Capitalism is now dead, in the sense that its dynamics no longer govern our economies. In that role it has been replaced by something fundamentally different, which I call technofeudalism. At the heart of my thesis is an irony that may sound confusing at first but which I contend makes perfect sense: the thing that has killed capitalism is… capital itself. Not capital as we have known it since the dawn of the industrial era, but a new form of capital, a mutation of it that has arisen in the last two decades, so much more powerful than its predecessor that like a stupid, overzealous virus it has killed off its host. What caused this to happen? Two main developments: the privatization of the internet by America’s and China’s Big Tech. And the manner in which Western governments and central banks responded to the 2008 great financial crisis.
If we do pay attention, it is not hard to see that capital’s mutation into what I call cloud capital has demolished capitalism’s two pillars: markets and profits. Of course, markets and profits remain ubiquitous—indeed, markets and profits were ubiquitous under feudalism too—they just aren’t running the show anymore. What has happened over the last two decades is that profit and markets have been evicted from the epicenter of our economic and social system, pushed out to its margins, and replaced. With what? Markets, the medium of capitalism, have been replaced by digital trading platforms which look like, but are not, markets, and are better understood as fiefdoms. And profit, the engine of capitalism, has been replaced with its feudal predecessor: rent. Specifically, it is a form of rent that must be paid for access to those platforms and to the cloud more broadly. I call it cloud rent. As a result, real power today resides not with the owners of traditional capital, such as machinery, buildings, railway and phone networks, industrial robots. They continue to extract profits from workers, from waged labor, but they are not in charge as they once were. They have become vassals in relation to a new class of feudal overlord, the owners of cloud capital. As for the rest of us, we 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, when we get the chance.
This great transformation, triggered by capital’s recent mutation, comes three centuries after capital’s original triumph in transforming feudalism into capitalism. Capitalism prevailed when profit overwhelmed rent, a historic triumph coinciding with the transformation of productive work and property rights into commodities to be sold via labor and share markets respectively. It was not just an economic victory. Whereas rent reeked of vulgar exploitation, profit claimed moral superiority as a just reward to brave entrepreneurs risking everything to navigate the treacherous currents of stormy markets. Nevertheless, despite profit’s triumph, rent survived capitalism’s golden age in the same way that remnants of the DNA of our ancient ancestors, including long-extinct serpents and microbes, survive in human DNA. Capitalist mega-firms, like Ford, Edison, General Electric, General Motors, ThyssenKrupp, Volkswagen, Toyota, Sony and all the others, generated the profits that outweighed rent and propelled capitalism to its dominance. However, like remora fish living parasitically in the shadow of great sharks, some rentiers not only survived but, in fact, flourished by feeding on the generous scraps left in profit’s wake. Oil companies, for example, have raked in gargantuan ground rents from the right to drill on particular plots of land or ocean beds—not to mention the unearned privilege to damage the planet at no cost to themselves.
posted by f.sheikh