarians, for whom it is the freedom of the conglomerate of capital that is identified with the freedom of humanity, which of course is one of the greatest distortions of liberalism. So I think that we of the left, we need to re espouse freedom as our number one motivation.
- [37:30]
Chris Hedges
You write in the book how this new paradigm is playing out both politically and in terms of the constriction of individual freedom. You write, our digital identity belongs neither to us nor to the state. Strewn across countless privately owned digital realms, it has many owners, none of which is us. A private bank owns your ID codes and your entire purchasing record. Facebook is intimately familiar with whom or what you like. Twitter remembers every little thought that caught your attention, every opinion that you agreed with that made you furious that you lingered over idly before scrolling on Apple and Google know better than you do what you watch, read by whom you meet, when and where. Spotify owns a record of your musical preferences more complete than the one stored in your conscious memory. And behind them are countless others invisibly gathering, monitoring, sifting and trading your activity for information about you. With every day that passes, some cloud based corporation whose owners you will never care to know, owns another aspect of your identity. Let's talk about how this plays out. Number one in terms of politics. We're watching the rise of Trump and kind of rapacious oligarchic elite dismantle what's left of a very anemic state and then talk about how you know the consequences for us. You say that we're essentially being pushed back into the role of serfdom.
- [39:16]
Yannis Varoufakis
You know, back then in the 70s, when these interesting debates were taking place between the Marxist left and the libertarian right. One of the defining concepts of the right was the concept of the liberal individual. The autonomous sovereign agent who likes what he does, was usually he and does what he likes. Homo economicus, right? So, you know, students of economics are still being taught this model. The idea is that you are a bundle of preferences which are your design, completely your realm. You choose what you like. You know, you may like stupid things, but it's your right. Nobody has a right to tell you that it's a stupid thing. There's no such thing as a stupid preference. There is just a preference. So you're a liberal individual. That liberal individual transacts with other others through markets. This is the main modus of interaction with other people. You sell them apples, you get back from them oranges, or you sell capital and you get labor or labor and you get capital. That's the right wing perception of the good capitalist society, of the enterprise culture, of the, of the market society. That's gone. Because when you have Alexa and you are training it to train you, to train it, to put preferences into your head, there's no, no such thing as the autonomous individual anymore, right? You are in a constant dialectical relationship with a machine or a network of machines owned by the 0.00001%, not even the 0.1% that tells you what you want. So suddenly you are in the matrix. You are not in the realm of freedom of Friedrich von Haekek or Milton Friedman, right? That's point number one. Point number two. The other loss of the liberal individual or decline of the liberal individual has to do with the separation between work and play in the traditional liberal mind or libertarian mind. Even in homo economics, if you look at every textbook that has ever been written about consumer choices, if you look at the way that the labor market is described by Nobel prize winners, the idea there is that work is something that gives you disutility, disutility. So you suffer while you're working, you get tired, you, you get bored, whatever, but you do it. It's the price you have to pay to get your wage, which then secures a degree of autonomy for you during your leisure time, or leisure, as you would say, in America, right? So there is, for the, for there to be a liberal individual, there has to be a separation between work time and playtime. But now cloud capital has eradicated that borderline, that fence between work time and playtime. It's not just because you're taking home your work with your Emails and you know, working from home, there is that, but it's actually something far worse, which I first noticed amongst my students before I got into politics in 2013, 2014 actually. I noticed that when I lived in the United States. I noticed how angst ridden youngsters were about social media. And it was a kind of subconscious angst because you know when you know that your social media profile is on the public record and you know that, you know in a year's time, five years time, when you apply for a job that you really crave at Google or Microsoft or one of the big snazzy cloudelists, you know that before you are given the chance for an interview, some bot, not even a human being, is going to go through your social media profile. So it's midnight, you are in bed, you are thinking of posting something on Instagram. Deep down you know that this is going to be part of your cv, your digital cv, five years hence. So especially if you are not totally conscious of this, this is works in your subconscious. You know at that moment you're trying to curate yourself on behalf of some employer gone, the liberal individual who during his or her free time, just before going to bed at midnight, expresses himself or herself by posting a video on, on Instagram. So there is a. I could be talking for hours about the manner in which the very concept of the liberal individual which is at the heart of right wing philosophy, is now not fit for purpose anymore.
- [44:20]
Chris Hedges
The whole when that scandal broke about Ashley Madison, the website for people who wanted to carry on affairs outside of their marriages, it turned out that most of the men, or many of the men who were communicating, they thought they were communicating with women. And apparently you paid, you had to pay according to the time you were on the site, were just communicating with bots. They were being confleced of thousands of dollars by bots.
- [44:49]
Yannis Varoufakis
Indeed. Indeed.
- [44:51]
Chris Hedges
I want to ask about the central bankers printing money. This is an important part of your book because at the 2008 you cite this as a pivotal point. You say in the 15 years since capitalism's near death experience, central bankers have been printing monies and channeling them to the financiers entirely of their own accord. In their minds they have been saving capitalism. In reality, they have been upending it by helping to finance the emergence of cloud capital. But that's how history arrives on the coattails of unintended consequences. Explain what happened.
- [45:32]
Yannis Varoufakis
Well, we all know what happened in 2007, 2008, a 20 year period of irrational exuberance which was essentially Wall street printing its own money, to cut the long story short, to keep it very technically minimal, essentially they were printing their own money. Why did they do that? Because after 1971, after the United States became a deficit country, it went from a US A trade surplus to a trade deficit. And with a Nixon shock in 1971, essentially what every government in Washington did was to increase, intentionally boost the trade deficit. And the trade deficit became a remarkable tool for the United States of enhancing American hegemony. Which is crazy. It sounds crazy because never before has a deficit enhanced the hegemonic power of the hegemon. It has done the opposite. It brought down the Roman Empire, the Dutch Empire, the British Empire. But in the case of the American Empire or the United States, it enhances hegemony. But what that did, man, how did he do it? The trade deficit sucked into the United States the net exports of the Germans, of the Japanese, later the Chinese. And then what did these capitalists, non American capitalists, do with the dollars that they were paid? They took it to New York. So there was a tsunami of capital from the 1970s all the way to today coming into New York City, into Wall Street. And of course, if you give Wall street financier a few billion to play with every day, even if it's only for 10 minutes, they find ways to financialize it, you know, to build bets on that money, derivatives, CDO, CDO squares, CDSs, and so on. Right? And so the effective, they were minting their own money, but they overdid it between, you know, after the Clinton administration effectively unleashed them completely from all the impediments and the shackles that the New deal and the 1960s Bretton woods system had imposed on the bankers. That went through Larry Summers and Tim Geithner, appointed by who else? Barack Obama. So they went crazy. They went berserk. To give our audience an example, in the year 2001, total planetary income was around 50. Forget the zeros, it was around 50 trillion. It's around 50. In 2000, 2001, 50, the derivative trades were 70. Okay, that's in 2000. By 2007, total income, planetary income went from 50 to 70, and the derivative trade went from 70 to 780. So there wasn't enough room on planet Earth. And so they came crashing down in a complete state of panic. The leaders of the west, presidents, prime ministers and their central bankers gathered in London In April of 2009, if you remember, and they all agreed to refinance. To refinance, to refloat finance, essentially. Socialism for the bankers. At the same time, every single Western jurisdiction imposed austerity on its people. So you have this combination of austerity for the many, depressing demand for goods and services and lots of money for the, for big capital. Because this, you know, all the money that, that the central banks were printing and giving to the bankers of Wall street, of Frankfurt, of London, of Paris and so on. I was flowing to the big, to the big business now, traditional big businesses like General Motors, General Electric, Volkswagen and so on. They looked outside the window of their skyscrapers and they saw impecunious masses. These people have no money. As if I'm going to invest in production lines that would produce, you know, snazzy new expensive products. They won't be able to afford it, the many. But they still took the money from the central bank and rushed to, to the stock exchanges to buy back their own shares. So you know, if you are Volkswagen, you don't want to produce expensive cars because the many can't afford them. But the central bank gives you free money. So what do you do? You buy Volkswagen shares similar in the United States. That creates no investment, no good quality jobs, but it creates a very nice little earner for the capitalist. And here is the crux. The only capitalists who actually took this money and invested it in machines were the Jeff Bezos, the Elon Musk's, the Googles, the Microsofts, the Nvidias, the Intels of the world. Nine out of every ten dollars that they invested in cloud capital, in Meta, in Google and so on. Nine out of every $10 has come from money that was printed by the Fed, by the central bank.
- [50:47]
Chris Hedges
And as you point out in the book, they didn't make profits.
- [50:50]
Yannis Varoufakis
They didn't need to make profits because it's all rent. Yeah, that's the thesis in my book. So essentially society paid for the cloud capital of the new masters of the universe who are no longer the bankers so much, but they are the owners of cloud capital whom I have decided to call cloudalists because I like the term comes from Star Trek, but that's another story.
- [51:18]
Chris Hedges
Yeah, you do have Star Trek in there. What do you have the Borg in there? Right?
- [51:23]
Yannis Varoufakis
I'm techie. What can I do?
- [51:27]
Chris Hedges
I would put my wife on, she's a total techie. Okay, I want to talk about how you end the book, about how we're going to fight back. You have kind of on the ground experience as the finance minister with Syriza when the international banking system decided to strangle Greece and Actually accelerate the selling off of assets and everything else. It was a horrible story, which is another show. But you know, how do we, I mean, these monoliths are global. They've completely intruded on every level, as you point out in your book, into our lives. You know, how do we recapture our own autonomy and control over the economy?
- [52:22]
Yannis Varoufakis
Through combining traditional collective action with cloud capital. We need to use the weapons, the tools of the enemy. We always did. The Marxist left was never about destroying the machines, it was always about taking over them. So let me give you a very, very practical example, because you mentioned Greece being squeezed and squashed and effectively put into debtors prison by the international financial community. If you can call them a community mafia, I would call them. So I only spent five and a half months in the Ministry of Finance. My number one priority was to prepare for the clash, for the rupture. And technically speaking, that took the form of preparing a parallel payment system, a digital payment system using our own home produced cloud capital so that we can use the tax office. The idea was since the central bank was not ours, it belonged to them. Our central bank was not ours, it belonged to Frankfurt. It was working against the Greek people. Imagine having a central bank that works against your people as an occupying force. But I control the Finance Ministry. Well, in principle, in theory, not in reality, but anyway, the idea was, imagine if one day you wake up and your tax file number is also a digital bank account, a digital wallet which you can download from the App Store, the Apple Store or Google Play or whatever, and you get a PIN number and you can make payments from one tax file number to another. Suddenly you have a parallel payment system that the bankers cannot control. So that was what I was working day and night to produce, to have it ready for the moment of the rapture. So this is an example of how you can use cloud capital and to combine it with a public system that belongs to the demos. In other words, that can be. It is not necessarily, but it can be democratized. That's one strand of my answer to your question. The other one is when it comes to collective action in the traditional industrial action sense, Chris, you know, ever since I was very young, I was in awe of the Trades Unionists in the United States, in Britain, in Greece, in around the world of the 19th century, because they were heroes and amazing heroes to think about it. You know, to, to unionize back then meant a very high probability of being beaten up, of being killed. And even if you weren't beaten up or killed physically, then you know, during the strike your family was starving because, you know, it was a hand to mouth existence, no wages, no food on the table. And yet, and despite the fact that the probability of personal gain from going on strike was tiny, and even worse, you are facing the strike breakers, the scabs, as we call them in England, right, who were working with the employer to break your strike. And if you manage to secure a 5%, 10% pay rise from your employer, the scabs would get it too. So in terms of cost benefit analysis, it is just a miracle that there was ever a single union, ever, or a single strike. That's what I was feeling always. So this cost benefit analysis has to change. It has to be rebalanced. Instead of having maximum personal sacrifice with very iffy, minuscule personal gain from collective action, we need to use cloud capital in order to rebalance that so that the working class, the cloud serves, the people without power can actually gain some power. So one thing that I always believed, especially while I was writing this book, and I tried to articulate this in the last chapter, plus in a novel that I wrote before publishing, Technofeudalism, it's called another. Now look, I plugged it. The idea there is to combine traditional forms of industrial action with consumer boycotts and even attacks at the financial instruments of the cloudelists, of the capitalists, of the private equity, particularly private equity owners of the big corporations. So let me give you a simple example. For some time I was looking at the way in which private equity, Remember how I was saying that they would buy a water authority or an electricity company and then saddle it with debt and try to squeeze payments out of workers, out of customers in order to repay those debts. Because the money that they borrowed all went into the pockets of the shareholders. Now the way they do it through financial engineering is they place these debts inside financial derivatives. If you can unpick those financial derivatives. If we had a team of 50, 100, 200 progressive lefty financial engineers, and these people exist, These people exist. I've met a lot of them. They would love to be part of a movement, you know, to redeem their soul, if anything else, for everything they've been doing all these years, right? And you could unpick and find out which of these derivatives are vulnerable, vulnerable in the marketplace. If you reduce the payments that go from the workers or from the customers to repay chunks of the debt within those financial derivatives. And you can do this by either having a strike or having, let's say consumer boycott or a payment strike, the you know, the people of Yorkshire do not pay their water bill for a month because we organize them along with workers that strike. That combination of traditional collective action with new financial measures or campaigns and consumer boycotts that can be organized through Instagram, through Facebook, through Twitter, whatever, that can redress this awful cost benefit in favor of the weaker forces in society. So. But that takes a lot. So in other words, we need to become experts in cloud capital, in financial engineering. It's not enough to be experts at organizing auto workers.
- [59:01]
Chris Hedges
Great. Thanks, Yannis. That was Yannis Verofakis on his book Techno Feudalism what Killed Capitalism. I want to thank Sophia, Diego, Thomas and Max who produced the show. You can find me at chrishedges.substack.com sa.