How Techno-Feudalism Killed Capitalism w/ Yanis Varoufakis

Summary

In this insightful discussion, Yannis Varoufakis, economist and former Finance Minister of Greece, argues that capitalism has effectively been replaced by a new system he terms 'techno-feudalism.' He explains that traditional capital, which refers to the means of production, has mutated into a form of cloud capital dominated by tech giants. This new variant of capital modifies behavior and replaces markets with digital platforms, creating a system where a few tech lords extract rents rather than profits. Varoufakis details how this shift has profound economic and sociological implications, contributing to increased inequality, reduced aggregate demand, and heightened geopolitical tensions, particularly between the US and China, the two main holders of cloud capital. His analysis provides a critical perspective on the transformation of economic power and its impact on society.

Takeaways

• 📈 Capitalism has evolved into a new system where capital, particularly in the form of technology (Cloud Capital), has become so dominant that it has transformed society beyond traditional capitalism into what is termed 'techno-feudalism'.
• 💡 The concept of capital has shifted from physical means of production to digital platforms and services that modify behavior and extract rents, similar to feudal practices.
• 🌐 The rise of Cloud Capitalism is linked to the privatization of the internet, where digital platforms have replaced traditional markets and have become the new means of production and consumption.
• 💻 The power of Cloud Capital lies in its ability to collect data on consumers, predict their preferences, and influence their buying decisions, creating a feedback loop that strengthens its control.
• 💰 The extraction of rents by Cloud Capitalists, such as tech giants like Amazon and Google, leads to a concentration of wealth and a reduction in the spending power of the general population, affecting economic growth.
• 🚀 The development of Cloud Capital has been unintentionally fueled by state actions, such as the quantitative easing measures by central banks post-2008 financial crisis, which benefited tech companies more than the average citizen.
• 🏦 The payment systems and financial power are increasingly concentrated in the hands of a few tech companies, particularly in the U.S. and China, leading to a new form of geopolitical tension.
• 🛍️ Consumers feel a sense of entrapment with digital platforms, as they become the primary means of purchasing goods and services, often leading to a lack of consumer choice and increased dependence on these platforms.
• 📊 The rise of Cloud Capitalism has significant macroeconomic implications, including the potential for increased economic inequality and a decrease in aggregate demand, which can lead to economic stagnation.
• 🌟 The success of Cloud Capitalists like Jeff Bezos and Mark Zuckerberg has been largely due to the state's financial support, which has allowed them to dominate markets and extract rents from other businesses.
• 🔄 The cycle of creating Cloud Capital involves consumers and producers unknowingly contributing to the capital stock of tech giants by using their platforms, which in turn is used to further entrench their market dominance.

Q & A

What is the central argument of Yannis Varoufakis in the book 'Techno-Feudalism: The Death of Capitalism'?

Yannis Varoufakis argues that capitalism has been transformed to such an extent by technology that it has essentially killed its own system and given rise to a new form of feudalism, which he calls 'Techno-Feudalism'.

What does Varoufakis mean by 'Capital' in the context of his argument?

Varoufakis refers to 'Capital' not as money, but as produced means of production—anything created to produce something else, such as a fishing rod, a tractor, or an industrial robot. Capital, in his view, is at the heart of societal transformation.

How does Varoufakis describe the shift from feudalism to capitalism?

He explains that under feudalism, power and wealth were accumulated by the owners of land, whereas in capitalism, wealth accumulates to the owners of capital, which are the means of production.

What is the concept of 'Cloud Capitalism' as introduced by Varoufakis?

Cloud Capitalism, as described by Varoufakis, is a form of capital that has emerged with the internet and technology. It is a machine designed to modify behavior, functioning on algorithms that live on the cloud and has replaced traditional markets.

How does Cloud Capitalism differ from traditional forms of capital?

Cloud Capitalism differs as it is not a produced means of production in the traditional sense. Instead, it is a machine designed to modify behavior, which is a significant departure from earlier forms of capital like fishing rods or industrial robots.

What role do digital platforms like Google Assistant or Amazon Alexa play in Cloud Capitalism?

These digital platforms act as interfaces connecting users to Cloud Capital. They train users to provide information about themselves, which in turn trains the platform to influence user behavior, ultimately leading to the purchase of goods and services.

How does Varoufakis explain the impact of Cloud Capital on traditional markets?

Varoufakis suggests that Cloud Capital has replaced traditional markets by convincing users to buy products directly through the platform, bypassing the market and extracting a form of rent from both the producer and the consumer.

What is the term 'Cloud Proletarians' as used by Varoufakis?

The term 'Cloud Proletarians' refers to workers in Cloud Capitalism, such as those working in Amazon warehouses, who package and send products to consumers. They are part of the new digital working class under the control of Cloud Capital.

How does Varoufakis view the current economic system in terms of social and economic equality?

Varoufakis argues that the current system, characterized by Cloud Capital, leads to a concentration of wealth and power, which diminishes the living standards and aggregate demand of the majority, creating social and economic inequality.

What are the geopolitical implications of Cloud Capitalism as discussed by Varoufakis?

Varoufakis suggests that the rise of Cloud Capitalism, particularly in the United States and China, creates geostrategic tensions and could potentially escalate into a new Cold War or even a thermonuclear war due to the concentration of power and the potential threat to the hegemony of the US dollar.

Outlines

00:00

📚 Introduction to Techno-Feudalism

The video begins with an introduction to the topic of the economy's transformation in a technological world. The guest, Yannis Varoufakis, an economist and former Finance Minister of Greece, argues that capitalism has been replaced by a new system he calls 'techno-feudalism.' He explains that capital, which he defines as produced means of production, has mutated and become so powerful that it has overtaken the host system of capitalism itself.

05:00

💰 The Misunderstanding of Capital

Varoufakis clarifies the common misconception that capital is money. He explains that capital is actually the means of production, and that money has existed for thousands of years before capitalism. He uses historical examples to illustrate how power has shifted from landowners in feudalism to capital owners in capitalism. He also introduces the concept of 'Cloud Capital,' which he argues is a new form of capital that modifies behavior.

10:01

🛍️ The Impact of Cloud Capital on Markets

The speaker discusses how Cloud Capital has changed the way markets function. He describes digital assistants like Google Assistant or Amazon Alexa as interfaces to Cloud Capital that serve not as servants but as mechanisms to collect personal data. This data is used to influence consumer behavior and make purchases directly through the platform, bypassing traditional markets. This leads to the creation of a new class of 'cloud proletarians' who work for companies like Amazon.

15:05

📈 The Rise of Techno-Feudal Lords

Varoufakis explains that Cloud Capital has given rise to 'techno-feudal lords' like Jeff Bezos, who act as digital landlords, extracting rent from the producers and consumers within their digital platforms. He discusses the feedback loop between individuals and these digital platforms, which are designed to train users to provide information that can be used to influence their behavior and purchases.

20:05

🌐 The Global Reach of Cloud Capital

The conversation touches on the geopolitical implications of Cloud Capital, with a focus on the United States and China as the main players. Varoufakis discusses the lack of European equivalents to major tech companies and the potential for conflict due to the concentration of Cloud Capital in two countries. He also addresses the potential for a new Cold War fueled by economic and technological competition.

25:08

💵 The Monopoly of Payment Systems

The guest delves into the importance of the dollar as the world's primary currency and the potential threat posed by China's digital payment systems, like WeChat. He explains how the U.S. maintains its hegemony through the dollar's status in international payments, and how the development of alternative digital payment systems could challenge this. The discussion also highlights the lack of a similar app in the U.S. and the implications for Wall Street.

30:09

☕️ The Cost of Private Payment Systems

Varoufakis criticizes the private control of payment systems in the U.S. and Europe, where banks charge fees for transactions that have no cost to process. He contrasts this with China's WeChat, which allows free payments, and suggests that this difference poses a significant threat to the traditional banking system and the dollar's dominance.

35:10

🚀 The Unintended Consequences of State Intervention

The speaker discusses the role of central banks, particularly the Federal Reserve, in inadvertently fostering the growth of Cloud Capital through the bailouts that followed the 2008 financial crisis. He argues that the state essentially created Cloud Capital for its owners, leading to a system where digital landlords extract rents rather than profits, marking a shift away from capitalism.

40:13

🛒 The Consumer Experience in the Era of Cloud Capital

The conversation concludes with a discussion on the consumer experience, where the guest expresses a feeling of entrapment due to the convenience of online shopping platforms like Amazon. He highlights the challenges of dealing with these platforms once a consumer is reliant on them, and the diminishing of traditional brick-and-mortar stores.

Keywords

💡Capitalism

Capitalism is an economic system based on private ownership of the means of production and their operation for profit. In the video, it is argued that capitalism has been transformed to the point where it has effectively 'killed itself' by evolving into a new form of economic structure, referred to as 'techno-feudalism.'

💡Techno-feudalism

Techno-feudalism is a term coined by the guest to describe the new economic system that has emerged from the transformation of capitalism. It is characterized by the dominance of cloud capital and the extraction of rents, akin to feudal times, but with technology playing a central role in the control and modification of behavior and the economy.

💡Cloud Capital

Cloud Capital refers to the digital infrastructure and data that is centralized in the cloud, owned by a few tech giants. It is used to modify consumer behavior and extract value, creating a new form of wealth and power that is distinct from traditional capital assets like factories or land.

💡Behavior Modification

Behavior modification is the process of influencing and changing human behavior. In the context of the video, it is used to describe how cloud capital, through algorithms and digital platforms, shapes consumer choices and preferences, leading to the creation of new desires and the promotion of products that fulfill them.

💡Market Displacement

Market Displacement occurs when traditional marketplace dynamics are replaced by digital platforms that facilitate transactions directly between producers and consumers, bypassing the traditional market. This is exemplified in the video by the rise of online shopping and recommendation algorithms that dictate what products consumers see and purchase.

💡Surplus Value

Surplus value is the economic term for the profit generated by a capitalist enterprise, which is the difference between the value produced by the workers and the wages they are paid. In the video, surplus value is discussed in the context of how it is extracted as rent by the owners of cloud capital platforms like Amazon.

💡Cloud Proletariat

The term 'cloud proletariat' is used to describe workers in the digital age who are employed by cloud capital platforms, such as those working in Amazon warehouses. They are likened to the proletariat in a feudal system, working to support the wealth and power of the 'techno-feudal lords' who own the cloud capital.

💡Digital Platforms

Digital platforms are online interfaces that facilitate various activities such as commerce, social networking, and content sharing. In the video, they are presented as a new type of marketplace controlled by a few dominant entities, which extract rents from both sellers and buyers, thus controlling the flow of goods and wealth.

💡Geopolitical Tensions

Geopolitical tensions are the political and economic conflicts between different countries or regions. The video discusses how the rise of cloud capital, particularly in the United States and China, has led to a new form of Cold War, as these nations compete for global economic and technological dominance.

💡Monopoly of International Payments

The monopoly of international payments refers to the dominance of the US dollar in global financial transactions. The video argues that this monopoly is under threat from the rise of Chinese cloud capital and its digital payment systems, which could potentially disrupt the established financial order.

💡Austerity

Austerity refers to the policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. In the video, austerity is mentioned in the context of the economic policies implemented in many Western countries following the 2008 financial crisis, which led to social and economic hardships for the general population while benefiting financial institutions.

Highlights

Yannis Varoufakis argues that capitalism has transformed so drastically that it has effectively killed itself, leading to a new system he calls 'techno-feudalism'.

Varoufakis defines capital not as money, but as produced means of production, which are used to create more goods.

He explains that capitalism has mutated into a form so powerful it has overtaken its own system, creating a toxic variant that has led to the rise of technology-based feudalism.

Cloud Capitalism is a term used by Varoufakis to describe the new form of capital that modifies behavior through technology, such as smartphones and the internet.

Cloud Capital has replaced traditional markets by using digital platforms to recommend and sell products directly to consumers.

The power of Cloud Capital lies in its ability to extract rents, similar to feudal lords, from producers and consumers within its digital domain.

Varoufakis discusses how consumers and producers are trained by algorithms to generate more Cloud Capital for tech giants like Amazon and Facebook.

The accumulation of wealth in the hands of a few tech lords is leading to a crisis in the circular flow of income, diminishing living standards and aggregate demand.

The rise of Cloud Capital in China and the US is causing geopolitical tensions, with China potentially offering an alternative to the US dollar's dominance in international payments.

WeChat, a Chinese app, allows for free payments and has capabilities beyond those of Western apps, which is seen as a threat to Wall Street's monopoly on payment systems.

Varoufakis suggests that the US policy towards China, including the confiscation of Russian assets, is pushing other nations to diversify their financial holdings, thereby increasing the significance of Chinese Cloud Capital.

The unintended consequence of the 2008 financial crisis and the subsequent state bailouts has led to the rise of Cloud Capital, funded largely by money printed by central banks.

The current system is not capitalism anymore, but a form of techn-feudalism where state-backed digital landlords charge rents rather than extracting profits.

Techno-feudalism is characterized by high switching costs for consumers and producers, leading to a sense of entrapment within digital platforms.

Varoufakis' book 'Techno-Feudalism: What Killed Capitalism' provides a comprehensive analysis of the transformation of economic systems and the rise of Cloud Capital.

Transcripts

good day and welcome to letters and

politics I'm MIT jerich today we're

going to talk about the transformation

of the economy and a technological world

my guest argues that the transformation

is so complete that has actually killed

capitalism itself my guest is Yannis

varu fakis yianis farus is an economist

former Finance Minister of Greece

currently he's a professor of Economics

at the University of Athens and the

Secretary General of democracy in Europe

movement 2025 dem2 he is the author of

number of books is latest which we will

be in conversation about is called techn

feudalism what killed capitalism jannis

verus joins us from Athens Mr Vera fuus

always good to see you sir thank you for

taking this time well thank you for

having me back it's a great pleasure so

the the death of capitalism um and you

make a very provocative argument that I

said in the technological World killed

capitalism but actually your argument to

be more precise is capitalism killed

itself

almost my argument is that Capital

killed

capitalism uh

Capital by by Capital what I mean is

produce means of production anything we

produce which we produce not in order to

use or to consume but in order to use it

to produce something else like anything

from a fishing rod to uh a tractor to an

industrial robot these are capital goods

that's capital that's what Capital means

you you purchase something to produce

something

more you produce

something which you use to produce

something else that's what capital is

it's a produced means of production like

that's why I give the example of a

fishing rod you create a fishing road to

catch the fish you build the tractor to

plow the land you create an industrial

robot not because you like to use it for

your pleasure but because you use it in

order to produce an automobile

so that's a produced means of production

that's what I mean by capital I don't

think of capital as money it can take a

money form but capital is a produced

means of production and come to think of

it it's at the heart of the

transformation of society 300 years ago

from feudalism to capitalism so under

feudalism it was land if you owned land

and a lot of it then you were the ruler

of the universe right you were the

landlord you were the landed gentry you

were the feudal Lord you had power you

were the Lord the Earl the baron and you

had political power economic power

military power all sorts of power okay

that was feudalism now what's capitalism

capitalism is a system

whereby wealth accumulates not to the so

much to the owners of land but to the

owners of capital of produce means of

production so under feudalism land was

uh the asset which allowed you to

accumulate wealth and power and Capital

it was Machinery it was produced means

of production it was Capital uh so my

thesis to cut a long story short is that

Capital became so triumphant it

triumphed so

strongly um it had no

um living threat from labor from

government from society from Cops it

stream rolled over all of us that it

mutated unopposed Capital mutated and

created a like a virus that mutates into

a more toxic variant which then kills

off its

host Capital became so strong so toxic

such a mutant version of itself that it

killed off its host which is capitalism

and replaced it with techn

feudalism let me just follow up on the

the word Capital again because I think a

lot of people do think and you mentioned

you know that there's a sense that

Capital might mean money do do when we

hear economists say Capital do they all

agree that capital is the production uh

or the purchasing of of something to

produce more of the I guess the

production

itself it's a mistake to think of

capitalis money money existed before

Capital before capitalism let me say

this again it's a mistake to think of

capital as money because let's face it

money was always around for thousands of

years well before capitalism

of course Capital yeah if you own yeah

take Thomas Edison or westing house or

any of the great uh Lords of capitalism

in the early in the guilded age right

where did their power come from from

owning the electricity grid uh the

vertically integrated chain from you

know the light bulb all the way to the

power station or in the case of Henry

Ford the production line he had

everything from um uh steel mills

producing the steel all the way to the

last Model T that he was selling right

of course when you have these means of

production they belong to you when

capital is owned by you then you can

easily translate them into money but to

say that capital is money is a mistake

yeah no that's a very good point I mean

we have coins going back a couple

thousand years uh so so money has been

around for a long

time um of course what we haven't had

for a couple of thousand years is an

internet is an online world is the

technology the the phone the smartphones

and all of these things tell me about

this term you have and you write about

Cloud

capitalism Cloud Capital not Cloud

capital I keep Mex there I go again I I

keep messing these up Cloud

Capital that you know my thesis is is

rather controversial one look what I'm

saying is this uh we always had Capital

even before capitalism like we had money

we had Capital before capitalism so you

know we had fishing rods and we had you

know axes and tools and plows these are

all capital goods produced means of

production we had them since

Antiquity uh capitalism is a system

where power comes from owning these

tools these machines these produce me of

production not from owning land say uh

and the point I'm making is that over

the last 15 20 years since the internet

not since the internet was created but

since the internet was privatized after

the 1990s the first form of of the

internet what I call internet one was

like a common uh it was a capitalism

free zone um those of us old enough to

remember it and to use it even before it

was called the internet remember it as a

splendid digital space where we

collaborated it was a gift exchange you

know I would write a program and give it

to you for free and you would use it

even to this day our listeners will note

that when they go into Chrome into

Safari into whatever uh web browser they

have at the top there is the HTTP column

two slashes and then the URL HTTP is a

program somebody wrote it and didn't

sell it just gave it away so the first

internet was a common but when it was

privatized by big Tech by Facebook by

Google by

the cloud as I call them in my book uh

then then then the internet changed

profoundly so the point I'm making is

this remember I mentioned the mutation

of capital the mutant Capital that

emerged and took over and killed off its

host capitalism well that's what I mean

by Cloud capital and here is the

difference between Cloud capital and all

other forms of earlier or terrestrial

Capital what lives in here and now I'm

pointing to the micro phone my cell

phone so that our listeners know what

lives in here is a form of cloud Capital

which is very different to fishing roads

industrial robots electricity grids in

what sense this is not a produced means

of production it is a produced means a

machine the purpose of which is to

modify Behavior now behavior

modification has always been with us I

mean what you do MIT with your program

is you try to modify the behavior of

people to form them to educate them to

to influence them because that's what we

do whenever we open our mouths we try to

modify people's behavior this is part of

human nature is part of society it's a

discourse orators philosophers priests

uh revolutionaries you know anybody who

opens their mouth has tried to modify

the behavior of others but this is the

first time ever that we have a machine a

piece of capital A produced means that

modifies Behavior so once upon a time it

was just advertisers that's why I use um

as an allegory uh Don Draper the

protagonist the leading character in

madman brilliant man um half drunk you

know decrepit but nevertheless he had

brilliant ideas on how to to make them

buy burgers that they neither need or

want right modify their behavior so that

they actually consume stuff that's what

advertisers did well today it's all done

by a machine and it's not any kind of

machine it's

it's a machine that is essentially

functioning on the basis of

algorithms that live on the cloud now of

course the cloud is not up there it's

down here it's totally terrestrial it

compris server Farms huge server Farms

like factories uh optic fiber cables

cell phon cell towers so it's really

material it's not it's not Airy Fairy

stuff that lives in the cloud we call it

the cloud but it's not the cloud it's

down here on Earth and this is my point

my point is that This Cloud

Capital has done two major things it's

done lots of things but two two are the

major changes that cloud Capital has

brought to our lives the first is that

it has replaced markets

so think about it if you have like I

have a Google Assistant here or an

Amazon Alexa just just test them out

this is my

excuse uh they they present themselves

or C on your phone or Bixby or whatever

they call these assistant

they present those as our servants so we

give it instructions you know wake me up

at 7: in the morning or order some milk

or book me a ticket to fly to New York

right they appear as Servants of us but

they're not they're interfaces that

connect us to the cloud to This Cloud

Capital which

is designed coded so that we train it to

train us to give it information about us

so that it is trained to train us train

it to train us to train it so that it

gives us good advice captures your

attention and then when because it's

given us good advice in the past about

what books to buy what music to to

listen to on Spotify and so on they're

very good I mean they always give me

advice on what to read which I I never

regret following or to what music to

listen to then once they grab their

attention and have impressed us with how

good their advice is they can say you

know if you want to buy you know a an

electric bicycle this is the one to buy

and then you buy it but not only that

not only has it convinced you to buy an

electric

bicycle and this is a machine we're

talking about right but it sells it to

you outside the market once upon a time

when you watched you know a great very

inspired

um advertisement convincing you that you

need a Big Mac you had to go out of the

house go to McDonald's and buy it now

you don't need to go to the marketplace

it is sent to you by the same algorithm

that has convinced you to buy it

bypassing the market and making some CL

I call them cloud proletarians cloud RS

work in an in in an Amazon warehouse to

package the thing and send it to deliver

it to you so markets are out now we have

these digital platforms which are called

Cloud thevs because they're like Thief

Dooms you know Jeff bases does not sell

you anything he simply has enclosed you

and the producer of the electric B

bicycle in the same cloud fish and

extracts 40% of what you pay or 30% of

what you pay for the electric bicycle

basis keeps so the Surplus value of the

capitalist making the the the bicycle is

forfeited as a form of rent by their new

landlord the cloud alist the the techn

fudal Lord Jeff Bezos that's no longer

capitalism welcome to techn feudalism

Jeff Jeff Bezos is a landlord Amazon is

yes he's a landlord digital space of a

cloud Capital made

fif when you coming back to the

algorithms knowing our our preferences

we train it to train well you you said

we train it to train us to are you to

train it to train us to train it at

infinum yeah it's a totally dialectical

relationship we have with them with

these machines all the time it's real

time so does that take it to the the

next step

of and and purpose step do you think of

trying to influence us to buy things we

otherwise wouldn't buy well that's what

the advertisers always did so this is

not new yeah you know Don Draper madman

again was that was his business his

business was to convince you to buy

something that you neither need nor want

and they were very successful of that

you know in the 1950s and the 1960s

the affluent society to use John Kenneth

galra's term was based on that on making

you feel that you are doing something

that you really want um you know by

buying more and more

stuff but in the end you felt like a

guinea pig running on a treadmill So the

faster you went you you didn't go get

anywhere but and so that's

consumerism the profound difference

under

techn feudalism is that now you don't

this is not something that has been

created for you by um a machine it is

something that has been created for you

by this constant feedback between you

and the Machine that is doing two things

at once it is imputing desires into your

head and selling the stuff that satiates

those

desires that is unique that is new that

wasn't happening in the 50s wasn't

happening in the 60s and the fact that

we now have um a a piece of capital that

can modify our

behavior that is monstrously radical to

buy

more modify Behavior to buy more to buy

more but not you know m not just to buy

more but also to get us to produce and

reproduce that cloud capital on behalf

of the cloud list of the owner because

think about it every time you go on

amazon.com not only do you buy stuff

right but you

also post

reviews by posting reviews you are

adding to the cloud capital of Jeff

basis every time you tweet on X we call

it X now Elon musk's ask X you adding to

the Capital stock to the cloud capital

of Elon Musk so that that is also unique

that has never happened before because

in the past Capal goods were being

produced by wage labor so if Henry Ford

wanted a new machine that sort of forged

metal in a way that was conducive to

building the Model T he would have to

order it from the manufacturer of this

machine who would then need to hire wage

labor now you and I and our listeners

are manufacturing Cloud Capital

surreptitiously without even realizing

it maybe we having having fun doing it

Tweeting or posting videos on Tik Tok or

on Instagram whatever but it doesn't

matter whether we're doing it

voluntarily happily or not we are

producing Cloud capital for the people

who use the cloud Capital to extract

magnificent rents Cloud rents from the

rest of society and that is not an

ethical point I'm making it is an

economic point and a sociological point

because given the

immense power to extract this money from

the economy from the circular flow of

income this money disappears because you

know if you give Jeff basis a billion

dollars he won't even notice it he just

it won't register in his mind if I give

you a billion dollars you will notice it

right if you give Jeff beas aill billion

dollars he it won't it it won't compute

right which means he cannot spend it so

he will sit there idly in somewhere in

his financial circuits it will not be

invested will not be spent in the local

shops so this money comes out of the

cirular flow of income and it dumps

dumps the living standards of everyone

and aggregate demand as we econom say

right so which means that as a result of

this the FED has to print more money

even if you have inflation so the crisis

of the system we live in which are

called techn you can call it capitalis

it doesn't matter what we call it in

reality um that crisis gets deeper the

booms and busts get heavier and the

capacity of society to reproduce itself

in a meaningful way to produce social

care education for the many health and

so on

diminishes also it creates huge

geostrategic tensions

because if if you think about it there

are only two countries in the world that

have Cloud Capital the United States and

China and that for me is the reason why

you now have this heightened new Cold

War which may become a new a

thermonuclear war so to understand the

way Cloud capital is changing the world

and is transforming capitalism into what

I call techn falis you can call it

something else uh is to understand

everything that is threatening us at in

our communities but also

globally you mentioned China in the

United States is the only two nations

with Cloud capital is that because

that's that's where the the tech

companies are yes that's that's these

are the two countries whether we like it

or not here in Europe we don't like it

but it's a fact we have to accept it

there's no there's no there's no

European Google there's no European

Facebook there's no European Tesla for

that matter there is no European Nvidia

there is no Europe you know the

Magnificent Seven as you call them in

the United States but in China for every

big Tech

me megga moth you

know Goliath there is a Chinese version

and

indeed the Chinese are ahead of the

United States not so much

technologically but in terms of one

important

parameter there is no clash in China

which resembles the clash between Wall

Street and Silicon Valley in your

country in the United States Wall Street

will never allow Apple or Google to take

over Finance you know Goldman Sachs JB

Morgan Bank of America will nuke Silicon

Valley before they let Silicon Valley

take over their capacity wall Street's

capacity to extract Financial rents from

you uh they will never surrender the

payment system so Visa Mastercard will

never allow they will accommodate apple

as they do with Apple pay and Google pay

and so on but they will be the main

players they will receive the majority

of you know the Lion Share of financial

rents which means that the development

of cloud capital and financial power are

kept separate because of wall Street's

power in China they don't have that so

in China there is an app an

application called

WeChat which doesn't exist in the United

States or Europe or the rest of the

world and it you know wichat can do

anything that our apps can do in the

West like you know the equivalent of

Netflix of Spotify of

Instagram you can post videos you can

watch movies you can listen to music you

can text and which does all that but it

does also something else which no

application in your country can perform

you can make payments to any Chinese

person or actually to anyone who has

maybe German or Dutch people who have

bank accounts inimi in

one Chinese bank accounts you you can

make any payment at zero fee zero fees

that is a very powerful app and the

United States doesn't have that app and

if you sitting in Washington DC and you

are one of the serious policy makers not

the people who contest elections because

they are not the serious ones the Ser

serious ones are behind the scenes not

contesting elections the people who are

in the know okay you would be very very

scared of wi out because

why is America hegemonic one reason of

course is the military that you have

bases in hundreds of countries uh but

the main reason is the exorbitant

privilege of the dollar that the dollar

the American dollar is the only currency

in the world that people want even if

they don't want to buy anything from

Americans uh so you know when I put gas

in my car here in Greece even if it is a

Greek company that I buy my gas from

that has bought you know pet rol from a

French Refinery that got the oil from

you know Algeria there's no American

involved in that still at some point

there has to be a conversion from my

Euros to your dollars so there's going

to be a demand for dollars even though I

am not buying anything that involves any

American company at all this is yeah

that there's only one country in the

world that has this privilege and that's

the United States because it has the

Monopoly of the international payment

system that's the

but now the Chinese even though they

don't necessarily want to challenge the

Monopoly of the dollar that's an that's

an important point but that's an a

separate one even if they don't want it

they have WeChat and they have the

digital currency of the Central Bank of

China that offers a free international

digital instantaneous payment system if

you're sitting in Washington DC and you

are one of those people who asks

themelves a question how we maintain the

hegemony of the United States of America

you look at weat and you look at this

agglomeration this this merger of

Chinese big Tech Chinese Cloud capital

and Chinese finance and you're very

worried about that and that means the

reason why we have a new Cold War this

is why Joe Biden did not overturn the

Donald Trump policy of start who started

by you know Banning Huawei if you

remember NZ uh Trump started the new

Cold War but Joe Biden did not undo it

he trouble charged it with a chips act

and all

that well tell me the the actual threat

and and the power of what it means to

have an app that you can make payments

without without fees I mean obviously as

just a regular person I'm like well I

would like that you know like not to

have to pay for you know to increase the

price of whatever I'm paying

for in the west in the United States but

CL in Europe and elsewhere we

have

surrendered the Monopoly of our payment

system to private bankers and we don't

even think about it twice it is absurd

what we've done it's like you know

giving every road and every sidewalk to

one company that charges you for using

it it is

crazy uh and if you are sitting in Wall

Street you are laughing all the way to

Wall Street from Wall Street you think

my God I mean these idiots out there

these Muppets they've given me a

monopoly over the their own money you

today if if you want to go to Starbucks

and get a coffee you need to have a bank

card so for to use your own money you

need to open an account with a private

company that charges you to use your own

money and what is the cost once upon a

time where there were you know written

checks and and and paper money and there

had to be tellers that give you the

money out okay there was a cost

involved today there's no cost when you

you know when you wave your uh Google

pay over the counter of Starbucks it

costs Google it costs the Bank of

America uh zero precisely zero the cost

of that transaction is zero and you get

charged or the shop gets charged or both

of you get charged now that is a

remarkable

remarkable schin or scam

on behalf of Wall Street now in China

they've done away with that they've done

away with that because the Chinese

Communist Party decided they will do

away with that so we chat allows you to

make free payments so so they had it and

did away with

it but China had it China had that kind

of a system with with fees and then they

did away with it yes of course of course

and they did away with it because they

allowed WeChat to to be used in order to

make free payments uh so imagine if the

United States you

allowed you you know somebody to create

an app on your phone that allowed you to

make you free payments then suddenly

your um your Banker would not be able to

charge you fees uh so you know that that

that is a clear and present danger for

both Wall Street and particularly for

the dollar payment system because the

Americans the Americans the Chinese now

have created an alternative to the

dollar payment system but allow me to

start with you with my theory as to why

is this has this not placed the American

payment system yet there are various

reasons but the main reason and this how

I'm going to try to start with you is

that the Chinese capitalists do not want

that the Chinese capitalists really want

to keep the dollar at the top of the

pyramid the reason is if you're a

capitalist in Shanghai who produces

aluminum right you have a factory

producing aluminum who do you sell it to

to United

States now why can the United States buy

your aluminum given that the United

States is in the red your government is

in the red your country is in the red

you have a trade deficit right what

allows you to maintain this huge trade

deficit and huge budget deficit and not

have an economic crisis other crisis if

they are in the red they have other

countries if they're in the red they

have a a major crisis like you know

Greece has had has and will have well

what allows you is exorbitant Pro

privilege of the dollar you you print

dollars you can print the money I and

you buy the aluminum from so the Chinese

capitalist knows that his profits depend

on your capacity to

dominate the world with your dollar so

the Chinese capitalist does not want the

American dollars hemony to be

sidelined but when the United States

starts a cold war against China when

President Biden

um starts using

the justification of the Ukraine

war to uh essentially confiscate

hundreds of billions of dollars of

Russian

money I'm not judging that whether he

should have done this or not I don't

care about the money of the oligarchs I

would I wish everybody's every oligarch

money was confiscated but I'm simply

making the factual point that the moment

the United States and Europe confiscate

00 billion US of the Russian Central

Bank if you we an emirati a shake in you

know Abu Dhabi or in Saudi Arabia

sitting on a pile of lots and lots of

dollars uh don't you start worrying

don't you start thinking okay today they

didn't like the Russians and they took

away their dollars maybe they will not

like me tomorrow so you start hedging

your bets so you're not going to go all

in take all your dollars and take them

to the Chinese digital

currency system no but you will take

10% to hedge your bets you want to

diversify diversify right diversify I

suppose diversify you know that's that's

what hedge funds do so this this is

what's happening already so the American

policy of confiscating the Russian money

and of embarking on a new cold war with

China is giving the Chinese digital pay

payment system it makes Chinese Cloud

Capital far more significant and the

more sign significant Chinese Cloud

Capital becomes the more agitated people

in Washington DC are and the greater the

escalation of the new war against China

so Cloud capital I insist and that's you

know that's my story and I'm sticking to

it um needs to be understood in order to

grasp not only what happens in our own

backyard but also this geopolitical

tension which we feel is uh pushing us

on the edge of even a nuclear war what

what what is that fear that pushes it

towards I mean you laid out the dynamic

and I get the dynamic that you're that

you're talking about what you have in

China what you have in the United States

um the payment

system I I get I well I kind of get that

of course but but I I largely get it um

but but why would that

cause leaders in Washington DC to react

so

strongly they

understand that American

Power American in Germany depends on the

Monopoly of international payments they

know that it doesn't depend so much on

the prowess of American Business on not

even the American Military you see Back

in

1970 197

1971 Henry Kissinger was at the time

when Richard Mixon was president had

been president for a couple of years he

was not at the state department yet he

was leading the National Security

Council and he was very worried because

as we know Henry kinger was the man that

epitomized the thinking geostrategic

thinking of the American government

doesn't matter whether they were

Democrats Republicans you know he was

asking the crucial questions regarding

the geostrategic power of the United

States and the question that he asked

his staff at the National Security

Council Back in 1970 by means of a memo

he said now that we are in deficit he

meant that now that the United States

because of the the Vietnam War the Great

Society program of LBJ

America had a large deficit trade

deficit it was buying more stuff it was

paying more dollars to

um foreign capitalist selling stuff to

the United States than it was receiving

from selling American Goods to the rest

of the world and kiss understood that

when an Empire goes into the

red its decline begins whether this was

the Roman Empire the Spanish Empire the

Dutch Empire the British Empire the

moment those Empires went into the red

they started declining and that started

in 1968 1969 in the United States so his

great concern was we are now in the red

how are we going to stop ourselves from

declining as a power and a young

man youngish man at the time you will

remember him Paul vuler who later became

the chairman of the FED who was working

for him in 1970 as an advisor

at the National Security Council and an

under secretary in the treasury

Department he wrote back very short very

short answer which was spot on he said

what we must do is we must not practice

austerity we must not do any belt

tightening because that will create a

recession that will precipitate an even

faster decline in the United States what

we must do is we must make sure that the

capitalist from the rest of the world

pay for our

deficits which is exactly what has been

happening in the last three four

decades think about it the United States

has a trade deficit who pays for it

whether it is the German exporters who

export mercedes-benzes to the United

United States it's a Chinese capitalists

who export all that stuff to the United

States they get in return what dollars

now they cannot spend those dollars in

China or in Germany so what do they do

with this money they can take it to Wall

Street where they invest in Us

treasuries in other words they lend

their profits to the American government

or they buy real estate in Miami or in

California or that's that is a great

Boon to American

renters or they buy shares in companies

that in which the American government

the federal government allows them to

buy shares in not all of them right so

this is amazing recycling

the deficits of the United States become

the strength of the United States but

that relies on one assumption that the

dollar is the main payment unit and the

dollar system digital system is owned by

the United States so when they started

looking at the world from their Ivory

Towers in Washington DC and started

realizing that the the CH the Chinese

unlike the Japanese like the Germans

unlike the French unlike the Indians

were developing Cloud Capital which

could because it's merged with Chinese

Finance unlike the United States but

this Cloud Capital could threaten the

Monopoly of international payments that

was the greatest threat for American

Germany and at that point they unleashed

the new Cold War against

China and yet and you write this yianis

verus in your book techn

feudalism Cloud capital is spurred well

spurred is the word I'll use but you can

correct me is is early on key players in

creating it are are G7 countries central

banks and the Federal

Reserve yes but that's that's

completely unintentional you know this

is how history proceeds very often

history proceeds through the power of

unintentional consequences so you will

recall it very vividly even more vividly

than me that in 2007 2008 Wall Street

went pair

shape for reason let's not get get into

why Wall Street collapsed and very soon

after that you had Hank pulson in the

Treasury under George W bush and then

immediately after that it was Obama and

Tim gner in the treasury uh

they started printing masses of money

and

you in order to finance and fund the

bailouts of the bankers that wasn't

enough so in April of

2009 the G7 met in

London under

the chairmanship the eges of Gordon

Brown the then British prime minister so

everybody was there Obama Tim gner Larry

sumers on behalf of the United States uh

the bank of Japan people uh the Japanese

governments the British government the

bank of England the European Central

Bank uh the um you know the chancellor

of Germany they were all there and they

decided to save the bankers collectively

so the they gave the order of the green

light to their central banks the fed the

ECB the bank of Japan the bank of

England the bank of Switzer the bank of

Sweden and so on to print in my

estimation around 36 trillion

36,000 billion that's 36,000 billion is

$36 trillion to give to the finances

between 2009 2022 that's how much they

printed to give to

finance now at the same time you will

also recall they were practicing

austerity for the many so Social

Services were being cut wages were

stagnant

um Health Care was suffering all over

the West here in Greece were the

champions of austerity but you had it

too you had your fair share of austerity

the British had it the Germans had it

the Italians had it the spanishs had

so this is the Magnificent Jacka

position 36 trillion for the financiers

austerity for everybody else or almost

everybody else now when you practice

austerity essentially people don't have

money so imagine you

are the CEO of Ford General Motors

General Electric

or Volkswagen in Europe and you look out

of your window and you see the masses

the ho pooy having very little

money and at the same time you get a

phone call from the Bank of

America in the case of Ford let's say

right and says oh um hi Mitch I have um

500 million for you it was printed by

the FED they're giving it to me to give

it to you so that you can do good things

with it invest and so on and create jobs

do you want it you look out there and

look at the people who who are

impecunious they just don't have the

money to buy the something like a Ford

version of the Tesla an expensive you

know Hightech car so you say no I don't

really want it but and the Bank of

America guy says but I have 500 million

for you I'll give it to you for free

zero interest rate because the Bank of

America was getting at the negative

interest rate from the Fed so even if he

gave it to you for free the Bank of

America was making money so you say okay

all right give it to me you now you have

500 million you don't want to invest it

because the the many out there are

impecunious so what you do you go to

Wall Street and you buy back Ford shares

your fault you take money from the state

through the Bank of America and you buy

back Ford shares the Ford share price

goes straight through the roof your

salary your bonus as the CEO of Ford not

just of you but all the members of the

board of directors is linked to the

share price so you are laughing all the

way to your own bank

okay but you haven't invested

anything right the only capitalist who

actually invested were the cloud

capitalists the ones who had Cloud

Capital Jeff basos Mark zukerberg

take Facebook I have done good authority

from within Facebook and I'm I have this

information in my book that out of every

$10 that went into meta into Facebook

into creating the service and the AI and

all everything that makes Instagram and

Facebook work and so on out of every $10

nine was printed by the state by the Fed

so essentially and this this is the

unintended consequence I'm not saying

that the FED printed it in order to

finance Cloud Capital no they did it in

order to save the bankers after 2008

they had no idea that the unintended

consequence of those bailouts would be

that essentially the state the state

produced Cloud capital on behalf of its

owners that's why it's not capitalism

anymore because it's completely State

based so the state has created new kind

of digital LLS who charge rents they

don't extract profits they extract rents

and that's why I'm saying and I know

it's got shocking value and it's

controversial but I'm saying to my

readers this is no longer capitalism

folks this is a kind of techn feudalism

we haven't gone back to feudalism

yesterday year no no we've moved Beyond

capitalis ISM to something worse than

capitalism which combines Capital Cloud

Capital with

feudalism and the rent is paid if if I

am a manufacturer of an item I have

to pay Amazon Jeff Bezos to have my

product on their site that's what the

rent is for yes in but it's exactly like

feudalism that is exactly under

feudalism you had Artisans making you

know swords and and and pl and Hammers

and stuff and they had to pay a rent a

rent a large SE segment of whatever

money need made to the landlord well

this is you know if you if if you're

selling cameras on Amazon you have to

pay 30% of every dollar you get from

selling your cameras to Bases so you end

up essentially with tiny profit margins

profit gets squeezed and rent gets ex

expanded

and that is not

only an

impediment to development to Economic

Development it's also as I said before

it's a macroeconomic source of

Crisis because all this money exits the

circular flow of

income in some ways and maybe this was

like feudalism in the past I do feel

trapped by all this just as you know a

quote unquote consumer in in one sense I

I I would like to go to a department

store to buy things again but there's

hardly any that even exist anymore uh

the big ones in my where I live in

Oakland California have all closed down

um so in one sense I feel forced

actually if I need some I don't have a

car I can't travel far distances I I I

feel forced to have to buy from Amazon

or other places online but I also feel a

sense of being trapped by I I feel

powerless once I'm on there purchasing

things sometimes I buy something I don't

receive maybe if I tried hard enough I

get refunded but eventually I give up um

and it just feels like there's no almost

impossible to communicate with somebody

over at and I don't know if this is the

I at all connected to it this sense of

uh techn feudalism but but there's

certainly an entrapment I feel once not

now that I'm in they got me in for the

convenience and now I feel trapped

yes look a couple of points here the

first one is that absolutely when they

when those platforms begin the cloud FS

as I call them when they begin they're

incredibly nice to

you whether you are a consumer or a

producer so Publishers you know

newspapers and Publishers uh were you

know just incredibly happy when uh

Facebook allowed them to share their

material and essentially advertise

themselves for free on Facebook but then

once they invested a lot in marketing

everything they were doing through

Facebook then Facebook had them they

grabbed them and they started milking

them essentially pushing them down on

your timeline and saying if you want to

go back up to where you used to be you

have to give us a higher rent uh

similarly with us consumers exactly as

you say initially Amazon was fantastic

to us now it reaches the more the higher

the switching costs the higher your cost

of finding another platform or finding a

bricks and mortars store in your

vicinity the harder you it is for you uh

the more shitty their behavior towards

you excuse the unscientific language but

you know a friend of mine Cory Doo who

may you may know has come up with a term

for describing what you described and

it's a beautiful term it should be

quoted as the new sentence ific word for

what you described he calls it

entific I I hope people get it um it'll

be on our video on online but you know

we have we have in America we have like

these really strange rules where over

terrestrial you could you could say

expletives on on cable you can say it in

the internet but gosh darn it if you

said it over terrestrial radio it would

just threaten the moral fabric of the

entire Society so those parts I'll have

to

they have to little put little beeps

over those areas but I I think most

people will will understand uh what you

are saying yeah Yannis verus thank you

thank you for taking this time to join

me today I really enjoyed it Mitch thank

you so much again jannis verus has been

our guest his book is called techn

feudalism what killed capitalism