Tech behemoths are replacing capitalism’s driving forces – profits and markets – with rents and ‘cloud fiefdoms’, creating a new and far more sinister system, according to the author, politician and former Sydney University economics lecturer.

“The moment you enter amazon.com, you exit capitalism,” said Varoufakis on the latest episode of the Australia Institute’s Follow the Money podcast.

“Because amazon.com, even though there are lots of buyers and sellers, is not a market – it is a digital fiefdom belonging to one man.”

Varoufakis calls the new system ‘technofeudalism’, the origins of which he traces to the Global Financial Crisis response.

“They printed 35 trillion and they gave it to the financiers,” he said.

“I tried to trace the money – follow the money, as they say – and of the money that was actually invested in capital, 90 per cent was invested in big tech.”

“I’m not arguing that we’ve gone back to feudalism. Techno-feudalism is built on capital, it is a triumph of capital, but it has killed off capitalism.

“That is the delicious irony of my thesis.”

Profits from innovations and production of real commodities, according to Varoufakis, are being replaced by the harvesting of rents from control of digital platforms.

“Steve Jobs – of course he was a genius – but he created a new form of exploitation.”

“Because on the back of the iPhone – which he sold all over the world and made a mint out of it – but he made an equal amount from the Apple Store.

“Which is what? You capture in the Apple Store vassal capitalists who are producing apps, selling them to people who have iPhones, and the techno-feudal lord retains 30 per cent of every sale.”

But it’s not just app developers that are subject to this exploitation, Varoufakis warned.

“The great innovation is that we are all serfs, even if we don’t buy anything,” he said.

“As you are walking around the CBD today with your phone, Google Maps knows where you are…and that informs Google Maps as to where the traffic is heaviest and therefore it reinforces, and makes more valuable, the cloud capital of Google.

“This is unwaged labour.”

Cloud capital:
It grabs our attention.
It manufactures our desires.
It sells directly to us the things that will satiate the desires that it has manufactured.

“Is it any wonder that the owners of this cloud capital have hitherto undreamt of power?”
– @yanisvaroufakis at #npc pic.twitter.com/NY9ojnIQSY

— Australia Institute (@TheAusInstitute) March 13, 2024

The first step to tackle the problem and re-democratise the internet is to levee a ‘cloud tax’, Varoufakis said.

“Every transaction on Amazon and such, every penny you put into Facebook in order to promote your product or your political party, for that matter – it gets taxed five per cent.

“Modest – five per cent. On revenues, not on profits, because they never have profits.”

Follow the Money is available on Apple Podcasts, Spotify, Pocket Casts, Google Podcasts or wherever you get your podcasts.