Nov 14, 2023 20:00:00

“Is capitalism dead?” How has the world economy changed with the emergence of big tech such as Apple and Amazon?

Economist

Yanis Varoufakis , who also served as Greece's finance minister, points out that ``existing capitalism is being replaced by techno-feudalism.''

Is capitalism dead? Yanis Varoufakis thinks it is – and he knows who killed it
https://theconversation.com/is-capitalism-dead-yanis-varoufakis-thinks-it-is-and-he-knows-who-killed-it-213992

Mr. Varoufakis grew up under the dictatorship in Greece from 1967 to 1974, became a professor of economics, and briefly served as Greece's finance minister in 2015. Varoufakis' father, a chemical engineer who worked in a steel mill, seems to have instilled in Varoufakis a critical appreciation of how technology drives social change. Mr. Varoufakis also said that his father instilled in him the belief that ``capitalism and true freedom are opposites.''

When Mr. Varoufakis' father first encountered the Internet in 1993, he told his son, ``Computers can now communicate with each other, and this network will make it impossible to overthrow capitalism.'' Or will it become capitalism's Achilles' heel?''

Since then, Varoufakis has continued to seek answers to this question. His book, Technofeudalism: What Killed Capitalism , answers this question.

In “Techno-feudalism: What Kills Capitalism,” Mr. Varoufakis writes, “We no longer live in a capitalist society,” and “(traditional capitalism is) a technologically advanced feudal system. 'It is changing,' he claims.

A traditional capitalist is someone who can generate income in the form of profits by making full use of capital such as factories, machinery, raw materials, and funds and by putting workers to work. While it's clear that these capitalists are still thriving, Varoufakis argued that 'traditional capitalists are not driving the economy the way they used to.'

Varoufakis argues that traditional capitalists have become 'vassal capitalists.' Specifically, capitalists have become subservient and dependent on the new rulers, Big Tech, which generate vast amounts of wealth through new digital platforms.

Varoufakis points out that the current market is 'being replaced by digital trading platforms that resemble markets but are not markets,' and uses services like Amazon as an example of this 'digital trading platform.' I am listing it. Varoufakis points out that if you start using these platforms, ``you will be leaving capitalism and entering something similar to feudalism (techno-feudalism).''

In the case of Amazon, which is one of the ``digital trading platforms'', the platform side, not the seller (capitalist), decides ``how to sell products'' and ``which customers can be approached.'' Mr. Varoufakis argues that sellers will be dependent on these 'rules' that are unilaterally determined by the platform, making them subordinate and dependent on Big Tech. Big Tech can kick out sellers if they don't follow the established sales methods. If mobile app developers are kicked out of the App Store or advertising companies are removed from Google's advertising business, it's no wonder businesses are out of business.

Additionally, access to the platforms (digital fiefdoms) built by Big Tech incurs exorbitant fees. For example, in the case of Apple's App Store, third-party developers are charged a 30% commission on sales, and Amazon also charges third-party sellers a 35% commission on sales. Varoufakis points out that this is 'very similar' to medieval feudal lords who commandeered most of their serfs' crops because they owned the land and everything in it. Masu.

Big Tech platforms are clearly exempt from free market competition, Varoufakis said, increasing their wealth and power at a dizzying pace every time a user clicks on an object on the platform.

Varoufakis says even bigger changes are on the way. At the heart of that transformation are cloud-connected devices and services such as smartphones, laptops, Alexa, Google Assistant, and Siri. These help train the algorithms underlying cloud services, allowing users to benefit even more from the enhanced algorithms. This feedback loop shapes user desires and behavior, allowing Big Tech to create more wealth.

For this reason, Mr. Varoufakis described users of cloud services as 'cloud serfs.' In cloud services, users are both consumers and capital, so the more users there are, the more technology companies can improve their ability to generate wealth from them and increase their influence. Varoufakis said, ``Traditional capitalist conglomerates used to spend about 80% of their income on employee salaries; today, Big Tech spends less than 1% of their income on employee salaries.'' ” he said.

The driving forces behind this dystopian change were the shift from Web 1.0 to Web 2.0 , the privatization of Big Tech in the US and China, and the economic restructuring in the aftermath of the global financial crisis. 'Central bank funds that were supposed to be floated were lent to large corporations,' Varoufakis said. With the privatization of Big Tech and the massive amount of investment that has gone into it, Big Tech stock prices have risen to astronomical levels.

Central bank money, which was meant to fuel the engine of the global economy, has given way to boosting the profits of Big Tech and has given way to new forms of capital (cloud capital). ) and the emergence of a new ruling class (Big Tech), Varoufakis points out.