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Is the digital economy responsible for the downfall of capitalism?


Upon entering Amazon, you have essentially left the realm of capitalism behind. Despite the constant buying and selling that takes place, it cannot be considered a market, not even in the digital sense. When I mention this in lectures and discussions, people often view me as if I am insane. However, as I begin to elaborate on my statement, their concern for my mental state quickly shifts to concern for society as a whole.

Picture yourself in a futuristic world where you are teleported into a bustling town filled with individuals buying and selling all sorts of items – from gadgets and clothes to shoes, books, songs, games, and movies. At first glance, everything seems ordinary. However, upon closer inspection, you realize that every single shop and building is owned by one man named Jeff. While he may not have ownership over the factories that produce the goods in his shops, he has an algorithm that takes a percentage of each sale and has the power to dictate what is allowed to be sold.

If that were the sole scenario, it would resemble a classic western tale where a lone cowboy arrives in town to discover that a portly strongman holds authority over the saloon, grocery store, post office, railway, bank, and even the sheriff’s office. However, there is more to the story. Jeff not only owns these establishments, but he also possesses the land, the benches, and even the air in this peculiar town. In fact, everything visible (and invisible) is controlled by Jeff’s algorithm. Although we may be walking side by side, our individual views are tailored to Jeff’s preferences. While navigating through Amazon, everyone except Jeff is essentially isolated in a world constructed by algorithms.

This is not a typical market town. It does not operate as a hypercapitalist digital marketplace. Even the least appealing markets serve as gathering spots for individuals to communicate and share information relatively freely. However, this situation is even worse than a completely monopolized market. In that scenario, buyers can at least communicate with one another, form groups, and potentially boycott a product to push the monopolist to lower prices or enhance quality. This is not the case in Jeff’s domain, where everything and everyone is controlled not by the impartial invisible hand of the market, but by an algorithm designed to benefit Jeff’s financial interests and cater solely to his desires.

If this isn’t frightening enough, consider that it is the very same algorithm used by Alexa that has conditioned us to train it to fulfill our wants and needs. The idea of such hubris is unsettling to the mind. This algorithm, which we actively assist in learning everything about us in real time, not only alters our preferences but also controls the selection and delivery of goods that will satisfy those preferences. It’s almost like a subliminal advertising expert who not only implants desires for specific products in our minds, but also has the ability to instantly deliver those products to our doorstep, bypassing any potential competition, all in service of increasing the wealth and influence of someone named Jeff.

The immense amount of power held by this entity is sure to frighten those with liberal beliefs. Even those who support the concept of a free market and individual autonomy should acknowledge that this marks the end of it. This should also alarm critics of the market, especially those who identify as socialists, out of their complacency in assuming that Amazon’s negative effects stem solely from it being a capitalist market out of control. In reality, it is something even more detrimental.

A student at the University of Texas once posed the question, “If Amazon.com isn’t a capitalist market, then what is it?” To which I responded, “It could be seen as a digital fiefdom – a post-capitalist one with ties to feudal Europe.”

During the feudal era, the overlord would assign parcels of land, known as fiefs, to his subordinates called vassals. These fiefs allowed the vassals to profit from a designated portion of the overlord’s territory, such as by farming or grazing livestock, in exchange for a share of the resulting goods. The overlord would then send out his sheriff to oversee the operations of the fief and collect the agreed-upon portion. Jeff’s arrangement with Amazon vendors bears similarities to this system. He grants them digital fiefs for a fee and relies on his algorithmic sheriff to monitor and collect from them.

Amazon was just the start. Alibaba has applied the same techniques to create a similar digital fief in China. Copycat e-commerce platforms, offering variations on the Amazon theme, are springing up everywhere, in the global south as well as the global north. More significantly, other industrial sectors are turning into digital fiefs too. Take for example Tesla, Elon Musk’s electric car company. One reason financiers value it so much more highly than Ford or Toyota is that its cars’ every circuit is wired into the cloud. Besides giving Tesla the power to switch off one of its cars remotely, if for instance the driver fails to service it as the company wishes, merely by driving around Tesla owners are uploading real-time information (including what music they are listening to) that enriches the company’s cloud-based capital. They may not think of themselves as serfs but, alas, that’s precisely what the proud owners of new, wonderfully aerodynamically gleaming Teslas are.

It took mind-bending scientific breakthroughs, fantastical-sounding neural networks and imagination-defying AI programs to accomplish what? To turn workers toiling in warehouses, driving cabs and delivering food into digital proles. To create a world where markets are increasingly replaced by digital fiefs. To force businesses into the role of vassals. And to turn all of us into digital serfs, glued to our smartphones and tablets, eagerly producing the capital that keeps our new overlords on cloud nine.

Technofeudalism creates significant challenges for those attempting to mobilize against it. However, it also grants a new level of influence to those who have the courage to envision a way to overthrow it – the ability to form coalitions, organize, and take action through the use of the internet, or what I refer to as “cloud mobilization”. While achieving this is far from easy or guaranteed, is it truly more difficult or less likely than the efforts made by 19th century miners, seamstresses, and dockworkers who sacrificed their lives to attain their goals? While the internet may take away certain freedoms, it also has the potential to empower individuals seeking to reclaim their freedom and democracy. Ultimately, it is up to us to demonstrate which force is ultimately more powerful.

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Yanis Varoufakis’ book, “Technofeudalism: What Killed Capitalism,” is available from Bodley Head for £22. To help support the Guardian and Observer, you can order a copy at guardianbookshop.com. Delivery fees may be applicable.

Further reading

Naomi Klein’s book “Doppelganger: A Trip Into the Mirror World” is available for purchase at a price of £12.99 on her profile.

David Runciman’s book, “The Handover,” discusses the ways in which individuals have relinquished control of their lives to corporations, states, and artificial intelligence. It is available from Profile for £20.

The Age of Surveillance Capitalism by Shoshana Zuboff (Allen Lane, £25)

Source: theguardian.com