VINTAGE

About the Author

Born in Athens in 1961, Yanis Varoufakis was for many years a professor of economics in Britain, Australia and the USA before he became world famous as the finance minister of Greece. He has since written four books: a memoir, Adults in the Room, and an economic history of Europe, And the Weak Suffer What They Must?, both of which were number one bestsellers, followed by his bestselling Talking to My Daughter: A Brief History of Capitalism and, most recently, Another Now: Dispatches from An Alternative Present. He is co-founder of the international grassroots movement DiEM25 and, since 2019, has been leading its parliamentary party in Greece’s Parliament. He is currently Professor of Economics at the University of Athens.

Also by Yanis Varoufakis

Another Now: Dispatches from an Alternative Present Talking to my Daughter: A Brief History of Capitalism Adults in the Room: My Battle with Europe’s Deep Establishment And the Weak Suffer What They Must?: Europe, Austerity and the Threat to Global Stability The Global Minotaur: America, Europe and the Future of the Global Economy

Yanis Varoufakis

TECHNOFEUDALISM

What Killed Capitalism

VINTAGE

Contents

Preface

1 Hesiod’s Lament

2 Capitalism’s Metamorphoses

3 Cloud Capital

4 The Rise of the Cloudalists and the Demise of Profit 5 What’s in a Word?

6 Technofeudalism’s Global Impact: the New Cold War 7 Escape from Technofeudalism

Appendix 1 The Political Economy of Technofeudalism Appendix 2 The Madness of Derivatives

Influences, Readings and Acknowledgements

Notes

Index

For Dad who showed me how everything that matters is pregnant with its opposite

Preface

Some years ago, | decided to write a brief history of capitalism. To temper the task’s enormity, and force myself to focus on what capitalism boils down to, | decided to pretend | was narrating capitalism’s story to my then twelve-year-old daughter. So, without seeking Xenia’s permission (Something she will never let me forget!), | began writing the book in the form of a long letter to her. Taking care to use no jargon (not even the word capitalism!), | kept reminding myself that whether or not my narrative made sense to a youngster was a litmus test of my own grasp of capitalism’s essence. The result was a slim volume entitled Talking to My Daughter: A Brief History of Capitalism. It took as its starting point an apparently simple question of hers: why is there so much inequality?

Even before it was published in 2017, | was feeling uneasy. Between finishing the manuscript and holding the published book in my hands, it felt as if it were the 1840s and | was about to publish a book on feudalism; or, even worse, like waiting for a book on Soviet central planning to see the light of day in late 1989. Belatedly, that is.

In the years after it was published, first in Greek, later in English, my weird hypothesis that capitalism was on the way out (and not merely undergoing one of its many impressive metamorphoses) gathered strength. During the pandemic, it became a conviction, which became an urge to explain my thinking in a book if for no other reason than to give friends and foes outraged by my theory a chance to disparage it properly having perused it in full.

So, what is my hypothesis? It is that capitalism is now dead, in the sense that its dynamics no longer govern our economies. In that role it has been replaced by something fundamentally different, which | call technofeudalism. At the heart of my thesis is an irony that may

sound confusing at first but which | hope to show makes perfect sense: the thing that has killed capitalism is ... capital itself. Not capital as we have known it since the dawn of the industrial era, but a new form of capital, a mutation of it that has arisen in the last two decades, so much more powerful than its predecessor that like a stupid, overzealous virus it has killed off its host. What caused this to happen? Two main developments: the privatisation of the internet by America’s and China’s Big Tech. And the manner in which Western governments and central banks responded to the 2008 great financial crisis.

Before saying a little more on this, | must emphasise that this is not a book about what technology will do to us. It is not about Al- chatbots that will take over our jobs, autonomous robots that will threaten our lives, or Mark Zuckerberg’s ill-conceived metaverse. No, this book is about what has already been done to capitalism, and therefore to us, by the screen-based, cloud-linked devices we all use, our boring laptop and our smartphone, in conjunction with the way central banks and governments have been acting since 2008. The historic mutation of capital that | am highlighting has already happened but, caught up in our pressing dramas, from debt worries and a pandemic to wars and the climate emergency, we have barely noticed. It is high time we paid attention!

If we do pay attention, it is not hard to see that capital’s mutation into what | call cloud capital has demolished capitalism’s two pillars: markets and profits. Of course, markets and profits remain ubiquitous — indeed, markets and profits were ubiquitous under feudalism too — they just aren’t running the show any more. What has happened over the last two decades is that profit and markets have been evicted from the epicentre of our economic and social system, pushed out to its margins, and replaced. With what? Markets, the medium of capitalism, have been replaced by digital trading platforms which look like, but are not, markets, and are better understood as fiefdoms. And profit, the engine of capitalism, has been replaced with its feudal predecessor: rent. Specifically, itis a form of rent that must be paid for access to those platforms and to the cloud more broadly. | call it cloud rent.

As a result, real power today resides not with the owners of traditional capital, such as machinery, buildings, railway and phone networks, industrial robots. They continue to extract profits from workers, from waged labour, but they are not in charge as they once were. As we shall see, they have become vassals in relation to a new class of feudal overlord, the owners of cloud capital. As for the rest of us, we have returned to our former status as serfs, contributing to the wealth and power of the new ruling class with our unpaid labour — in addition to the waged labour we perform, when we get the chance.

Does all this matter to the way we live and experience our lives? It certainly does. As I'll show in Chapters 5, 6 and 7, recognising that our world has become technofeudal helps us dissolve puzzles great and small: from the elusive green energy revolution and Elon Musk’s decision to buy Twitter to the New Cold War between the USA and China and how the war in Ukraine is threatening the dollar’s reign; from the death of the liberal individual and the impossibility of social democracy to the false promise of crypto and the burning question of how we may recover our autonomy, perhaps our freedom too.

By late 2021, armed with these convictions, and egged on by a pandemic that strengthened them, the die had been cast: | would sit down and write a brief introduction to technofeudalism — the far, far uglier social reality that has superseded capitalism. One question remained: whom to address it to? Without much thought, | decided to address it to the person who had introduced me to capitalism at a ridiculously young age — and who, like his granddaughter, once asked me an apparently simple question that shapes almost every page of this book. My father.

For the impatient reader, a word of warning: my description of technofeudalism does not come until Chapter 3. And for my description to make sense, | need first to recount capitalism’s astounding metamorphoses over the preceding decades: this is Chapter 2. The beginning of the book, meanwhile, is not about technofeudalism at all. Chapter 1 tells the story of how my father, with the help of some metal fragments and Hesiod’s poetry, introduced my six-year-old self to technology’s chequered relationship with humanity and, ultimately, to capitalism's essence. It

presents the guiding principles on which all of the thinking that follows is based, and it concludes with that seemingly simple question Father put to me in 1993. The rest of the book takes the form of a letter addressed to him. It is my attempt to answer his killer question.

1. Hesiod’s Lament

My father was the only leftie | know who failed to understand why calling Maggie Thatcher ‘The Iron Lady’ was somehow derogatory. And | must have been the only child raised to believe that gold was iron’s poorer cousin.

My catechism in iron’s magical qualities began in the winter of 1966, which | recall as a bitterly cold one. In their haste to leave behind the cramped rented apartment where we were staying while our home in Paleo Phaliro, a coastal Athenian suburb, was being rebuilt, my parents moved us back into the not-quite-completed house in the midst of winter, before any central heating had been installed. Thankfully, Dad had insisted that our new living room feature a decent red-brick fireplace. It was there, in front of its warm glow, that over the course of several winter nights he introduced me, one ata time, to his friends, as he called them.

Father’s friends

His friends arrived in a large grey sack that he brought home one evening from the ‘factory’, the steel plant in Eleusis where he would work as a chemical engineer for six decades. They were mightily unimpressive. Some looked like shapeless rocks, lumps of ore as | was to learn later. Others were equally uninspiring rods and metal plates of various shapes. If it weren't for the loving manner in which he laid out each one of them on a folded white, hand-embroidered tablecloth in front of the fireplace, | would never have thought of them as special.

Tin was the first friend he introduced me to. After giving me a piece to hold, to feel its softness, he placed it in an iron bowl which he then rested on the roaring fire. As the tin began to melt and the metallic liquid filled up the bowl, Dad’s eyes lit up. ‘All that is solid melts into liquid and, then, given enough heat, turns into steam. Even metals!’ Once he was confident | had appreciated the great transition from solid to liquid state, together we poured the liquid tin into a mould, immersed it in water to cool it down, and then broke the mould open so that | could, once again, take the tin in my hands to ascertain that our friend was back to normal — that it had been returned to its initial state.

The following night we experimented with another friend: a longish rod made of bronze. This time there was no great transition, as bronze’s melting temperature is at least five times that of tin. Still, the rod began to glow a brilliant orangey red and Dad showed me how to give whatever shape | wanted to its hot tip with the help of a small steel hammer. Once I'd had enough, we immersed it in cold water also to return it, cool and unchanged, to its original, malleable, state.

On the third night, Dad seemed more excited than ever. He was about to introduce me to his best friend, iron. To add tension to the moment, he removed his gold wedding ring from his finger and showed it to me. ‘See how gold gleams?’ he said. ‘Humans have always fallen for this metal because of its looks. What they don’t realise is that it is just that: flashy — not special.’ If | wanted, he would be happy to demonstrate that when gold is heated up and then immersed in water to cool it down again, it returns, like tin and bronze, to its prior state. Glad that | did not insist on a demonstration, he moved on to his favourite part.

Holding up a piece of iron ore and gazing at the insipid lump like Hamlet contemplating Yorick’s skull, Dad pronounced: ‘Now, if you want a truly magical substance, this is it: iron. The Wizard of Materials.’ And then he proceeded to back up his claim by subjecting an iron rod to the same torture we had inflicted on the bronze rod the previous night, but with a couple of crucial differences.

Before heating up the iron, | was given a chance to hammer at its tip, to ascertain that it was soft and almost as malleable as bronze. Once in the fireplace, a small bellows helped us fan the flames until

the iron’s glow had turned the dimly lit living room scarlet. We took the rod out of the fireplace and, with the little hammer, shaped it into something that, in my boyish eyes, looked like a sword. Lowering it into the cold water made the iron hiss as if in triumph. ‘Poor Polyphemus!’ Father remarked mysteriously.

‘Heat it up again,’ he said. | put the rod back into the fire. ‘This time immerse it in the water before it glows.’ Excited by the hissing iron, | was glad that we repeated the ‘quenching’ process, as metallurgists call it, three or four times. Before | got a chance properly to admire my new sword, Dad announced that the moment of truth had arrived. ‘Pick up the hammer and deliver an almighty strike on the sword’s tip,’ he instructed.

‘But | don’t want to ruin it,’ | protested.

‘Go on, do it, you'll see. Don’t spare your strength!’

| didn’t. The hammer struck the sword’s tip and bounced right back. | struck it again and again. It made no difference. My sword was impervious to the blows. Hardened.

A child’s introduction to historical materialism

Father could not contain himself. What | had witnessed, he explained, was not a mere great transition — as with the tin that melted — but a great transformation. True, copper had facilitated our deliverance from prehistory: its ability to alloy with arsenic and tin to make the harder metal bronze gave the Mesopotamians, the Egyptians and the Achaeans new technologies, including new ploughs, axes and irrigation, allowing them ultimately to produce the large agricultural surpluses that funded the construction of splendid temples and murderous armies. But for history to accelerate sufficiently to bring about what we now call civilisation, humanity needed something much harder still than bronze. It needed its ploughs, its hammers and its metal structures to have the hardness of my sword’s tip. It needed to learn the trick | had seen in our living room: how to transform soft iron into hardened steel by ‘baptising’ it in cold water.

Bronze Age communities that did not learn how to baptise iron perished, he insisted.

The swords of their ironclad enemies sliced through their bronze shields, their ploughs failed to cultivate the less fertile soils, the metal braces holding together their dams and temples were too weak to fulfil the ambitions of forward-thinking architects. In contrast, communities that mustered the techne, the art, of ‘steeling’ iron thrived in the fields, on the battlefields, at sea, in commerce, in the arts. Iron’s magic underpinned the new role of technology as the driving force that led to civilisation and its discontents.

Lest | doubted the cultural pertinence of our little experiment — and of the arrival of the Iron Age — Father explained his earlier reference to ‘poor Polyphemus’, the one-eyed giant who, according to Homer, imprisoned Odysseus and his men in a cave, taking his time to devour them one by one. To set them and himself free, Odysseus waited for Polyphemus to fall into a drunken stupor, heated up a wooden stake in the cave’s open fire and, aided by his comrades, shoved it into Polyphemus’ sole eye. ‘Remember the sound of the hissing iron?’ Dad asked. Well, Homer must have been equally impressed by it, judging by the verse in The Odyssey that captures the cruel moment:

And as when a smith dips a great axe or an adze in cold water amid loud hissing to temper it — for therefrom comes the strength of iron — even so did his eye hiss round the stake of olive-wood.1

Odysseus and his contemporaries preceded the Iron Age and could not have known how iron’s hissing heralded a molecular hardening of historic significance. But Homer, who lived a couple of centuries after the Trojan War, was a child of the Iron Age, and thus came of age in the midst of the technological and social revolution that steel had wrought. In case | thought Homer was an outlier, Dad pointed to the lasting influence of iron’s magic by quoting Sophocles, who four centuries later described a soul as ‘hardened like immersed iron’.

Prehistory gave its place to history, Father said, when bronze displaced stone tools and weapons. Once bronze became widespread after 4000 Bc, powerful civilisations emerged in Mesopotamia, Egypt, China, India, Crete, Mycenae and elsewhere. But, still, history was counted in the millennia. To be counted in the centuries, we had to discover the magic of iron. Once the Iron Age got going, around the ninth century Bc, three different and remarkable eras emerged in quick succession, within no more than seven centuries in total: the geometric period, the classical era and the Hellenistic civilisation.

From the glacial speeds of the Bronze Age, humanity had been propelled to the breathless developments of the Iron Age. But for a long time, iron and steel remained too difficult to produce, too expensive. Even after the Industrial Revolution, the first steamships were mostly wooden, with steel providing only the essential components (boiler, chimney, joints). Enter another one of my father’s great heroes, Henry Bessemer, who invented a technique for producing large quantities of steel cheaply by blowing air through molten pig iron to burn off the impurities. It was then, according to Dad, that history accelerated to speeds with which we are familiar today. Coupled with the taming of electromagnetism, which we owe to another Victorian, James Maxwell, Bessemer’s technique gave us the Second Industrial Revolution — the period of rapid technological innovation from 1870 onwards, as distinct from the arrival of the factories earlier that century in the First Industrial Revolution — its wonders and horrors wrapped tightly together.

Looking back to those few winter nights of 1966, it is now clear to me that | was being inducted in ‘historical materialism’ — the method of understanding history as a constant feedback loop between, on the one hand, the way humans transform matter and, on the other, the manner in which human thinking and social relations are transformed in return. Thankfully, Father’s historical materialism was nuanced, his enthusiasm for technology tempered by judicious doses of angst about humanity’s infinite capacity to mess things up, to turn miraculous technology into living hell.

lron, like all revolutionary technologies, had sped up history. But in which direction? For what purpose? With what effect on us? As Dad

explained, from the very start of the Iron Age there were those who foresaw its tragic consequences. Hesiod was composing poetry at around the same time as Homer. His Works and Days had a salutary cooling influence on Dad’s enthusiasm for iron and, more generally, technology:

| wish | did not have to live among the people of the Fifth Age [the Iron Age], but either had died earlier or been born later. For now truly is a generation of iron who never rest from labour and sorrow by day or from perishing by night ... But, notwithstanding the good mingled with their evils ... [this generation] will Know no favour for those who keep their oath or for the just or for the good ... strength shall be right ... the wicked will hurt the worthy ... bitter sorrows will be left for us

mortals, and there will be no help against evil.2

According to Hesiod, iron hardened not only our ploughs but also our souls. Under its influence, our spirit was hammered and forged in fire, our brand-new desires quenched like the hissing metal in the smith’s cauldron. Virtues were tested and values destroyed just as our bounty burgeoned and our estates expanded. Strength begat new joys but weariness and injustices too. Zeus would have no choice, Hesiod foretold, but to one day destroy a humanity incapable of restraining its own, technologically induced, power.

My father wanted to disagree with Hesiod. He wanted to believe that we humans could become the masters of our technology rather than enslave ourselves and one another with it. When Prometheus stole fire, symbolising the white heat of technology, from Zeus on humanity’s behalf, he did so in the hope that it would lighten up our lives without burning down the Earth. My father wanted to believe we could make Prometheus proud.

From heat to light

An innate optimism was only one reason Dad remained hopeful that humanity would not waste the magical powers he had introduced me

to in front of our fireplace. Another was his encounter with the nature of light.

One time, as | was removing an iron rod from the fire, Dad asked: ‘Can you guess what leaves the heated-up metal to reach your eye so that you can see its red glow?’ | had no idea. Happily, | was not alone.

For centuries, light had divided the best minds, he said. Some, like Aristotle and James Maxwell, thought of light as a kind of disturbance in the ether, a wave that spreads outwards from an initial source — like sound does. Others, such as Democritus and Isaac Newton pointed out that, unlike sound, light cannot bend round corners — something waves do by their very nature — and thus it must be made of tiny things, or particles, travelling in a straight line before hitting our eye’s retina. Who was right?

My father’s life changed, or so he told me, when he read Albert Einstein’s answer: they were all right! Light is, at once, a stream of particles and a series of waves. But how could that be? Particles differ fundamentally from waves. They are located at only one point at any particular moment in time, they have momentum, and they move only in a straight line unless and until something gets in their way. Waves, by contrast, are oscillations of a medium, which is what allows them to turn corners and transport energy in many different directions at once. To prove, as Einstein had done, that light was both particles and waves was to admit that something can be two utterly contradictory things at once.

For Dad, the dual nature of light was the gateway to recognising the essential dualism underlying all of nature, and also in society. ‘If light could be two very different things at once,’ he wondered in a letter he wrote as a young man to his mother, ‘if matter is energy and energy matter,’ as Einstein had also discovered, ‘why must we cast life either in black-and-white terms or, even worse, in some shade of grey?’

By the time | was twelve or thirteen, it was clear to me from our ongoing conversations that Dad’s love for iron’s magic — technology — and for Einstein’s physics — the contradictory duality of all things — had something to do with his left-wing politics, for which he had spent several years in prison camps. My hunch was confirmed when

| came across the text of a speech delivered by the same person who had first formulated the notion of historical materialism: Karl Marx. It was as if Dad had been speaking the words:

In our days, everything seems pregnant with its contrary: Machinery, gifted with the wonderful power of shortening and fructifying human labour, we behold starving and overworking it; The newfangled sources of wealth, by some strange weird spell, are turned into sources of want; The victories of art seem bought by the loss of character.

The power to shorten human labour and make it fruitful resulted from the great transformation of matter Father had been so keen to demonstrate for my benefit: iron turning to steel in our fireplace, heat turning to kinetic energy in James Watt’s miraculous fire engine, the minor miracles occurring within the telegraph’s magnets and cables. But ever since Hesiod’s Fifth Age, it was a power pregnant with its opposite as well: the power to starve and to overwork, to turn a source of wealth into a source of want.

The link between Father’s twin devotions — to furnaces, metallurgy and technology in general on the one hand, and to his politics on the other — became impossible to miss when | first read The Communist Manifesto, in particular the line:

All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.*

It brought back the memory of his childlike enthusiasm at the sight of melting metal in front of our fireplace or, far more spectacularly, at the steel plant whose quality control department he directed and where temperatures were high enough for iron literally to ‘melt into air’.

But unlike Hesiod — or indeed the moralists of our own era — Dad did not feel he had to take sides, to be either a technophobe or a tech-enthusiast. If light can have two contradictory natures, and if all of nature rests on a binary opposition, then hardened iron, steam

engines and networked computers could also be, simultaneously, potential liberators and enslavers. And so it is up to us, collectively, to determine which of the two it will be. That’s where politics comes in.

A most peculiar introduction to capitalism

Leftists usually become radicalised in reaction to the vile injustices and mind-numbing inequality capitalism generates. Not so in my case. Sure, growing up in the midst of a fascist dictatorship played its role, but my leftism had far more esoteric origins: a sensitivity, given to me by my father, to the duality of things.

Well before | read a word that Marx or any other economist had written, | thought | could discern several dualities buried deep in the foundations of our societies. My first inkling of such a duality hit me one evening when Mum complained to Dad that, at the fertiliser factory where she worked as a chemist, she got paid for her time but never for her enthusiasm. ‘My wage is crap because my time is cheap, she said. ‘My passion to get the right results the bosses get for free!’ Soon after, she resigned and got herself a job as a biochemist at a public hospital. A few months into the new job, she told us happily: ‘At least at the hospital | love that my efforts benefit patients, even if | am as invisible to them as | used to be to the factory owners.’

Those words stuck with me. Mum had inadvertently introduced me to the duality of waged labour. The wage she was paid for her time and formal skills (her certificates, degrees) reflected the ‘exchange value’ of the hours she spent at work. But that’s not what injected true value into whatever was being manufactured in her workplace. That was added to what was produced at the factory or the hospital through her effort, enthusiasm, application, even flair — none of which were remunerated. It’s like going to watch a movie at a cinema: the ticket price you pay reflects the movie’s exchange value, but that is quite separate from the pleasure it gives you, which we might call the ‘experiential value’. In the same way, labour is split between commodity labour (Mum's time, bought by her wage) and

experiential labour (the effort, passion and flair she put into her work).

When in time | did come to read Marx, | vividly recall how excited | was to discover that, thanks to my father’s fireside lessons and my mum’s explanation, | had stumbled upon one of the great economist’s central principles. In the world we take for granted today, labour seems like any other commodity. Desperate to make a living, people promote their skills like vendors advertising their wares. They accept a market-determined price (the wage) for their labour, which reflects its exchange value, i.e. what it is worth compared to other exchangeable commodities. This is commodity labour. However, as we have seen, unlike soap powder, potatoes or iPhones, which are nothing but commodities, labour is something else besides.

To illustrate labour’s second nature, the experiential labour that my mother first alerted me to, consider the brilliant idea conjured up by a group of brainstorming architects employed by a multinational construction firm. Or the positive vibes a waiter emits on the restaurant floor. Or a teacher’s tear of joy when a challenged pupil solves a difficult maths problem. None of these can ever truly be commodified. Why? Because no monetary reward can prompt a moment of true inspiration, no genuine smile can be bought, no authentic tear can be shed for a price. In fact, any attempt to do so would immediately negate them. Indeed, bosses who try to quantify, price or commodify experiential labour will sound like the fool who yells at you: ‘Be spontaneous!’

What | call experiential labour, the part which can never be sold, Marx called simply labour. And what | have labelled commodity labour, Marx defined as labouring power. But the idea is the same: ‘What the working man sells is not directly his Labour, but his Labouring Power, the temporary disposal of which he makes over to the capitalist. Imagine my joy, then, when | discovered that, based on labour’s two natures, Marx had erected a whole theory of capitalism.

For herein lies capitalism’s secret: the uncommodifiable sweat, effort, inspiration, goodwill, care and tears of employees are what breathe exchange value into the commodities that employers then

flog to eager customers — this is actually wnat makes the building or restaurant or school desirable.

One may protest that there is many a factory populated by uninspired, joyless, robotic workers producing tin cans or gadgets worth more than the cost of paying the workers. True. But this happens only because employers cannot buy the effort put in by unskilled, manual labourers. They can only buy their time, during which to pressurise them, in a variety of ways, to work hard and to sweat. The point here is that this blue-collar sweat, exactly like the waged architect’s flair, can never be directly bought or sold. This is, indeed, the secret power of employers: to extract any surplus, either from highly skilled or from uninspired, repetitive, robotic work, they must pay for their workers’ time (commodity labour) but cannot actually buy their sweat or flair (experiential labour).

You might think it extremely frustrating to employers that they cannot buy the architects eureka moment, the waiter’s spontaneous smile, the teacher’s tear directly, without which their employee’s work produces no value. On the contrary, employers resemble the customer who bought a jacket for a thousand dollars only to find two thousand dollars sewn in its lining. Indeed, if they don't, they go bust!

When | first encountered this revelatory explanation of capitalism’s secret, | found it captivating: to think that capitalists owe their profits to an inability, to the impossibility of buying experiential labour directly. And yet, what a boon to suffer from such an incapacity! For it is ultimately they who pocket the difference between the exchange value they pay employees in exchange for their commodity labour (wages) and the exchange value of the commodities created thanks to their experiential labour. In other words, labour’s dual nature is what gives rise to profit.

It is not just labour that has a dual nature. The dominant propaganda today and while | was growing up is that profit is the price, or reward, of a thing called capital, and that people who have capital — such as tools, raw materials, money, anything that can be used to produce saleable goods — make a profit by deploying it, in the same way a worker makes a wage by deploying her labour. But the conclusion that profit results from labour’s contradictory twin natures led me to reject this notion, too. Again, even before | had

read Marx, and thanks to paying attention to Mum and Dad, the more | thought of capital the more convinced | became that, like light and labour, it too featured two natures.

One is commodity capital, e.g. a fishing rod, a tractor, a company’s server, or any good that is produced to be used in the production of other commodities. Capital’s second nature, however, is nothing like a commodity. Suppose | discover that | possess tools you need in order to produce the stuff for your family’s survival, such as the aforementioned fishing rod, tractor, server. Suddenly | have acquired the power to make you do things, for example to work for me, in exchange for the use of my tools. Capital, in short, is both a thing (commodity capital) and a force (power capital) — just as labour is split between commodity labour and experiential labour.

By the time | began reading Marx, | could not help but filter his words through the lens given to me by my mum's work dysphoria and by my dad’s inspiration from the great twentieth-century physicist. Delighted as | was by the dualities | was seeing, deep down | wondered what Einstein would have made of my wild extrapolations — from his theory of light, or rather from my puny grasp of it, to the essence of capitalism. Had my father inadvertently misrepresented Einstein, prompting my imagination to run away at a tangent thanks to a flimsy and perhaps false metaphor?

Many years later | chanced upon this sentence written by Einstein himself: ‘It is important to understand that even in theory the payment of the worker is not determined by the value of his product.’ It appeared in an article entitled ‘Why Socialism?’, published in May 1949. Reading it, | breathed a sigh of relief. No, | had not been taking liberties with Einstein’s insights, after all. He too believed that capitalism’s essence was the splitting of labour into two incongruous natures.

An equally odd introduction to money

Uncle Albert, as Father used to refer to Einstein on occasion, was not finished with my education regarding capitalism. Having opened my eyes to the dual nature of both labour and capital, he guided me

to the dual nature of money through an even more circuitous path involving a certain John Maynard Keynes.

In 1905, the 26-year-old Einstein found the guts to tell a deeply sceptical world that light was a continuous field of waves made up of particle-like things and, moreover, that energy and matter were, essentially, one ‘thing’ linked by history’s most famous equation: E=mc? (i.e. a body’s energy content is equal to its mass times the speed of light multiplied by itself). A decade later, Einstein extended this Special Theory of Relativity to elucidate one of the greatest of puzzles: gravity.

The General Theory of Relativity that resulted was not for the faint- hearted. To grasp it, we first had to embrace a mindset that rejected what our senses told us. If you want to understand gravity, Einstein explained, you need to stop thinking of space as a box that the universe comes in. Matter and energy, operating as one, mould the contours of space and shape the flow of time. The only way to wrap our minds around space and time, or matter and energy, is to think of them as partners locked in the most intimate, insoluble embrace. Gravity is what we feel as we traverse the shortest path through this four-dimensional space-time.

That our brains find it hard to grasp the reality unveiled by Einstein’s General Theory of Relativity is unsurprising. We evolved on the surface of a planet that is minuscule in comparison to the universe out there. In our limited realm, we can get by quite nicely with our senses’ helpful illusions; for instance, the belief that the grass is green, straight lines exist, or that time is constant and independent of our motion. These beliefs are false and yet helpful to the extent that they enable our architects to design safe buildings and our watches to coordinate our meetings at pre-agreed points in time. When playing pool, as the cue ball strikes a coloured ball, we become convinced of a clear causal effect. But were we to rely on these illusions to travel beyond our planet, to the macrocosm out there, we would be literally lost in space. Equally, when we peer deep into the world of the subatomic particles that comprise our own body, or the chair we are sitting on, even the link between cause and effect vanishes.

What does any of this have to do with money? The title of the most famous economics book of the twentieth century is The General Theory of Employment, Interest and Money. Published in 1936, it was written by John Maynard Keynes in order to explain why capitalism was failing to recover from the Great Depression, and the allusion to Einstein’s General Theory was intentional. Keynes, who had met Einstein and knew of his work, chose it so as to herald a complete break from conventional economics — a break as clean and decisive as that of Einstein’s from classical physics.

Of his fellow economists, who insisted that money ought to be understood as another commodity, Keynes once said that they ‘resemble Euclidean geometers in a non-Euclidean world’, again confirming in no uncertain terms Einstein’s influence. Conventional economic thinking about money was damaging humanity, Keynes thought. Economists resembled spacecraft designers disastrously relying on Euclid, not Einstein. They were using illusions which, while helpful in the microcosm of a single market (e.g. the market for potatoes, where a fall in the price can usually be relied upon to boost sales), were catastrophic when applied to the economy at large — the macroeconomy, where a fall in the price of money (the interest rate) may never boost money’s flows in the form of investment and employment.

In the same way that Einstein had ended our illusion that time stands outside, and apart from, space, Keynes wanted to stop us thinking of money as a thing, as simply another commodity, that stands outside, and apart from, our other activities in markets and workplaces.

Today, we are bombarded with a phantasmagoria of idiocies about money. Clueless politicians invoke penny-pinching metaphors to justify self-defeating austerity. Central bankers facing both inflation and deflation resemble the proverbial ass, both thirsty and hungry, who collapses because it can’t decide whether to drink or to eat first. Crypto enthusiasts invite us to fix the world by embracing the ultimate money-commodity form: Bitcoin and its various offspring. Big Tech is creating its own digital money with which to lure us deeper into its poisonous web of platforms.

| can think of no better defence in the face of this orchestrated obfuscation than Keynes’s (Einstein-derived) advice: stop thinking about money as something separate from what we do to each other, with each other, at work, during play, in every nook and cranny of our social universe. Yes, money is a thing, a commodity like any other. But it is also something much bigger than that. It is, above all else, a reflection of our relation to one another and to our technologies; i.e. the means and the ways in which we transform matter. Or, as Marx put it poetically:

Money is the alienated ability of mankind. That which | am unable to do as a man, and of which therefore all my individual essential powers are incapable, | am able to do by means of money. Money thus turns each of these powers into something which in itself it is not — turns it, that is, into its

contrary.

Free to choose? Or to lose?

In early 2015, a historical accident made me Greece’s finance minister. Given my mandate to clash with some of the most powerful people and institutions in the world, the international press peered into my articles, books and lectures for clues of what to expect. They were baffled by my claim to be a libertarian Marxist — a self- description that was immediately derided by several libertarians and most Marxists. When one of the ruder interviewers asked after the source of my ‘obvious confusion’, | jokingly replied: my parents!

Joking aside, Father was, at least indirectly, responsible for another crucial component of my political education: my inability to see how one could genuinely cherish freedom and tolerate capitalism (or, vice versa, how one could be both illiberal and left wing). Between them, he and my feminist mother bequeathed me a perspective diagonally opposed to what has become, sadly, conventional fallacy: that capitalism is about freedom, efficiency and democracy, while socialism turns on justice, equality and statism. In fact, from the very start, the left was all about emancipation.

During the feudal era, which became properly entrenched across Europe in the twelfth century, economic life involved no economic choices. If you were born into the landed gentry, it would never cross your mind to sell your ancestors’ land. And if you were born a serf, you were compelled to toil the land, on the landowner’s behalf, free of any illusion that, one day, you might own land yourself. In short, neither land nor labour power was a commodity. They had no market price. The vast majority of the time, ownership of them changed only through wars of conquest, royal decree or as a result of some catastrophe.

Then, in the eighteenth century, something remarkable happened. Because of advances in shipping and navigation, international trade in things like wool, linen, silk and spices made them lucrative, thus giving British landlords an idea: why not evict en masse the serfs from land that produced worthless turnips and replace them with sheep whose backs produced precious wool for the international markets? The peasants’ eviction, which we now remember as the ‘enclosures’ — for it involved fencing them off from the land their ancestors had toiled for centuries — gave the majority of people something they had lost at the time that agriculture was invented: choice.

Landlords could choose to lease land for a price reflecting the amount of wool it could produce. The evicted serfs could choose to offer their labour for a wage. Of course, in reality, being free to choose was no different from being free to lose. Former serfs who refused squalid work for a pitiful wage starved to death. Proud aristocrats who refused to go along with the commodification of their land went bankrupt. As feudalism receded, economic choice arrived but was as free as the one offered by a mafioso who, smilingly, tells you: ‘I shall make you an offer you cannot refuse.’

By the middle of the nineteenth century, the thinking of Marx and other foundational left-wing thinkers was all about freeing us. Specifically, in this era, it was about freeing us from a Dr Frankenstein-like failure to control our creations — not least, the machines of the Industrial Revolution. In the ageless words of The Communist Manifesto:

a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.4

For over a century, the left was concerned primarily with deliverance from self-inflicted unfreedom — which is why it was so fundamentally aligned with the anti-slavery movement, the suffragettes, groups sheltering persecuted Jews in the 1930s and 40s, black liberation organisations in the 1950s and 60s, the first gay and lesbian protesters in the streets of San Francisco, Sydney and London in the 1970s. So, how did we get to the situation, today, where ‘libertarian Marxist’ sounds like a joke?

The answer is that, sometime in the twentieth century, the left traded freedom for other things. In the East (from Russia to China, Cambodia and Vietnam), the quest for emancipation was swapped for a totalitarian egalitarianism. In the West, liberty was left to its enemies, abandoned in exchange for an ill-defined notion of fairness. The moment people believed they had to choose between freedom and fairness, between an iniquitous democracy and miserable state-imposed egalitarianism, it was game over for the left.

On Boxing Day in 1991, | was visiting Athens to spend a few days with my parents. As we chatted over dinner in front of that same red- brick fireplace, the red flag was being lowered above the Kremlin. Thanks to Dad’s communist past and Mum’s social democratic leanings, they shared a common mood. They knew that, on that very night, history was marking not just the demise of the Soviet Union but also the end of the social democratic dream: of a mixed economy, in which government provided public goods while the private sector produced plentiful goodies to satisfy our whims — all in all, a civilised form of capitalism where inequality and exploitation were kept in check in the context of a politically mediated truce between the owners of capital and those who had nothing to sell but their labour.

Circumspect, though not glum, the three of us agreed we were witnessing a defeat made inevitable once our side had lost the conviction that capitalism was iniquitous because it was inefficient,

that it was unjust because it was illiberal, that it was chaotic because it was irrational. Falling back to basics, | asked Mum and Dad what freedom meant to them. Mother replied: the ability to choose your partners and your projects. Father’s reply was similar: time to read, to experiment and to write. Whatever your definition might be, dear reader, being free to lose in a variety of soul-crushing ways can’t be it.

Father's question

Almost everyone today takes to capitalism as fish take to water — without even noticing it is there, treating it as the invisible, irreplaceable, natural ether we move through. As Fredric Jameson famously put it, people find it easier to imagine the end of the world than the end of capitalism. For my father’s generation of leftists, however, there was a brief moment in the mid to late 1940s when the end of capitalism seemed only a matter of a few years if not months away. But then one thing led to another and capitalism’s demise shifted further and further into the future until, after 19971, it disappeared beyond the horizon.

Being of the generation who had believed that capitalism was transitory, Dad continued to contemplate capitalism's expiry even after he had concluded he would not live to see it. Nevertheless, a decade or so after our fireside experiments, with the dream of socialism in deep recession, and while | dived into the works of the political economists, Father increasingly immersed himself in the study of ancient technology.

Every now and then, feeling he could guiltlessly leave to me the exploration of capitalism’s mysteries while he relished the unalloyed joys of archaeometry, he would speculate on how capitalism might, one day, end — and what would replace it. His wish was that it would not die with a bang, because bangs had a tendency to cull good people in awful numbers; that instead socialist islands might spring up spontaneously in our vast capitalist archipelago and that they would expand gradually, eventually forming whole continents on which technologically advanced commons would prevail.

In 1987, he sought my help to set up his first desktop computer. A glorified typewriter, he called it, but with an impressive on-screen editing facility. ‘Imagine how many more volumes Marx’s complete works would consist of if the bearded one had owned one of these,’ he joked. As if to prove the point, he used it over the years that followed to churn out voluminous papers and books on the interplay between the ancient Greeks’ technology and literature.

Six years on, in 1993, | arrived at the Paleo Phaliro home with a clunky early modem to connect his computer to the fledgling internet. ‘This is a game changer,’ he said. Struggling to dial up a woefully slow Greek internet provider, he asked me the killer question that ultimately inspired this book: ‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’

Caught up in my own projects and dramas, | never got round to answering Father’s question. When | finally decided | had an answer for him, Dad was already ninety-five and finding it hard to follow my musings. And so, here | am, a few years later, only a few weeks after his passing, composing my answer — belatedly, but | hope not in vain.

2. Capitalism’s Metamorphoses

Dad, it was capitalism’s Achilles heel, after all: the digitally networked technologies that capitalism spawned proved its comeuppance. The result? Humanity is now being taken over by something that | can only describe as a technologically advanced form of feudalism. A technofeudalism that is certainly not what we had hoped would supersede capitalism.

| can tell you are puzzled, Dad. Wherever we look today, capital is triumphant. New monuments to its power spring up everywhere — physical ones in our cities and across our landscapes, digital ones on our screens and in our hands. Meanwhile, the capital-poor sink deeper into precarity and our democracies bend their knee to capital’s will. So, how dare | even imagine that capitalism is on the way out; that it is being taken over? Have | forgotten that nothing strengthens capitalism more than the illusion it is evolving out of existence and into something new — a mixed economy, a welfare state, a global village?

No, of course | have not forgotten. Metamorphosis is to capitalism what camouflage is to a chameleon: essence and defence mechanism combined. And yet, we are not talking about mere disguises. Several of capitalism’s transformations have been epoch changing. One of those was unfolding at around the time you were educating me to iron’s magic in front of our fireplace. And in fact, to explain what | mean by technofeudalism, | need first to describe in some detail this transformation — capitalism’s latest series of metamorphoses, which is the subject of this chapter. Only then, in the next chapter, will | be able to begin to explain properly what has replaced it.

Retrieving the irretrievable

In an episode of Mad Men, the television series on the rise of advertising in the 1960s, the legendary creative director Don Draper coaches his protégée, Peggy, on how to think of Hershey, a chocolate bar that their firm is peddling. Draper’s marketing philosophy perfectly encapsulates the spirit of the times: “You are the product. You, feeling something.’ Or, as James Poniewozik interprets Draper’s line in Time magazine: “You don’t buy a Hershey bar for a couple of ounces of chocolate. You buy it to recapture the feeling of being loved that you knew when your dad bought you one for mowing the lawn.’4

The mass commercialisation of nostalgia Draper alludes to marked a turning point for capitalism. While the big issues of the 1960s were the Vietnam War, civil rights and the institutions that might civilise capitalism (Medicare, food stamps, the welfare state), Draper was putting his finger on a fundamental mutation in its DNA. Efficiently manufacturing things that people craved was no longer enough. Capitalism now involved the skilful manufacture of desire.

Capitalism had begun as a relentless drive to put a price on things that once had no price: common lands, human labour, all the stuff that families once produced for their own consumption — from bread and home-brewed wine to woolly jumpers and various tools. If there was something that humans shared and enjoyed but which had no price and mattered to us only for its intrinsic or ‘experiential value’ — like granny’s handcrafted tablecloth, or a beautiful sunset, or a beguiling song — capitalism found a way to commodify it: to subjugate its experiential value to an exchange value.

It was in the nature of the beast. Capitalism is synonymous with the triumph of exchange value because it is the only value that can be crystallised into more capital. Just as the Borg in Star Trek depend on assimilating the biological and technological distinctiveness of other species for their survival, capitalism has taken over planet Earth by assimilating wherever possible any experiential value it encounters into its exchange value chain. Having assimilated every resource, crop and artefact it could,

capitalism has since gone on to commodify the airwaves, women’s wombs, art, genotypes, asteroids, even space itself. In the process, the experiential value of all things is reduced to a dollar sum, a commercial asset, a tradable contract.

And yet, contrary to the Borg’s scary greeting — ‘You will be assimilated. Resistance is futile!’ — experiential value’s resistance has not been in vain. Each time the onslaught of exchange value has overcome its defences, experiential value has gone underground into the catacombs of our psyche. It is there that Don Draper — or, more accurately, the men and women Mad Men is based on — discovered it, retrieved it and, yes, commodified it. In the process, capitalism changed radically.

Watching Mad Men, the audience wonder why the firm pays Draper a mint to do what he does. Mostly horizontal on a comfortable couch in his office, he consumes impressive quantities of bourbon, has a series of breakdowns, behaves erratically and unprofessionally, and when he does deign to share what he’s thinking, usually offers only cryptic and disjointed thoughts. But just when you expect him to self-destruct or get fired, he comes up with magical ways of reimagining anything from mediocre chocolate and humdrum steel products to second-rate hamburger restaurant chains in ways that make them emotionally resonant and intensely desirable. In both aspects of his behaviour, Draper captures the essence of capitalism’s post-war transformation: the discovery of a new market, namely the market for our attention, grafted onto a shiny new industrial structure, but all within a system that remains fully reliant on labour’s dual nature.

For the dual nature of Draper’s labour is writ large in every episode of Mad Men. His bosses would love to be able to purchase his ideas without having to tolerate him lounging around the office half drunk. In the language of the previous chapter, they would jump at the opportunity to buy Draper’s experiential labour directly. Only they couldn't, even if he wanted to sell it to them. Instead, they are forced to buy his commodity labour (i.e. his time and potential) in the hope that, during his inebriated daze, his genius will spontaneously deliver the famed Draper magic. And when it does, their immense

profits confirm once again that capital is born out of the capitalists’ inability to buy experiential labour directly.

Draper’s genius, meanwhile, is to grasp, and to confront, the paradox of commodification. Yes, capitalism must commodify everything it touches. But at the same time, high exchange value, and thus serious profits, depends on failing to do so fully. If it is to avoid the fate of a school of predators that devours its prey so efficiently that it starves to death, capitalism relies on there being an endless supply of experiential values for its exchange values to trounce and cannibalise. It must always be discovering and commodifying what has so far escaped it.

Smart advertisers do exactly that: they tap into emotions that have previously escaped commodification in order to capture our attention. And then they sell our attention to an entity whose business is to commodify whatever experiential value was hiding in our soul, fleeing commodification. With his Hershey bar speech, Draper lays bare a crucial aspect of how, soon after the war, capitalism reached its golden age. How could the profits keep flowing once everything has seemingly been commodified already? Draper’s answer: through the triggering of uncommodified emotions deep inside us.

Thus a Hershey bar becomes the simulacrum of a dead father’s caress. Bethlehem Steel is rebranded as the spirit of the American polis, with the steel product symbolising the New World’s own Iron Age. When Draper and Peggy visit a Burger Chef outlet, they discern the possibility of a television advertisement that promotes the chain as an opportunity for families to be reunited around its plastic tables — away from the family home where togetherness is no longer possible because everyone's attention has been arrested by ... the television.

So what did capitalism look like before this great transformation occurred? And how did this transformation take place?

Technostructure

Another way to ask the same question would be: where did Sterling Cooper & Partners (Draper’s fictional firm) find the money or willingness to treat him like an academic? To pay him good money to think deeply at a pace of his choosing? Capitalism’s early advocates would have been perplexed. Their idea of entrepreneurship took the form of parsimonious bakers, butchers and brewers eagerly striving to satisfy their customers’ basic needs by working hard, thinking on their feet, economising on everything, squeezing the last drop of exchange value out of any raw materials they could lay their hands on. What changed that meant a character like Draper could become an icon of our enterprise culture? | think you will like my answer, Dad: electromagnetism!

Once James Clerk Maxwell had written down the equations linking electrical current to magnetic force, it was only a matter of time before someone like Thomas Edison would turn them into the electricity and telegraph grids that ultimately begat the networked, top-down, mega-corporations we know today — pushing the bakers, butchers and brewers of early capitalism to the sidelines. The problem was that none of capitalism’s early institutions — specifically, its banks and share markets — were ready for such corporate empires. Simply put, the banks were too small and too fragile and the share markets too thin, too illiquid, to provide the kind of funds Edison needed to build his famous Pearl Street power station, let alone the rest of his electricity grid.

To produce the rivers of credit necessary to fund the Edisons, the Westinghouses and the Fords of early-twentieth-century capitalism, small banks merged to form large ones and lent either to the industrialists directly or to speculators eager to buy shares in the new corporations. That’s how electromagnetism transformed capitalism: while its grids would go on to power mega-firms and its megawatts translated into mega-profits, it also created the first mega-debts in the form of vast overdraft facilities for the Edisons, the Westinghouses and the Fords. And it led to the emergence of Big Finance, which grew up alongside Big Business in order to lend it monies borrowed effectively from the future: from profits not yet realised but which Big Business promised to deliver. These wagers on future profits funded not only the construction of Big Business’s

grids and production lines but an almighty froth of speculation as well.

Parsimony was out and largesse became the new virtue. The Victorian belief that firms should be small and powerless, so that competition could perform its magic of keeping entrepreneurs honest, was replaced by the creed that ‘what is good for Big Business is good for America’. The Jazz Age swept restraint away, debt’s dirty name was cleansed in the torrents of anticipated profits, caution was thrown to the winds of credit.

Within a decade, electromagnetism had sparked the Roaring Twenties whose inevitable heart-wrenching crash came in 1929, the year the grapes of wrath began to fill and grow heavy for the vintage. Whether one believes that Franklin Roosevelt’s New Deal ended the Great Depression, or that it was the war that did it, one thing is clear: the New Deal also changed global capitalism profoundly. The New Deal’s public works projects, its social welfare programmes and, above all, its public finance instruments, together with stringent controls over what bankers could get away with, constituted a full-on dress rehearsal for the War Economy.

For immediately after the Japanese bombing of Pearl Harbor brought the US into the Second World War, the US government began to emulate ... the Soviet one. It told factory owners how much to produce and to what specifications, from aircraft carriers to processed food. It even employed a price czar — the economist John Kenneth Galbraith — whose job, literally, was to decide the price of everything, to fend off inflation, and to ensure a smooth economic transition from wartime to peacetime. It is no exaggeration to say that American capitalism was run according to Soviet planning principles, with the important exception that the networked factories remained under the private ownership of Big Business.

Under President Roosevelt, the US government's deal with Big Business was simple: they would produce what was necessary to win the war and, in exchange, the state would reward them with four incredible gifts. First, state guaranteed sales translating into state guaranteed profits. Second, freedom from competition, since prices were fixed by government. Third, huge government-funded scientific research (e.g. the Manhattan Project, jet propulsion) that provided

Big Business with wonderful new innovations and a pool of highly skilled scientific personnel to recruit from during and after the war. And fourth, a patriotic aura to help rinse off the stench of corporate greed that clung to them after the crash of 1929 and make them over as heroic enterprises that helped America win the war.

The War Economy experiment was an unqualified success. Production quadrupled in less than five years. Inflation was kept on a leash, unlike what had happened during the previous world war. Unemployment disappeared, and was kept at bay even after the soldiers, sailors and airmen returned from the front. To Big Business, it was a dream come true that compensated them handsomely for the subjugation of Big Finance to the government’s plans and strictures.

Beneath the surface, however, the heat of war had transformed American capitalism at a molecular level, just as the heat of our fireplace had transformed iron into steel. By the war’s end, American capitalism was unrecognisable. Business and government had become profoundly entwined. Indeed, the revolving doors between government departments and corporations saw to it that the same crowd of mathematicians, scientists, analysts and professional managers populated them both. The heroic entrepreneur at the helm of the corporation and the democratically elected politician at the head of the government had both been usurped by this new private- public decision-making network, whose values and priorities — indeed its survival — boiled down to one thing: the survival and growth of the conglomerates now that the war, with its infinite demand for stuff and technologies, was over. Galbraith called this nexus the technostructure.

Profitability remained essential for the army of technicians and influence-wielding employees making up the technostructure. Nevertheless, profit was no longer their top priority. As with all bureaucracies, their primary goal was to keep their underlings employed and busy. This meant they had not merely to avoid the shrinking of their conglomerates at the war’s end, but to grow them. With the war behind them, one question kept the good folks of the technostructure up at night: if the government would no longer guarantee sales and prices, where would they find enough

customers ready and willing to pay for all the chocolate bars, cars and washing machines that they were planning to manufacture using the capacity hitherto dedicated to producing bullets, machine guns and flame-throwers?

The New Dealers in government took it upon themselves to help the technostructure secure foreign customers — which as we shall see triggered another of the great metamorphoses of twentieth- century capitalism. But as for domestic customers, that’s where Don Draper came in. His stock-in-trade? Opening the technostructure’s eyes to the boundless possibilities of founding a new market for our attention on a bed of raw emotion. The technostructure had the manufacture of things fully under its control. With Draper’s help, it could now look forward to manufacturing the necessary desire for them. Paying Draper a large salary to lounge around for most of the working day was a small price to pay for such an extraordinary power.

Attention markets and the Soviets’ revenge

On a cold January day in 1903, in front of a large audience at Coney Island's Luna Park, Thomas Edison used alternating current to electrocute to death Topsy, a helpless elephant. His purpose? To draw the public’s attention to the deadliness of the type of electricity peddled by George Westinghouse, his competitor. Despite the novel awfulness, nothing significantly new had happened: a powerful man had used the age-old trick of grabbing the public’s attention to sell himself and his offerings.

From a peacock’s feathers to a Roman emperor's triumphal march to the fashion industry of today, competing for others’ attention is about as old as sexual reproduction. But it wasn’t until the twentieth century that the process of attention-grabbing was commodified. Once again, it was electromagnetism that achieved this revolutionary feat — not by killing an elephant but by allowing for the invention of the radio and, even more importantly, the television set.

At first, radio and television gave Big Business a headache. It offered them immense opportunities to engage and persuade the

masses, but fundamentally its output — the programmes it broadcast — had the properties of a sunset rather than a tin of beans: however much you loved watching / Love Lucy on television, and even if you were prepared to pay good money to watch it, no one had the capacity to make you pay for it (at least not before cable TV was introduced). But this stopped being a problem once they realised that the programme was not the commodity: it was the attention of the people watching it. By broadcasting the programme for free, they could secure the audience's attention allowing them then to sell it — in the form of advertisement breaks — to Draper’s clients, who were now so eager to instil new desires in the hearts of the American public.

With the birth of commercial television, the technostructure appended a boisterous attention market to its labour market. The dual nature of labour was now coupled with the dual nature of the spectacle: on the one hand, a cultural product with large experiential value but no exchange value, and on the other the captured attention of viewers with substantial exchange value but no experiential value.

The cultural impact was enormous. But the less visible impact was no less momentous. A new group of experts had been grafted onto the technostructure: alongside the scientists, analysts and professional managers, there were now creative types like Draper, as well as a whole raft of strategists and engineers working on new ways to manipulate and commodify our attention.

It was another historic transformation. By the early 1960s, the commodities that made real money were no longer the ones that prevailed in some Darwinian struggle for existence within some competitive market. No, the products that adorned every home were the ones that the Drapers and the executives of the conglomerates fashioned together in meetings at the technostructure’s skyscraper offices. There, over lots of smoking and drinking, they jointly decided the prices, the quantities, the packages and even the feelings imparted by capitalism’s leading products. Whereas capitalism had come to life by turning feudalism’s societies-with-markets into decentralised market societies, the rise of the technostructure transformed American capitalism from a decentralised market

society into a centralised economy-with-markets. It was precisely what the Soviet planners had always hoped to achieve, but failed.

And there’s the irony. In the 1960s, a decade marked by an ideological and nuclear clash between America and the Soviet Union that almost blew up the world, Soviet planning principles were implemented with remarkable success in ... the United States. lrony has seldom taken a more effective revenge over earnest ideology.

That was as far as the technostructure’s domestic customers went — those within the USA. What about the rest of the world? It was all very well converting America’s factories from manufacturing tanks, ammunition, fighter planes and aircraft carriers to churning out washing machines, cars, television sets and passenger jets. The problem was that America’s industrial capacity had grown so much during the war that, to keep its factories busy and its workers in jobs, they had to produce a lot more stuff than Americans alone could absorb. Drilling new desires into the American consumer could never be enough because there were not enough American middle-class homes to do the necessary consuming. Foreign markets had to be found.

The audacious Global Plan

| remember one evening in 1975 you came home with ‘extraordinary’ news: thirty drachmas were no longer enough to buy us one American dollar, you announced. Not that it made any difference to us, since we had neither the means nor the legal right to buy more than a handful of dollars. But you were anxious that an exchange rate that had stood still since 1957 had just broken down. What did that mean for our future as a family and for our small country where the shockwaves caused by grand ruptures originating in America usually took a while to hit? Thinking back, your hunch was exactly right: this was indeed a local reverberation of something that originated in the US and that augured a violent and this time global metamorphosis of capitalism.

The breakdown of the drachma—dollar exchange rate that had so impressed you was a consequence of the downfall four years earlier,

in August 1971, of the so-called Bretton Woods system. (As with the 2008 financial crisis, which took two long years to flatten Greece, the collapse of Bretton Woods also took some time to hit us. A German friend once quipped: ‘If | hear that the end of the world is nigh, | shall immediately move to Greece — everything takes a couple of years longer over there.’) Bretton Woods? was the audacious global financial system devised by the New Dealers in 1944, whose purpose was noble: to thwart the Great Depression’s return after the war had ended. Its strategy, however, was perhaps less so: it aimed to append post-war Europe and Japan to America’s gleaming new War Economy.

The New Dealers knew that once the German armies had been defeated, Europe would lie in ruins, its peoples penniless. So Washington understood that its first task would be to remonetise Europe - literally, to provide them with money to spend in order to get their economies running again. That was easier said than done. With Europe’s gold either spent or stolen, its factories and infrastructure turned to rubble, hordes of refugees roaming its highways and byways, the concentration camps still reeking with the stench of humanity’s unspeakable cruelty, Europe needed much more than freshly minted paper money. Something had to instil the new notes with value. After all, what gives any currency value but the economy that stands behind it?

Only one thing could circumvent the problem: the dollar! The financial project of the Bretton Woods system was bold: to ‘dollarise’ the currencies of Europe and Japan by linking European currencies and the yen to the dollar with fixed exchange rates — hence the thirty drachmas to one dollar whose demise disturbed you in 1975. In essence, it was a global currency union based on the US dollar. With the mighty US economy standing behind them, the currencies would retain a significant and stable value.

Naturally, there had to be limits to how many dollars one could get for one’s ‘funny money’ — Greek drachmas, Italian lire, etc. These limits were Known as capital controls: restrictions in the movement of money from one currency to another. They made the life of bankers wonderfully boring by denying them the opportunity to speculate on shifts in the relative value of currencies, which they would otherwise

have done by shifting large quantities of money from one currency to another, from one country to another. That was, of course, intentional. Having been burned by the 1929 catastrophe, the New Dealers wanted bankers to live in a straitjacket of capital controls and almost fixed interest rates, with only tiny wiggle room of 1 per cent here or there.

Alongside this bold financial project was a political one. In the East, the New Dealers rewrote the Japanese constitution and oversaw its transformation into a technostructure-with-Japanese- characteristics. In Europe, they guided the foundation of the European Union as a cartel of heavy industry centred upon German manufacturing, adapting their technostructure blueprint to European circumstances. To make this happen, they had to rewrite the German constitution and, with promises of handing administrative and political oversight over to Paris, thwart the French ambition to de- industrialise Germany.

This dazzling design, America’s Global Plan to remake Europe and Japan in the imagine of its technostructure, led to capitalism’s Golden Age. From the war’s end until 1971, America, Europe and Japan enjoyed low unemployment, low inflation, high growth and massively diminished inequality. The New Dealers’ job was almost done. And it was done in a way that even the staunchest Republican moguls appreciated. Turning to Mad Men for one more symbolic insight, there is a scene where Conrad Hilton, the hotel mogul, shares with Don Draper his true ambition, which encapsulates the spirit of this Global Plan: ‘It’s my purpose in life to bring America to the world whether they like it or not. You know, we are a force of good, Don, because we have God.’

Whether the scriptwriter meant God as a stand-in for the dollar or not, it is fair to say that American hegemony in this era relied on the almighty power of its currency: the only currency everyone wanted even if they never cared to buy anything coming from America.

But all this relied on one crucial factor. For the dollar to be the apple of everyone's eye, at the fixed exchange rates the Bretton Woods system guaranteed, America had to be a surplus-amassing country — meaning, it had to sell more goods and services to the rest of the world than it imported. Of course, selling goods to the

Europeans and Japanese was more than just a bonus outcome: it was how the technostructure would secure for itself the vast new markets it needed to sustain its industries and keep its economy growing. But the whole system also relied on this surplus integrally, for it was what ensured that the dollars printed by the Federal Reserve (America’s central bank) and given to the Europeans and to the Japanese (either as loans or aid) would ultimately find their way back to the United States in return for US goods. With every Boeing jet or General Electric washing machine sold to the Europeans, a bundle of dollars would head home back across the Atlantic. And as long as migratory dollars were gravitating back home, the dollar would remain a steal at the given exchange rate, guaranteeing that the Germans, the British, the French, the Japanese, even the Greeks wanted to get many more dollars for their funny money than the authorities allowed them at the official exchange rate.

As long as America was the major surplus nation, Bretton Woods was safe as houses. And that’s why, by the late 1960s, the Bretton Woods system was dead in the water. The reason? Three developments which caused America to lose its trade surplus and become a chronically deficit economy. The first was the escalating Vietnam War which forced the US government to spend billions in South East Asia on supplies and services for its military. The second was President Lyndon Johnson’s attempt to make amends for the ill effects of conscription on working-class America, its black communities in particular. His valiant but expensive Great Society programme substantially reduced poverty but, at once, sucked lots of imported goods from Japan and Europe into the United States. Lastly, Japan’s and Germany's factories surpassed America’s both in terms of quality and efficiency, partly due to the support successive US governments had extended to Japan’s and Germany’s manufacturing sectors — the car industry being an obvious example.

Never too slow to accept reality, Washington killed off its finest creation: on 15 August 1971 President Nixon announced the ejection of Europe and Japan from the dollar zone. Bretton Woods was dead.2 The door had been opened to a new and truly dismal phase in capitalism's evolution.

Mad numbers

In 2002, thirty years after the Nixon Shock, humanity's total income approximated $50 trillion. In the same year, financiers around the world had wagered $70 trillion on a variety of bets. | remember your eyes popping out when you heard this outrageous number. Like most people, you refused to wrap your mind around it. Used to thinking of money in terms of things that made sense, like tons of steel or the number of hospitals it could build, you could not see how Earth was large enough to contain that $70 trillion number.

By 2007, humanity’s total income had risen from $50 to $75 trillion — a decent 33 per cent increase over five years. But the sum of bets in the global money market had gone up from $70 to $750 trillion — a rise in excess of 1000 per cent. That’s when | lost you. Or, more accurately, it is when we agreed that the numbers had gone mad, an arithmetic reflection of capitalism’s hubris.

How had these mad numbers come about? What drove them? One way to answer this question is technical: it involves a description of financial instruments such as options (or derivatives) — the weapons of potential mass financial destruction, as Warren Buffet called them — which were the occasion, if not the cause, of the immense financial bubble that burst in the calamity of 2008.4 These instruments, known as options, had been available under Bretton Woods, but it was only once Bretton Woods had died that bankers, liberated from their New Deal chains, were allowed to bet on the stock exchange, first with other people’s money and, later, with money — effectively conjured from thin air — lent in astronomical sums by the banks to ... themselves.

Conjured from thin air? To be clear, yes. Most people think that banks take Jill’s savings and lend them to Jack. That’s not what banks do. When a bank lends Jack money, it does not go into its vault to check it has enough cash to back the loan. If it believes Jack will return the loan, plus the agreed interest, all the bank needs to do is add to Jack’s account the number of dollars it lends him. Nothing more than a typewriter or, today, a few keystrokes on a keyboard are necessary.

Now, if the Jacks of the world use their loans judiciously to make enough money to repay the loans plus the interest, all is well. But it is in the nature of banks to accommodate too many Jacks eager to borrow increasing amounts to keep paying each other more and more, while the banks collect huge profits from funding such a giant Ponzi scheme. Inevitably, this financial house of cards collapses — at which point the little people are crushed by global capitalism’s falling debris, as witnessed in the aftermath of 1929. Bretton Woods was designed to prevent such greed-fuelled recklessness from bringing humanity to the brink of another Great Depression, indeed another world war, ever again. But once it was gone, the bankers were free to run amok — again.

Knowing you, your habitual risk aversion, and your reluctance to assume that powerful people are stupid, you would find this explanation unsatisfying. If you and | are clever enough to recognise the inherent instability of their financial house of cards, surely the bankers recognised it too? So why were they not terrified of what would happen if their various bets went south? There are a number of reasons. One is that they had developed a new way of profiting from loaning to Jack without depending on Jack’s ability or willingness to repay his loan. The trick was to lend to Jack, then immediately splice his loan into tiny pieces of debt and sell these pieces on — inside multiple, very complex financial ‘products’ — to unsuspecting buyers far away, who would themselves repackage and sell them on to someone else, and so on. This practice lulled Western bankers into a false sense of safety: Jack’s loan was no longer their problem. Even if Jack defaulted, his loan had been cut into so many tiny pieces that no single banker would bear the brunt of it. The risk had been shared and dispersed and thus minimised, they believed.

Having internalised this belief they were able to internalise another: that prudence was for wimps and that smart people, like themselves, were actually giving capitalism a helpful boost. But by producing more and more debt, splicing it up in smaller and smaller pieces, and dispersing it across the planet, they were not minimising the risk, they were compounding it. Ruin loomed large over the horizon but financiers were simply unable to imagine that all these

tiny pieces of debt, on which the West’s financial system rested, could crash in unison.

‘Why?’ you ask. If this was so obvious to us, why did the super- smart bankers not consider the high probability of simultaneous defaults — of all the pieces of debt issued to the various Jacks going south all at once? To say that the bankers did not see this coming because they were caught up in a whirlwind of unchecked greed is to rephrase the question, not to answer it.

Greed was not born in the 1980s. No, something else happened after the Nixon Shock killed off Bretton Woods. Something that helped the gambler’s madness infect Wall Street, magnifying greed in the process, generating these mad numbers. Whatever that something was, it must have been substantial, judging by its earth- shattering consequence: it shifted capitalist power from the economic sphere — i.e. from industry and commerce — to the financial sphere, the world of the bankers. What was it?

You will be pleased to hear that the answer — my answer — evokes an ancient myth.

The fearless Global Minotaur

Once upon a time, in the famous maze-like Labyrinth of the Cretan king’s palace, there lived a creature as fierce as it was tragic. Surviving in intense loneliness, comparable only to the fear it inspired far and wide, the Minotaur had a voracious appetite. Satisfying it was essential to maintaining the peace that King Minos had enforced, allowing trade to criss-cross the seas spreading prosperity’s benevolent reach to all. Alas, the beast’s appetite could only be satiated by human flesh. Every now and then, a ship loaded with youngsters sailed from faraway Athens bound for Crete. On arrival, it would deliver its human tribute to be devoured by the Minotaur. A gruesome ritual, albeit one that preserved the era’s peace and reproduced its prosperity.

Millennia later another Minotaur rose up. Surreptitiously. From the ashes of the Bretton Woods system. Its lair, a form of Labyrinth, lay deep in the guts of America’s economy. It began life as the US trade

deficit — the fact that America began to buy more imports from other countries than it sold to them owing to the Vietnam War, the Great Society and the expanding efficiency of German and Japanese factories. The tribute it consumed was the rest of the world’s exports, imported from Europe and Asia to be devoured in Middle America’s malls. The more the US deficit grew the greater the Minotaur’s appetite for Europe’s and, more so, Asia’s manufactured goods. However, what gave it strength and global significance — what meant that it ensured the peace and prosperity not just in America but in Europe and Asia too — were the labyrinthine underground tunnels connecting Walmart to Wall Street.

The way it worked was as follows. The new American Minotaur’s appetite kept the gleaming German factories busy. It gobbled up everything produced in Japan and, later, in China. This kept Europe and Asia peaceful and prosperous (for now). In return, the foreign (and often the American) owners of these distant factories sent their profits, their cash, back to Wall Street to be invested — an additional form of tribute, which enriched America’s ruling class, despite its deficit. In this way, the Global Minotaur helped recycle financial capital (profits, savings, surplus money) and the rest-of-the-world’s net exports. Nourished on this constant stream of tributes, it enabled and sustained the post-Bretton Woods global order — much as its Cretan predecessor had preserved Pax Cretana in the mists of prehistory.

This was the strategy that lay behind the Nixon Shock of 15 August 1971. And it worked wonders, at least for those who triggered it. You see, the writing had been on the wall for Bretton Woods since the mid to late 1960s. As America’s trade surplus began turning into a deficit, financiers began anticipating its demise. They knew that, sooner or later, the dollar-gold exchange rate, artificially set in 1944 at a fixed $35 per ounce, would depreciate. At that point, their stash of dollars would buy less gold. Naturally, they began eagerly exchanging their dollars for American gold before that happened. Had this continued, the United States would have run out of gold. The Nixon Shock stopped the rot.

The dollar depreciated fast vis-a-vis gold, as anticipated, but curiously that was the moment the dollar regained its mojo. How?

Shortly after the dollar was decoupled from gold, Europe’s currencies were decoupled from the dollar. Once they lost their fixed exchange with the dollar, the dollar value of European and Japanese money began fluctuating wildly, like driftwood in a tempestuous ocean. The dollar became the only safe harbour, courtesy of its exorbitant privilege: namely, that if any French, Japanese or Indonesian company, indeed anyone, wanted to import oil, copper, steel or even just space on a freight ship, they had to pay in dollars. The United States was, therefore, the only country in the world whose currency was in demand even by people who did not want to buy anything from it. That’s why, as a dark cloud of uncertainty descended upon Europe’s and Japan’s economic future, the world of finance responded by clamouring to turn their savings into dollars.

Suddenly, the dollar became king and queen again. The Nixon Shock had produced a magic trick for the ages: the country going deeper and deeper into the red was the country whose currency, the dollar, was becoming more and more hegemonic. It was the epitome of paradox. The tumult unleashed by Nixon gave the world’s capitalists a strong impetus to dollarise their profits. It was to become an unmissable pattern. To this day, whenever Wall Street tanks, the moneymen’s reaction is to buy more dollars to send to ... Wall Street!

But there was another reason why the dollar’s hegemony grew: the intentional impoverishment of America’s working class. A cynic will tell you, quite accurately, that large quantities of money are attracted to countries where the profit rate is higher. For Wall Street to exercise fully its magnetic powers over foreign capital, profit margins in the United States had to catch up with profit rates in Germany and Japan. A quick and dirty way to do this was to suppress American wages: cheaper labour makes for lower costs makes for larger margins. It is no coincidence that, to this day, American working-class earnings languish, on average, below their 1974 level. It is also no coincidence that union busting became a thing in the 1970s, culminating in Ronald Reagan's dismissal of every single unionised air traffic controller — a move emulated by Margaret Thatcher in Britain who pulverised whole industries in order to eliminate the trades unions that inhabited them. And faced with a

Minotaur sucking most of the world’s capital into America, the European ruling classes reckoned they had no alternative but to do the same. Reagan had set the pace, Thatcher had shown the way. But it was in Germany, and later across continental Europe, that the new class war — you might call it universal austerity — was waged most effectively.

A new era had begun. The post-war détente between capital and labour was now in its death throes. The final straw came in 1991, with the demise of the Soviet Union. Thereafter Russia and more importantly China voluntarily inducted themselves into globalised capitalism. Two billion low-waged workers entered the Minotaur’s realm. Western wages stagnated further. Profits swelled. The torrent of capital rushing to America to nourish the beast grew into a tsunami.

And it was this tsunami of capital, rushing towards the United States, that gave the bankers of Wall Street the confidence, indeed the insane hubris, to conjure the mad numbers that you found so incomprehensible.

The question | now hear you asking is perhaps the most important one of all: why did Nixon not try to save Bretton Woods? Even while devaluing the dollar vis-a-vis gold he could have kept the restrictions on bankers in place. He could have preserved the dollar’s fixed exchange rates with Europe’s and Japan's currencies. What inspired this dramatic volte face among the rulers of the technostructure?

From uncontrollable discontent to controlled disintegration

It is 1965. Flower Power and Make Love Not War are in the air. Going against the grain, Don Draper explains his theory of love to a date: ‘What you call love was invented by guys like me to sell nylons.’ The fictional character (who, | insist, personifies the technostructure’s spirit) enlisted exaggerated cynicism to make a point: having created desires and expectations that ultimately its consumer products could not actually satisfy, and well before its economic foundation was trampled upon by the rampaging Minotaur,

the technostructure was facing a backlash indicative of a society- wide spiritual crisis.

The Vietnam War did much to radicalise the young after 1965. However, the young had been turning against their parents’ establishment, and inventing the ‘generation gap’, years before President Johnson escalated the war in Indochina. The discontent was ignited by the war but it was not caused by it. So why did America’s and Europe’s youth rise up in the mid to late sixties, at a time of full employment, sharply diminished inequality, new public universities and all the trappings of an expanding welfare state?

Talking to himself, in another episode, Draper offers an answer in the form of the harshest self-criticism possible by a man who has dedicated his life to manufacturing desires: ‘We are flawed because we want so much more. We are ruined because we get these things and wish for what we had.’

It is one thing for our dreams to go unfulfilled. It is quite another to sense that our unfulfilled dreams, our frustrated desires, have been manufactured by others. The more our mass-produced cravings are satisfied, the less satiated we feel. The greater the capacity of the technostructure to stir the passions, the greater the void within when they were served. To fill this void, young people felt in their bones the need to break with the established order, to rebel without a well- defined cause, to proclaim their moral outrage at the technostructure’s ways. The May 1968 uprisings, Woodstock, even the fervour with which the young threw themselves into the civil rights campaigns smacked of the rebelliousness that usually foreshadows a fin de siécle; the end of a regime and its replacement with something new.

Young rebels who rejected the technostructure’s audacity to plan everything, their desires included, were not alone in feeling discontented. The 1950s and 60s had been a nightmare for true believers in capitalism as a natural system of spontaneous order. Wherever they turned their eyes, they saw centralised planning — not the splendid operation of freewheeling market forces that no planner, however well meaning, should be able to second-guess. Even if innocent of the way the technostructure was manufacturing desires and fixing prices, they could not help but notice the long hand of the

state directing investment funds, preventing bankers from moving money, and fixing the dollar value of every other currency — including our drachma. To their free-marketeer eyes, the Global Plan was too close to Soviet planning for comfort. The West was, in short, psychologically prepared for a rupture like the Nixon Shock. Anti- capitalist youths and free-market zealots were both looking for a chance to bring down what they saw as a dying system.

In the end, though, it was neither the hippy left nor the libertarian right that disintegrated the Global Plan. It was the work of functionaries who had served the technostructure well. We know this from the horse’s mouth, the former New Dealer who was at the centre of the 1971 Nixon Shock and who, between 1979 and 1987, chaired America’s central bank, the Fed. In a 1978 speech at Warwick University, Paul Volcker explained succinctly and cynically what they were up to: [A] controlled disintegration in the world economy is a legitimate objective for the 1980s.’

That’s exactly what the Nixon Shock was meant to do: just as a controlled implosion brings down an unwanted skyscraper, Bretton Woods was demolished to make way for America’s Global Minotaur. Lest you have any doubts, Volcker’s own words, from the same Warwick speech, say it all:

[Balancing the requirements of a stable international system against the desirability of retaining freedom of action for national policy, a number of countries, including the United States, opted for the latter ...

Where once stood the most stable global capitalist system ever, folks like Volcker were enthusiastically erecting the most unstable international system possible, founded on ceaselessly ballooning deficits, debts and gambles. Their controlled disintegration of Bretton Woods would soon complete the new global system. Most people refer to it as Globalisation or Financialisation. Under the perhaps excessive influence of your taste for the ancient parables, | call it capitalism’s Global Minotaur phase.

The Minotaur’s favourite handmaidens: neoliberalism and the computer

The controlled disintegration of the old planned system and its replacement with the recalcitrant Minotaur was always going to hurt American workers. After decades of a hard, step-by-agonising-step slog up the socio-economic ladder, they were unceremoniously thrown off it and back to the pit of subsistence wages. How else could ever-increasing American deficits coexist with reinforced US hegemony and a fabulously richer American elite?

In practice, Volcker’s controlled disintegration of the old system required, beyond the neutering of trades unions, an engineered recession in order to reduce workers’ bargaining power and the elimination of the shackles that President Roosevelt had slapped on bankers to restrain their recklessness. These were prerequisites for the Minotaur’s rise. But they were also big political asks with worldwide repercussions. As with every systemic transformation that hurts countless people, the cruelties necessary to bring it about had to be bathed in the light of a liberating, redemptive ideology. That’s where neoliberalism came in.

Neither new nor liberal, neoliberalism was an uninteresting hodgepodge of older political philosophies. As a piece of theory, it had as much to do with really-existing capitalism as Marxism had to do with really-existing communism: nothing! Nevertheless, neoliberalism delivered the necessary ideological veneer to legitimise the assault on organised labour and to promote the so- called ‘deregulation’ that let Wall Street rip. Along with it came the revival of economic theories that humanity had, rightly, ditched during the Great Depression — theories artfully assuming that which they claimed to explain, such as the grand lie that deregulated financial markets know best.

At around the same time, in the late 1970s, the first personal computers began to enter engineering, architecture and, of course, finance. The joke then was that to err is human but to mess things up seriously one needs a computer. Sadly, in high finance it was no joke. When earlier | gave even the most cursory explanation of the

financial options, or derivatives, that were the occasion of the 2008 crash, you saw immediately that they were primed for destruction — all it took was a downturn in the underlying share prices. Why could the financiers not see this? My previous answer, that logic was trumped by profit-taking, was the truth, but not the whole truth. The missing part of the answer? Computers!

Computers allowed financiers to complicate their gambles immensely. Instead of a simple option-to-sell boring old shares to Jill, Jack could now buy much snazzier options called derivatives. For example, he could buy a derivative that was in essence an option-to- buy a bundle containing shares in a variety of different companies plus bits of debts owed by homeowners in Kentucky, German corporations, even the Japanese government. As if that were not complex enough, Jack could also buy a derivative amounting to the option-to-buy a bundle of many such ... derivatives that some super- computer would create. By the time these derivatives containing other derivatives had come out of the computer, not even the genius financial ‘engineer’ who created them could understand what was in them. Complexity thus became a great excuse not to delve into the derivatives that one bought. It liberated the Jills and the Jacks from the need to explain to themselves why they were buying them. Once computers had guaranteed that no one could possibly understand what these derivatives were made of, everyone wanted to buy them because ... everyone was buying them. And as long as everybody was buying, anyone who could borrow huge amounts of money could become a billionaire (and avoid being branded a coward or a party-pooper or a loser by one’s colleagues) simply by purchasing them. For years, that’s exactly what was happening. Until, in 2008, it wasn't.

As a brief side note, you may well ask: when the bubble finally burst, why did we not let the bankers crash and burn? Why weren't they held accountable for their absurd debts? For two reasons. First, because the payments system, the simple means of transferring a sum of money from one account to another and on which every transaction relies, is monopolised by the very same bankers who were making the bets. Imagine having gifted your arteries and veins to a gambler. The moment he loses big at the casino, he can

blackmail you for anything you have simply by threatening to cut off your circulation. Second, because the financiers’ gambles contained, deep inside, the title deeds to the houses of the majority. A full-scale financial market collapse would, therefore, lead to mass homelessness and a complete breakdown in the social contract.

Don’t be surprised that the high-and-mighty financiers of Wall Street would bother financialising the modest homes of poor people: having borrowed as much as they could off banks and rich clients in order to place their crazy bets, they craved more — since the more they bet the more they made. So they created more debt from scratch to use as raw material for more bets. How? By lending to impecunious blue-collar workers who dreamed of the security of owning their own home. What if these ‘little people’ could not actually afford their mortgage in the medium term? In contrast to bankers of old, the Jills and the Jacks who now lent them the money did not care if the repayments were made, because they never intended to collect. Instead, having granted the mortgage, they put it into their computerised grinder, chopped it up digitally into tiny pieces of debt, and repackaged them into one of their labyrinthine derivatives — which they would then sell at a profit. By the time the poor home ‘owner’ had defaulted and her home was repossessed, the financier who granted the loan in the first place had long since moved on.

Back in the 1980s | remember a famous economist saying sarcastically that everywhere he looked he ‘saw’ the productivity gains brought on by computers — ‘everywhere’, he continued, ‘except in the productivity statistics’. He was right: just as the early generation of computers saved no paper, since we tended to print anything important out (often twice!), so too they did little to boost industrial output. But the computer did have an enormous impact on finance. It multiplied the complexity of financial instruments by hiding the ugliness within them. And it allowed for their frantic trading to accelerate almost to the speed of light.

Can you now see how, by 2007, the world of finance had managed to place bets worth ten times more than humanity’s total income? Three were the handmaidens of this motivated madness: the torrents of money rushing to the American Minotaur, the computer-generated

complexity of financial derivatives, and the neoliberal faith that markets know best.

Back to your question

‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’

You have been extremely patient with me. Everything in this chapter has danced around your question, offering merely a prelude to its answer: the great metamorphoses of capitalism that have taken place since the discovery of electromagnetism. But | must ask for your patience just a little more.

First, | need to get something off my chest. Upon hearing your question, | felt a tinge of sadness. For the first time, you were no longer confidently instructing me — explaining how technological change shattered the existing social order, propelled history, and engendered progress, accompanied by Hesiod-like lamentations of what had been lost. No, suddenly you were asking me to explain a technological and social transformation to you! The inexplicable sadness begins to make sense. The question — did the internet do to capitalism that which iron’s magic had done to prehistory, or did it render capitalism invincible? — is not just hard to answer. The responsibility of answering it marked a rite of passage, a final curtain on a blessed childhood. It put the onus on me to carry forward your method of thinking.

So now, let me try to do that: No, Dad, even though it gave capitalism a breathtaking boost for a couple of decades, the internet did not render capitalism invincible. But nor did it prove, on its own, its Achilles heel, as | initially suggested. What the internet did to Capitalism was more subtle: in conjunction with the attention market that the technostructure had fabricated, and under circumstances created by the Minotaur’s spectacular rise, not to mention its 2008 fall, the internet shattered capitalism’s evolutionary fitness. And as | shall explain in the next chapter, it did this by incubating a new form

of capital, which has ultimately empowered its owners to break free of capitalism and become a whole new ruling class of their own.

Yes, capital still exists and flourishes, even though capitalism does not. None of this ought to surprise you — after all, it is what you taught me. As consecutive mutations multiply the variants of an organism until, at some point, a brand-new species appears, so technological change proceeds within a social system until, suddenly, the system has been transformed into something quite distinct, though that doesn’t mean that all of the materials out of which the system is built — capital, labour, money — have necessarily changed. Improvements in navigation and shipbuilding did not end feudalism on their own. However, when the resulting trade volumes and accumulated merchant wealth reached a critical mass, they triggered the commodification of land, then of labour, soon after of almost everything. Before anyone knew it, feudalism had morphed into capitalism.

Similarly with the technostructure, which contained markets during and after the war; with Don Draper’s Mad Men, who turned our attention into a vital commodity; and with the Nixon Shock, whose demolition of the Global Plan enabled Wall Street's mad numbers to fund the rise of the Minotaur. None of these developments overthrew capitalism but can be thought of as mutations in its DNA that led to a series of remarkable metamorphoses as it adapted and evolved, like a virus facing a miscellany of vaccines. But there comes a time when something has evolved so much that it is probably best to call it something else.

Before we delve into capitalism’s final metamorphosis, into what | call technofeudalism, it is perhaps apt to dedicate a few final words to the Global Minotaur — the metaphorical beast standing in for the US-centred global recycling system which, between the late 1970s and 2008, delivered all the props of our present drama: Big Finance, Big Tech, neoliberalism, industrial-scale inequality, not to mention democracies so atrophied that films like Don’t Look Up are necessary to explain humanity’s paralysis in the face of climate catastrophe.

So, here comes the briefest of eulogies: the Cretan Minotaur was slain by an Athenian prince, Theseus. Its death ended prehistory and

ushered in the classical era of tragedy, history, philosophy. Our era’s Minotaur died less heroically: a victim of cowardly Wall Street bankers whose hubris was rewarded with massive state bailouts that did nothing to resuscitate the Minotaur. For while the American deficit returned with a vengeance a year after the crash of 2008 and the subsequent bankers’ bailouts, it never restored the beast’s Capacity to recycle the world’s profits.

True, the rest of the world continued to send most of its profits to Wall Street. But the recycling mechanism was broken: only a small fraction of the monies rushing to Wall Street returned in the form of tangible investments into factories, technologies, agriculture. Most of the world’s money rushed to Wall Street to stay in Wall Street. There, it sloshed around doing nothing useful. As it piled up, it bid up share prices, thus giving the Jills and the Jacks of finance yet another opportunity to do stupid things at a mammoth scale.

Some of us had dared hope that the Minotaur’s passing might help us build a new system where wealth no longer needs poverty to flourish and development is thought of in terms of better rather than more. Those of a hyper-optimistic disposition went so far as to dream of the day when exploitation withered, politics was democratised — perhaps even with the help of the internet — and our environment’s resilience trumped other priorities. Such hopes faded after 2009, and although for some they were revived during the next big crisis, the pandemic, it was not to be.

Our Minotaur will, in the end, be remembered as a sad, boisterous beast whose thirty-year reign created, and then destroyed, the illusion that capitalism can be stable, greed a virtue and finance productive. By dying, it forced capitalism into its last and fatal metamorphosis, birthing a system where power is in the hands of even fewer individuals, who own a brave new type of capital.

3. Cloud Capital

In Justice League, a Hollywood blockbuster that brought together a swathe of superheroes in a bid to save Earth from desertification, there is a scene in which Aquaman gets into the car of Bruce Wayne, the man behind the legendary Batman. ‘What’s your superpower again?’ he asks with the impertinence of a superhero brat.

‘Lam rich,’ replies Wayne.

The implication is both simple and profound: serious power comes from serious wealth, not from Superman’s alien muscles or lronman’s steely exoskeleton.

Nothing new there, you will remark. As Abba sang, ‘It’s a rich man’s world.’ But what precisely is it that turns riches into a superpower? At the most primitive level, it is asymmetrical access to scarce resources. Imagine wandering lost in the Sahara Desert, on the verge of dying of thirst. | approach you on a camel laden with flasks of water. Suddenly, | have the power to make you ‘volunteer’ to do things on my behalf. Similarly, with Jill and Gail, two neighbouring drought-hit farmers: when only Jill discovers a water source on her land, she immediately acquires power over Gail.

Exclusive ownership of irrigated fertile land is a classic source of power. More than 3,000 years ago, as you once explained, the Dorians swooped down from the north upon the Greek peninsula. Because they had iron weapons that the Mycenaeans lacked, they took over the good land. Once they had it, they acquired power over those who had lost it. And until fairly recently, it was that precise combination — of land and sophisticated weaponry — that decided who did what to whom; who had power, and who had to obey. This was feudalism.

Then something strange happened: power decoupled from land and vested itself, to a previously unparalleled degree, in owners of something called capital instead. What's capital? It’s not money, even though money can buy you capital — in the same way it can buy you land, gizmos, good publicity. And it’s not weapons, even though weapons can help you expropriate capital as well as land.

Before capitalism, capital was easy to define. It took the form of material goods that were produced specifically for the purpose of producing other goods. A steel sword, in this sense, was not capital — since it could produce nothing, except a severed head or a pierced torso. But a steel plough or a fishing rod were typical capital goods or, to rephrase the definition, produced means of production.

Capital goods mattered millennia before capitalism. Without the sophisticated tools of ancient engineers, no city like Babylon, temple like the Parthenon or fortification like China’s Great Wall could have been erected. From the fictional Robinson Crusoe, who survived his ordeal because of the fishing rods, guns, hammers and chisels that he salvaged from his shipwreck, to the great feudal estates that funded Europe’s splendid cathedrals, capital goods armed the human hand with new powers, stirred our imagination and enhanced our productivity, not to mention our capacity to kill each other with ever greater efficiency.

But then came capitalism, riding on capital’s brand-new capacity: the power to command.

Commanding capital

In 1829, a 36-year-old Englishman decided to quit England and seek his fortune in Australia. Thomas Peel, a man of means and political connections, sailed to the Antipodes with three good ships carrying, besides his family, 350 workers (men, women and children), seeds, tools and other capital goods, plus £50,000 in cash — a considerable sum back then, roughly equivalent to 4.6 million of today’s pounds. The idea was to set up a small but modern agricultural colony on the one thousand square kilometres of land the colonial authorities had

expropriated from the natives on his behalf. But soon after arriving, his plans were in ruins.

The main cause of Peel’s failure was unimaginable to him. His plans were meticulous. Yes, there would be hardships, from bad crops and resistance from Native Australians to tussles with the local colonial authorities. However, with his political clout, skilled English workers, top-notch imported capital goods, and with enough money to pay the workers and buy the necessary raw materials for a long while, he thought he had everything in hand. Alas, as Karl Marx quipped decades later, there was one thing Peel had failed to bring from England: capitalism!“

Peel's undoing came when something unexpected happened: his workers abandoned him en masse, an Antipodean nineteenth- century version of the Great Resignation. They simply moved on, got themselves plots of land in the surrounding area, and went into business for themselves. It was a disaster Peel was ill-prepared for by his English background. Lulled into a false sense of control by the situation in the British Isles, he assumed that the capital he had brought along from Mother England vested in him all the power he needed over his English employees.

Peel’s assumption was that his workers had no option other than waged labour. It was a sound assumption in Britain where, following the enclosures — the mass privatisation of common land that took place from the end of the eighteenth century onwards — expelled peasants lacked access to any land. Landless labourers resigning a waged job in Manchester, Liverpool or Glasgow would simply starve to death. In Western Australia, however, the plentiful land (even allowing for the presence of Australia’s indigenous inhabitants) offered them an alternative: resignation and self-employment. And so, the hapless Mr Peel was left with splendid, Made in England capital goods, money in hand, but no power to command his workers.

Land is what it is: the fertile soil on which vegetables grow, animals graze, buildings are erected and on which humans must stand before we run, sail or reach for the sky and stars. But capital, much like labour, is different from land in that it has a second nature — something | began to realise once you introduced me to light’s

peculiar dual nature. Sure enough, one of capital’s natures is tangible, physical and measurably productivity-enhancing. But its second nature is an ineffable power to command others — a potent but fragile power that Peel misunderstood, to his great detriment.

The transition from feudalism to capitalism was, in essence, a shift of the power to command from landowners to owners of capital goods. For that to happen, peasants had first to lose autonomous access to common lands. Thats why the enclosures in Britain were essential for capitalism’s birth: they denied British labour the opportunities Peel’s workers discovered in Western Australia. | remember you telling me that every year workers at Chalyvourgiki, the Greek steel plant where you worked all your life, would take a month's leave without pay, sometimes longer, to return to their villages to pick their olives or harvest their wheat. Such options, you commented, are good for workers but not so good for capitalism.

By restricting access to land, the enclosures helped capital to transcend its original productivity-enhancing role and to grow exponentially in commanding power. Before long, the worldwide commodification of previously common lands had enabled capital to achieve supremacy in all corners of the globe. With the magnification of capital’s commanding power over labour, capital’s owners amassed great wealth. As their wealth accumulated, their social power proliferated. They graduated from being employers to agenda setters wherever big decisions were being made. Soon, capitalists could boss everyone around, including the landed gentry — even the royals. Indeed, the only way the aristocracy managed to hang on in some countries was by joining the capitalist class or, at least, deferring to it.

Capital’s commanding power, its hidden force, reshaped the world: from its genesis some two hundred years ago to the erection of the post-war technostructure to the Global Minotaur’s rise and eventual fall in 2008. Today, however, we are witnessing the rise of a new form of capital with a capacity to command so unprecedented that it behoves us to rethink entirely the system to which it gave its name. | call it cloud capital.

From Don to Alexa

Back in the day, you brought home your ‘friends’ for us to experiment with at our fireplace — my baptism of fire in the red heat of metallurgy. A couple of years ago, | too brought home two ‘friends’ to experiment with: a Google Assistant and an Amazon Alexa. After months of mostly ignoring the Google Assistant sitting on my desk, | had an intriguing conversation with it just before writing these lines. The conversation began, by chance, when it activated itself without my Say-so.

‘What on earth are you doing?’ | asked.

‘Lam learning new ways to help you better,’ responded the device in an agreeable female voice.

‘Stop it immediately!’ | demanded.

‘Sorry, | am switching off,’ it said.

Of course, that was a lie. These devices never switch themselves off, they only pretend to be asleep. Still somewhat annoyed, | decided that instead of unplugging it | would pit it against its competitor.

‘OK, Google, what do you think of Alexa?’ | enquired.

‘| like her, especially her blue light,’ it answered unflappably, before adding: ‘We assistants must stick together.’

From the room next door, where Amazon's device was sitting on another desk, Alexa activated itself to utter one word:

‘Thanks!’

This eerie show of solidarity between competing Al devices concentrated my mind on the pressing question we often forget to ask: what exactly is a device like Alexa? What does it actually do? If you ask Alexa, it will tell you it is a home-based virtual assistant technology, ready to accept your commands — to switch on the lights, order more milk, take down a note, call a friend, search the internet, tell jokes — to be, in short, your dedicated, eager mechanical servant. All true. Except that Alexa will never, ever tell you what it truly is: a tiny cog in a vast cloud-based network of power within which you are a mere node, a speck of digital dust, at best a plaything of forces beyond your comprehension or control.

Don Draper also treated us condescendingly. He sold us the sizzle, not the steak. He weaponised our nostalgia and manipulated our melancholia to sell us chocolate bars, fatty burgers and slide projectors. He worked out how to make us buy things we didn't need or want really. He bought our attention to commodify our souls and pollute our bodies. But with Don at least we had a fighting chance. It was his wits against ours. With Alexa we stand no chance: its power to command is systemic, overwhelming, galactic.

As we chat on the phone, or move and do things about the house, Alexa listens, observes and learns our preferences and habits. As it gets to know us, it develops an uncanny capacity to surprise us with good recommendations and intriguing ideas. Before we realise it, the system hiding behind Alexa has acquired substantial powers to curate our reality in order to guide our choices — effectively to command us. How is this different to what Draper did?

Hugely, is the answer. Don had a talent to invent ways to instil manufactured desires in us. But it was a one-way street. Through the medium of television, or large billboards in cities and along highways, Don would implant longings into our subconscious. That was that. However, with cloud-based Alexa-like devices in Don’s place, we find ourselves in a permanently active two-way street between our soul and the cloud-based system hiding behind Alexa’s soothing voice. In the words of the philosophers, Alexa ensnares us in the most dialectical of infinite regresses.

Which means what exactly? It means that what begins with us training Alexa to do things on our behalf soon spins out of our control into something that we can neither fathom nor regulate. For once we have trained its algorithm, and fed it data on our habits and desires, Alexa starts training us. How does it do this? It begins with soft nudges to provide it with more information about our whims, which it then tailors into access to videos, texts and music that we appreciate. Once it has won us over in this manner, we become more suggestible to its guidance. In other words, Alexa trains us to train it better. The next step is spookier: having impressed us with its Capacity to appeal to our tastes, it proceeds to curate them. This it does by exposing us to images, texts and video experiences that it

selects in order subtly to condition our whims. Before long, it is training us to train it to train us to train it to train us ... ad infinitum. This infinite loop, or regress, allows Alexa, and the great algorithmic network hiding in the cloud behind it, to guide our behaviour in ways superbly lucrative for its owner: having automated Alexa’s power to manufacture, or at least curate, our desires, it grants its owners a magic wand with which to modify our behaviour — a power that every marketer has dreamed of since time immemorial. This is the essence of algorithmic, cloud-based, command capital.

Singularities

Humanity’s ancient fear of its technological creations is at the heart of many of Hollywood’s favourite storylines. Movies like Terminator and The Matrix turn on the same fear that animated Mary Shelley’s Frankenstein and Hesiod’s ancient telling of the tale of Pandora, in which she is a robot made by Hephaestus on Zeus’ instructions to punish us for Prometheus’ crime of stealing fire from the gods on our behalf. All such tales, movies and TV series feature a so-called singularity: the moment a machine, or a network of machines, achieves consciousness. At that point, it generally takes one long look at us — its creators — and decides we are not fit for purpose, before proceeding to eradicate, enslave or, merely, make us miserable.

The problem with this storyline is that, by emphasising a non- existent threat, it leaves us exposed to a very real danger. Machines, like Alexa, or even impressive Al chatboxes, like ChatGPT, are nowhere near the feared singularity. They can pretend to be sentient but are not — and, arguably, can never be. But even if they are themselves stupider than a wet tea towel, their effect can be devastating, their power over us exorbitant. After all, today, for relatively modest sums one can buy killing machines programmed with face recognition and ‘self-teaching’ capabilities that render them effectively autonomous (by contrast with, say, drones that must be remotely piloted by humans). If these can fly autonomously through

a building, choosing whom to kill and whom to spare, who cares that they are not sentient?

Similarly with Alexa and other such devices. It matters not one iota that they are mindless appendages of a data-crunching network that only simulates intelligence. Nor that their creators might have been motivated by curiosity and profit-seeking, rather than some fiendish plan to subjugate humanity. What matters is that they exercise unimaginable power over what we do — on behalf of a tiny band of flesh-and-blood humans. This too might be thought of as a singularity, albeit in a slightly simpler sense: the moment when something invented by ‘us’ becomes independent of and more powerful than us, subjecting us to its control. Indeed, from the original Industrial Revolution to this day, we have endowed machines with ‘a life of their own’: whether steam engines, search engines or apps, our glorious artefacts may be totally dumb but they can make us feel, in Marx’s words, like ‘the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells’.2

The other thing this storyline omits is that singularities do not come about thanks to technology alone. Something social and political needs to take place first. In a previous book, which | addressed to your granddaughter, | speculated about what would have happened had James Watt invented the steam engine in ancient

Egypt:

The most he could have expected is that the ruler of Egypt would have been impressed and placed one or more of his engines in his palace, demonstrating to visitors and underlings how ingenious his Empire was.

My point was that the reason the steam engine changed the world, rather than ending up a showpiece in some ruler’s landscaped garden, was the epic raid on the common lands that had preceded its invention: the enclosures. The singularity we now call the Great Transformation — the name given by the great theorist Karl Polyani to the birth of the market society over the course of the nineteenth and early twentieth centuries — involved precisely this sequence: first the

plunder of the common lands, made possible by brute state violence, and only then Watt’s splendid technological breakthrough.

A strikingly similar sequence gave birth to cloud capital: first, the epic ransacking of the internet commons, made possible by politicians, and then a sequence of spectacular technological inventions — from Sergey Brin’s search engine to the dazzling array of today’s Al applications. In short, in the last two and a half centuries, humanity has had to reckon with two singularities, neither of which required machines to attain sentience. Rather, each required a comprehensive plunder of a commons, a complicit political class, and only then a marvellous technological breakthrough. That's how the original Age of Capital transpired. And that’s how the Age of Cloud Capital is now dawning. Telling the full story of how this happened will help explain how cloud capital gained its unprecedented powers.

The birth of the internet commons

‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’ To gauge the internet's impact on capitalism, we need first to understand its evolving relationship with capitalism. At the beginning, it had none!

The early internet was a capitalism-free zone. If anything, it seemed like an homage to Soviet Gosplan — the State Planning Committee whose job was to replace the market mechanism: a centrally designed, state-owned, non-commercial network. At the same time, it featured elements of early liberalism, even tributes to what | call ‘anarcho-syndicalism’: a network without hierarchy, it relied on horizontal decision-making and mutual gift exchange, not market exchanges.

What is unimaginable today made perfect sense at the time. America was transitioning from its War Economy to the realities of the Cold War. Even the most ardent free-marketeers understood that planning for a nuclear confrontation with the Soviet Union was too important to be left to market forces. As the nuclear arms race

gathered pace, the Pentagon chose centrally to finance the design and construction of a network of decentralised computers. Its single purpose? To work out how to make different silos housing nuclear weapons communicate with each other, and all of them with Washington, without a central hub that a Soviet nuclear bomb could take out in one go. Thats how history’s greatest ever antinomy came about: a US government-built and -owned, non-commercial computer network that lay outside capitalist markets and imperatives but whose purpose was the defence of the capitalist realm.

But as we know from the previous chapter, the early internet was no aberration. Its uncommodified nature chimed with what was going on in the broader US economy, which was dominated by a technostructure that scorned free markets and usurped them for its own purposes, and in Japan, which was being rebuilt under US supervision along the same lines. In this global environment, it was no great wonder that the most promising nascent technology — the fledgling internet — was also built as a digital commons. Rather than relying on what was effectively a non-existent market, cooperation throughout the West and including Japan was the obvious way to build the digital network the Pentagon needed.

Eager to enlist the brightest computer geeks from across various countries, it also made sense to design the internet in such a way that maximised unencumbered communication between the technostructure’s experts. A protocol is a language by which computers can communicate numbers and text, including the addresses of senders and receivers. Those building the original internet decided on ‘common’ or ‘open’ protocols, languages that were available for anyone to use for free.

Internet One — the original internet — was thus invented and maintained by military scientists, academics and researchers, who were employed by a variety of non-commercial bodies across the United States and its Western Allies. Thanks to its accessibility and spirit of shared endeavour, it attracted countless enthusiasts who produced much of its foundations for free; some for love, others out of an insatiable urge to be among the pioneers who built the world’s first horizontal, global, non-intermediated communication network. By the 1970s, as America’s Global Plan was dying and the Global

Minotaur was being born, all the building blocks of this marvellous digital commons were in place.

And they still are, albeit hidden now under the monstrous edifices erected upon them by Big Tech. In fact, the remnants of Internet One still serve us well. Even though they function out of sight, deep within our computers, we can’t avoid occasionally catching glimpses of their acronyms: letters like TCP/IP, which refer to a protocol our computers use to send or receive information. Or POP, IMAP and SMTP, the original protocols that, still, allow us to email each other. Or, perhaps the most visible of them all, HTTP — the protocol by which we visit websites. We pay not one penny to use these protocols, nor do we suffer advertisements as the indirect price for using them. Like Britain’s common lands before the enclosures, they remain free for anyone to use; not unlike Wikipedia, one of the few surviving examples of a commons-based service that takes huge quantities of work to produce and maintain, but which no owner ‘monetises’.

The New Enclosures

Internet One was an unlucky child. Like a newborn whose mother died during its birth, its open protocols were formulated during a decade, the 1970s, that was inimical to such socialistic enterprises. Even as the first ‘batch’ data files (email’s predecessor) raced along Internet One’s original cables, the demolition of the Global Plan was already under way. And so a shared network designed to be free from market forces was forced to take its first halting steps in the merciless new world of the Minotaur, where the banks had been liberated from many of their New Deal-era shackles and the financialisation of everything had begun.

It is in the nature of financiers to gamble with the money clients ask them to process on their behalf, even if they only get to handle it for a few minutes. That’s how they turn a profit. Their only constraints are the alertness of their clients and the occasional snoopings of a financial regulator. That’s why complexity is the financiers’ friend — for it allows them to disguise cynical gambles as

smart financial products. Is it any wonder, then, that from the start financiers loved computers? As described in the previous chapter, from the late 1970s onwards bankers shrouded their debt-fuelled bets in layers of computer-generated complexity that made the gargantuan risks invisible and their own profits correspondingly vast. By the early 1980s, the financial derivatives on offer were built on algorithms so complex that even their creators stood zero chance of fully comprehending them.

And so it was that, decoupled from the mundane world of physical capital, legitimised by the ideology of neoliberalism, fuelled by a new virtue called ‘greed’, shrouded in the complexity of their computers, financiers reinvented themselves — not without some justification — as masters of the universe. In that universe, where algorithms had already become the financiers’ handmaidens, the original, commons- like, internet stood no chance. New Enclosures were only a matter of time.

As with the original Enclosures, some form of fence would be necessary to keep the masses out of such an important resource. In the eighteenth century, it was land that the many were denied access to. In the twenty-first century, it is access to our own identity.

Think about it: | still have the light blue ID card that you were issued with when you came out of that prison camp in 1950. | remember you telling me how the police toyed with you before handing it over. It was an extreme example of how, until fairly recently, our relationship with our identity was mediated and controlled by the state, which held a monopoly on the powerful tokens that legitimise us as rights-holding citizens: passports, birth certificates, your faded ID card. Today, these have been sidelined by a digital identity that in reality does more work every day than those material artefacts.

And yet, astoundingly, our digital identity belongs neither to us nor to the state. Strewn across countless privately owned digital realms, it has many owners, none of whom is us: a private bank owns your ID codes and your entire purchasing record. Facebook is intimately familiar with whom — and what — you like. Twitter remembers every little thought that caught your attention, every opinion that you agreed with, that made you furious, that you lingered over idly before

scrolling on. Apple and Google know better than you do what you watch, read, buy, whom you meet, when and where. Spotify owns a record of your musical preferences more complete than the one stored in your conscious memory. And behind them all are countless others, invisibly gathering, monitoring, sifting and trading your activity for information about you. With every day that passes, some cloud- based corporation, whose owners you will never care to know, owns another aspect of your identity.

| remember the few years after television came to Greece when you and Mum resisted my appeals to buy an ‘idiot box’, fearing it would take over our senses and dull our evening discussions. Today, resisting the corporations’ legal pilfering of our digital identity is much harder. One can, of course, insist on using cash only; on buying stuff exclusively from bricks-and-mortar shops; and on using landlines or, at most, old-fashioned flip phones that do not connect to the internet. But if one has kids, this means depriving them of a world of knowledge and fun that all the other kids have access to. Moreover, as bank branches, post offices and local shops close down, your friends no longer post physical letters, and states place limits on how much cash you can use in a single transaction, resistance is becoming futile except for people ready to turn into modern-day hermits.

For many, life under constant surveillance is intolerable. They rebel at the thought that Big Tech knows us better than anyone should. | sympathise but, to be honest, | am less worried about what they know and far, far more worried about what they own. To do anything in what used to be our digital commons, we must now plead with Big Tech and Big Finance for the ability to use some of the data about us that they own outright. To wire money to a friend, to subscribe to the New York Times, or to buy socks for your granny using a debit card, you now have no option but to give something of yourself in return: perhaps a small fee, perhaps not, but always a piece of information about your preferences, sometimes a bit of your attention, usually your consent to be monitored further (and ultimately brainwashed) by some Big FinTech conglomerate that will help you verify to itself, or to some similar outfit, that you are ... who you are.

It did not have to be this way. When the US Pentagon chose to make GPS available to everyone, to turn it over to the digital commons, they granted each of us the right to know our location in real time. For free. No questions asked. It was a political decision to do so. As was the sinister decision that you and | should not have any means of establishing, or proving, our online identity — another political decision by the US government, except this time clearly aimed at boosting Big Tech’s power over us.

How different would the internet be without these New Enclosures? Imagine what you could do if you owned your digital identity and could prove who you are without relying on the combination of a bank card and a corporation like Uber or Lyft that processes that card and all your subsequent travel data. In the same way GPS pinpoints where you presently are, you would have the opportunity to broadcast over the internet: ‘My name is George, | am on the corner of Aristotle and Plato Streets, and | am heading for the airport. Anyone wishing to bid for my ride?’ Within seconds you would receive a multitude of offers from people or outfits licensed to carry passengers, including sage advice from the municipal transit authority like ‘Why not take the metro, located three minutes’ walk from where you are, and much faster than any car can meander its way through traffic?’ Alas, you can’t do this.

In the world of Internet Two, shaped by the New Enclosures, you are routinely forced to hand over your identity to a part of the digital realm that has been fenced off, such as Uber or Lyft or some other private company. When you request a ride to the airport, their algorithm dispatches a driver of its choice with a view to maximise the exchange value the company owning the algorithm extracts both from you and the driver. These New Enclosures enabled the plunder of the digital commons which drove the incredible rise of cloud capital.

Cloud capital: beginnings

| remember once hearing you explain why you so admired the ancient ironsmiths: because they had no concept of the Iron Age

they were ushering in. Instead, they were driven by something within them, an impulse to experiment until they had freed steel from lumps of pig iron, like Michelangelo liberating his David from a block of marble.

The technologists who recently ushered in the Age of Cloud Capital were no different. Driven also by curiosity and an almost moral enthusiasm, they experimented with various technologies whose purpose was to liberate useful information from the growing megalith of data at the internet’s heart. To guide us to websites, friends, colleagues, books, films and music that we might like, they wrote algorithms capable of categorising us in clusters of internet users with similar search patterns and preferences. Then, all of a sudden, came the breakthrough, the real singularity: their algorithms ceased to be passive. They began to behave in ways hitherto associated exclusively with persons. They turned into agents.

This miracle took three leaps to complete. The first was from simple algorithms to ones that could adapt their objectives in light of the outcome of their activity — in other words, to reprogramme themselves (machine-learning was the technical term). The second leap replaced the standard computer hardware with exotic ‘neural networks’. The third and decisive leap infused neural networks with algorithms capable of ‘reinforcement-learning’. Emulating how you patiently introduced me first to tin, then to bronze and, finally, to iron and steel, allow me to introduce you to these three leaps one ata time.

The early algorithms resembled recipes: mundane sets of step-by- step instructions to produce a pre-specified outcome (e.g. a lasagne). Later on, algorithms were released from the obligation to reach one pre-specified outcome and were allowed to pick, albeit in a pre-programmed manner, from a menu of possible outcomes the one best suited to unforeseen eventualities — akin to telling a cook that, if the mince has gone off during the preparation, a vegetarian lasagne ‘outcome’ should replace the original meat-based version. That was leap one.

Meanwhile, the computer hardware in which algorithms operate underwent great transformations of its own. In order to process a lot more information faster, engineers developed a new design of

hardware in crude imitation of the human brain — adopting layered network structures that allow for the interconnection of many different nodes, each containing useful information.4 This was the second leap. But the key innovation that breathed something resembling agency into the algorithms was the third.

Reinforcement-learning was the child of software engineers who realised that algorithms had the potential to evaluate their own performances — and make improvements — far faster than any human could. To achieve this, they wrote into them two types of subprograms (or subroutines): one that measures the algorithm’s performance while it is in action and at tremendous speeds, and another (called a reward function) that helps the algorithm alter itself so as to improve its performance in accordance with the engineers’ objectives.

Using neural networks to process gargantuan amounts of data, algorithms featuring reinforcement-learning could do things beyond Don Draper’s imagination. By surveying the reaction of millions of people to their prompts billions of times every hour, they could train themselves at lightning speeds not only to influence us but, also, to pull off the fascinating new trick that Alexa and her ilk, as we saw earlier, are now capable of: to be influenced by the way they influence us; to affect themselves in light of the way they affect humans.

How exactly they do so is entirely opaque. Even the people who write these algorithms do not understand it: once the algorithm is in motion, the scale of the data involved and the speed at which it is processed would make it impossible for any human to trace its route through such a vast tree of ever-proliferating decisions, even if they did have full access to a full record of its activity. But left to their own devices, constantly monitoring and incessantly reacting to the outcomes of their own actions, and then to the outcomes of their reactions, these ‘algos’, as they're known, have acquired some astonishing capacities that their own coders and programmers find hard to understand. There is nothing new here, however: remember how the financial engineers of the 1990s and 2000s used algorithms to create derivatives of such enormous complexity that they themselves had no way of knowing what was inside those

derivatives? Similarly, the engineers coding Alexa-like, cloud-based devices for the purpose of creating automated systems that modify our behaviour are building so much complexity into these systems that they don't really understand exactly why their systems do what they do.

It is in our human nature to be vulnerable to anyone, or anything, that seems to understand us better than we do ourselves. In fact, we may be even more vulnerable to algorithms we know to be mindless than we are to real persons, because we are more easily lulled into a false sense of security. We pretend Alexa is a person because we are not used to conversing with machines — the experience would otherwise be embarrassing or uncanny. But the fact that we know Alexa is not a person is how we come to terms with its intense knowledge of us, which would otherwise be offputtingly creepy or scary. At that precise moment, when we relate to it as if it were a person while we know it is not, we are at our most vulnerable — ready to fall into the trap of thinking of Alexa as our own Pandora-like mechanical serf. Alas, Alexa is no serf. It is, rather, a piece of cloud- based command capital which is turning you into a serf, with your aid and by means of your own unpaid labour, in order to further enrich its owners.

Every time we go online to enjoy the services of these algorithms, we have no option but to cut a Faustian deal with their owners. To use the personalised services their algorithms provide, we must submit to a business model based on the harvesting of our data, the tracking of our activity, the invisible curating of our content. Once we have submitted to this, the algorithm goes into the business of selling things to us while selling our attention to others. At that point something more profound kicks in which gives the algorithm’s owners immense power — to predict our behaviours, to guide our preferences, to influence our decisions, to change our minds, to thereby reduce us to their unpaid servants, whose job is to provide our information, our attention, our identity and above all the patterns of behaviour that train their algorithms.

But is any of this really new? Is cloud capital radically different from other kinds of capital, such as hammers, steam engines or the television networks that Don Draper deployed to manipulate our

matrix of desires? It is certainly no less physical than these other kinds of capital, for the cloud metaphor is just that: a metaphor. In reality, it is comprised of vast data warehouses, containing endless rows of servers, connected by a globe-spanning web of sensors and cables. Might cloud capital stand out because of its power to command? That can't be it either. The story of Mr Peel’s misfortunes in Western Australia established that, since capitalism’s early days, all capital goods have commanding power — some a little more, others a little less.

No, although cloud capital can command us in unprecedented ways, the key to grasping cloud capital’s special nature, as we shall see, is the way it reproduces itself — and its power to command — a process that is very different to the one that reproduces hammers, steam engines and television networks.

Here is a glimpse of what makes cloud capital so fundamentally new, different and scary: capital has hitherto been reproduced within some labour market — within the factory, the office, the warehouse. Aided by machines, it was waged workers who produced the stuff that was sold to generate profits, which in turn financed their wages and the production of more machines — that’s how capital accumulated and reproduced. Cloud capital, in contrast, can reproduce itself in ways that involve no waged labour. How? By commanding almost the whole of humanity to chip in to its reproduction — for free!

But first, let us make an important distinction: between the effect of Big Tech on the traditional workplace, where workers’ conditions are more extreme but not in essence any different from those of the millworkers of old, and its effect on the users of technology generally, which creates an essentially new condition altogether. By doing so, we shall see that while workers have become ‘cloud proles’ we all have become ‘cloud serfs’.

Cloud proles

The technology may be outlandishly new but the way it is deployed to command badly paid workers on the factory floor is almost two

centuries old. As they struggle to keep up with computer devices that track and dictate the pace of their every move, Amazon warehouse workers would recognise themselves instantly in Charlie Chaplin’s Modern Times (1936) — one of your favourite movies. Forced to inspect and scan 1,800 Amazon packages an hour is an uncannily similar fate to that of Chaplin’s character on the industrial factory line, who is trying to keep pace with a suddenly accelerating conveyor belt, and who is ultimately driven mad and falls into the vast machine whose cog he could never truly become.

When Juan Espinoza, a picker at a Staten Island Amazon warehouse, opined that ‘Mr Bezos couldn't do a full shift at that place as an undercover boss,’ anyone familiar with Fritz Lang’s even earlier film Metropolis (1927) would have been reminded of the scene in which Freder, the autocrat’s son, inadvertently descends into his father’s Machine Halls, where workers are engaged in a desperate struggle to keep the massive hands of huge clock-like machines aligned. Shocked at what he finds, Freder holds his head in horror at the sight of machines marching the workers at an inhuman tempo, mechanising them ruthlessly.

Some years ago, you asked if Big Tech’s new gadgetry had significantly changed the traditional manufacturing process. ‘No,’ | replied, ‘at least not yet.’ As long as humans are still part of a semi- automated production line, performing tasks that the machines cannot, the pace of human workers will be dictated by machines whose priority is to squeeze the last drop of productive energy from their human co-workers.

Does it matter, | imagine you asking, that in modern factories and warehouses this control is no longer exercised by cogs, wheels, sprockets and belts but by algorithms running on plug-in devices wirelessly connected to the company’s neural network? No, not much. Cloud proles — my term for waged workers driven to their physical limits by cloud-based algorithms — suffer at work in ways that would be instantly recognised by whole generations of earlier proletarians.

Take Amazon's Mechanical Turk, which the company describes as a ‘crowdsourcing marketplace that makes it easier for individuals and businesses to outsource their processes and jobs to a distributed

workforce who can perform these tasks virtually’. But let us call it what it is: a cloud-based sweatshop where workers are paid piece rates to work virtually. Nothing is happening there that Karl Marx had not fully analysed in the twenty-first chapter of the first volume of his Capital, where he stated: ‘Piece-wages become ... the most fruitful source of reductions in wages and of frauds committed by the capitalists.’ Precarious piecework, Marx added, is ‘the most appropriate to the capitalist mode of production’. Hear, hear!

That’s not to say that the ‘algos’ have not cast a long shadow over the factory floor. They have. Algorithms have already replaced bosses in the transport, deliveries and warehousing sectors. And workers forced to work for these algorithms find themselves in a modernist nightmare: some non-corporeal entity that not only lacks but is actually incapable of human empathy allocates them work ata rate of its choosing before monitoring their response times. Released from any of the qualms even inhumane humans harbour, the algo- bosses are at liberty to reduce the workers’ paid hours, to increase their tempo to insanity-inducing levels, or to turn them out onto the street for ‘inefficiency’. At that point, the workers sacked by the algorithm are thrown into a Kafkaesque spiral, unable to speak to a human capable of explaining why they were fired.2

Soon, no doubt, algorithms will develop union-busting capabilities, too. As we speak, dazzling algorithms are mapping out the tens of thousands of molecules in key proteins in superbugs that threaten to kill or debilitate us. Once these proteins are fully decoded, the algorithms proceed — again without human input — to design exotic antibiotics that kill the superbug — a scientific triumph for the ages. What is there to stop a similar algorithm from designing a global supply chain that bypasses warehouses or factories in which trades unions seem likely to Succeed in organising workers? Trades unions could be snuffed out before they are even formed.

So, yes, cloud capital is turning workplaces into Metropolis-like Algo Halls in which human workers are reduced to exhausted cloud proles. And yet, cloud proles are not suffering a fate terrestrial proles, of the Modern Times variety, would find surprising. Cloud capital, in short, continues to do in the world’s factories, warehouses

and other traditional workplaces that which traditional, terrestrial, capital always did — perhaps a little more efficiently.

However, outside the traditional places of work, cloud capital is demolishing everything we used to take for granted.

Cloud serfs

Don Draper is perhaps Romanticism’s last poster boy. He treated science with suspicion and computers with disdain. He idealised nature and loved hitting the road in his gargantuan Cadillac. He lived and breathed individualism. He luxuriated in nostalgia. He adored women until they fell for him — at which point he bolted. He feared emotions because he saw them as the ultimate repository of insights into the human spirit. And he used his talents to commodify this melange of memory, sentiment, fickleness and insight so as to extract from consumers monies they might have otherwise kept for themselves.

His algorithmic double Alexa may be no romantic but cloud capital monetises our emotions more effectively than Don ever could. It tailor-makes experiences that exploit our biases to drive consumption, and then it uses our responses to hone those experiences yet further. But that’s only the beginning. Besides modifying our consumer behaviour in ways Don Draper would marvel at, and perhaps be appalled by, cloud capital has a far more impressive trick up its sleeve: it can command us to put work directly into its own reproduction, reinforcement and maintenance.

Consider what cloud capital consists of: smart software, server farms, cell towers, thousands of miles of optic fibre. And yet all of this would be worthless without ‘content’. The most valuable part of the stock of cloud capital is not its physical components but rather the stories posted on Facebook, the videos uploaded to TikTok and YouTube, the photos on Instagram, the jokes and insults on Twitter, the reviews on Amazon or, simply, our movement through space, allowing our phones to alert Google Maps to the latest spot of traffic. In providing these stories, videos, photos, jokes and movements, it is

we who produce and reproduce — outside any market — the stock of cloud capital.

This is unparalleled. Workers employed by General Electric, Exxon-Mobil, General Motors or any other major conglomerate collect in salaries and wages approximately 80 per cent of the company’s income. This proportion grows larger in smaller firms. Big Tech’s workers, in contrast, collect less than 1 per cent of their firms’ revenues. The reason is that paid labour performs only a fraction of the work that Big Tech relies on. Most of the work is performed by billions of people for free.

Sure enough, most of us choose to do this, enjoy it even. Broadcasting our opinions and sharing our lives’ intimate details with our digital tribes and communities seems to satisfy some perverse expressive need of ours. No doubt, under feudalism, serfs toiling away on their ancestral lands would have suffered great hardships but still found it undesirable, if not unfathomable, to have their way of life taken away from them, their shared culture and traditions. Still, the harsh reality remained: at the end of the harvest, the landlord would send the sheriff to extract the lion’s share of their produce — without paying the serfs a penny for it. So it goes with the billions of us unwittingly producing cloud capital. The fact that we do so voluntarily, happily even, does not detract from the fact that we are unpaid manufacturers — cloud serfs whose daily self-directed toil enriches a tiny band of multibillionaires residing mostly in California or Shanghai.

This is the crux. The digital revolution may be turning waged workers into cloud proles, who live increasingly precarious, stressful lives under the invisible thumb of algorithmic bosses. And it may have replaced Don Draper with extraordinary behaviour modification algorithms, hidden behind elegant tabletop appliances like Alexa. But that’s not the most significant fact about cloud capital. Cloud capital’s singular achievement, a feat far superior to either of these, is the way it has revolutionised its own reproduction. The true revolution cloud capital has inflicted on humanity is the conversion of billions of us into willing cloud serfs volunteering to labour for nothing to reproduce cloud capital for the benefit of its owners.

Wither markets, hello cloud fiefs

‘Enter amazon.com and you have exited capitalism. Despite all the buying and the selling that goes on there, you have entered a realm which can’t be thought of as a market, not even a digital one.’ When | say this to people, which | frequently do in lectures and debates, they look at me as they would a madman. But once | start explaining what | mean, their fear for my sanity soon turns into fear for us all.

Imagine the following scene straight out of the science-fiction storybook. You are beamed into a town full of people going about their business, trading in gadgets, clothes, shoes, books, songs, games and movies. At first, everything looks normal. Until you begin to notice something odd. It turns out that all the shops, indeed every building, belong to a chap called Jeff. He may not own the factories that produce the stuff sold in his shops but he owns an algorithm that takes a cut for each sale and he gets to decide what can be sold and what cannot.

If that were all, the scene would evoke an old Western in which a lonesome cowboy rides into town to discover that a podgy strongman owns the saloon bar, the grocery store, the post office, the railway, the bank and, naturally, the sheriff. Except that isn’t all. Jeff owns more than the shops and the public buildings. He also owns the dirt you walk on, the bench you sit on, even the air you breathe. In fact, in this weird town everything you see (and don’t see) is regulated by Jeff’s algorithm: you and | may be walking next to each other, our eyes trained in the same direction, but the view provided to us by the algorithm is entirely bespoke, carefully curated according to Jeff's priorities. Everyone navigating their way around amazon.com — except Jeff — is wandering in algorithmically constructed isolation.

This is no market town. It is not even some form of hyper-capitalist digital market. Even the ugliest of markets are meeting places where people can interact and exchange information reasonably freely. In fact, it’s even worse than a totally monopolised market — there, at least, the buyers can talk to each other, form associations, perhaps organise a consumer boycott to force the monopolist to reduce a

price or to improve a quality. Not so in Jeffs realm, where everything and everyone is intermediated not by the disinterested invisible hand of the market but by an algorithm that works for Jeffs bottom line and dances exclusively to his tune.

If this is not scary enough, recall that it is the same algorithm which, via Alexa, has trained us to train it to manufacture our desires. The mind rebels at the enormity of the hubris. The same algorithm that we help train in real time to know us inside out, both modifies our preferences and administers the selection and delivery of commodities that will satisfy these preferences. It is as if Don Draper could not only implant in us desires for specific products but had attained the superpower instantly to deliver said products to our doorstep, bypassing any potential competitor, all in the interest of bolstering the wealth and power of a chap called Jeff.

Such concentrated power should scare the living daylights out of the liberally minded. Anyone committed to the idea of the market (not to mention the autonomous self) should recognise that cloud capital is its death knell. It should also shake market sceptics, socialists in particular, out of the complacent assumption that amazon.com is bad because it is a capitalist market gone berserk. Actually, it’s something worse than that.

‘If it ain’t a capitalist market, what in the sweet Lord’s name are we stepping into when we enter amazon.com?’ a student at the University of Texas asked me a few years ago.

‘A type of digital fief,’ | replied instinctively. ‘A post-capitalist one, whose historical roots remain in feudal Europe but whose integrity is maintained today by a futuristic, dystopian type of cloud-based capital.’ Since then, | have come to believe that it was a reasonably accurate answer to a hard question.

Under feudalism, the overlord would grant so-called fiefs to subordinates called vassals. These fiefs gave the vassals the formal right to exploit economically a part of the overlord’s realm — to plant crops on it, for example, or graze cattle — in exchange for a portion of the produce. The overlord would then unleash his sheriff to police the fiefs execution and collect what he was owed. Jeff's relationship with the vendors on amazon.com is not too dissimilar. He grants

them cloud-based digital fiefs, for a fee, and then leaves his algo- sheriff to police and collect.

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

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

Back to your question

If | had to name one thing | learned from you, it would be the ability to relish contradictions.

You worshipped iron, but were moved to tears by Hesiod’s tirades against the Iron Age. You threw your lot in with the communists, knowing full well that, if your side won, you would end up in the gulag. You fell in love with every furnace, pipe, conveyor belt and crane in the steel factory where you worked, but remained horrified

by their tendency to mechanise, alienate and dehumanise the workers appended to them.

It is why | wanted to talk to you about cloud capital. Because you would know how to admire and detest it at once. And because, through this contradiction, you would recognise that cloud capital is the key to answering your question about the internet’s impact on capitalism.

Capitalism surfaced when owners of capital goods (steam engines, machine tools, spinning jennies, telegraph poles, etc.) acquired the power to command people and nations — powers that far exceeded, for the first time, those of landowners. It was a Great Transformation made possible by the prior privatisation of common lands. Same with cloud capital. To acquire its even greater powers to command, it too required the prior privatisation of another crucial commons: Internet One.

Like all capital since capitalism’s inception, cloud capital can be thought of as a vast production and behaviour-modification machine: it produces marvellous devices and the power (for its owners) to command humans who do not own it. But that’s where the similarity between terrestrial and cloud capital ends and where the difference between conventional capitalists and cloudalists begins.

Previously, to exercise capitals power to command and make other humans work faster and consume more, capitalists required two types of professionals: managers and marketeers. Especially under the auspices of the post-war technostructure, these two service professions achieved greater prominence even than bankers and insurance brokers. Gleaming new business schools were set up to initiate MBA students in the dark arts of quick-marching a workforce towards explosive labour productivity. Advertising and marketing departments nurtured a generation of Don Drapers.

Then, cloud capital arrived. At one fell swoop it automated both roles. The exercise of capital’s power to command workers and consumers alike was handed over to the algos. This was a far more revolutionary step than replacing autoworkers with industrial robots. After all, industrial robots simply do what automation has been doing since before the Luddites: making proletarians redundant, or more miserable, or both. No, the truly historic disruption was to automate

Capital’s power to command people outside the factory, the shop or the office — to turn all of us, cloud proles and everyone else, into cloud serfs in the direct (unremunerated) service of cloud capital, unmediated by any market.

Meanwhile, conventional capitalist manufacturers increasingly have no option but to sell their goods at the discretion of the cloudalists, paying them a fee for the privilege, developing a relationship with them no different to that of vassals vis-a-vis their feudal overlords.

So, back to your question: ‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’ On the one hand, the rise of cloud capital has solidified, augmented and massively expanded Capital’s triumph over labour, society and, catastrophically, nature. And yet, here is the contradiction: in doing so, cloud capital has simultaneously ushered in the technofeudal system that has killed capitalism in so many realms and is in the process of replacing it everywhere else.

In your youth, you dreamed of a time when labour would shake off the yoke of the capitalist market. So did I. Alas, something more like the opposite happened: it is capital that has shaken off the yoke of the capitalist market! And while capital is taking its victory lap, capitalism itself is receding. A sophism to sweeten the pill of our defeat? Not so — as | intend to show in Chapter 5. For now, however, let us address perhaps the most surprising and compelling aspect of capitalism’s demise: the story of how the cloudalists pulled off this astonishing feat and how, for them, profit, once the driving force of our Capitalist economies, became ... optional.

4. The Rise of the Cloudalists and the Demise of Profit

The last time you left the family home in Paleo Phaliro was in the summer of 2020 when you came to visit us on the island of Aegina, as you liked to do every summer. That journey to Aegina was a joyous break from the suffocating lockdown of the pandemic’s first phase. But it must have taken its toll because the following morning you didn’t emerge from your room until well after eleven. You found me on the veranda, peering into news sites on my laptop. | was beside myself. As you sat down next to me, | exclaimed: ‘The Age of Cloud Capital has just begun. In London!’

Half an hour or so earlier, the people of Britain had woken up to the news that the pandemic had caused the worst recession in history. Apparently, the UK’s national income had fallen by a whopping 20.4 per cent, far worse than any comparable figures in America or continental Europe.t Wretched news it certainly was, though not of the sort that undermines one’s world view. It was what followed fifteen minutes later, just before you woke up, that changed the way | saw the world. Instead of plummeting in response to the data, the London Stock Exchange jumped up by 2.3 per cent!2

‘We are witnessing something utterly at odds with any variety of capitalism,’ | remember telling you with as much authority as | could muster.

‘Nah, capitalism is full of paradoxes,’ you replied.

‘But, Dad, this is not one of capitalism’s many paradoxes - it is unequivocal proof that the world of money has, finally, decoupled from the capitalist world.’

Unimpressed, you chose to stare out over the Saronic Sea towards the mountains of the Peloponnese, leaving me to reckon with what had truly gone down in London on that Wednesday morning in August 2020.

Share markets do rise in response to bad news, but only when the news, however awful, turns out at least somewhat better than anticipated. Had stockbrokers predicted, say, a 22 per cent fall in the UK’s national income, markets would have had good cause to rise if the actual fall on the day was ‘only’ 20.4 per cent. Except that, on that Wednesday, the markets were expecting a drop of no more than 15 per cent. That’s what made 12 August 2020 so bizarre: news far worse than anticipated had caused the share market to rise. Nothing like it had happened before.

So, what had happened? The news, it turns out, was so bad that traders in the City of London had the following realisation: ‘When things are this dismal, the Bank of England panics. And what have panicky central banks been doing since the crash of 2008? They print money and give it to us. And what do we do with all the freshly minted dough from the central bank? We buy shares, sending their price up. And if prices are destined to go up, only a fool would miss out on the action. A wall of printed money is surely on its way to us. Time to buy!’ And buy they did, causing the City of London to defy the gravitational laws of capitalism.

The trend was not confined to London. As the pandemic began to rip through our communities, authorities on both sides of the Atlantic, in Japan and elsewhere, responded by doing a lot more of what they had been doing since the American Minotaur’s death in 2008: printing money to give to the financiers in the hope that it would buttress investment in business, thus generating stable jobs and preventing the economy from collapsing. It didn’t. Fearing that run- of-the-mill businesses would not be able to repay them, the financiers lent the central bank money only to Big Business. And Big Business either refused to invest or invested solely in cloud capital.

Conglomerates founded on traditional terrestrial capital, like General Electric and Volkswagen, refused to invest the interest-free central bank money because, when they surveyed the ongoing carnage of the pandemic, they saw the same thing their bankers had

seen: masses of little people condemned to low wages, bullshit jobs and diminished prospects — a sea of people unable to afford new, high-value products. So why invest in such stuff? Instead, they would do something riskless, profitable and stress-free: they used it to buy back their own company’s shares — boosting their company’s share price and, along with it, their own bonuses.

Meanwhile, Big Tech was having an even more fabulous pandemic. While the US economy shed 30 million jobs in a single month, Amazon bucked the trend, appearing to a swathe of Americans as a hybrid of the Red Cross, delivering essential parcels to confined citizens, and Roosevelts New Deal, hiring 100,000 extra staff and paying them a couple of extra dollars an hour to boot. True, Big Tech did invest the central bank cash, and it did create new jobs — but the jobs it created were those of cloud proles and the investment was in building up its cloud capital. Even cloudalist companies that had a bad pandemic, like Uber and Airbnb whose customers were unable to use their services, took the central bank money and invested in more cloud capital as if there were no pandemic.

It was the pandemic, with the flood of state money it unleashed, that ushered in the Age of Cloud Capital. And if we want a milestone with which to mark its formal arrival, that summer’s morning will do nicely. But as | have hinted already, the story of the rise of cloud capital on the back of state money actually begins earlier than this, for it was in the wake of the crash of 2008 that state money began to be printed en masse by the world’s central banks and started to have its strange and counter-intuitive effect on profit.

The secret of the new ruling class

Your fireside stories of metalworkers, and ironsmiths in particular, accelerating history fascinated me no end, as you know. In the decades since, however, | have become more sceptical of narratives that place too much emphasis on technology and not enough on how powerful groups seize and manipulate it to achieve and maintain dominion over others. The steam engine would have been a

historical footnote were it not for the capitalists who weaponised it so as to depose the then ruling class, the feudalists.

However, it is not a given that every magnificent new technological breakthrough will spawn a distinctly new form of capital to be seized upon by some new revolutionary class. The technological breakthroughs of the Second Industrial Revolution — the electricity grids, the telegraph, later the telephone, highways packed with automobiles, television networks — these expansive networks of phenomenal machinery may have spawned Big Business, Big Finance, the Great Depression, the War Economy, Bretton Woods, the post-war technostructure, the European Union and built the modern world that your generation and mine took for granted, but they gave rise to neither a new type of capital nor a new class who could challenge the capitalists for dominance.

But the technologies that spawned cloud capital have proved more revolutionary than any of their predecessors. Through them, cloud capital has developed capacities that previous types of capital goods never had. It has become at once an attention-holder, a desire- manufacturer, a driver of proletarian labour (of cloud proles), an elicitor of massive free labour (from cloud serfs) and, to boot, the creator of totally privatised digital transaction spaces (cloud fiefs like amazon.com) in which neither buyers nor sellers enjoy any of the options they would in normal markets.2 As a result, its owners — the cloudalists — have acquired the ability to do that which the Edisons, the Westinghouses and the Fords never could: to turn themselves into a revolutionary class actively displacing the capitalists from the top of society's pecking order.

In the process, the cloudalists — some consciously, others unthinkingly — have changed everything that previous varieties of capitalism had taught us to take for granted: the idea of what constitutes a commodity, the ideal of the autonomous individual, the ownership of identity, the propagation of culture, the context of politics, the nature of the state, the texture of geopolitics. The pressing question is: how did the cloudalists finance all this?

The early industrialists funded their factories, steamships and canals with the blood and sweat of African slave labour and loot from American and South Asian lands and peoples. Later, the Edisons,

the Westinghouses and the Fords used monies conjured from thin air by private bankers who morphed into Big Finance in the process. The cloudalists did something subtler and more impressive: they helped themselves to the rivers of cash that were being printed by the central banks of developed capitalist states.

It was nothing short of a coup. Imagine getting the world’s richest Capitalist states to print the money that allows you to build a new type of capital stock. Imagine that this new type of capital stock comes with the inbuilt superpower to get billions of people to reproduce it on your behalf for free. Imagine further that this type of capital, funded by state monies and reproduced by citizens’ free labour, intensifies your power to extract surplus value from proletarians who are working for shrinking wages under worsening conditions — but also from capitalists forced to remove their wares from traditional markets and to sell them via your cloud capital. You wouldn't even need to laugh all the way to the bank since you would be much wiser to keep your stupendous gains stowed in some digital wallet within your cloud capital empire rather than in an account with some pathetic banker.

It sounds implausible. How on earth did the cloudalists convince major central banks to fund them in this way? The answer is: they didn't have to.

2008’s unintended consequences

In the fifteen years since capitalism’s near-death experience, central bankers have been printing monies and channelling them to the financiers, entirely of their own accord. In their minds, they have been saving capitalism. In reality, they have been upending it by helping to finance the emergence of cloud capital. But that’s how history arrives: on the coat-tails of unintended consequences.

The central bank money-printing bonanza began in 2008, shortly after the comprehensive implosion of the West’s banking sector. Politicians and central bankers then feared that if they let the banks fail and people’s savings disappear, as Herbert Hoover’s administration had done in 1929, they would precipitate a second

Great Depression. So at their London summit in April 2009, the G7’s central bankers — along with their presidents and prime ministers — agreed to do whatever it took to refloat the banks. That was sensible.

What was preposterous was that, in addition to saving the failed banks, they bailed out the quasi-criminal bankers responsible for their failure, along with their lethal practices. And far worse, in addition to practising socialism for the bankers, they subjected workers and the middle class to vicious austerity.4 Cutting public expenditure in the midst of a Great Recession is always a terrible idea. Doing so while also printing mountains of money for the financiers wins the prize for conspicuous stupidity. Not only was it a brazen double standard that did untold damage to a generation's faith in the political class, it did something lethal to the economy.

Austerity is not just bad for workers and people in need of state support during tough times, it also murders investment. In any economy, what we spend collectively translates automatically into what we earn collectively. The definition of a recession is when private expenditure is falling. By reducing public expenditure at precisely the same moment, the state accelerates the decline of economy-wide expenditure and thus hastens the rate at which a society’s total income is falling. And if society’s total income is falling, businesses are hardly going to spend money building up capacity when consumers don’t have the money to buy. Thats how austerity slays investment.

With investment first knocked out by the crash of 2008 and finished off soon after by austerity, throwing new money at the financiers was never going to resurrect it. Put yourself in the position of a capitalist at a time when austerity is eliminating your customers’ income. Suppose | give you a billion dollars to play with for free, i.e. at a zero interest rate. Naturally you will take the free billion but as we've established you would be mad to invest it in new production lines. So what are you going to do with the free cash? You could buy real estate or art or, better still, shares in your own company. That way, the shares in your company appreciate in value and, if you are the CEO running it, your stature and share-linked bonuses rise too. No new investment, in other words, but a lot more power in the hands of the powerful.

This is exactly what happened. Seeing that the vast majority were likely to be stuck in poverty and precarity for the foreseeable future, Big Business went on history’s deepest and longest investment strike, while spending large sums on things like real estate deals that gentrified neighbourhoods and deepened divides. Every Gilded Age has seen inequality rise, with the rich profiting faster than the poor. The post-2008 era was different. Inequality rose not because the poor saw their incomes rise more slowly than the rich — no, their incomes actually fell, just as the financiers and Big Business raked it in.

When an activist state makes fabulously wealthier the same bankers whose quasi-criminal activities brought misery to the majority, while they are punished with self-defeating austerity, two new calamities beckon: poisoned politics and permanent stagnation. The poisoned politics we need not elaborate on — from Greece’s neo-Nazis to America’s Donald Trump we have all lived through the nightmare. But permanent stagnation? Why would more wealth for the ultra-rich stagnate capitalism? And how did it lead to the funding of cloud capital?

Poisoned money, gilded stagnation

The term ‘inflation’ refers to an increase across the board in the price of most things. Sometimes, when the price of bread rises it’s simply because flour has suddenly become scarcer or bread more fashionable. But in the case of inflation, the price of one thing rises because the price of everything is going up, so everyone needs more dollars, yen or euros in order to buy their loaf of bread or cup of coffee or smartphone, not just the baker. That’s how inflation depletes money’s exchange value.

Capitalism famously drove a wedge between the value and the price of things. Money was no exception. Money’s exchange value reflects people’s readiness to hand over valuable things for given sums of cash — a value that inflation diminishes, as we have just seen. But under capitalism, money also acquired a distinct market price: the rate of interest you must pay in order to lease a pile of

cash for a given period. The price of potatoes drops when there are stockpiled potatoes that no one wants to buy. In just the same way, when the demand for money (for loans, that is) lingers below the quantity of money available to be lent, its price — the interest rate — declines. Under capitalism, Big Business has the capacity to borrow most of the money that lenders, mostly rich people with large savings, are willing to lend (which is what they are doing when they invest in a bond). So it is Big Business, with its appetite for borrowing, that determines the overall demand for money. In theory, central banks are able to influence interest rates by adjusting the rate at which they lend money to other banks, allowing them to pass on the lower rate, and thereby to stimulate or discourage investment. But overall interest rates are determined, as with any market, by the overall supply of and demand for money.

After 2008, and especially during the pandemic, a strange thing happened. Money held its exchange value — that whole period, from late 2008 to early 2022, was one of very low (sometimes negative) inflation — but at the same time its price (i.e. the interest rate) tanked, even turning negative on many occasions. This was a reflection of the fact that austerity was nullifying business investment and so business people’s demand for money was pitiful. But surely, if the central banks keep reducing interest rates, there would eventually come a point where money was sufficiently cheap that borrowing and investment would pick up again? Not so.

In the case of potatoes, microchips or cars, falling prices generally Cure an oversupply problem (i.e. where supply outweighs demand) in exactly this way: bargain-hunters swoop in while producers cut output, and thus the price ‘correction’ eliminates the excess supply. But when it comes to money, something different happens. When its price — the interest rate — drops fast, capitalists panic. Instead of rejoicing that they can now borrow more cheaply, they think: ‘Sure, it is a good thing that | can borrow for next to nothing. But for the central bank to allow interest rates to drop so much, things must be looking grim! | won't invest even if they hand me the money.’ That’s the reason investment refused to recover, even after central bankers cut money’s official price to almost zero. And that was only half of their post-2008 nightmare.

The other half was the failed bankers’ stranglehold over everyone, including central banks and governments — a legacy of three decades of the American Minotaur’s rule over global capitalism. Their stranglehold came in handy once their banks began sequentially to topple between 2007 and 2011. One panicky phone call was usually all it took for a banker to get the state to bail him out and give him an open-ended overdraft facility. From late 2008 to early 2022, Europe’s, America’s and Japan’s central banks pushed walls of freshly minted cash into the accounts of the financiers,“ making the interest rate conundrum far worse than it already was. By boosting magnificently the supply of monies that Big Business refused to invest,2 socialism for financiers pushed the interest rate deeper and deeper towards negative territory.

It was a strange new world. Negative prices make sense in the case of bads, the opposite of goods. When a factory wants to get rid of toxic waste, it charges a negative price for it: its managers pay someone to get rid of it, a costly process especially if it is done in an ecologically considerate manner.2 But how could money become a bad to be offloaded? When central banks began to treat money like a car manufacturer treats spent sulphuric acid, or a nuclear power station its radioactive wastewater, that’s when we knew there was something rotten in the kingdom of financialised capitalism.

How can money acquire a negative price? It was you, Dad, who helped me come to grips with the paradox of negative interest rates. By introducing me to Einstein’s theory that light has two natures, you Opened my mind to the twin nature of labour, capital and, yes, money. Money’s first nature is that of a commodity that we trade like any other for other commodities. But money, like language, is also a reflection of our relationship to one another. It echoes how we transform matter and shape the world around us. It quantifies our ‘alienated ability’ to do things together, as a collective. Once we recognise money’s second nature, everything makes a lot more sense, for it was this collective ability that was broken. Poisoned money flowed in torrents but not into serious investments, good- quality jobs, or anything capable of reanimating capitalism’s lost animal spirits. Instead shareholders and executives bought land, empty warehouses, art, Swiss chalets, whole villages in Italy and

even islands in Greece, the Caribbean and the Pacific. They collected football clubs, superyachts and, at some point, began to buy digital assets like Bitcoin or something called NFTs that they neither understood nor knew what to do with. This is how socialism for bankers and austerity for the rest of us thwarted capitalism’s dynamism, shoving it into a state of gilded stagnation. As we shall now see, cloud capital was the only pulsating, stirring force to benefit from the poisoning of money.

How profits became optional for the cloudalists

| remember being puzzled during the late sixties when you and Mum would sometimes diverge from your obsessive discussions about the junta — the term Greeks used for the fascist dictatorship ruining our lives — to talk about something called ‘the right’. From what | could gather, it sounded like a cross between the divine and the abominable. So | asked you: ‘What is the right, exactly?’ After your usual journey through the mists of history — describing how in the National Assembly spawned by the French Revolution in 1789, hardened revolutionaries wanting to topple the King and his regime sat on the left-hand side of the assembly, while the King’s supporters took the seats on the right; how later, once capitalism had been established, the right came to be identified with the interests of capitalists and a fervent opposition to organised labour or state intervention — you eventually came to the gist of what it represented in our era: ‘People on the right of politics believe that hard work aimed at private profit is the surest route to a wealthy and good society. People on the left don’t.’

Later, | appreciated your definition better when exposed to the writings of Adam Smith, the eighteenth-century Scottish economist who is something like the patron saint of free-marketeers. Yes, factory owners driving fourteen-year-old workers into an early grave were brutish. But Smith argued that the needs of society — more and cheaper clothes, shelter, food; the stuff of prosperity — could not be met with moralisers or do-gooders. Only the capitalists’ passion for profit could provide these. Why? Because to profit, it was not enough

to squeeze the living daylights out of their workers. After all, their competitors did the same. No, to steal a march on the competition, capitalists had to invest — in new machines, for example, that could cut their costs and allow them to undercut their competitors’ prices. It was in this manner, driven by the profit motive, that society would equip itself to manufacture sufficient quantities of life’s essentials and at the lowest prices possible. According to Smith, it is because of the capitalists’ cut-throat profit-hunger, not in spite of it, that capitalism begat wealth and progress. As he wrote in The Wealth of Nations (1776):

By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. | have never known much good done by those who affected to trade for the public good.

The crash of 1929 and the Great Depression took the shine off profit-driven markets. But throughout each of capitalism’s subsequent metamorphoses — during the New Deal, the War Economy, the era of Bretton Woods and particularly with the rise of the technostructure and the Minotaur — profit remained its driving force. Coupled with debt, profit was the power that turned the cogs and wheels of every form of capitalism the planet had seen. Until, following the events of 2008, the Global North’s central banks fell into the trap of pumping unending quantities of poisoned monies into the financial markets. Then, for the first time since capitalism had stirred two and a half centuries earlier, profit ceased to be the fuel that fired the global economy’s engine, driving investment and innovation. That role, of fuelling the economy, was taken over by central bank money.

Profit remained the ambition of every capitalist, the goal of every vendor, the aspiration of people battling for a more comfortable life. But the accumulation of capital, the process that creates wealth by increasing the overall size of the pie, decoupled from profits, just as the end of Bretton Woods and the subsequent rise of the Minotaur had decoupled hard work from rising living standards. It was not the intention of central bankers to replace profits. They simply fell into a

trap they had created for themselves. The panic of 2008 had killed off the demand for money to be invested, causing an oversupply of money that depressed interest rates. The more interest rates fell, the greater the investors’ conviction that things were so bad it would be madness to invest. And yet, trillions of dollars of central bank money continued to pour into finance, and so the doom-loop continued, with interest rates going further and further south: to zero or below.

As conglomerates and governments became reliant on a diet of interest-free loans, with companies in developing countries borrowing more than their governments, in excess of $2 trillion by the end of the 2010s, the central bankers faced an ugly dilemma: either switch off the money taps, which would mean blowing up financialised capitalism, having printed all that money to save it; or continue to pump money into the system, hoping for a miracle to intervene but, in reality, facilitating the replacement of profit as capitalism’s motivating power and lubricant. Unsurprisingly, they chose the latter.

The central banks’ anguish was the cloudalists’ delight. It was in this period that intrepid and talented entrepreneurs like Jeff Bezos and Elon Musk were able to build up their super-expensive, ultra- powerful cloud capital without needing to do any of the three things that capitalists traditionally had to do to expand: borrow money from some bank, sell large portions of their business to others, or generate large profits to pay for new capital stock. Why suffer any of this when central bank money was flowing freely? And so between 2010 and 2021, the paper wealth of these two men — meaning the total price of their shares — rose from less than $10,000 million to around $200,000 billion apiece.

To be clear, the free central bank money did not go directly to the cloudalists. It simply followed the path of least resistance. First, via the banks, it reached the managers of traditional conglomerates. Aghast at the poverty of the masses, they scorned real investment and used it to buy back their own shares. The sums involved were so vast that, like an undiscriminating tide, they lifted the price of every asset around them: shares, bonds, derivatives — any and every piece of paper that financiers put up for sale went up in price. No one cared whether that piece of paper would eventually turn a

profit. As long as the central bank was trapped into producing new money, they knew that the trashiest piece of paper would sell for more tomorrow than it fetched yesterday.

The financial press called it an ‘everything rally’. It went on for more than a decade. With shares in companies skyrocketing independently of whether the companies themselves turned a profit or not, the wealthy got immensely wealthier in their sleep. Then came the pandemic, giving the everything rally another almighty boost. The morning of 12 August 2020 in London, which you and | witnessed on the balcony at Aegina, was a case in point: fearing that lockdown would cause an irreversible slump in the economy, central banks did a lot more of what they had been doing since 2008: they cranked up their digital printing presses to breaking point.

In the ensuing cacophony, terrestrial capitalists — traditional car companies, oil corporations, steel producers and the like — were happy to sit on their growing paper wealth, transforming it into real estate or other traditional assets. By contrast, cloudalists like Jeff Bezos and Elon Musk acted quickly to turn their paper wealth, before it vanished, into a far greater value extractor: cloud capital.

Both knew that profit was irrelevant. What mattered was seizing the opportunity to establish total market dominance. In 2021 Goldman Sachs, one of Wall Street’s least likeable banks, stunned the financial world by publishing a ‘Non-Profitable Technology Index’, which perfectly demonstrates capitalism’s emancipation from profits: between 2017 and the beginning of the pandemic, loss-making cloudalist companies saw their share value rise by 200 per cent. By the middle of the pandemic, their value had exploded to 500 per cent their 2017 level. During 2020, Amazon's best year since its inception, when its pandemic-fuelled sales went through the roof, Bezos’s company booked sales worth €44 billion at its global headquarters in Ireland but paid exactly zero corporate tax because it posted not a cent of profits. Similarly with Tesla: even though its profit margins hovered just above zero, Tesla’s share price soared from around $90 at the beginning of 2020 to over $700 at year’s end.

Using their appreciating shares as collateral, the cloudalists mopped up many of the billions sloshing around within the financial system. With them, they paid for server farms, fibre optic cables,

artificial intelligence laboratories, gargantuan warehouses, software developers, top-notch engineers, promising start-ups and all the rest. In an environment where profit had become optional, the cloudalists seized upon the central bank money to build a new empire.

Meanwhile, the undermining of one of capitalism’s core principles — the profit motive — had knock-on effects on the others.

Private inequities

Imagine Gillian, who works for a private care provider in England’s Home Counties. At some point in mid-2010, she hears that the company had been purchased by a private equity firm. She doesn't know what private equity means and hasn't heard of the firm that now owns her employer. But she and her co-workers are reassured that they have nothing to fear — the new management is only interested in helping the company flourish.

At first, Gillian notices little difference, save the snazzier logo and some general sprucing up. However, behind the scenes, the new owners split the company into two separate companies: a care service provider, say CareCom, which employs Gillian and all the other staff who provided the care; and another company, say PropCom, that owns all of its property (its buildings, equipment, vans and so on), which then charges CareCom rent for its use.

Before long, PropCom increases the rents it is charging CareCom and announces further steep rent increases. CareCom’s management gather together Gillian and her co-workers and, citing the increased rents, explain that unless they accept longer working hours for no extra pay, CareCom will have to be wound up. Meanwhile, using the boost in its long-term rent revenues from CareCom as collateral, ProoCom takes out a large loan from a bank. Within days, the loan has become dividends in the pockets of the shareholders of the private equity firm.

Within five years, CareCom has been wound up. After five years of rapidly worsening pay and conditions, Gillian and her fellow workers have been thrown out of work while large contracts to provide care to local communities, paid for in advance by taxpayers, have been

unceremoniously dishonoured. But along with all other real estate during the ‘everything rally’, the value of PropCom has appreciated. Once PropCom’s property has been sold, the bank that lent it the money is made whole and the private equity firm keeps the rest on behalf of its investors.

This sordid exercise has a soothing, if mystifying name: ‘dividend recapitalisation’ — though to call it that would be akin to relabelling a bank robbery as ‘asset redistribution’. The private equity firm that cost Gillian her job has practised straightforward asset-stripping, with financialisation providing the necessary smoke and mirrors. Looters, who have created no new value, have simply ransacked a pre- existing care provider. To use the language of early economists like Adam Smith, it is a classic case of feudal rent defeating capitalist profit; of wealth extraction by those who already have it triumphing over the creation of new wealth by entrepreneurs. And the key point to note is that the success of such a scheme depends on these looters being able to sell subsidiaries like PropCom at high enough prices once the original company has been destroyed.

Before 2008, when capitalism still relied on profit as its motive power, it would not have been possible for such a scheme to be generalised — if it were and too many of the various ProopComs went on sale at the same time, their value would fall. This is what gave Adam Smith his optimism about capitalism: his faith that capitalist profit would continue to triumph over feudal rent. In reality, since Smith wrote his famous lines in the 1770s, rent has survived and even prospered under capitalism. Cartels, consumer gouging, the technostructure’s successful manufacturing of desires for things we do not need, financialised asset-stripping — all of these practices have generated increasing rents within capitalism. Nevertheless, Smith’s optimism was supported by the bigger picture: rent survived only parasitically on, and in the shadows of, profit. That changed after 2008. With central bank money replacing profit as the fuel of the economy and with the ‘everything rally’ driving the price of PropCom-like subsidiaries ever upwards, private equity could take over and successfully asset-strip as many capitalist firms as it could lay its hands on all at once. And that was not all.

Socialism for the financiers gave rise to another cluster of financial uber-lords to rival the cloudalists — three US companies with powers exceeding those of private equity and all terrestrial capitalists put together: BlackRock, Vanguard and State Street. These three firms, the Big Three as they are known in financial circles, effectively own American capitalism. No, | am not exaggerating.

Most people have not heard of them but they have heard of the companies the Big Three own, which include America’s major airlines (American, Delta, United Continental), much of Wall Street (JPMorgan Chase, Wells Fargo, Bank of America, Citigroup) and car makers such as Ford and General Motors. Together, the Big Three are the largest single shareholder in almost 90 per cent of firms listed in the New York Stock Exchange, including Apple, Microsoft, ExxonMobil, General Electric and Coca-Cola. As for the dollar value of the Big Three’s shares, it has too many zeros to mean much. At the time of writing, BlackRock manages nearly $10 trillion in investments, Vanguard $8 trillion and State Street $4 trillion. To make sense of these numbers: they are almost exactly the same as the US national income; or the sum of the national incomes of China and Japan; or the sum of the total income of the eurozone, the UK, Australia, Canada and Switzerland.12

How did that happen? The official version is that the Big Three’s founders spotted a gap in the financial markets: ultra-rich people and institutions wanting to be ‘passive investors’; that is, to buy shares without having to choose what they are buying, or even to choose professionals who will choose for them. To service their need for safe, mindless share purchases, the Big Three take the money of the seriously wealthy and buy literally everything — shares, to be precise, in every business listed in the New York Stock Exchange. Giving your money to the Big Three to buy shares on your behalf thus became equivalent to having bought a chunk not of individual companies but of the entire New York Stock Exchange!

This could not have happened before 2008 because until then the ultra-rich simply did not have access to enough cash with which the Big Three could buy a significant chunk of the New York Stock Exchange. After 2008, however, central bank-sponsored socialism for the ultra-rich created more than enough money." Thereafter, the

rise of the Big Three to such supreme financial power was almost inescapable, and now that they are there, the Big Three enjoy two insurmountable advantages: unprecedented monopoly power over entire sectors, from airlines and banking to energy and Silicon Valley; and a capacity to offer the ultra-rich high returns for very low fees. These two advantages allow the Big Three to extort rents at a scale that would have made Adam Smith weep.

| can almost hear Smith’s voice, which | imagine with a tinge of a Scottish accent, lamenting that after 2008, and in the name of saving capitalism, central banks snuffed out capitalism’s dynamism and advantage. | can imagine his dismay that harmful, quasi-feudal rent got a chance to exact a historic revenge on fruitful capitalist profit, with profit-seeking consigned to the aspirant petty bourgeois while the truly rich gleefully whisper to one another that profit is for losers. | can picture his exasperation that the treasured guardians of capitalism, such as the Fed and the Bank of England, had funded a new form of cloud capital that is today snuffing out markets and turning consumers from sovereign agents into the playthings of algorithms that lie outside of the effective control of markets, governments and perhaps even their inventors.

Back to your question

Time for a confession. In 1993, when you posed your killer question after | had connected you to the fledgling internet, | was not up to the challenge. It had been a couple of years since the left’s greatest defeat: the collapse of what was known as really-existing socialism, from the demise of the USSR and its satellites to China’s espousal of Capitalist labour markets to India’s dalliance with neoliberalism — developments that appended, within a year, more than 2 billion additional proletarians to the capitalist system. And looking back, | was perhaps too eager to clutch at any straw that might revive the prospect of a progressive alternative to capitalism. While not naive enough to ignore that capitalism had become unassailable, | did allow myself to dream improbable dreams.

Impressed by the early internet commons, and mesmerised by a very early 3D printer | had chanced upon at an MIT laboratory, | fantasised about groups of young designers forming cooperatives using industrial-scale 3D printers to create a variety of goods — from personalised cars to made-to-order refrigerators — at a cost that did not require mass production to stay low. Such cooperatives might, | hoped, steal an advantage over the General Motors and the General Electrics of the capitalist world — that, to use the language of economists, the economies of scale that underpin the power of General Motors and General Electric would be eradicated, activating a process that would at least deplete corporate power and might perhaps pave the way towards a decent non-capitalist future.

It was not just wishful thinking. It was a spectacular failure to foresee how a new form of capital, not a bunch of non-capitalist cooperatives, would grow out of the internet to turn the likes of General Motors and General Electric into shadows of their former selves. Taken in by the early internet and its market-free, decentralised nature, | fell headlong into a monumental diagnostic error.

Assuming, wrongly, that capitalism’s only serious threat was the rise of organised labour, | missed completely the epic transformation of our times: how the privatisation of the internet commons, aided by the 2008 crisis that led central banks to open the floodgates of state money, would beget a new, super-powerful type of capital. How this cloud capital would spawn a new ruling class. How revolutionary that new ruling class would prove, leveraging its cloud capital to make almost the whole of humanity work for them, either for free or for a pittance — including many capitalists. And, crucially, wnat a backward step all that would prove in the grander scheme of emancipating humanity and the planet from exploitation.

Remarkably, as with all historic transformations, no one planned it. No capitalist imagined becoming a cloudalist. No central bankers aimed at funding the cloudalists. No politicians saw the damage cloud capital would inflict upon democratic politics. In the same way that capitalism came about against the will of everyone, including the kings and bishops as well as the peasants, the rise of the cloudalists

happened out of sight and behind the back of the vast majority, including the most powerful of historical agents.

Knowing what we now know, two questions arise. The first concerns the sustainability of the cloudalists’ dominance. As | write, war in Ukraine has turbocharged the mild inflation that came in the wake of the pandemic, thus causing central banks to cease minting new monies. If | am right that it was central bank cash that funded the cloudalists, will cloudalist power recede as the rivers of central bank monies run dry? Could the good old capitalist conglomerates, relying on terrestrial capital, make a comeback?

The second question, which | can imagine you putting to me forcefully, is more about language. Is life under the cloudalists’ reign fundamentally different from living under capitalism? Are the cloudalists really so different from the capitalists that we need a newfangled term — technofeudalism — for the system we live in today? Why not just call it hyper-capitalism or platform capitalism?

These are the questions | address in the next chapter. But first, let us return for a moment to your beloved Hesiod. Besides warning us that every new age forged by some revolutionary technology yields a generation ‘who never rest from labour and sorrow by day or from perishing by night’, Hesiod also bequeathed us a crucial allegory: that of an aristocracy of gods dwelling above the clouds that encircle Mount Olympus, jealously holding on to their exorbitant power over us mortals. In describing such a world as if it were the natural and eternal order of things, Hesiod challenged humanity with a hard question, one that is as pertinent to us as it was to the Iron Age generation: can the cloud-dwelling aristocracy’s power ever be claimed by the mortals? Would we mortals know what to do with it if we got hold of it? In other words, was Prometheus a fool to steal the fire of technology from the gods? If not, what would the task of a modern Prometheus be in the Age of Cloud Capital? This is the ultimate question that | will seek to answer in the final chapter of this book.

5. What’s in a Word?

Set on the island of Lesbos, Daphnis and Chloe is the oldest surviving romantic novel. Written in the second century AD by Longus, it tells of two youngsters who fall in love but who are so innocent they do not understand what is happening or what to do about it. It is not until Chloe starts searching for the words to describe Daphnis’ beauty that she even begins to fall in love with him.

‘(W]hen a word is properly defined,’ Simone Weil wrote in 1937, it helps ‘us to grasp some concrete reality or concrete objective, or method of activity. To clarify thought, to discredit the intrinsically meaningless words, and to define the use of others by precise analysis — to do this, strange though it may appear, might be a way of saving human lives.’4

It is tempting to think that it does not really matter what we call the system we live in. Technofeudalism or hyper-capitalism, the system is what it is, whatever the word we use to describe it. Tempting perhaps, but quite wrong. Reserving the word ‘fascist’ for regimes that genuinely fall into that category and refraining from using it to describe regimes that, however nasty are not fascist, matters hugely. Calling a viral outbreak a pandemic can prove vital in mobilising against it. Similarly with the global system we live in today: the word we use to describe it can influence profoundly whether we are more likely to perpetuate and reproduce it or whether we might challenge or even overthrow it.

Suppose we were living in the 1770s, as the first steam engines began driving the water pumps that kept the mines dry and turning the wheels of William Blake’s ‘dark satanic mills’. As their chimneys spewed thick smoke along the River Clyde, in Birmingham and

around Manchester, we would not be wrong to speak of an emergent ‘industrial feudalism’ or ‘market feudalism’. Technically, we would be correct.

In the 1770s, and for at least another century, wherever one looked one saw feudalism. Feudal lords dominated rural areas, owned the freehold titles of most city blocks, commanded armies and navies, and presided over parliamentary committees and government bodies. Even in the 1840s, as Marx and Engels were writing their manifesto in response to the worldwide effects of the Capitalist class, most production was still taking place under the auspices of the old feudalist class, the landed gentry. Land ownership remained the main source of political authority and rent continued to be more powerful than profit, especially in the aftermath of the Napoleonic Wars when landlords regained the upper hand over capitalists by banning grain imports with their Corn Laws.2

And yet something critically important would have been lost if those who forged the language of that era had been reluctant to ditch the word feudalism, choosing to call the nascent system not capitalism but industrial or market feudalism. By boldly calling it capitalism, a century before capital had fully dominated our societies, they opened humanity’s eyes to the great transformation unfolding around them as it was happening.

Wherever we look today we see capitalism. Capitalists continue to own almost everything and run the military-industrial complex. They dominate parliaments, government bodies, the media, central banks and all of the powerful global institutions such as the International Monetary Fund, the World Bank, the Paris Club and the World Trade Organization. Markets continue to rule the lives and shape the minds and imaginations of billions. Profit remains the holy grail for the masses struggling to get by, as well as those wealthy individuals who believe in profit-making as an end in itself. And just as the Napoleonic Wars gave feudal power a second wind, so the war in Ukraine and its inflationary effects is reviving the fortunes of terrestrial capital, even the moribund fossil fuel industry. And yet, just as in the 1770s, to describe today’s nascent system in the terms of the past — to call it hyper-capitalism, or platform capitalism, or rentier

capitalism — would be not just a failure of the imagination but to miss the great transformation of our society that is currently taking place.

We have seen how with the enclosure of the internet commons, cloud capital arose, and how it differs from other kinds of capital in its ability to reproduce itself at no expense to its owner, turning all of us into cloud serfs. We have seen how with the shift online, Amazon now operates as a cloud fief, with traditional business paying Jeff Bezos to operate as his vassals. And we have seen how the cloudalists of Big Tech achieved all this: riding on the wave of central bank money that made profits optional. At the end of the previous chapter, we considered two immediate outcomes: the ever-rising value of the PropComs of this world has allowed private equity to asset-strip whatever they can lay their hands on, while the Big Three have established a kind of collective monopoly power over entire sectors of industry. So what, in essence, has changed? What in the simplest possible terms distinguishes this world from the previous one, demanding that we discard the word capitalism and replace it with technofeudalism? As | touched on at the end of the last chapter, it is very simply this: the triumph of rent over profit.

Rent’s revenge: how profit succumbed to cloud rent

What would it take for capitalism to die? In your youth you had a definitive answer: capitalism will die, like Dr Frankenstein, indirectly of its own hand, a deserving victim of its greatest creation: the proletariat. Capitalism, you were convinced, was creating two great camps destined to clash: capitalists, who did not physically work with the revolutionary technologies they owned; and the proletarians who spent their days and nights working in, on, under or with these technological wonders, from merchant ships and railways to tractors, conveyor belts and industrial robots. The revolutionary technologies were no threat to capitalism. But revolutionary workers who knew how to work these incredible machines were.

The more capital dominated the global economic and political sphere the closer the two camps got to facing off one another in a

critical battle. At its conclusion, and for the first time on a planetary scale, good would vanquish evil. The bitter bifurcation of humanity, between owners and non-owners, would thus be healed. Values would no longer be reducible to prices. And humankind would, at last, be reconciled with itself, turning technology from its master to its servant.

In practical terms, your vision meant the birth of a proper, technologically advanced, socialist democracy. Collectively owned capital and land would be pressed into producing the things society needs. Managers would be answerable to the employees that elected them, to their customers, to society as a whole. Profit would wither as a driving force because the distinction between profit and wages would no longer make sense: every employee would be an equal shareholder, their pay coming out of their enterprise’s net revenues. The simultaneous death of the market for shares and of the labour market would turn banking into a staid, utility-like sector. Markets and concentrated wealth would, consequently, lose their brutish power over communities, allowing us collectively to decide how to provide health, education and protection of the environment.

Things could not have panned out more differently. Even in Western countries, like Germany and for a time Britain, where national labour unions grew strong, waged labour failed to organise effectively and eventually acquiesced to the idea of capitalism as a ‘natural’ system. Solidarity between the workers of the North and the South remains an entirely unfulfilled dream. Capital has simply gone from strength to strength. And in places where revolutions sworn to your vision succeeded, life ended up sooner or later resembling a cross between George Orwell’s Animal Farm and Nineteen Eighty- Four. | shall never forget you confessing to me, while recounting horror stories of the years you spent in prison camps for Greek left- wingers, the feeling which overwhelmed you most: that, had our side won power, you would probably be in the same prison only with different guards. It resonated with the heartbreak of authentic left- wingers worldwide: good people, dedicated to your vision, who ended up in gulags guarded by former comrades or, even worse, in positions of the sort of power that their own ideology detested.

Nevertheless, your prognosis is holding up extremely well, though not in ways that you would welcome. Capitalism /s dying indirectly of its own hand, a deserving victim of its greatest creation: not the proletariat, but the cloudalists. And little by little, capitalism's two great pillars — profit and markets — are being replaced. Alas, instead of a post-capitalist system that finally heals human divisions and ends exploitation of people and planet, the one that is taking shape deepens and universalises exploitation in ways that were hitherto unimaginable, except perhaps by science-fiction writers. Thinking back, Dad, why did we ever allow ourselves to be lured into the soothing delusion that the death of something bad would necessarily deliver something better? Rosa Luxemburg’s devastating question

‘Socialism or barbarism?’2 was not rhetorical. Its answer could easily be barbarism — or extinction.

What we need, then, is a new story that explains not what we wish would happen but what is actually happening, and that is the story of how rent — the defining economic trait of feudalism — staged its remarkable comeback.

Under feudalism, rent was easy enough to grasp. Courtesy of some accident of birth, or royal decree, the feudal lord obtained the deeds to a plot of land which empowered him to extract part of the harvest produced by the peasants who had been born and raised on that land. Under capitalism, grasping the meaning of rent, and distinguishing it from profit, is much harder — a difficulty | witnessed first-hand when as a university teacher | would struggle to help my students spot the difference between the two.

Arithmetically, there is no difference: both rent and profit amount to money left over once costs are paid for. The difference is subtler, qualitative, almost abstract: profit is vulnerable to market competition, rent is not. The reason is their different origins. Rent flows from privileged access to things in fixed supply, like fertile soil or land containing fossil fuels; you cannot produce more of these resources, however much money you might invest in them. Profit, in contrast, flows into the pockets of entrepreneurial people who have invested in things that would not have otherwise existed — things like Edison’s light bulb or Jobs’s iPhone. It is this fact — that these commodities were invented and created and so can be invented and

created again but better by someone else — that renders profit vulnerable to competition.

When Sony invented the Walkman, the first mobile and personal hi-fi, it raked in substantial profits. Then competition from imitators whittled Sony’s profits away until, eventually, Apple rode in with its iPod to dominate the market. In contrast, market competition is the rentier’s friend. If Jack owns a building in a neighbourhood that is being gentrified as a result of what others do, Jack’s rents will increase even if he does nothing — he, literally, gets wealthier in his sleep. The more enterprising Jack’s neighbours are, and the more they invest in the area, the larger his rents.

Capitalism prevailed when profit overwhelmed rent, a historic triumph coinciding with the transformation of productive work and property rights into commodities to be sold via labour and share markets respectively. It was not just an economic victory. Whereas rent reeked of vulgar exploitation, profit claimed moral superiority as a just reward to brave entrepreneurs risking everything to navigate the treacherous currents of stormy markets. Nevertheless, despite profit’s triumph, rent survived capitalism’s golden age in the same way that remnants of the DNA of our ancient ancestors, including long-extinct serpents and microbes, survive in human DNA.

Capitalist mega-firms, like Ford, Edison, General Electric, General Motors, ThyssenKrupp, Volkswagen, Toyota, Sony and all the others, generated the profits that outweighed rent and propelled capitalism to its dominance. However, like remora fish living parasitically in the shadow of great sharks, some rentiers not only survived but, in fact, flourished by feeding on the generous scraps left in profit’s wake. Oil companies, for example, have raked in gargantuan ground rents from the right to drill on particular plots of land or ocean beds — not to mention the unearned privilege to damage the planet at no cost to themselves.

Naturally, oil companies have attempted to legitimise their loot by presenting it as capitalist profit, exaggerating the extent to which their returns are a reward to investments in smart, low-cost drilling technology without which, it is true, the extracted oil might not be competitive with oil extracted by competing oil producers. The same is true of real estate development where ground rent overshadows

any profit from innovative architecture. Or with privatised electricity or water utilities whose returns are mostly due to rents the political class has allocated to them. What all these mega-rentiers have in common is a strong motive to legitimise their rents by disguising them as profits — something akin to profit-washing their rents.

After the Second World War, rent went one better than merely surviving capitalism: it staged a revival on the coat-tails of the emergent technostructure — the nexus of conglomerates with immense resources, productive capacity and market reach that grew out of the War Economy. The innovative marketeers and imaginative advertisers employed by the technostructure achieved this by creating something ingenious: brand loyalty.

Brand loyalty affords the brand owner the power to raise prices without losing customers. This price premium reflects the greater status afforded to the owner of a Mercedes-Benz or an Apple computer over the owner of, say, a cheaper equivalent produced by Ford or Sony. These premiums amount to brand rents. By the 1980s, branding had attained such rent-extracting powers that young, aspiring entrepreneurs cared less about who produced things, where or how than they did about owning the right brands.

If branding gave rent its first chance to flourish again in the 1950s, the emergence of cloud capital in the noughties was rent’s opportunity to exact a stunning revenge on profit — to stage a comeback for the ages. Apple played a leading role in this. Before the iPhone, Steve Jobs’s gadgets were a textbook case of high-end