Capitalism as we know it is over, so what comes next? | My Wildest Prediction with Varoufakis

we're good one two three welcome to the show Janice thanks Tom great to be here um let's start there

what

's your

wildest

prediction

for the future? It is not a

prediction

, it is a diagnosis. My name is Tom Goodwin and this is. My

wildest

prediction is that his name rose to prominence in 2015 when he was anointed Minister of Finance in Gree at the height of the European debt crisis. This is Janis Verlis, an author, academic, maybe activist, politician, and we are here to discuss the future of

capitalism

and how technology is changing the world we are going to talk about her latest book techn feudalism the end of

capitalism

this book is not is about

what

will happen in the future is a very controversial notion of what has already happened, so this I'm not writing about what AI would do in labor markets, what will happen to us with big brother and you

know

, surveillance and all of that is my estimate and this is a controversial hypothesis that capitalism is already over, which is very strange.

Yes, I don't remember this feeling as if anything had happened, you see, but Tom, as I see it, supposes that this was in 1776 and we were in London and we were having a discussion about the state of the world now everywhere. we look in 1776 we would see Fidelis we would see Fidelis in the House of Lords in the House of Commons in government in every local council around the world um on the land we would see peasants we would see aristocrats and yet we

know

that Don't we? Feudalism was already dead and was gradually but rapidly being replaced by something called capitalism.

The magnificent shift of power from the owners of the land to the owners of the steamboat machinery of the power grids later and the shift of wealth creation. from accumulating rents to making profits, my view is that we are already experiencing a similar transformation everywhere we look, we see capital, we see markets, we see capitalists doing extremely well, and yet I believe we have already experienced a transformation towards something resembling feudalism, but a very technologically advanced version of its marketplaces has been replaced by platforms, so amazon.com is not a marketplace, it looks like a marketplace, but rather a digital fif, a cloud fifm that belongs to a man whose accumulation of wealth is not based on profits but on a form of rent every time you buy something on Amazon 30 40% of the price goes to Mr. bases, not to the manufacturer and how are assets defined in this world of technological feudalism, like what do they own? that they are renting is our data our attention our relationship not all of that is part of the story but it is not the story the story is that a new form of capital began to emerge about 10 years ago uh Capital was always a means of production produced So , whether you have Robinson Cruisers fishing on Road, a steam engine or a very advanced industrial robot today, it is a produced means of production, something we produce to produce other things, but this new mutation of capital that I called Cloud Capital It is what lives. on your phone through the cloud, you mean it's some kind of ethereal asset, you mean it's a permission.

I'm talking about the cloud, okay, so take Alexa or Siri or Google Assistant right now that's sitting there on your phone or on your desktop and command it to do things MH okay, yeah, but that's just a little part of the story, yes, what it is, is an interface between you and a whole glomeration of capital goods, including the fiber optic cables that run into the huge Ocean Floors gigantic server. like a factory like a dark satanic mill to quote EDM Burke, uh, cell towers, this is capital, it doesn't live in the cloud, yeah, but it's what we call the cloud when you upload things you know, cloud photographs or you save things in the cloud so that you interact with this thing that is a kind of capital but is not exactly a means of produced production because what does Amazon Alexa do?

What are you doing? You're essentially training him through your commands, just talking around the house, yeah, he gets. of your data, but data about your preferences, so you're training it to learn to give you good recommendations, so I don't know about you, but when Amazon recommends a book, I always want to read it because it knows when. Spotify uh gives me a recommendation for music invariably I like it invariably because it understands that you have to do it very well so I'm training it to train me to train me to train me to train me so that at some point I can actually make a recommendation and then I can say Okay. , that's how I want it and the bottom line here, Tom, is that this is not like standard advertising where you know you see a billboard that says buy a Mercedes-Benz, then you go to the Mercedes-Benz dealership and get one, no, Alexa convinces you to buy something, a stationary bike, whatever, a pair of binoculars, and then she sells them to you, mhm, without going through all the markets in the world, now, that's one way, that's a market, and you see, most of the income is now accumulated.

It accumulates in the form of rents that the base charges the capitalists for access to this digital fif, so we return to the system where access to land only this time it is digital land, it is what I call capital in the cloud mhm um it's restricted, crucial outside the market outside of capitalism and it provides a magnificent rental for the new Cloud Lords, that's a new system and how do you define these new Cloud Lords? Is it a question of the service space they have? How many clients do you have? At what point does Walmart become Amazon?

At what point does a taxi become converted? Walmart is now in the cloud. It's okay because Walmart has very cleverly, yes, developed its own competitor to Amazon. It is using its stores to build its cloud fiefdom and now more and more. Walmart's profits, net returns come from the cloud, not from the analog buildings that it still has and that it uses to effectively attract people to the cloud, and you talk about this in a very sinister way, I almost want to say that his book is pretty bleak, you know, some people would look at this and say they decided to get into a relationship with Amazon, they decided to upload their photos to Instagram, they decided to use WhatsApp as a way of I don't think.

My book is pretty bleak. I try, I try to write my book, you know, in a very jovial way, you could argue with the people I'm writing it with, by the way, like a letter to my dad, yes, I constantly have a little fight with my dad. uh because I try to imagine what he would have said to me and I try to respond to what I imagine he would have said to me. I think my book is a very enjoyable read, I didn't feel that way, but um. I mean, I'm very optimistic about the future and what technology means and I think there's something inter, but it takes an incredible degree of naivete to be optimistic about the future.

There is no empirical evidence to support that anything good will happen. but where evidence that things have gotten better year oh no no no no, we don't, everything is getting a lot worse for most people on this Earth, including the climate catastrophe, come on Tom, but I'll tell you, I'll give it to you. this I'll give you this and let's see if we can converge yes, yes, yes, I'm hopeful, yes, I'm not an optimist, okay, I make a big distinction between optimism, which is the poor cin of hope, and the hope that we need. have I love those technologies, don't get me wrong, I'm not a Lite and keep in mind that Lites are very misunderstood, they didn't like it completely.

I love Lites, but you know what I mean, I'm not against machinery, uh. I'm absolutely excited, completely addicted, yes, to all those applications, for example, I think the world of AI, yes, I think AI can destroy us, but I love it. I absolutely love the idea that today there is an AI that designs antibiotics that can kill super bugs. That human Minds cannot design an antibiotic against that is brilliant, that is a Triumph of the human Spirit, but not to see that we have exponential concentrations of income in the hands of people who produce nothing except the right and opportunity to extract income from others as the world is sinking, uh, in terms of the climate catastrophe that we must recognize if we are to maintain hope.

I mean, you are a great study of History, um, and you in your books. talks a lot about technology, especially when it

comes

to capital, and you would look at most forms of technology and see them as levers for human potential. You know the loom obviously had huge threatening impacts on the Lites, hence their fight for justice. But in general terms, technology is a lever that allows us to create more wealth. Its distribution has not always been fair, but over a long period of time the trend lines are quite consistent. And especially since about 1910, global inequality has remained roughly the same.

And? since 1910 since around 1910 1930 on a global scale still the same very similar depends on whether you look up or not 1% depends on what you are I'm sorry but my question is as if I am afflicted by an economic mind that refuses let's see things is global inequality 2022 Ro polarized glasses is the report on world inequality 2022 um and has analyzed things globally and obviously no one lives in a global world we all live in our own reality um and to a certain extent we have to ask ourselves if It's about relative income or absolute income, but at what point in recent years do you think we moved into a kind of technological feudalism?

Is there a defining moment where you think we qualified? to reach this turning point, well it's between 2008 and today, so it's impossible, it's like saying, do you know when you became bold, what hair did you lose to go from being a person with hair to a bold person, yeah, it doesn't exist such hair. defines a transition, but I can tell you it was around the night I was 40 years old. Similarly, the change occurred after 2008 and occurred because of 2008, largely due to the way the G7 governments and the central banks responded to the great financial catastrophe with a combination of socialism for the bank, you know, trillions were pumped out of our central banks to go into the financial sector with enormous wealth for everyone else who stood by watching so you know you create a lot of money.

We have liquidity that we never had in the history of the world and that we never invested in due to low levels of demand, so the companies that got this money from central banks bought back their own shares, which created inflation in asset prices. , the only ones who invested. they were the cloud lists the people who own the Capital cloud you know the technology Gentlemen uh and you know Wonderful machinery and all that, but that investment was dedicated to creating the Capital cloud which then replaced the markets with platforms and changed a very significant flow of income circuit from profits to rents, yes, and that is destabilizing for the global system, what do you think has been the relationship between the rise of these technology companies and zero interest rates?

That's what I said, yeah, I mean, zero interest rates is what happens when we're trying to refloat the financial sector by printing huge amounts of money. I mean, the price of money is related to its supply, so when you increase the supply like there is no tomorrow, the price of money, which is the interest rate, will go down. at zero and below zero, which is what happened, it's interesting when you try to find the kind of characteristic that defines what is a technology company versus what is not a technology company, you can look at a lot of things, like the effects of network, you can look at the data usage um, the only kind of interesting element, I guess, is looking at the return on capital and the degree to which they need it.

I think all of that is relevant to IR, it's just hot air, I'm just trying to sound like you're financially smart. Sorry, but you know I'm tech savvy, yes, yes, I'm sure, I'm sure, but from a socioeconomic point of view what really matters is none of that. I don't care how you define a technology company, okay? I can have a tech company that makes cool industrial robots that aren't cloud capital, okay, it's beautiful, I love it, you know? Every time I see industrial robots assembling beautiful cars and micros, it's like poetry in motion, now it's a tech company, yeah, that's not who I am. talking about, I'm talking about companies that are investing in creating what my definition of cloud capital, which is a produced means of behavior modification, the difference between a fantastic, technologically elegant industrial robot, etc., and Amazon or U uh, for that matter, Facebook.

Yes, the latter is not a produced means of production, it is a produced means of behavior modification. Okay, so Cloud Capital gives the owner immense and exorbitant power and privilege to alter people's behavior in order to create alternatives to the markets in which we are all trapped as buyers and sellers, but not within a marketplace where we can choose our partners and choose the algorithms that make thechoice for us and the algorithm chooses in a way that maximizes the cloud rents of the owners of that cloud capital and you. We are a little worried that this will become somewhat monopolistic because of the information they have about us, which makes it difficult to leave that ecosystem or because of their market share or because it is impossible for other people to enter the market or because this is not a kind from Concern about monopoly, well, you see, I avoid the word monopoly, okay, and I avoid it because a monopoly is a market.

M, it is a monopolized market. My point about uh um Alibaba, so I wasn't going to just talk about Amazon, you know, is that it's not a marketplace. You see and I try to explain this in the book. I imagine you and me, you know, walking into a town in the United States of America, you know, in the 19th century, let's make it a little, you know, romantic, from a western movie, and we discover that every store in the city ​​belongs to a man. You've seen western movies like that. true, and there is a confrontation it would be more that one person owns the land, no, no, suppose this person owns the bar, the saloon, the stores, the hotel, everything, the post office, the sheriff.

Okay, you've seen these movies. with John Wayne and right now it is a monopolized market, a monopolized city, you and I walk by the store, we know that it belongs to that person who owns everything, has immense monopoly power over everyone in that city, but in Alaba, for example, 100%. of your income wait, wait, wait, you're missing the point of my allegory here. I have an allegory from a western movie, let's not lose it, what I'm trying to say is that this is a monopolized market, but Alaba and Amazon are not because in that city in the western movie you and I Tom walk down the street street, yes, and we look at the window, you and I see the same thing, maybe we won't buy it, we can say, let's not give our money to this terrible man who owns everything, but we talk, we see the same thing if you and I had a laptop here and we would go to Alibaba or Amazon and type with fancy binoculars, you see different things than what I'm going to see, yeah, the algorithm knows that you know me. and it calibrates what we see and does not select the same thing so that we do not even see the same things that is not the market it is not a monopolized market it is not a market it is an algorithm like a Soviet economic system yes, the one that decides who does what with who without any consultation without any way for you and I to communicate as buyers or you as a seller and me as a buyer there is no way for us to communicate unless the algorithm chooses for us to communicate.

I mean, some people would call that customization something people, that's all nonsense, it's not a market, you can call it whatever you want, eh, yeah, not the point I mean, it's not a market, yeah, right, and It is an algorithm that matches the people who sell. people who buy in the interest not of the seller, even that would be Monopoly mhm, but of the rener or the owner of that cloud Capital, that's the point I'm getting at, okay, okay, I mean, what do you think is the solution to all this? How are things going to progress from now on?

Can technology be the solution and also the problem? Technology has never been the solution to the problems we create with technology. The problem is political, it is social. So you know, steam engines weren't responsible for the horrible conditions of the working class in Manchester, uh, when the first dark, satanic Mills were set up, right? uh, and the solution was not technology, the solution was, you know, social political interventions, that will always be the case, so I don't blame technology. and so I don't expect technology to solve the problem the question is who owns what you see some people are very concerned about surveillance you know these companies know a lot about us it doesn't bother me that much personally I mean , I understand. why people are worried I'm a little bit worried, but I'm much more worried about what they own, okay, and they own this Capital, which is the ability to separate us, fragment us as markets, communities and societies, uh, to influence on us in ways we don't.

I don't understand in a way that the people who wrote the algorithms don't understand, this is even more worrying as you hear that AI coders are more true, like AI is a good example. People are surprised, so for me, as an old lefty, yes. The answer must always be the socialization of the means of production, somehow technology has been forced to democratize access to wealth creation, so now you live in a different universe, democratization, what democratization we have exactly the opposite, We live in a world where three companies Black Rock State and Vanguard own 90% of all the companies on the New York Stock Exchange and you're talking about democratization, they don't own 90%, they all have a majority stake together in 90%, they become picky, yes, this is this.

Are you, Adam Smith, a patron saint of the FY Market? Yes, it would be a pleasure to hear you talk about the democratization of capitalism. For him, what we have now would be a nightmare, but you could argue that a platform like Shopify makes it easy for people without much means to set up a store. You could argue that YouTube gives the opportunity to anyone in the world to make a good quality documentary and they can make money from advertising. One could argue that Facebook has democratized access. to advertising tools that allow people to buy media at the same rate as larger companies.

I am aligned with almost all of his thoughts. I just think it's a little unfair to look at some of the dynamics that provide access to people in a more leveled way, um and to some extent the data that allows a Marketplace to customize what they offer actually works in favor in some cases of smaller companies using them. That last sentence is absurd. Everything else you said before was fine. The conclusion. It was absolutely absurd, let me say it right now, listen, there is no doubt, yes, Amazon provides fantastic opportunities every day for producers to reach customers, there is no doubt that Shopify does the same, um, not all of these, It's not this extension, but you knowing all the paraphernalia of podcasting and so on allows us all to be broadcasters, okay, all of that is perfectly true and it's great, yes, it's great, however, what I mean is that the forces fundamental technological solutions in place, which are based on the way that Cloud Capital operates, yes, they make sure that all those working people that you know create businesses and sell things through Amazon or Shopify, etc., in the end they end up become vessels, yes, because you know that the owners under feudalism allowed people to do the things they were given. land, they were given the opportunity to produce Stu, they were called vessels in the sense that they were complete, they depended on the owner who actually took away their rent until he took out the living ingenuity from them, this is precisely what we are having.

We are having machinery and Cloud Capital that allows us to do many things well, podcasts, etc., and yet, if we look at the concentration of the ability to influence public opinion, we have never had less free press than we have today. In the context of each of us being a little BBC or Euron News or whatever, I guess when I listen to a lot of what you say, the sentiment you have is something I completely agree with. Personally, I'm by no means a fan of Amazon or any of these tech giants and I hate the level of influence they have over our lives, but I think of it more in terms of algorithmic persuasion.

I think of it more in terms of a bit of a sociopath. Tendencies to monetize our attention in ways that lead us to be angrier at each other than we should be, so I sometimes wonder if maybe the real weight of your concern is that it's not more about the algorithms and the way that is used. um I love it the question is who owns that damn thing yeah right if one person owns their algorithm that controls billions of people then we have something worse than 1984 yeah where the shift to a world happy open access to the algorithms where you see. 1984 there was a surveillance problem, yeah, uh, Brave New World is a problem where we are all happy little slaves who love our slavery, right?

And that is a problem, yes, if you are liberal, if you are, if you believe in freedom, if you believe, but. There's also something else, no, that really worries me. You talked about algorithms that are prepared to maximize anger, indignation and intolerance. We all know. You just need to continue with X formally, five minutes of that like some. Who said that? I think it was Steven Fry. He said something brilliant. He said this quite a while ago before Musk. It's a bit like taking everything that's written on the walls of men's bathrooms around the world and posting it online, so yeah, I agree. with you, but think about this, if my macroeconomic analysis in the book is correct, yes, we have a situation where, as David Ricardo asked in 1809, if you have an economic system in which increasing percentages of income deviate from the investment cycle by tenants.

Talking about the Corn Laws back then because of the Napoleonic Wars, you know, the war in Europe, then the Napoleonic Wars, they were a boom for landowners because they didn't have to compete with imported corn and therefore they were able to charge more and more. rents to the corn producers who use their lands, but they simply became rich while they slept because it was rent, it was not capitalist profit, it was as if this money, this economic energy had been taken out of the circular flow, there was less investment. and the whole system was degenerating, so I'm telling a similar story: if the owners of those cloud stealers, these platforms, are siphoning off increasing amounts of economic energy in the form of rents, that goes a long way toward explaining why we have inflationary central banks. continue printing money, why even though inflation is good because aggregate demand is reducing as a result of the fact that a large amount of wealth is being diverted from the circular flow of income in the form of cloud rents, then there is inflation, there are jobs as a result.

David Graber corrected it scientifically: discontent is building with our central banks, with our governments, with the markets, with inflation and then there are those algorithms that make a lot more money by preparing the outrage and then, the more they prepare the outrage, the more they extract money from the circular flow of income and more outrage there is, that gets out of control and what be

comes

the end point of this kind of global end of civilization, okay, this is this, you know, this is not going to be good. I don't think anything good is going to come out of this.

I don't think he's one of those left-wing revolutionaries who think, as Lenin once said, that the worse it is, the better it is. I do not think it is like that. What I've seen in this country in Greece, I've seen the deterioration of living standards year after year and all of that produces NIS, nothing good, um and when you look at a tool like AI, can you see that as something that gives us will get us out of that spiral or something will technology get us out, I mean in a good society we will use AI all the time mhm all the time, we no longer need, for example, you know, teachers to train us to do things that we need teachers . to educate us, but training can be outsourced to AI wonderfully, may be right, so I love it, but it won't solve the problem of cloud lists, as I call them, the exorbitant power of the rest of society, in everything case, it will It's worse because AI makes algorithms faster and better, how can you reconcile in your mind the type of cloud owner ERS with forces for Absolute Evil versus companies that have elements in what they do, what Which is beneficial for society?

You could watch YouTube and see how that could educate people around the world who otherwise wouldn't have access to books like: Is it possible in your head to reconcile what is a good use of server-based technology and what is bad , of course? Absolutely, there are many fantastic and totally humanistic users of technology today. The question is: where is humanity as a whole, being guided by more powerful forces to work within it? That is the question and we have to be constantly. looking for good uses of the technology that is upon us, looking for ideas about how society should function, be designed, what its architecture should be and how you see these conversations progressing in the context of global climate change and progress towards a net network. zero I mean, do you think of that again as kind of a catalyst to bring the end closer?

Do you think of it as an environment that changes people's motivations away from consumption in a way that helps slow this change? I'm afraid not. I see the opposite because in the same way that algorithms are prepared to excite intolerance in our souls, they are prepared to make us buy things that we do not need orwe want, MH, and you know that we must forget about difficult things like the climate crisis, of course, these algorithms are essential to fight the climate crisis, yes, so if we, as a society, as a community, as the League of Nations or of societies, we could agree to stop drilling for oil and, you know, fossil fuels in general, if we agree to end wars, that would be very helpful.

War does not help the climate. In the least, then we would design our new green energy networks and you can only design them if you have a very strong use of fantastic algorithms that are. necessary to ensure that the selection load is always used correctly, you know, wind, solar and other renewable energies are optimally combined, so, like at the beginning of time, our technologies are a force for good and for a force of evil and if evil prevails it is our fault. I think I want you to leave some action we can take. It will turn out good or bad, what can we do to make sure we get to a better place together?

Well, I think we should focus on two things, mhm, first we should end the free services, mhm, because you don't need me to explain that to you. when you have effective free services if you have the complete tyranny of the cloud capitalist or the cloud enlisted, it would be great if we had subindex micropayments, a micropayment system and if some people can't afford it, they should get it. SocialPayments security to make these micropayments, so you're building an app, right? The person using the app pays you directly, yes, no, no, indirectly through advertising, because that way you don't have this complete acquisition of our souls, yes, okay, that's one thing and the second, it would be fantastic if we started thinking in terms of changing corporate law, imagine, just imagine, I know it sounds like science fiction, but technically it's very simple, imagine that you and I if we formed a company or 30 of us, 40 of us formed a cooperative and we each have one share.

Imagine if every company, especially large ones, had a share structure where each employee had one share that could not be traded equally. as a college student you get a library card or student union card when you enroll and then you have to turn it in or it becomes invalid when you leave when you graduate they can't sell it they can buy it but they can use it to vote. they can use it to check out books, they can use it to use the Internet, the Internet, etc. Imagine if that was how shares were, they gave you a vote in the company and you worked, it didn't mean equality because we could vote for that person. who really creates the really good things that allow us to run our company well, we should give them more money, so imagine that would be a magnificent revolution, it would end the stock markets and the labor markets MH in one go, yeah, yeah, and then there would be no state, there would be market-based cooperatives that owned the algorithm, but in a way that was not predatory, and if they had to receive micropayments from those who actually use them, then we would be talking about technology in the interests of a combination. of freedom and justice, okay, so something rooted in philosophy almost like a dow or something based on blockchain or the technology it doesn't matter, it's about the type of technology, it doesn't matter, so what I described to you I could do it in chunks of paper, it really helps to have an algorithm, blockchain could be useful, but you know the problem with blockchain is that it has become a religion, yeah, and you know there are people who religiously hate it and people who religiously hate it.

Adopted and I'm just not a religious person when it comes to these things. I think you know, horses for courses, blockchains can be very useful. I mean, JB Morgan uses it internally. If they use it internally, we should use it internally. also, but we should not think that blockchain is the answer, yes, blockchain is a tool that makes sense, so when this prediction comes to your world, somehow you are thinking that maybe this could be the beginning of the downfall. of civilization um or are you also open-minded to there being another way. I remain hopeful. Hope is my duty and I cling to it against all ethical evidence that makes absolute sense.

Janis bar black is thank you very much for the show, thank you. you gave your time it was good it was fun