Thursday, August 24, 2023


Two of my favorite authors are making the same point. First, Kim Stanley Robinson in passing during a fascinating interview by Oscar Boyd and Akshat Rathi:
Capitalism is the name of a power relationship of the few over the many. It is a hierarchy. It is feudalism liquidified, where money has replaced land as the source of power, but there's still the powerful and there's still the weak, and there's still incredible inequality in the world system.
Second, in Autoenshittification Cory Doctorow writes:
In his forthcoming book, Techno Feudalism: What Killed Capitalism, Yanis Varoufakis proposes that capitalism has died – but it wasn't replaced by socialism. Rather, capitalism has given way to feudalism:

Under capitalism, capital is the prime mover. The people who own and mobilize capital – the capitalists – organize the economy and take the lion's share of its returns. But it wasn't always this way: for hundreds of years, European civilization was dominated by rents, not markets.
Below the fold some discussion of this idea.

Wikipedia's broad definition of "feudalism" is that:
it was a way of structuring society around relationships that were derived from the holding of land in exchange for service or labour.
In other words, rent. Doctorow continues:
A "rent" is income that you get from owning something that other people need to produce value. Think of renting out a house you own: not only do you get paid when someone pays you to live there, you also get the benefit of rising property values, which are the result of the work that all the other homeowners, business owners, and residents do to make the neighborhood more valuable.

The first capitalists hated rent. They wanted to replace the "passive income" that landowners got from taxing their serfs' harvest with active income from enclosing those lands and grazing sheep in order to get wool to feed to the new textile mills. They wanted active income – and lots of it.

Capitalist philosophers railed against rent. The "free market" of Adam Smith wasn't a market that was free from regulation – it was a market free from rents. The reason Smith railed against monopolists is because he (correctly) understood that once a monopoly emerged, it would become a chokepoint through which a rentier could cream off the profits he considered the capitalist's due:
Wikipedia describes many forms of feudalism but the one Robinson and Doctorow have in mind is manorialism:
Its defining features included a large, sometimes fortified manor house in which the lord of the manor and his dependants lived and administered a rural estate, and a population of labourers who worked the surrounding land to support themselves and the lord. These labourers fulfilled their obligations with labour time or in-kind produce at first, and later by cash payment as commercial activity increased.
The lord held his manor from the monarch, and usually part of his duties was to maintain a body of armed retainers the monarch could call upon at need. This force also ensured that the manor's "population of labourers" remained subservient.

Doctorow describes techno-feudalism:
Today, we live in a rentier's paradise. People don't aspire to create value – they aspire to capture it. In Survival of the Richest, Doug Rushkoff calls this "going meta": don't provide a service, just figure out a way to interpose yourself between the provider and the customer:

Don't drive a cab, create Uber and extract value from every driver and rider. Better still: don't found Uber, invest in Uber options and extract value from the people who invest in Uber. Even better, invest in derivatives of Uber options and extract value from people extracting value from people investing in Uber, who extract value from drivers and riders. Go meta.

This is your brain on the four-hour-work-week, passive income mind-virus. In Techno Feudalism, Varoufakis deftly describes how the new "Cloud Capital" has created a new generation of rentiers, and how they have become the richest, most powerful people in human history.

Shopping at Amazon is like visiting a bustling city center full of stores – but each of those stores' owners has to pay the majority of every sale to a feudal landlord, Emperor Jeff Bezos, who also decides which goods they can sell and where they must appear on the shelves. Amazon is full of capitalists, but it is not a capitalist enterprise. It's a feudal one:
The basis of feudalism was owning land, the basis of techno-feudalism is owning intellectual property. The enforcement mechanism of feudalism was the armed force of the lord of the manor's goons, the enforcement mechanism of techno-feudalism is the army of lawyers the IP owners can deploy against dissenters, ultimately backed by the state's monopoly of legitimate force. In both cases the vast majority of the population have no effective recourse against the owners, but must meekly submit to their demands. A current extreme example is Russia.

There are three self-reinforcing drivers of techno-feudalism:
  • These technologies inherently have very strong economies of scale thus, in the absence of countervailing pressure become oligopolies or monopolies.
  • Ever since the Chicago School killed off anti-trust enforcement, the countervailing pressure has indeed been absent.
  • The excess profits from monopoly rent extraction have reinforced the economies of scale in many ways, including the extraordinary ratcheting-up of intellectual property protections, and the ability of monopolists to buy and kill nascent competitors.
Thus we get ludicrous situations such as, among many others:
The importance of the Biden administration's proposed revision of the merger guidelines is that among the three drivers above, anti-trust is the only one susceptible to legal attack.


David. said...

A Welfare Analysis of Tax Audits Across the Income Distribution by William C. Boning et al reveals that:

"an additional $1 spent auditing taxpayers above the 90th income percentile yields more than $12 in revenue, while audits of below-median income taxpayers yield $5. ... Audits of the 99-99.9th percentile have a 3.2:1 return; audits of the top 0.1% return 6.3:1. ... we use randomly selected audits to examine the impact of an initial audit on future revenue. This specific deterrence effect produces at least three times more revenue than the initial audit. Deterrence effects are relatively consistent across the income distribution. This results in the 12:1 return above the 90th percentile."

As Leona Helmsley said "only the little people pay taxes". And and a 1200% RoI explains why it is so important for the GOP to "defund the IRS".

Blissex2 said...

«The basis of feudalism was owning land, the basis of techno-feudalism is owning intellectual property.»

There is much agreeable in the "technofeudalism" story, but this is a very big misunderstanding of feudalism:

* It was based not on land but on *force*: feudalism was exactly the same as the protection racket. The knights were enforcers, the lord of the manor was the local bossman, the earls and dukes were the territory bosses, and the boss of bosses. With territory wars, dynastic fights, Feudalism was simply mob rule being the basis of politics. The peasants would pay protection money or they houses would be burned up by a gang of knights sent by the local lord of the manor.

* The whole structure was held together by *personal* relationships, "liege"-wise. Knights owing personal loyalty to the lord of the manor and so upwards.

The difference with capitalism is that it based on power over the means of production and on impersonal relationships indirectly mediated by "the markets". But it is still about the extraction of rent, not from the land, but from workers engaged in creating value added. Capitalism is still based on force: there needs to be something to enforce unequal market transactions and contracts, but the use of force to do that id by "the state" (indirectly controlled by the capitalists), not directly by the lords via their personally loyal enforcers.

What technofeudalism does is to move rent extraction from mainly the employment relationship to all other relationships, via unequal contracts enforced in "the markets".