This piece originally appeared in the Washington Free Beacon.
For as long as there has been "capitalism," there have been observers predicting its demise—most famously Karl Marx himself, who helped popularize the term. Nearly a century later, James Burnham foresaw a "managerial revolution," in which control over production would be taken over by a new class of administrators and technocrats, while Joseph Schumpeter prophesied that capitalism would be undone by its very success as intellectuals and industrialists turn against it. While Marxist writer Fredric Jameson observed that it is easier to imagine the end of the world than the end of capitalism, plenty of thinkers would counter that witnessing the end of capitalism requires not imagination but simple observation of, as Burnham put it, "what is happening in the world."
With Technofeudalism: What Killed Capitalism, Yanis Varoufakis joins this strange canon, arguing that capitalism has disappeared right under our noses. Varoufakis, who rose to global prominence as Greek finance minister during the country’s debt crisis, is a self-proclaimed "libertarian Marxist," and Technofeudalism is as intriguing and puzzling as his label, though it does not ultimately persuade.
Varoufakis contends that new technologies have over the last decade put an end to capitalism. But, contrary to what conventional Marxists promised, it has managed to be replaced by something even worse. Under capitalism, the owners of capital are supposed to compete with each other, pursuing profits in the market. But markets—the forums in which buyers and sellers directly engage with each other—have been overtaken by digital platforms that control every feature of these previously free transactions; think of Amazon or Apple’s App Store. And this establishment of digital "fiefs" has in turn eliminated profits—the surplus revenue that drives one to beat the competition. Through their intermediation in these digital transactions, fiefs can take a cut from every sale without producing anything themselves. This cut constitutes a "cloud rent," rents being any money gained through a privileged position that competition would have eliminated.
