Yanis Varoufakis’s ‘Technofeudalism’: A review by Boris Kagarlitsky

First published in Russian at /spichka. Translated by Dmitry Pozhidaev for LINKS International Journal of Socialist Renewal. Boris Kagarlitsky wrote this review from a Russian penal colony, where he is currently serving a five-year sentence for his opposition to Russia’s war on Ukraine.

Technofeudalism: What Killed Capitalism
Yanis Varoufakis
Penguin

Books that reach a prisoner are always important. They are read attentively, without skipping details that, in the outside world, would probably escape our notice. Yet I think the book by Greek economist and left-wing politician Yanis Varoufakis, Technofeudalism, which was sent to me some time ago, deserves attention regardless of the circumstances in which we read it.

Alongside Nick Srnicek’s Platform Capitalism and Shoshana Zuboff’s The Age of Surveillance Capitalism, this work represents an attempt to provide a broad account of the transformations that have already taken place in the economy and society as a result of new technologies: the internet, artificial intelligence, cloud data storage, messaging applications, social networks, and so forth.

Varoufakis enjoys a distinct advantage here. First, his book is superbly written and, it should be added, excellently translated into Russian by A. Snegirov under the editorship of A. Kvachko and A. Pavlov, who also contributed an afterword. Second, rather than focusing exclusively on technology, Varoufakis demonstrates how these new economic practices are connected to the crisis of 2008-10, known as the Great Recession.

When the crisis erupted across the world in 2008 (having already struck the US housing market and banking sector in 2007), most analysts, including many liberals, agreed that major structural reforms were inevitable, many of them resembling proposals long advocated by the left. Yet this did not happen. The crisis was “extinguished” simply by flooding the economy with money.

This occurred everywhere, though on different scales, with the US Federal Reserve playing the central role. In many countries — including Greece, where Varoufakis, after teaching at a US university, briefly served as finance minister — the private debt crisis was transformed into a public finances crisis. Governments, in rescuing banks, pushed themselves to the brink of bankruptcy. Yet the basic characteristics of the system appeared unchanged. Everything seemed to continue as before.

At least, that is what we thought. Varoufakis argues the situation was rather different.

The defining feature of the anti-crisis policies of 2008-2010 was that generous financial support for banks and corporations was accompanied by austerity measures imposed on ordinary citizens. As a result, the rescued companies and financial sector as a whole found themselves sitting on mountains of money with nowhere productive to invest it. Impoverished households and governments preoccupied with saving the banking system were no longer generating sufficient demand for goods. In fact, this was a classic case of capital overaccumulation, one already described by Rosa Luxemburg. Such crises of overaccumulation usually lead, over time, to a redistribution of resources among industries and countries. And this time was no exception.

Funds that, under different circumstances, might have been directed toward industry, agriculture or social infrastructure instead flowed into firms developing and deploying new technologies. A social network, for example, requires relatively little investment compared to building new factories, while appearing entirely free to users already battered by the crisis. Yet those same users generate content and information that raise the platform owner’s market valuation. Around these networks emerge platforms for classified advertisements, advertising services, taxi coordination and countless other activities. All of this generates revenue.

This gave rise to what Varoufakis, by analogy with cloud data storage, calls “cloud capital.” Its prosperity no longer depends primarily on profits from the sale of goods but on rent extracted from other businesses that sell products and communicate with customers through the platform. Varoufakis places particular emphasis on this point, arguing that rent has triumphed over profit. At the same time, the mass of users enjoying free access to these networks continually fills them with content and data, valuable and otherwise, which in turn fuels further business expansion. Companies that sell goods through the networks can no longer leave them without risking the loss of customers.

As for the redistribution of influence among countries and regions, Varoufakis highlights Europe’s relative decline. Europe lacks homegrown giants comparable to Amazon, Google or Meta, while the clear winners have been the US and China, the latter having built its own digital networks that, in some respects, are even more powerful than their US counterparts. I would add that, in this context, Russia also appears relatively successful due to the creation of platforms such as Yandex. Whether these platforms are truly “ours” is another matter. Varoufakis calls China and the US “cloud fiefdoms”, predicting a struggle between them for global dominance.

Up to this point, I found myself agreeing with virtually every sentence Varoufakis wrote. Then the problems began.

Feudalism?

Had Varoufakis used the term “technofeudalism” merely as a metaphor, there would have been little reason for controversy. Unfortunately, he devotes an entire chapter to proving the political-economic and sociological validity of the term. As we shall see, several other problems follow from this framework. These are serious problems, not only from the standpoint of theoretical analysis but in terms of political strategy.

For Varoufakis, feudalism is essentially an economy based on rent. Unfortunately, history tells a rather different story [see Additional Remarks below]. Rentier relations tend to develop precisely when the bourgeois order begins to successfully undermine and displace feudal structures.

In classical feudalism, the system is based on the direct extraction by lords of the agricultural product produced by peasants, whether through labour services (corvée) or payments in kind. Second, there is no private ownership of land in the modern sense. The manor is not the property of the lord but rather his possession. The issue is not simply that the land can be confiscated if the vassal fails to fulfill their obligations, as happened when French kings seized Aquitaine from their English relatives. More importantly, the same land could simultaneously belong, in different respects, to the king, the lord and the village community. Each possessed certain rights over it, and the balance among these rights made possible the reproduction of both social and productive relations.

Even a large manor could not produce everything it required. As a result, some surplus would be sold on the market to obtain goods that could not be produced locally: metal, salt, luxury goods for the lord’s household, and so forth. In this sense, Fernand Braudel was entirely correct in arguing that a purely self-sufficient natural economy never existed. Trade and exchange were always present. However, monetary relations remained marginal in relation to the feudal economy as a whole.

Around the 11th century (somewhat earlier in certain regions, somewhat later in others), advances in stone construction technology enabled feudal lords to build castles (castellations), thereby intensifying the exploitation of the peasantry. Around royal castles, towns gradually began to emerge.

It was in these towns, known as burgs in German and bourgs in French, that monetary trade and bourgeois social relations began to develop. As new opportunities opened up, the needs of the feudal lords also grew. Yet the existing order itself became an obstacle. Not only could little money be extracted from peasants, but vassals generated no monetary income either, since they fulfilled their obligations through military service or various forms of labour and in-kind duties. They might maintain a road or a bridge, for example, while even today the administrators of New College are still required to oversee the maintenance of Oxford’s city wall.

Seeking cash revenues, kings introduced ever more taxes, while feudal lords, lacking such powers, attempted to replace labour services and payments in kind with monetary dues. Yet the process was far from straightforward. The obstacles included not only peasant resistance but also the absence of private property in land. Land could neither be freely divided nor sold, nor could it be “repurposed,” for example from grain cultivation to more profitable commercial crops. After the crisis of the 14th century, which thoroughly destabilised the medieval economy, a new social order gradually began to prevail: bourgeois relations.

Landowners either began producing commodities for the market themselves, becoming what Richard Lachmann called “capitalists in spite of themselves,” or they leased their land to entrepreneurial farmers who likewise produced for sale. Common lands were enclosed and people were driven from their traditional homes. This was the famous English Enclosure Movement, which did not occur in the 18th century, as Varoufakis suggests, but roughly two centuries earlier. To be sure, Scotland experienced its own wave of clearances in connection with its integration into Britain at the end of the 18th century, but this was a far more localised phenomenon that did not even affect most of the Scottish Lowlands.

What matters is that it was precisely during this period, alongside the spread of capitalist relations, that Eastern Europe witnessed the “second serfdom,”1 while the Americas saw the expansion of plantation slavery. The coercive character of these social relations lay in the fact that serfs and slaves, unlike peasants under classical feudalism, produced commodities for the market. The use of forced labor itself became a competitive economic advantage, as both Rosa Luxemburg and Mikhail Pokrovsky2 argued long ago. Capitalism gradually incorporated surviving feudal elements into its own structure and adapted them to its needs, as occurred in England, or else destroyed them by force, as happened in France.

Indeed, it is precisely the question of capital accumulation, so fundamental to understanding the bourgeois order and its prospects, that Varoufakis largely neglects. This omission has important consequences for his subsequent analysis. But more on that later.

Serfs?

Varoufakis divides the people and firms operating within the world of “cloud capital” into three categories: cloud proletarians, cloud serfs and vassals. The proletarians are relatively straightforward. The companies he describes as “vassals” do, in fact, become dependent on platform owners, although the nature of this dependence differs significantly from feudal relations. In essence, they are tenants renting pieces of virtual space and are compelled to surrender a portion of their profits, much as businesses pay rent to owners of land or commercial premises when they cannot afford to own those assets themselves. The notion of cloud serfs, however, requires closer examination.

On the one hand, by filling digital networks with information and conducting our affairs through them, we perform valuable labour for platform owners without direct compensation. The platform owners, meanwhile, provide us with access free of charge. No one forces either side to participate, although social conditions undoubtedly exert a form of objective pressure by requiring us to live according to certain established rules. Here, it should be noted, Varoufakis appropriately cites Karl Marx. Yet there remains an enormous difference between a peasant performing corvée labour on a landlord’s estate and a modern social media user uploading photographs of a cat or posting stories about a recent holiday.

I am willing to believe that a peasant might have felt a certain satisfaction when looking over a well-ploughed field. Modern users, however, often derive genuine enjoyment from what they do online. More importantly, they themselves decide what to post, what information to seek and how to interact. Anyone familiar with psychology can easily identify manipulation, incentives and subtle mechanisms encouraging people to behave in particular ways. There is certainly no freedom here in any deep existential sense. Yet what matters for our discussion is the absence of direct coercion.

Continuing the comparison with serfdom, one should note that users retain the ability to move from one platform to another. In Russian history, serfdom fully triumphed only after the abolition of Yuriev Day, which had allowed peasants to transfer from one estate to another.3 Landowners themselves sometimes took advantage of this mobility, dismissing unsatisfactory workers or luring peasants away from neighbouring estates. For users of digital platforms, however, no one has yet abolished their equivalent of Yuriev Day. To be sure, significant efforts are underway in China to bind users more tightly to ecosystems such as WeChat; meanwhile, Russian officials appear eager to emulate aspects of this model. Yes, the situation in the West remains different. Indeed, we can observe in real time how users migrate away from X (formerly Twitter) after Elon Musk altered its rules and dramatically reduced staffing levels.

The combination of voluntary user behaviour, indirect pressures and often imperfect forms of manipulation creates the heterogeneous and contradictory environment of contemporary digital life. Some social contradictions are simply reproduced online; others arise from the very nature of modern information technologies. This recalls a long-running debate among Marxists: is the personal computer a means of production or a consumer good?

In reality, it is simultaneously both. As a consequence, the boundary between working time and free time, so central to the industrial age, becomes increasingly blurred. This distinction was fundamental to industrial society but far less obvious in many pre-industrial social formations.

The issue extends far beyond office workers playing Tetris or killing virtual monsters during work hours and then handling business matters from home after leaving the office. More fundamentally, we are witnessing a shift from the exploitation merely of labour power, that is, the capacity to work, toward the exploitation of the entire personality, including its intellectual and creative capacities. Soviet scholars Marat Cheshkov and Viktor Krylov argued as early as the late 1970s that the emerging forms of production increasingly draw upon dimensions of human activity that cannot easily be separated into discrete categories of labour and leisure. The object of exploitation is no longer simply labour power but the broader human capacity for communication, creativity, knowledge and self-expression. On the surface, labour appears less alienated. Yet in essence, alienation reaches a new and deeper level.

Utopia?

The final section of Varoufakis’s book, “Escape from Technofeudalism,” is highly enjoyable reading. Yet it leaves unanswered the very question posed in its title: how do we escape our present condition and move toward a different social order?

Most of the book takes the form of a dialogue with the author’s deceased father. Reading these passages carefully, I found myself involuntarily recalling my relationship with my parents, which in many respects resembled what Varoufakis describes. Toward the end, however, another figure from the past enters the narrative: a conservative London eccentric who demands that the clever Greek explain how socialism would actually function.

A London pub is hardly the ideal venue for such discussions, and the author candidly admits that he was caught off guard and unable to provide a satisfactory answer. Later, attempting to make up for this missed opportunity, he undertakes to describe life in a future society. Unfortunately, the drunken London sceptic is unlikely to ever read Technofeudalism and, perhaps, unlikely to read any books at all. Consequently, the story once again becomes addressed primarily to the author’s father.

The resulting vision is undeniably attractive. Digital money frees us from dependence on banks because all transactions pass through a common clearing system. Information is universally accessible. Virtual platforms belong to territorial communities. Companies are organised through worker self-management. Similar “teal organisations” already exist in today’s world, although they remain private enterprises. In Varoufakis’s utopia, they become cooperative and social institutions.

I do not deny that life in such a society would be pleasant. What immediately stands out, however, is the absence of any discussion of long-term planning, investment, who decides priorities or how resources are allocated. Varoufakis’s market socialism turns out to be excessively market-oriented, while his democracy remains confined largely to the sphere of production. Self-managed enterprises interact primarily through markets.

But what about the public interest? The sum of private and group interests has never been equivalent to society’s collective interest. The history of capitalism demonstrates this abundantly.

If, in describing the contemporary order and the power of the cloud oligarchy (which, in my view, the author mistakenly labels “technofeudalists”), Varoufakis pays little attention to the process of capital accumulation that underpins the reproduction of the system, then, when turning to socialism, he similarly neglects the mechanisms of development. The resulting picture is entirely static, as is often the case with utopian visions. The problem is that, first, democratic socialism is impossible without democratic planning; and second, that the need for planning and coordination of development programs arises from the very conditions of today’s global crisis of reproduction, regardless of our ideological convictions.

I fear that if Varoufakis were to return to that London pub and once again encounter his half-intoxicated interlocutor, he would still fail to convince him. Inevitably he would be confronted with the question: “All of that sounds wonderful. But how do we get there?” How do we transform existing corporations and platforms rather than imaginary ones? How do we socialise financial institutions and financial processes? The discussion inevitably leads back to politics: to restoring economic power to democratic institutions and creating a genuine public sector within production.

Such questions cannot be answered merely through the construction of appealing utopias, although many valuable ideas do emerge in that way. They can only be answered through practice. And, unfortunately, the political practice of the contemporary left remains weak. Consequently, its position in such debates is weak as well.

Whenever I encounter such questions, I take an approach almost opposite to that adopted by the author of Technofeudalism. Rather than beginning with a vision of the future, I propose discussing current problems. By taking steps that transform reality today, we simultaneously shape the characteristics of tomorrow’s society. To mention an uncomfortable example, the measures taken to organise the security apparatus of the Cheka4 during the Russian Civil War influenced the subsequent development of Soviet society far more than Lenin’s ideas about popular armament and self-government in State and Revolution.

That is why, whenever someone asks me, “But what would it actually look like?”, I usually suggest that they formulate five or six issues that genuinely concern them and remain unresolved under contemporary society. The list may range from climate change and migration to academic freedom and access to digital platforms. I then explain, one by one, how the left proposes to address these specific problems. If my answers appear reasonable, attractive and, above all, convincing, I simply say: “Now put all of that together.” The picture that emerges is the image of a new society. I think Varoufakis’s father would have approved of this approach. At least, my own father taught me to think in precisely that way.

A turning point in history?

Having criticised Varoufakis’s attempt to compare the development of cloud capital with feudalism, I nevertheless find it difficult to resist extending the comparison myself, albeit in a very different sense. Remarkably, contemporary late capitalism does indeed reproduce many of the structures and practices characteristic of early capitalism. This reflects the transitional nature of our age.

When I think about the beginning of a similar transition during the 15th century, I can easily imagine a learned Greek arriving from a declining yet highly cultivated Byzantium to teach at a Western European university, perhaps not yet provincial London but magnificent Bologna or even Rome. Observing unprecedented developments unfolding before their eyes, they might have tried to understand them through reference to an even earlier historical experience, namely Greco-Roman antiquity. What appears to us today as a return to feudalism might, from the perspective of that era, have looked like the rebirth of Roman commercial society. It was no coincidence that feudal norms were increasingly replaced by systems derived from Roman law.

This story of the learned Greek is not entirely fictional. Fifteenth-century Italy was filled with intellectuals of Byzantine origin, many of whom left behind a rich theoretical legacy that is, unfortunately, largely forgotten today. Why do I mention all this? Not merely to conclude with the banal observation that “there is nothing new under the sun.” Rather, it is to remind us that despite all the conflicts, crises and suffering of that earlier transitional era, humanity eventually emerged into a social order that we now criticise severely, yet which nevertheless opened new possibilities for development and freedom. One may hope that the same will happen again.

Additional remarks on feudal rent

This is Kagarlitsky’s response to Spichka’s request for clarification as to whether corvée labor and quitrent could be described as "feudal land rent," as Soviet Marxists often did.

The key concept in feudal law is not property but possession. Incidentally, this concept also existed in pre-revolutionary Russian law. Possession was conditional and limited. Alongside it stood another fundamental concept: obligations. Both corvée labour and quitrent were obligations. Moreover, there could be many different kinds of obligations, imposed upon particular families, communities or groups. Some of these obligations were not economic at all or, at least, were unrelated to the extraction of surplus product.

For example, the fellows of New College in Oxford are required to supervise the condition of the city wall. My relative and colleague, Andrei Zorin, complained bitterly about this while working there. He had to climb the wall, inspect it for deterioration, prepare detailed reports, and so forth. Yet the wall has remained standing from the 13th century to the present day.

Feudal lords, in turn, had obligations toward local communities, including arrangements for the shared use of resources, hunting grounds and other common assets. A knight, for example, could not fortify his castle without permission from his superior lord. He needed what was known as a “license to crenellate.”

Beginning in the late 12th century, however, feudal lords increasingly sought to transform possession into property. In other words, they attempted to free themselves from the obligations attached to possession and effectively privatise the assets entrusted to them. At the same time, peasant obligations were increasingly monetised. Traditional duties in kind were replaced by monetary payments. The peasants resisted this process vigorously, since they often lacked access to silver currency. In effect, the feudal lord was pushing the peasantry into the market, both literally and economically. Through this process, the countryside became subordinated to the town, and traditional social relations increasingly yielded to urban, bourgeois ones. Peasants resisted.

The legends of Robin Hood are not primarily about robbing the rich to give to the poor. They describe, in considerable detail, resistance to monetisation and privatisation. This included resistance to the collection of taxes in money, one of the most important instruments of market-oriented reforms promoted by the state. The chronology of the Robin Hood stories is revealing. In earlier versions, the events are set in the late 13th and early 14th centuries. In later retellings, however, they are moved backward to the late 12th and early 13th centuries. Why? Presumably because by the late 14th century resistance to monetisation had largely been defeated, and these struggles had already become “the tales of a distant past.”

Soviet Marxism generally possessed highly simplified, and often factually inaccurate, conceptions of feudalism. This stemmed in part from efforts to portray Russian serfdom of the 18th and 19th centuries as a “survival of feudalism” rather than as a form of coerced labour specific to commercial capitalism, following the interpretation of Mikhail Pokrovsky.

• 1

  The Second Serfdom refers to the intensification of serf labor in Central and Eastern Europe between the sixteenth and nineteenth centuries, at a time when serfdom was weakening or disappearing in much of Western Europe. Historians often associate it with the expansion of export-oriented agricultural production.

• 2

  Mikhail Pokrovsky (1868-1932) was a leading Soviet Marxist historian who interpreted Russian serfdom as a form of coerced labor linked to the development of commercial capitalism rather than simply a survival of medieval feudalism.

• 3

  Yuriev Day was a period in medieval Russia during which peasants were legally permitted to leave one landlord and transfer to another. The gradual abolition of this right between the late 16th and 17th centuries was a key step in the consolidation of Russian serfdom.

• 4

  The Cheka was the first Soviet secret police and state security agency, established in 1917 during the Russian Civil War. Its organisational structures and methods had a lasting influence on the development of the Soviet state.