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Economics

Техно-феодализм побеждает

Jun 28, 2021 Yanis Varoufakis

АФИНЫ – Вот так заканчивается капитализм: не революционным взрывом, а эволюционным стоном. Когда-то капитализм постепенно, исподтишка вытеснял феодализм, пока однажды основная масса человеческих отношений вдруг не стала рыночной, а феодализм не оказался сметён. И точно так же сегодня капитализм свергается новым экономическим укладом – техно-феодализмом.

Это серьёзное заявление после массы преждевременных прогнозов о смерти капитализма, особенно со стороны левых. Но на этот раз оно вполне может оказаться верным.

Уже раньше можно было различить явные намёки. Цены облигаций и акций, который должны двигаться в резко противоположных направлениях, быстро и в унисон растут, иногда падая, но всегда вместе. Стоимость капитала (то есть доходность, которая требуется владельцам ценных бумаг) должна падать с повышением волатильности, но вместо этого она растёт на фоне возросшей неопределённости по поводу будущей доходности.

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The Post-Capitalist Hit of the Summer
Alexi Rosenfeld/Getty Images

Economics 11

The Post-Capitalist Hit of the Summer

Yanis Varoufakis points to August 12 as a historical turning point, when equity markets' link to the real economy was severed.
The Goldilocks Stimulus Myth
Robert Alexander/Getty Images

Economics 11

The Goldilocks Stimulus Myth

Yanis Varoufakis shows why there is no longer any amount of additional US fiscal spending that is just right.

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0 Comments on this paragraph, 39 Comments on this article

Luisa Alvares Jan 4, 2022

Here below is (indirect) evidence that the Bank of England colluded (not sure this is the appropriate word, maybe collaborated? or - literally- lent support?) with UK's Government to print money anew to pay for the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS).

In other words, this indirect evidence suggests they used sovereign money to cushion the pandemic impact. If true, which I make no claims to be, for what it is, is what it is measured, the implications would be very interesting to study.

1. “the Bank of England has coordinated its actions with those of the UK Government in order to ensure that these initiatives are complementary and have maximum impact in supporting households and businesses during this period of disruption” (...) “Over recent weeks, the MPC [Monetary Policy Committee] has also announced an increase in the stock of asset purchases, financed by the issuance of central bank reserves, by £200 billion to a total of £645 billion (...). The majority of additional asset purchases would comprise UK government bonds.

Source: https://www.bankofengland.co.uk/-/media/boe/files/monetary-policy-summary-and-minutes/2020/march-2020.pdf?la=en&hash=F79A300BF2CE1E918CD5D873364D9985B45B9C50

2. "I am placing no limit on the amount of funding available for this scheme"
Source: Her Majesty's Treasurer, Rishi Sunak, March 20th 2020: https://www.bbc.com/news/business-51982005

3. The Office of National Statistics treated this as "other subsidies on production", which do not count as government expenditures to the GDP, even if de facto they are expenditures which sustained the economy through the lockdowns: https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/coronavirusandtheeffectsonukgdp/2020-05-06
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M.L. B. Dec 28, 2021

If anyone, including Mr. Varoufakis, wish to learn more about techno-capitalist-feudalism, please check out the book *Techno-Capitalist-Feudalism* on Amazon, published on September 7th, 2020, some 6 months before Mr. Varoufakis began speaking on the subject. It is the foundational text of this new socio-economic phase of capitalism, namely, the age of totalitarian-capitalism. Indeed, the logic of capitalism is still operational in the age of Techno-Capitalist-Feudalism, in the sense that it is the central-operating-code of the new techno-capitalist-feudal mode of production, consumption, and distribution!
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Ben Leet Aug 14, 2021

In the U.S. corporate profits as % of GDP rate is still high, it's still above 10% of GDP. It took off after 2000 when Bush 2 came into office. It was 4.5% of GDP in 2000. The Fed purchase of corporate bonds in 2020 was about $4 trillion, but it stayed in the financial market, did not affect the normal commercial market. I compared the growth of income from 1964 to 2020: "average weekly (and yearly) earnings for production and nonsupervisory workers" (80% of workforce) grew by 4%, (BLS data: https://data.bls.gov/timeseries/CES0500000031) (yes I know that sounds wrong but you'll have to check for yourself, it's correct), and in 2020 it was still about 8% lower than 1973 levels (check the BLS web page); the hourly wage grew by 25% (but average hours per week decreased); and the GDP/capita grew by 189%. It's that 4% to 189% growth that should stand out in everyone's mind. Wages dropped by 23% between 1973 and 1993, and have steadily risen but are still 8% below 1973 levels (see the BLS web page). The RAND Corporation study "Trends in Income 1975 to 2018" states that average workers' income, including supervisory workers, increased from $43,000 in 1973 to $50,000 in 2020, when they would have risen to $92,000 had wage growth matched income growth, as it had 1946 to 1973. This is well-known history, RAND brought it to light. Other studies agree with RAND, see Olivier Giovannoni at the Levy Economics Institute, What We Know about Labor Share, Part 3. A shift of income occurred, the lower 90% lost 12% to 17% of total income, the top 10% received what the lower lost. "The New Gilded Age" published at the Economic Policy Institute has similar results. This is the demise of prosperity, but not of capitalism. Mexico never experienced prosperity, and the inequality of income there is typical of the future of the US, in my opinion. Unless the general population takes notice, which they might. Bernie Sanders is popular, and he has noticed all this. While the GDP/capita jumped by 189% between 1964 and 2020, so did the S&P 500. But last year the S&P 500 increased its value by 33%, from 3300 to 4400, roughly, while the economy slipped by 3.6% of 4.5% depending on how you calculate. As many know, professor Lazonick has shown that over the past decade and more, at least 90% of the S&P 500 profits have gone to shareholder dividends or stock buybacks. It's an ongoing thing. This is how our society allocates its surplus -- it essentially wastes it. That wealth is "static" not "dynamic"; it contributes nothing to social well-being. It's almost criminal, it's at least disgusting. Since January 2009, the Fed's Flow of Fund reports that total private "household net worth" has increased by 134%, adjusting for inflation, from $58 trillion in January 2009 to $136.917 trillion in June 2021. GDP increased by 23%, nonsupervisory worker weekly income increased by 8%. Get the picture? I write a blog, Economics Without Greed, Part Two, some of this is on it. http://benL88.blogspot.com --
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j M Jul 10, 2021

Sadly, I suspect climate change is going to rip the rug out from under our infrastructure soon enough, to the point that this is all moot. The future is more likely to be one of Mad Max Warlordism than anything else. If we even have a future.
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Enrique Woll Battistini Jul 6, 2021

July 4, 2020 : Given the threats posed by Global Warming and the Anthropogenic input accelerating it, and by the Global COVID-19 Pandemic, in the face of a rudderless Government in the U.S., and the resulting calamitous Global Economic Crash that is currently unfolding, with mass hunger and illness to be expected at this time and for the foreseeable future, it has become evident that drastic Development Proposals on a Global Scale will have to be conceived and implemented without delay. This is and must be the primal task and duty of the U.S. to the Peoples of the World, from Fourth World to First World, especially the poorest, given the enormous Development it has garnered for the so-called American People since its founding, with the incessant and stolid participation of these very same peoples. This is one such proposal: Mathematical Model and Simulation for "A Partnership for Development with the United States of America", at no cost to the U.S., but great profit, that would articulate Private Sector and Public Sector entities pertinent to environmentally-friendly holistic socioeconomic development in the American Hemisphere, bringing together its 35 nations, in a concerted effort to reduce and eliminate the existing Ominous Welfare Gap, led by the Private Sector, for profit. This very same scheme can be implemented on a North-South basis, not only in the Americas, but in Europe Africa, and Asia Oceania. Model and Simulation developed in Excel in 1999, and subjected to its subsequent versions through Excel 2003 and its updates through 2014. Some macros may not work appropriately today.

https://www.academia.edu/40526767/Mathematical_Model_and_Simulation_for_A_Partnership_for_Development_with_the_United_States_of_America_December_1999
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john zac Jul 5, 2021

Good points, great article but slightly disagree with the conclusion. Most serfs are happy in this fiefdom, whether they're hollering for lower taxes, watching Euro 2020, shopping non stop, for or against LGTBQ, or risibly saving the planet on a private jet, no one is out there rallying any troops. So we'll follow that great prophet, Jackson Brown and "become happy idiots struggling for the legal tender"
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joel bernard Jul 4, 2021

VV's pieces, this one and the one it links to, provide a very intriguing overview of the contemporary tranformation of capitalism. I do think, though, that the logic of his argument suggests a version of Modern Monetary Theory as the resolution to what he terms "techno-feudal exploitation and mind-numbing inequality."

If I read him correctly, VV argues that central banks' liquidity decisions provide the actual motor for current economic activity. At this level of Fed-created liquidity (and Obama-era fiscal policy), low interest rates simply subsidize the speculative profitability of capital at a given level of production. But if the interest rate is a non-factor in real economic activity, then the Treasury can borrow and spend like any private corporation. And if a Fed/Treasury-financed Biden stimulus provides employment opportunities and reinforces the social safety net it can raise the both level of economic activity and the standard of living.

This is pretty much MMT, isn't it? I don't see VV's interest rate paradox. The political problems getting this done are obvious and daunting. But the goal, at least, seems clear.
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Bogac Ozdemir Jul 4, 2021

Great article.
Just a few points: The transition from feudalism to capitalism in 19th century had more impact in history because of its impact on productivity. At the end, nations where feudal relations persisted ended up losing their independence through world wars and went through this transition with a foreign mandate.
Transitions from capitalism to oligopoly and its derivatives did not have the same impact, hence we haven't seen any major wars as most of the world is governed by some sort of oligopoly.
The impact of central bank currency - since 1971 but especially 1999 is enormous but not as fundamental as it is believed today because it is unstable just like any unlimited credit scheme is. The difference between the path to GFC and the path we are following is where the credit bomb is placed.
Unfortunately, we do not have any real markets left to rely on when that bomb goes off which will only increase the power of governments to dictate everything in our lives with the help of technology exactly how it was predicted by Orwell.
Here, the corporate currency and its unlimited leverage is applied only for this transition.
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Joe Ryan Jul 4, 2021

The author says some true things about capitalism: that it has passed from more-competitive to less-competitive forms of industrial capitalism and then to financial capitalism, and that a "main feature" is the extraction of private profits and rent.

His statements about capitalism would be much clearer, however, if he made a declarative statement of what capitalism is.

For example, he might write: capitalism, as an institution, is a part of an industrial economy, specifically the part composed by large firms that are the properties of a small minority of the population, "capitalists," who direct the firms to maximize their own benefit and for whom payments to other people, such as employees, are costs to be minimized; and capitalism, as an ideology, is "laissez faire," the assertion that any involvement in direction of firms by others besides the capitalist owners — such as by employees, governments, or "society" — is illegitimate and socially harmful.

Then, when he makes statements about capitalism, the reader could judge whether the statements are justified or not.

By the way, how is an oligopolistic firm not a private fiefdom? I don't think the author has really found anything new in this respect.
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Sergio Paradiz Jul 4, 2021

I’m lost. A professor of economics writes “the cost of capital (the return demanded to own a security) should be falling with volatility; instead, it has been rising as future returns become more uncertain”. I’ve always assumed ( and trust me , I will continue to assume until proven wrong) that volatility has a positive ( increase ) effect in the cost of capital.
- Michael Harrington Jul 4, 2021
  
  Agree. This is the only statement that contradicts the logic of his arguments. With greater volatility (risk and uncertainty), the returns demanded go up not down. But the cost of capital is now negative because of central bank policy of buying up debt. It almost sounds as if this was a typo.
  - Sergio Paradiz Jul 4, 2021
    
    Other statements contradict evidence. The author writes “Bond and share prices, which should be moving in sharply opposite directions, have been skyrocketing in unison,“. The facts ie evidence are : - gov bonds rate is at half of 2 years ago and 1/4 of 20 years ago. Bond rates can hardly be any lower. How can one claim “they have been skyrocketing “? The statement is a fallacy elaborated to meet the writer’s argument.
    - Michael Harrington Jul 4, 2021
      
      But he doesn’t refer to rates, he refers to bond prices, which move inversely to rates. Bond yields are at all time lows because of deflationary forces and Fed accommodation as lender of last resort. All asset markets move higher because of the Fed put, there is no hedge except devaluing currency or negative return treasuries.
      - Sergio Paradiz Jul 4, 2021
        
        I’ve tried to shrink my comment and wasn’t clear enough. My point is :- the entire paragraph is meant to explain why this time “capitalism’s demise” “mayy well be true”. Then the argument goes on showing the inconsistency of the current economic trend. Which alone is a very shortsighted perspective needless to say. And to make his point argues with the irrationality of current economic trend. And my point is :- there is no inconsistency. Bond prices are high because rates are low ( inverse correlation). Share prices are high amongst other reasons because Fed or CBs rates are low. With an extremely liquid market can one expect players to act differently? Therefore my point :- No there no demise of capitalism in the horizon and indeed ( and quite the opposite ) all “clues” point out to capitalism functioning as one would expect. Thank you for your enlightening contribution.
        
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Per Kurowski Jul 4, 2021

Besides “central banks’ balance sheets”, the techno-feudalist’s regulations.
For bank capital requirements, even though Greece cannot print euros on its own and independent of Greece’s credit rating, a 0% risk weight assigned to its sovereign debt. That doomed it!
https://subprimeregulations.blogspot.com/2012/12/one-of-greatest-myths-is-that-if-greece.html
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Joe Fowler Jul 4, 2021

Cheap ‘credit money’ issued by banks to lenders has been by far the dominant source of new money - causing spectacular asset bubbles (housing). Central bank purchase of bonds has driven investors money into safe company stocks (driving share prices up). Central bank QE just changes liquidity a bit - swapping cash for bonds just reverses the bond sale.
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Chandrashekar Tamirisa Jul 4, 2021

We live in a world not of techno-feudalism but post-modern feudalism. The income disparity created by technical change has produced the expanding precariat and it remains to be seen whether, as Simon Kuznets observed, the rising income gap will be reversed at some point in the future.
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Roman Smirnov Jul 4, 2021

Don't panic. CBDC solutions will separate money flows of real economy and "virtual" in few seconds, with gateways between them.
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Mike Flair Jul 1, 2021

I enjoy Yanis, he interesting and provocative. I think USA capitalism end is premature, and I think the USA will change significantly over the next 4 years, in other the Progressives will be thrown out forever. It is EZ to see to me. The USA FED is the USA Stock Market backstop...they have taken risk out of the system and ongoing inflation is not in sight. TINA = USA Stock Market. Invest over time and enjoy the riches.
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Michael Public Jun 30, 2021

When the tractor was invented the agricultural labour force went from 90%+ of populations to around 1-2%. We are now in another process where as per the now famous quote : "Software is eating the World". Example: Tesla (who makes computers with wheels) is in process of building cars that will render other manufacturers to no better than the horse traders of yesteryear. Idem for every industry. We are entering an era when technology performs the real work while people fight for the scraps. Historically, much power was associated with the work a man does, see labour unions or peasant/worker uprisings, but this is now in its death throws. Jeff, Bill, Elon and those Google chaps now wield more collective power than all the labour unions of the World combined, including the largest one - the CCP. The problem is that once the economic power of human beings is dead, we are left with only political power to give us agency, and this is far too blunt an instrument for a good solution. The solution lies in the ownership - why must technology (and powerful brands) be forever owned by a handful of 'techno-barons'. They are more valuable and crucial than land itself, so just as aristocracy fell to make way for alternatives with capital/socialist blends - so must aristocratic intellectual property : brands and technology need to be placed into general ownership(of whatever socialist/capitalist style) by the people. Of course it must be a workable system carefully designed and implemented. Failing this, the entire population (without significant tech holdings) must become either unemployed double graduates or work-till-you-jump-from-the-roof software engineers. This pressure cooker is going to cook hotter until something gives - either with guillotines or with broad economic reforms. I give it 10 years.
- Gerald O'Connell Jul 5, 2021
  
  Yes, that's right, ownership is all. And the political machinery of democracy can work with the basic logic of market capitalism to change ownership in radical ways. There is no inevitability about techno-feudalism or inequality, merely a shortfall in awareness of how to remedy their ills: http://oconnellomics.com/ai-automation-globalisation-and-the-inevitability-of-socialism/
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Jun 30, 2021

This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
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Michael Public Jun 30, 2021

Surely it jumped 2% because speculators had already priced in (say) a 24% drop and not a 20% drop. It was above expectations. Speculators typically keep their real estimates under lock and key. Estimates out in the public should be treated with a double grain of salt.
- Yanis Varoufakis Jun 30, 2021
  
  No, the great fall in UK GDP was NOT priced in. Markets were expecting something like -15%. What happened is that financiers thought: "By golly, this is much worse than we thought. But that's good! The BoE will panic, they will print new mountains of pounds, these will flow into the City, share prices will rise - time to buy!"
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- Michael Public Jun 30, 2021
  
  Or maybe Yanis is right and it jumped because they realised they would get EVEN MORE free money from the guvamint.
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Mr. Bu Jun 30, 2021

The cancellation of Ant Financial’s IPO may be a seminal moment. A political system does exist where the interests of capital do not run riot.
- Michael Public Jun 30, 2021
  
  "where the interests of capital do not run riot"
  Russia. China. Iran. South Korea. Cuba.
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Andrés Cárdenas O´Farrill Jun 29, 2021

I fully agree.
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Dr. Mamdouh Barakat Jun 28, 2021

Thank you. Insightful as always.
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