Factually! with Adam Conover - Capitalism Has Mutated Into Something Worse with Yanis Varoufakis

Episode Date: February 7, 2024

Capitalism has changed. A century ago, capitalists amassed untold wealth by building and manufacturing goods, but today, our economy appears to be dominated by massive tech corporations that don't actually produce anything at all. Instead, these tech giants offer platforms—such as search engines, AI, or marketplaces—through which they extract profits from users. Adam speaks with Yanis Varoufakis, former finance minister of Greece, about his book Technofeudalism: What Killed Capitalism, exploring how this new form of capitalism jeopardizes our livelihoods and what measures we can take to safeguard our future from big tech. Find Yanis's book at at factuallypod.com/booksSUPPORT THE SHOW ON PATREON: https://www.patreon.com/adamconoverSEE ADAM ON TOUR: https://www.adamconover.net/tourdates/SUBSCRIBE to and RATE Factually! on:» Apple Podcasts: https://podcasts.apple.com/us/podcast/factually-with-adam-conover/id1463460577» Spotify: https://open.spotify.com/show/0fK8WJw4ffMc2NWydBlDyJAbout Headgum: Headgum is an LA & NY-based podcast network creating premium podcasts with the funniest, most engaging voices in comedy to achieve one goal: Making our audience and ourselves laugh. Listen to our shows at https://www.headgum.com.» SUBSCRIBE to Headgum: https://www.youtube.com/c/HeadGum?sub_confirmation=1» FOLLOW us on Twitter: http://twitter.com/headgum» FOLLOW us on Instagram: https://instagram.com/headgum/» FOLLOW us on TikTok: https://www.tiktok.com/@headgum» Advertise on Factually! via Gumball.fmSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Hello and welcome to Factually. I'm Adam Conover. Thank you so much for joining me on the show again. You know, the economic system that we call capitalism has gotten pretty weird. Think about the capitalism that we started with, you know, 100 years ago, when jerks in top hats with monocles built untold wealth by making things like coal, steel and railroads and colluding to protect their gains. Well, guess what? The workers had to fight back. They had to rise up and make sure they weren't being exploited. The government started regulating those businesses a little bit.

Things got a little bit better. We still had a lot of problems. But that was capitalism as we knew it, right? Well, that form of capitalism seems to be straight up gone. Instead, we're living under something extremely weird. The economic system that dominates the world today is run by massive tech companies that have a thousand fingers in a thousand pies, online marketplaces, social media platforms, artificial intelligence, even TV and film studios.

These companies surveil us in ways that would make the CIA blush, and then they crunch all of our personal data through algorithms that are so complex that even they do not understand how they work, and they do it in order to feed us manipulative advertisements and control our behavior. And here's the weirdest part. These monopolistic, polymorphous mega-entities increasingly do not even make anything at all. Instead, they just sit there extracting rent from us, the consumers and the people who are trying to buy things from the actual producers in our economy, even though they don't do anything other than connect us together. So what we call capitalism today increasingly seems to be simply a different economic system

than it was at the beginning of the century. And it's worth asking whether capitalism is even the best thing to call it. Well, our guest today argues that no, it is not. And that in fact, it has evolved into something far worse. He's one of the foremost critics of our economic system from the left. And he's someone with a truly deep and impressive understanding of our global economic system. And you know that because he once served as the finance minister of Greece. His most recent book is called Techno Feudalism. What killed capitalism?

This was such a fascinating conversation. But before we get into it, I just want to remind you that if you want to support this show, you can do so on Patreon. Head to patreon.com slash Adam Conover. Five bucks a month gets you every episode of the show ad free. We have a community discord and a lot of other great features as well. Would love to see you there. And now, please welcome Greek economist and politician Yanis Varoufakis. Yanis, thank you so much for being on the show.

It's a thrill to have you. My great pleasure. Thank you for having me. So let's jump right into it. You have a new book out called Technofeudalism. You argue that we have left capitalism behind and that we've entered into something worse. What is that and what do you mean by it? Well, before anyone can pronounce credibly the end of capitalism, one has to decide what capitalism is, right? end of capitalism one has to decide to decide what capitalism is right so for me this is not just a

a world in which people buy and sell stuff in markets capitalism is a very specific system where uh there are two pylons on which the whole socioeconomic system rests one is profit and not any kind of profit but profit that comes out of entrepreneurial activity, out of creating things and selling. And the second pile, of course, is markets. Because before capitalism, we had a world in which markets were everywhere, but they were peripheral. Because come to think of it, during feudalism, when peasants worked at the land, there was no labor market. They worked, but they didn't sell their labor. They didn't receive a wage. What happened was at the end of the harvest, the sheriff on behalf of the landlord, the baron, the earl,

would come and collect 60%, 70% of the produce and leave the rest to the farmer, to the peasant. So there was no labor market. There was no wage. And indeed there was not even profit in today's parlance because all there was was loot. Essentially you know, an anti-extraction on behalf of feudal lords. There may have been a market in the center of town where

you could go buy and sell shoes or boots or whatever. But that wasn't the central feature of the economy. The central feature of the economy. The central feature of the economy was basically forced labor, where you live on my land, you have to give me most of what you make. You can keep a little bit for yourself because I'm in charge. That's not anything close to a market. That's right. There were always markets ever since, you know, humanoids on trees started exchanging bananas for apples. There was a market.

But most of what humans did until capitalism emerged, most of what we did did not go through markets. The markets were peripheral, exactly as you put it. And the two markets that were completely missing until capitalism was one, it was the labor market. The other was the market for land. Land, either you inherited it if you were a member of the landed gentry or the aristocracy, or maybe it was given to you by a lord or a king that owed you a favor. But you

couldn't buy land. There was no real estate section in the newspaper where you could buy and sell land. Land you conquered, you inherited. And if you neither conquered or inherited it, you never had it. You were landless forever. Right. So, capitalism brought in markets as the main domain where everything happened. And profits are supposed to rents being the fuel that drove the system, the market system. Right.

My claim is that the triumph of capital, capital, of course, being all these produced means of production, like if you think of a steam engine or a modern industrial robot, it's a produced means of production. It's a machine that we have created in order to create other stuff, not for its own sake. If you think of capital as having taken over as the main source of wealth creation from land, so once upon a time, all wealth came from land. With capitalism, it all came from owning the machinery of capitalism, owning steam engines, owning the telegraph poles, owning the electricity grids, owning the airlines. All this is machinery. Capital

produced means of production. Capital was so triumphant. It beat organized labor, trade unions, the political system. Effectively, it took over the world. Yeah. It certainly feels as though capital runs the world right now. It certainly feels that it runs the United States. It is everywhere. Not just the United States. Malaysia, Indonesia, everywhere you look, you see the triumph of capital. But my hypothesis is that capital, because it was so successful, it mutated and it produced a mutant version of capital, which I call cloud capital, which remarkably,

it is not a produced means of production anymore. It is a produced means of behavioral modification. So the algorithm that lives inside your iPhone or your Samsung phone or whatever, or your laptop, is attached to machinery. So there are cell towers and there are optic fiber cables and there are server farms and there are pieces of software. This is all capital goods.

But these goods are not created to produce other stuff. They are there to modify your behavior and mine. And this kind of cloud capital, that's my hypothesis, has become so powerful at modifying our behavior that the owners of cloud capital, whom I call the cloud ballists, no surprise there, have a powerful new power to make other people work for them. So if you're Jeff Bezos, you own a lot of cloud capital.

It's called Amazon.com, for instance, as well as server farms and all that. And what do you produce? Nothing. But what it has created for you, this cloud capital, is a fantastically large digital thief, a cloud thief, I call it, where there's a lot of trading taking place between consumers and producers.

And Jeff Bezos manages to charge the producers up to 40% of the price that consumers pay, while at the same time, makes you and I produce free labor in order to replenish his cloud capital. For instance, every time you post a review of a book on amazon.com, and you buy anything or you show your interest in X as opposed to Y. That increases the capital stock, the cloud capital stock of Jeff Bezos, which gives him an even greater opportunity to extract rents from Vassar Capital, selling their wares on his cloud fee. Yeah.

So the moment you enter Amazon.com, and this is how I'm going to end my soliloquy. The moment you enter Amazon.com, you exit capitalism. Welcome to techno-futurism. there are multiple buyers and sellers are selling things, but it sounds like you'd argue that you are so firmly under Jeff's boot when you are on amazon.com as either a buyer or a seller that this is not a free market, certainly. It's not a market at all. It's not that it's not free. It's not a market. You see, the way I visualize is this. Because, you know, there's a lot of criticism of what I'm saying The way I visualize it is this.

Because there's a lot of criticism of what I'm saying by people who say, come on, Yanis, it's still a market. It's monopolized. It's a monopolistic market. It's owned by one man, Jeff Bezos. Well, I beg to differ. Think of a Western movie, a really bad Western movie, where you and I are riding into some town that is owned by one person. Let's call that person Jeff again, right?

And we discover very soon that in this Western setting, every shop in that town, the post office, the saloon bar, the bank, everything, the police station, the sheriff is owned by that one man, Jeff, right? Now, that's a monopolistic market. Right. But that's not Amazon.com. Amazon.com is far worse. Because, you see, if you and I were to ride into this town, this imaginary town somewhere in the far west, when you and I looked to our left in the same direction,

to a particular shop window, you and I would be seeing the same thing. But in Amazon.com, we're not seeing the same thing. If you and I, as we speak, were to type in Amazon.com, electric bicycle or binoculars or, you know, whatever, you would get a different list than the one I would get. Because the algorithm that Jeff owns knows me and you very, very well. They have huge quantities of data on us. So they know our likes, dislikes,

how much money we're prepared to pay for anything. And it will match you and me to different kinds of vendors, vendors that the algorithm knows just as well as it knows us, with one intention in mind, to maximize the capacity of the statistical probability that Jeff Bezos will extract the maximum amount of rent from that capitalist who will sell us the electric bicycle binoculars. So, in a sense, there is a algorithm

that matches every buyer to every seller in ways that the buyer and the seller cannot control. Buyers cannot talk to one another. They cannot talk to sellers, except They cannot tell sellers except any communication that the algorithm permits

in the interest of maximizing the rents extracted by Jeff Bezos. Now, this is not a market. A market is a place which has to be decentralized at least on one side. Even if you have a monopolistic market, buyers can talk to one another.

They can even, ideally or in theory, discuss with one another a consumer boycott. When you are on Amazon.com, you can't do that because the algorithm will never allow you to communicate with anybody. So a market which is completely and totally centralized. with anybody. So a market which is completely totally centralized. You know, think of it.

This would be a dream come true for the Soviet economic planning agency. Because the whole point about the Soviet Union is, I really,

truly believe that. You know, because I've started quite, for quite a while, the way in which Gosplan, the planning ministry of the Soviet Union worked

and what they were intending to do. And I can tell you, for them, I mean, they had never imagined the algorithm that Jeff Bezos has at his disposal. But when I read, you know, what it is that they wanted to do, that's exactly what they want. They wanted to know exactly what consumers wanted. They wanted to know exactly what consumers wanted. They wanted to know exactly what producers were capable of producing. And they wanted to make the producers produce stuff

that then they would match to particular consumers in a way that was in the interest of the system. Neither of the producers, nor of the consumers. That's what basis algorithm does. That's why I insist, this is not a market. It's a trading place. It's a digital trading place which operates like a

kind of techno thief or fiefdom. I call it a cloud fief. So as not to give the impression to our listeners, to our viewers, that this is only pertinent to Amazon.com. Wherever you go, whichever country you go, you go to Malaysia today, you go to India, you go to Nigeria, you'll find that besides Amazon.com, there are such digital or cloud fiefs belonging to local magnets. And you've got this feudal system

comprising many different digital or cloud fiefs where about 30 or 40% 30 or 40% 40% of all payments are in the end

they end up in the pockets of not the producers, not the workers who have helped produce on behalf of their companies and their employers, the products that are being sold, but they're being confiscated in the form of cloud rents by the cloudless, the owners of cloud capital. I mean, this is exactly the fee that, for instance, Apple famously takes off of almost every transaction made on an iPhone, or at least every digital transaction of a certain sort, which they go to great lengths to protect. And what I find really interesting is that you are comparing that sort of fee or the sort of fee that Amazon takes

to the rent taken by the feudal landlord. Um, like that, that sort of rent, not rent that I might pay to a landlord whose apartment I live in, but the sort of rent that is taken by, uh, you know, a feudal Lord is simply because of the power that they have. They're not producing anything. They're not providing anything to the transaction other than saying, because of my power, I can take a giant cut of what you have made. Can you talk a little bit more about that comparison? Because that's where the connection to feudalism makes the most sense to me, is seeing Apple's pound of flesh, Amazon's pound of flesh, as similar to the feudal lord taking the wool that the poor peasant has made from their sheep. Absolutely. You put it spectacularly accurately.

All I need to add is that I'm not suggesting that we've gone back to an earlier mode of production. My argument is not that we have returned feudalism. No, we've moved forward. Because there is a profound difference between Bezos, Zuckerberg, all those clout analysts, Elon Musk, and the feudal lords of yesteryear. The feudal lords of yesteryear did not need to invest anything in order to create that feudal power of theirs, Their power to extract rent. It's simply the accident, the lottery of birth.

They were born into a feudal society on the side of the aristocracy. They inherited the land and, hey, presto, they could collect rent. Whereas people like Bezos and Zofia Barbe, they are smart entrepreneurs and they put a lot of work into it. They were not born with a lot of work into it. They were not born with a silver spoon in their mouths. They invested huge quantities of capital, and they ended up with majestic digital capital, cloud capital. And it is on the basis of that huge investment that now they have the power to extract rents.

And it is, of course, similar to the feudal kind of rent in the sense that it is rent. What is rent? Rent is a payment courtesy of what you own, not of what you do. But of course, in order to collect that cloud rent, they had to do a lot of investment

prior to that. But, and here comes do a lot of investment prior to that. But, and here comes a very interesting little twist to the story. Most of the money that went into the investments that begat cloud capital is state money. It's public money. Really? If you look at what happened after the... How so? 90%. 90%. 90%.

You will recall, of course, that in 2008, after Lehman Brothers collapsed and Wall Street went pear-shaped, along with the Frankfurt banks, the Parisian banks, the City of London and so on, the G7 central bankers and our great and good leaders gathered together in April of 2009 in London and in a state of panic decided to reflow finance. Since then, they have collectively, all those G7 central bankers, they have printed around $35 trillion. $35 trillion. And they gave it to the bankers. That's got nothing to do with techno-fidelis, right?

Or big tech or cloud capital. So far. It's a entirely different, fucked up thing that happened. Indeed. This is how history works, through coincidences and overlapping forces that are developing and evolving. So you will recall also that at the same time that they were printing all this money, that they were pumping into the private banks to refloat them. You remember Tim Geithner and the Geithner-Sommers plan that gave $13 trillion effectively to refloat the mortgage derivative markets and so on? Yes.

The idea was that all this money would go to the Bank of America, Citigroup, J.B. Morgan, Goldman Sachs, and those bankers would then lend the money on to business, and business would employ people, and the economy would start running again through investment. Those central bank monies would become investment. Well, the problem was that at the very same time that they were printing these mountains of money, they were practicing fiscal austerity. Even under Obama, even under the so-called stimulus, if you add the federal government and the state governments together,

where the state governments were, remember, they were entrenching left, right, and center. They were in deep austerity because they were in pecuniary. All governments together, federal and state, in the United States, practiced austerity. Effectively, they cut down on public spending and increased taxation, if you put it all together. In the European Union, we were the champions of austerity. My country, Greece, broke every world record when it came to austerity.

Britain practiced austerity. Now, this is a fantastically interesting combination. You have the central bank spreading huge quantities of money, pumping them into the system. So there's a lot of money in the system. And at the very same time, you have the many, the multitudes, the hoi polloi, with very little money. So imagine you are an industrialist, an entrepreneur, and Bank of America calls you and says, I've got a billion or 200 million

to give to you. Do you want it? You are not going to say no when the interest rate is almost zero or sometimes negative. In Europe it was negative. Effectively, you were being paid to borrow money. Right. But you look outside your window or in the window of your imagination and you think, who's going to buy the stuff I'm going to be producing? These people

out there, the many, the riffraff, they don't have anything. They can't afford to buy expensive, high-value-added stuff. So you take the $100 million or $200 million that the bank gives you, and you take it to Wall Street, and you buy back your own shares. That drives your share price up. Your bonus goes up. You're happy.

But that's not investment. Of all the industrialists in the United States who actually received some of that money that was printed under what was so-called quantitative easing, just money printing by the Fed, of all these industrialists who got the money from the banker, who got it from the Central Bank,

the American Central Bank, only the Zuckerbergs, the Elon Musks, the people that I refer to in my book as cloud analysts, the owners of cloud capital, took the money and invested it in capital, and it was cloud capital. My estimation, and I have this on quite good authority from within Facebook or Meta,

90% of the money that went into building up Meta came from central bank money. So this is very interesting, isn't it? Because you've got a new variety of feudal lords, I call them cloud delists or techno feudal lords, being financed by the state. Folks, this is not capitalism. Yeah. And you also said, by the way, that these men were not hereditary rulers. They didn't

inherit everything. But these are also people who happened to be in the right place, right time, came from the right backgrounds. Zuckerberg went to Harvard, you know, and they had the access to this large amount of funds. This is not a, they did not compete to get ahead in the way that, you know, capital, we're told capitalists are supposed to. There was a lot of advantage given here by the state and by circumstance. Indeed. So the state gives them the money. state and by circumstance. Indeed. So the state gives them the money. It gives them the technologies as well

because let us not forget if you take your iPhone apart every single technology in your iPhone was developed by some government fund or research project. Everything was.

The touchscreen, GPS from the Pentagon, Wi-Fi from the Australian CSIRO, everything came. So society at stage, in a collective way, provided the technologies and the money to these very smart people. There's no doubt that these people are extremely smart and worked very hard to create cloud fiefs, not to create capitalist firms that compete with one another

on the basis of products, but to create cloud fiefs that are engineered through algorithms that are primed to modify your behavior and mine to extract the rents from the actual producers of stuff. I want to talk about how much this trend is also coincided with the privatization of the Internet. These are primarily Internet firms that you're talking about, although I'm sure there are some examples of this that go beyond the internet. But when the internet was created, it was, especially with the first few decades of its existence, believed to be a radically decentralized place, the most decentralized possible. Anybody could, you know, put up a website on their own server and sell

something to anybody who came by. And now we have all experienced the shrinking of the internet in a way to three or four gigantic firms through which everything runs. And that is such a radical transformation in such a short period of time for us to go from a place that felt like a Wild West town, as you said, you know, a true Wild West frontier where anybody can build anything. Hey, look, here's my little shop. Buy from me to a place where if you don't go through Mark or Elon or Jeff or a few other small number of people, you can't sell anything to anyone. or a few other small number of people, you can't sell anything to anyone.

Doesn't that strike you as, I mean, that happened in 10 years, 15 years, something like that? Yeah, precisely. I tell that story in my book, the story of how the internet comes. It wasn't just decentralized. It was centralized,

but it was actually more than that. It was a capitalism free zone. Yes. A market town, an old-fashioned market town, farmer's market, is decentralized. You've got lots of producers. Everyone is producing their own tomatoes or potatoes or whatever. And they

compete with one another. No one can control the price because each one of them is a small drop in a large ocean of produce. And that's a decentralized capitalist market. The internet was not even that. It was a commons. Nobody paid for doing stuff. years, when you go into Google Chrome or some kind of browser, you will still see those letters, HTTP, colon, slash, slash, something.

That is a language, a computer code, developed once upon a time in the early 1970s so that people can actually visit each other's pages, browse. And we still use that. The people who actually created the HTTP or SMTP that you may have seen in your email app, it's the protocol for sending email,

SMTP, HTTP, all those protocols, which are still there inside the internet today, were developed by folks, scientists, computer people, who gave them away. They didn't make a single penny on it. Not a single penny. It was a commons.

It was a gift exchange economy. That's what the internet was. People would put them out there a completely open source and just enjoy the fact that others used their wares yes that was the entire culture of the internet was creating things like that i remember when i was a kid so i i joined the internet in the in the 90s when it was still dominated by that culture. And I loved video games. And there was a whole culture of people would write guides for video games, long, long guides with art and jokes in them and things like that.

And they would just post them on the internet because I love this video game, you love it too, and I want to share that with you. And that was the culture was this sort of free gift exchange. And it really strikes me how these companies have, I think you might be working away to this point, perverted that culture so that now we still post in that way. I post to Instagram, to Reddit, to all these places for free, except now the reason,

the fundamental reason for the post is to line the pocket of the person who owns the site that they are profiting off of it even though i am not uh which is a really remarkable shift but i i worry i cut you off no no no well you're adding to what i said uh um the the the delicious irony about the uh the process which uh began the privatization of the original Internet Commons has to do with our identity. Because when

we started playing around with the Internet and I joined the Internet before it was called the Internet, I joined an earlier version called Janet. Standing for Joint academic network. That was the internet. That reveals my age, right?

And I tell you, the other thing that people won't believe, the first time I joined the internet, I didn't even have a screen. I had a teletype. And all the output was being printed on a doc matrix. That's amazing.

But that's so cool. I love that. So that internet began to get privatized for one simple reason. Because governments did not help us become the owners of our identity. Because in that internet, everybody was anonymous, or we had whatever name that we chose to have through aliases. At some point, when you were given the opportunity of buying stuff over the internet, or hailing a taxi, whether it's Uber or something else,

you had to have an identity. You had to make a payment. At that point, something quite absurd started. Because unlike the physical world, where you have an ID card, a driver's license, a passport, that is issued by the state for a small fee to every citizen, courtesy of being a citizen. Your citizen's right to have an ID card of sorts,

to be able to identify yourself if the police pull you over or anything. On the internet, to this very day, you have to beg some bank or Google or Facebook to testify to who you are before you can transact with anyone and declare your identity. You're not the owner of your identity. So that's how the colonization and the privatization of the internet began. Because we do not, we still do this day. There's no way you can identify yourself unless some conglomerate says, yeah, okay, this is Yanis.

I can certify for you that this is Yanis. And every time you need to transact, you have to beg some conglomerate to testify to who you are, which is quite astonishing. It makes a very big difference in the way we conceptualize digital trade. So, for instance, I mentioned before hailing a cab. Now, the only way to do it today is you have to have an account, Uber or Lyft or one of those apps. And the way to do that is you use your banker,

you use your debit card, your credit card, essentially, you beg the Bank of America to tell Uber that you are who you say you are. Right. You use the codes that Bank of America has given you for you to have the right to call an Uber cab, right? Now, imagine if you and I were the owners of our digital identity. And I wanted to go to work today.

I'm here in Athens today. Now, you know, I imagine I could. There was an app free for everyone, you know, just a commons kind of license where I would say, this is who I am. I identify myself because I own my identity. This is where I am. I'm myself because I own my identity. This is where I am. I'm on the corner of such and such streets.

And I won't go to the airport. Who wants to offer me, you know, bid for my fare? Yeah. And imagine if anybody, anybody could bid for my fare, including public transport, who would send me, would send me a smart little message saying, you idiot, there is a tube station, a public bus, and take you there much faster

and at a much lower cost. We cannot do this now. And we cannot do this because we do not own our digital identity. You know, the cloud doesn't own it for us. I also think that, you know, these companies worked so quickly to decentralize and to privatize the Internet. If you look at Amazon, for instance, it not only built a major section of the pipes of the Internet with their Web services that so many companies are now, you know, now use. But they also worked to destroy their competitors, to either buy them out or to ruin them, to underprice them.

Aggressively anti-competitive policies that the government did nothing to protect against. These were classic sort of, Amazon worked to build a monopoly in classic fashion, and it was able to do it because the internet was a frontier. And the government, who's the regulator, who's supposed to be the cop on the beat, didn't stop them from doing it.

And now they are finally suing them and prosecuting them. But, you know, probably 15 years too late. Yeah. But you see, I think you're absolutely right. There's no doubt that anybody who has a lot of power tries to enhance it by means of destroying the competition, destroying anybody who threatens them. That was the case with Henry Ford, you know, and General Motors. They, since the 1900s, 1910s, 1920s, they bribed municipalities to rip out the trams and to replace them with their own petrol-engined cars and buses.

So there is a similarity. But that's where the similarity ends. If you look at Teddy Roosevelt versus Rockefeller and Standard Oil, the famous antitrust laws and the trust busters and so on of the 1920s, that was very impressive. But the argument of the antitrust push-drive

policy, which is a very good argument, had to do with the way in which those monopolists were cornering markets in order to drive prices up. Because they were traditional capitalists. They were monopolists, but they were traditional capitalists in the sense that they

produced stuff and they wanted to have a monopoly and to sell you the stuff that they produced using old-fashioned terrestrial capital. The capitalists that I refer to, they are not in the business of driving prices up to exploit you.

They're actually driving prices down. It is impossible to use the Teddy Roosevelt mentality and antitrust legislation against Zuckerberg because it doesn't charge you anything. The price is a very radical zero. That's the price you pay to use Instagram or to use… Our political class was also not trained to see what cloud capital does differently to the capital of Henry Ford and Westinghouse and all the other folks or Edison. The whole

point about Bezos and these people is that they use capital and free services in order to capture both consumers and producers, to extract rents from them, not to sell them stuff at higher prices. Right. So exploitation of society takes also the form of pushing prices so low that the environment suffers, the producers suffer, the middle ground, the small and medium scale producers go to the wall. So that's why I'm insisting on the importance of understanding the difference between cloud capital as a produced means of behavioral modification from the traditional

capital that, you know, the Robert Barons used 100 years ago. Yes. I mean, maybe there's a comparison you could make between the railroads of 100 years ago, because they were, you know, a means of transportation as a system that was trying to extract rent from producers and consumers. But I take your point very well that Jeff Bezos is not producing anything and he's not trying to raise prices for consumers.

He tries to lower the price to the lowest possible floor, but then extract unearned money from everybody at every part of the transaction. And also, I want to return to this, extract free labor from everyone as well. I feel that constantly in my use of the internet, that every time, again, I post a story, just, oh, I want to communicate with my friends. I'm also providing value to Mark Zuckerberg or whatever site I'm posting the story to. Every time I write a review, if you look at, um, and also in my role as a content producer, right, I'm making this show right now. I'm doing labor right now that benefits YouTube, right? That benefits Google. They will sell an ad against this video. And the only promise of income I have

is that this is going to go through YouTube's algorithm. And if it is successful in the algorithm, according to some metric that I don't know, I have my guess, I'll come up with a title that I hope will make people click on this or we'll make YouTube show it in the right hand sidebar. But I have no guarantee of that because the algorithm is always changing. If the algorithm bestows its favor upon this video, they will break me off a percentage, a small percentage of the ad revenue that they earn

off of it. And that percentage is up to their whim. They can change it at any time. I just log into my little panel and it said, oh, you made 50 bucks. Oh, you made 200 bucks. And I'm like, oh, thank you. I'm so happy to receive the blessing from YouTube this year that they didn't take too much of the money I this is this is a bizarre way for me to do labor. And yet it is, in fact, my only choice because this company, Google, has via YouTube has replaced so much of the media consumption in the United States. And there is literally nowhere else to go if you want to make or consume this sort of content. if you want to make or consume this sort of content. And they are, you know, despite the fact that they do not make the content,

they are able to extract huge amounts of revenue from it. I couldn't have put it better myself. You are a cloud, sir. You are a cloud. God damn it. Yeah? Let's go back 500 years to Europe. Yeah. So let's go back 500 years to Europe, where you had the actual serfs in the estate of some lord in Nottinghamshire, let's say, right? In England.

That's how they felt. They were glad to have access to the land. It was the same land and they lived in probably the same hut or house in which their parents and grandparents lived. They toiled on the land. They loved the land. They loved the area. They probably never left it all their lives

unless they went to war. And, you know, they had their rituals. They married on that land. They had their children and grandchildren. They were praying to God that they would have more time on that same land and they would not be expelled. They put all their resourcefulness into producing wheat or barley or whatever it is that they produced. or barley, or whatever it is that they produced.

And they hoped, like you hope, in relation to YouTube, that the sheriff would leave enough produce for them to have a decent life at the end of the harvest after extracting their rent. They hope they don't get demonetized, yeah. Yeah, exactly the same thing. They never knew exactly how much the sheriff would take on behalf of the Lord at the end of the harvest. That varied in ways that reflected the mysteries in the mind of the landlord or his own calculations of how much he had to leave the peasants at the end of the harvest

in order to minimize the chances of a rebellion that would remove his head from your shoulders. Yeah. You don't even have that opportunity with Google. You wouldn't know where to find them. So it is a form of feudalism, but it is far more than that because as you put it so brilliantly, you know, this is the first time

in the history of humanity where through our leisure, or leisure as you would say in America, we are contributing, we are replenishing and reproducing the capital stock, the cloud capital stock, which reinforces the land, the cloud land, the digital land, the fiefdom in which we toil. That is the new element of it. And also, if I may add something else, the same algorithm that creates the fiefdom in which you labor for free or partly for free is this algorithm which you train to train you,

to train it to train you, to give it the opportunity to make good suggestions to you through recommendations in order to impress you so that the next time it says to you, you should buy that, you want to buy that, and then it sells it to you directly as well by passing every market. While you're also a sponsor for the same thing. And the same algorithm, and this is my conclusion,

in the warehouse or the factory where some proletarian or precariously employed proletarian is producing the stuff, either in the factory or even in the Amazon warehouse, has a digital device strapped to their hand using the same algorithm, exactly the same algorithm, in order to speed up their work and to tell them which box to take where and monitors the rate of their working and maybe firing them occasionally, detecting the probability that the union will form in that particular facility and therefore it winds down that facility and opens a warehouse or another factory somewhere else. That's the same algorithm that does all that at once. That's science fiction. Yeah. I mean, and if you compare that, for instance, to an Uber driver, or better yet, let's say a gig delivery driver, because we as consumers often interact with Uber

most often, but your packages are now delivered via the same means. That's, again, someone who is directly being paid via algorithm, doesn't know how much they'll be paid until the moment the job appears. And, you know, is just going to hope that, oh, the algorithm bestows them enough work at a high enough rate to make a living. We're so much under the heel of the algorithm that I think surf really, the more you describe it, the more of an appropriate term it becomes for how we all feel. On both ends of the equation, as consumers, we feel that way too, that we're just like, all right, we'll just watch whatever the algorithm chooses to give us. This is the best that we can get.

Might as well accept it. Can I add another two elements to this story? Please do. We've done a good job of putting this together, but there are two elements which I think are essential and missing. One is finance. I was completely gobsmacked when I discovered that in a country which I know reasonably well from years ago, Indonesia.

I remember the first time I went to Indonesia many, many years ago, I was struck by the so-called warungs. The warungs are stalls on wheels that you find along the countryside at different townships or at intersections. And they would sell everything from cigarettes and various small wares to telephone cards, SIM cards, and so on. This is a bodega. That's what they're called in New York, except that's a store. This is a cart.

Okay. Let me tell you this. Why was I gobsmacked? Because I found out that three and a half million of those have been taken over by one of those digital fiefdoms owned by an Indonesian magnate. And then Jeff Bezos, Jeff Bezos himself decided that he wants a piece of the action. And Jeff Bezos Enterprises, one of his companies, went over and purchased the other remaining couple of million of those. So when you see the cloud capital spreading like wildfire in a place like Indonesia. So the question is, why do they care about these war rooms?

Yeah. I mean, what kind of value added can they have? Yeah. That was the first question. What profit margin do these sales leave? Nothing. Until you realize the real purpose of taking them over, to use them as mini banks providing microloans to their own local area

through the same app that the locals were using once these loans were taken over by CloudFee in order to buy telephone cards and cigarettes. Right. And so you have a financialization process seeping through cloud capital all the way to those grassroots in China as we speak

there is an application called WeChat I'm sure you've heard of it because it's not available in the United States or not used in the United States WeChat is everything we know in the West wrapped up in one application.

It can do everything that Netflix, Uber, Spotify, Google, Facebook, Instagram does. And in addition to that, you can make payments to anybody in China for free. Now, you don't have that application in the United States. We don't have it in Europe. Why? Because Wall Street won't let you. Because Wall Street wants to maintain the monopoly of financial capital and transactions. And they will do deals with Google, but they will not be for free.

Right? And with Apple Pay. That's why Apple Pay is not free. There is a huge cost involved in transacting through Apple Pay. But WeChat doesn't have that. Why am I talking about that? Because firstly, you see how through the imperialist waves from Indonesia to Korea to Kenya to Nigeria, you have a spread of cloud capital and also the way in which the predominance of Wall Street in the United States is, and that is my hypothesis, and it's a hypothesis that really worries me.

Wall Street is the most powerful agglomeration of bankers in the world who are really worried about big tech and cloud capital. And they do not want to share the dollar payment system, which they control internationally, not just in the United States. So it's a global payment system because that's what the dollar is. It's the global payment currency. They do not want to share this with big tech,

whereas the Chinese big tech and the Chinese financiers have joined forces together under WeChat on one hand and the digital currency of the central bank. That contrast between what's happening in the United States, why you don't have WeChat, they have WeChat in China, is for me, the't behind the new Cold War that Donald Trump started. Remember against Huawei initially, ZTE, and Joe Biden turbocharged. Because, you know, I was puzzled for quite a few years now.

Why is the United States starting a Cold War against China? You know, the answer that was given to me about Taiwan and spying and that's all rubbish. As if Taiwan was not the problem since 1950. Yeah.

Nothing changed by Taiwan. The idea that, you know, Washington suddenly got pissed off because the Chinese are spying on them.

You know, the country that produced the NSA. That's a joke and a half. Yeah. The reason, my estimation is that the super cloud thief of the United States is in direct

clash, in a direct clash with the Chinese cloud thief. And the policymakers in Washington, who are very smart people, understand that they have a disadvantage. And the disadvantage stems from Wall Street's rivalry with Silicon Valley, which is a clash that the Chinese do not suffer from. That is fascinating. If that clash were to end, if they were able to, you know, reach an agreement between themselves, if, you know,

they were able to cut each other in on the deals, would that be, it'd probably be even worse from your perspective? What would the effect be? Well, I am in two minds about that because the clash between the American and the Chinese cloud thieves may jeopardize our existence on the planet

if it ends up with nuclear bombs blowing up. So I fear that. But I also fear what you said. If Wall Street and Silicon Valley strike a truce between them, find a way of sharing the spoils, sharing the cloud events, then they will become even more powerful within the United States,

within the West, within Europe, than they already are. So, you know, we're damned if they do, and we're damned if they don't. I'm not sure which damnation is worse. which domination is worse. Okay, so you're talking about a group of people who the feudal lords, our new feudal lords, who are so powerful in every respect.

They're not just economically powerful, they're politically powerful beyond our wildest imaginations because they, I mean, again, the comparison to feudal Lords, these were people who owned the land and could have to often, you know, had the fate of the King in the palm of their hands, right. Because of the amount of land and money that they owned and they're like, Oh, we don't like the King off with his head. Let's put a new King in.

That was often the case in many feudal societies. And it often feels that way today. If, you know, Jeff Bezos isn't a fan of the president, well, the president might not be around that long or, you know, he and his friends, right, that that group. And so to bring us to sort of a conclusion here, what hope is there of resisting this trend, right, when these folks have that much power. I mean, I know the EU has been passing laws to rein in the power of big tech, or at least that's the headline. You're shaking your head. What do you think of the fate of that effort? And, you know, is there any hope of fighting back against these folks? Are the European unions hopeless? They're hopeless. I know

them inside out. I've dealt with them when I was Finance Minister of Greece. They have no clue of what's going on. And, you know, their constant concern is how to continue pretending that they are following their own rules while violating them.

You can see that the European Union is falling behind on every level. When it comes to AI, we are nowhere near the Chinese, let alone the Americans. Green technology, gone, finished. Either we import it from China or we don't have it. When it comes to the banking sector, still fragmented. We don't have something equivalent of the U.S. Treasury bill.

Think about it. We don't have the equivalent of the U.S. Treasury bill. We don't have a common safe asset that we can sell people. No, I'm afraid that I'm saying this as a Europeanist and a proud European. You're saying that Europe overall sucks.

I understand that. But what about in terms of reining in the techno-feudalists? They cannot. You see, only China has produced cloud capital that can compete with the American capital. The European Union has no cloud capital. the European Union has no cloud cap we are completely at the mercy of

Google and Facebook and all those you know Silicon Valley based big tech companies Jed Bezos last year made

44 billion euros something like 50 billion dollars in Europe only he paid zero zero tax

zero tax and the Europeans were trying to tax him, but they couldn't. So he's running rings around them. So no, we can become protectionists. Yes, we can raise our walls, digital walls.

But then we are not going to have access to YouTube. And we don't have our own. The Chinese don't care because they have their own YouTube. They have their own Amazon. They have everything that America has created in the cloud capital world. They have replicated and actually done it better in many, many ways. So Europe is not the answer. What can we do more generally? Well, look, I do believe that the first step is to understand what's going on. So conversations like the one you and I are having are very, very important because it is crucial that people understand what's going on.

Without it, it's unnecessary, even if it is not a sufficient condition. Beyond that, I think that, you know, I respect people who are trying to regulate Amazon and so on, but I don't believe that it is realistic. People call me utopic because I try to imagine a world in which we own our digital identities, a world where we amend corporate law so that when it comes to crucial industries like this one, they operate on the basis of one person,

one employee, one share, one vote, like big cooperatives, as opposed to companies that belong to some shadowy figure who controls everything without even working in those companies. And so they call me a utopian,

and they are proposing instead regulation as if this is the 1920s and Teddy Roosevelt would come back. I don't believe you can regulate Amazon.com. I don't believe you can regulate Google. The whole point of Facebook is that it is international. You know, breaking it up like we once broke up Standard Oil into regional companies doesn't make any sense. The whole point is that you go into Facebook to find your friends from all over the world, not from your village or your county. So the short

answer to your question is that we need to socialize the ownership of algorithms that we are creating collectively. It's like our language. It's like a language. What Wittgenstein said, there can be no such thing as a private language by definition. Similarly, there can be no such thing as a privately owned algorithmic capital that is consistent with the interests of society. Yeah. You know, I often think about the comparison to the public airwaves that in the early days of broadcasting, there was a decision made that, you know, these signals are sent by vibrating the air that nobody can own. No one can own the, people can own the land, but they can't own the air.

And that says these are public. Therefore, the public gets to exercise control over them. And, you know, we can make laws, you know, simple laws like no one, no one person can own every radio station in town, that kind of law. And I think we've reached a point where, you know, when we look at the algorithms that, you know, control what we see, if you just look at Instagram or any of these others, those algorithms so dominate what we see that we have to see them similarly as the air that we all breathe. And by the way, the signal is still traveling through the air because that is what your cell phone signal travels through. So the principle also still applies. So I agree with you. And I've made that argument myself in videos that I've posted on YouTube's private algorithm that we that we

need to we need to make these public goods that the public has control over these media. Indeed, indeed. And there are ways of imagining the transition towards the socialization of the means of communication, because this is what we're talking about. For instance, imagine that instead of saying that we need to tax Zuckerberg more, Facebook or Google, I don't believe you can tax them, by the way, because they have the better accountants who will hide their profits by inflating their costs. But imagine you had a situation where you said, look, we are producing part of your capital, so we should own part of your capital. And let's say that in order to put this into effect, to operate in the United States of America,

you will need to deposit 10% of your shares in a social equity fund, which accumulates dividends, and then they can be paid back to citizens in the form of a basic income. And then, you know, that 10% can become 20%. And the limit is, of course, digital libertarian communism. That's the name of this system, digital libertarian communism. I just came up with that now. I love the principle that because it is our free labor that is powering the engine that you have built or your rents, we should receive a part of the profit.

That the public is creating the system that therefore the public needs to profit from it is a very beautiful, simple argument that I think most people would understand and agree with. And let's emphasize, this is not taxation. It's like saying, if somebody has 20% of the capital stock of a company, they receive dividends. They're not taxing the company. They are part owners. So I don't

believe in taxing the cloud rents of the cloud delis. I believe in grabbing grabbing let me put it in in non-serving grabbing a chunk of their shares and saying you know what this is ours mate yeah this is ours yeah and they will collect dividends and we will do whatever we want the dividends and you know the easiest thing to do and the most fair thing to do is distribute it to everyone. Yeah. But in order to do that, we need to have power in the system. Right. I don't believe that. Look, we have a couple of regulators in the U.S. right now who are trying their best and they are, you know, real ideologues and believe that these tech companies need to be reined in.

But we're talking about a few department heads here who might be, you know, out on their ear next January, depending on what happens in the election. That's the best we have currently. We have a labor movement that is, you know, premised on workers banding together and exerting their power collectively. But that only works at certain times when you're able to get, you know, the right movement of folks together. What you're talking about is it seems like it would require a mass movement of the users, of us, the public saying, hold on a second, Instagram, cut me in, give me those shares, right? Or else I'm not going to use the app anymore. So how could we practically move ourselves towards being able to execute a plan like you're talking about how do you envision that happening creating a political movement that

makes this possible you're talking to somebody who you know i look i was an i was an academic living very happily in my little academic cocoon writing esoteric articles for another 20 people around the world. And then the 2008 crisis bankrupted my country and I opened my big mouth and I was telling the world what I thought should happen and what shouldn't happen. And then I got involved in politics, which I didn't do. I regret the fact that I lived in part of the 21st century, which made that essential that I lived in, you know, part of the 21st century, which made that essential or possible for that matter. And now, for eight years now, I mean, I'm a politician.

I'm very reluctant, not particularly successful. That's how we like it. I'm a political party. I have found a pan-European democratic movement called DIN25. In 2008, with Bernie Sanders in Vermont, we started what we call the Progressive International. Now we have 200 million members around the world. We started the Make Amazon Pay campaign, which you may have heard of. I hope you have. Hashtag Make Amazon Pay every Black Friday.

I have heard this. It's a strike that begins. Yep. So that's the answer. The answer is we can no longer afford to be bourgeois intellectuals sitting in our little offices or, you know, at our desk writing books for each other. We have to engage the people out there because there is a lot of suffering out there. Yeah. We have to engage the people out there because there is a lot of suffering out there. There are a lot of wasted opportunities and there is so much disinformation. And those algorithms are primed to poison the debate and our democracy.

So we have a duty to drop our little intellectual games and get our hands dirty with real democratic politics of being out there and talking to people, listening, understanding, changing our minds, but not giving up. That is, it's inspirational to see you put that into practice. Honestly, I talked to a lot of experts on this show and I often ask at the end, what do we need to do? And they often say, well, I think everybody needs to X, Y, Z and people in Washington need to ABC. Not many people say we need a political revolution and here's what I've done to start one. And I think that's incredible. People can pick up a copy of your book at factuallypod.com slash books, but how can people join the effort

that you're talking about and uh become part of this movement that you're trying to build well google progressive international google progressive international and join us if you're in the united states if you're in europe uh google dm25.org dm as in carpet dm25.org it's amazing that when you when you tell people to find it, you still have to cite Google, one of the techno-feudalists that you're railing against. But hey, that's the world that we live in. That's the air we breathe and the land we walk upon, right?

It was always a game. I remember the Gutenberg Press was created to print the Bible. Yeah. Okay, we printed the Bible, and then we started printing subversive stuff as well. Yeah. Yeah. Okay, we print the Bible and then we started printing subversive stuff as well. I love it. Giannis, thank you so much

for being on the show. I really can't thank you enough. This has been a wonderful conversation. It was a great, great pleasure. Thank you for having me. Well, thank you once again to Giannis Varoufakis for coming on the show.

If you want to pick up a copy of his book, Techno Feudalism, you can get it at factuallypod.com slash books. Just a reminder, when you buy there, it supports not just this show, but your local bookstore as well. If you want to support this show directly, you can do so on Patreon. Head to patreon.com slash Adam Conover. Five bucks a month gets you every episode of the show ad free. For 15 bucks a month, I will read your name at the end of this podcast and put it in the credits of every single one of my video monologues.

This week, I want to thank Jasmine Andrade and April Nicole. Thank you so much for your support of the show. Once again, patreon.com slash Adam Conover. I want to thank our producers, Sam Roudman and Tony Wilson, everybody here at HeadGum for making the show possible. You can find me online at adamconover.net, where you'll also find all of my tickets and tour dates for the stand-up shows that I do across the country. Please come and see me and I'll see you next week on Factually. That was a HeadGum Podcast.