The Age of Neo-feudalism
(Check out Y. Varoufakis’ address to the Australian National Press Club)
History “rhymes” in cycles, if only for the fact that history is but a record of human behavior (and thus socio/politico/economic structures) which always swings to one extreme, only to revert to the other extreme.
In medieval feudalism, peasants (serfs) ploughed their lords’ land and in return, were allowed to live within the lords’ fiefdoms. With industrialization, capitalism prevailed over feudalism when profit from productive work supplanted rent from property rights. Under capitalism, managers and marketers in free markets replaced feudal lords in commanding people to work faster and consume more. Absent perfect regulation, free markets naturally facilitated profit concentration in the hands of the most capable capitalists, eventually resulting in extreme wealth disparity. Globalization merely accelerated this process by tearing down geographic borders and massively availing the lowest-cost labor and material to capital.
Then came the digitized Information Age. As I write, algorithms are increasingly replacing managers and marketers (many of whom now take the form of online “influencers”). Midwestern factory owners, London Uber drivers, Indonesian street hawkers and “content publishers” all over the world now depend on the same “cloud” for access to the minds and pocketbooks of the mass. Profit — the engine of capitalism — is increasingly taking the form of cloud rent (e.g. recurring subscription fees) that must be paid for access. And free markets — the medium of capitalism — is increasingly supplanted by cloud fiefdoms wherein cloud serfs now directly serve neo-feudal lords — owners of cloud capital. The world is imperceptibly reverting to neo-feudalism from free-market capitalism. Just like their previous incarnations, neo-feudal lords are oligarchs (less than altruistic aristocrats), — whether Russian, Chinese, or American.
In this neo-feudalism dominated by digital technologies, we surrender data on our every thought and action to Big Tech and Big Finance corporate overlords who in turn use it to exploit and control us. In return, we are allowed to live as serfs in their cloud fiefdoms, with our agency replaced by (AI assisted) algorithms which train (often by instant gratification) our likes and dislikes. Owners of traditional capital (plant, equipment, workers, even robots) become vassals to these neo-feudal corporate overlords who shape — with their cloud capital — the way serfs think, act, and interact with each other. This is another way of saying producers of physical goods are subjugated by owners of virtual tollgates to cloud fiefdoms. Case in point: Countless Chinese producers of cheap-goods must pass through the Amazon tollgates to get to American customers. Would you rather be Jeff Bezos (a neo feudal overlord), or a Chinese producer (a neo feudal serf)?
Big Tech corporate overlords like Google and Amazon have replaced the physical markets of Main Street America just as Taobao (Alibaba) and Temu (Pinduoduo) have done in China. In media, X and Facebook dictate the social narratives and social “norm” in America just as Weibo, WeChat and TikTok do in China. Meanwhile, Big Finance corporate overlords like banks, shadow banks, brokerages and insurance companies have set themselves up as the mandatory intermediary through which all economic activities must transact. It is by this toll-keeper role that Big Finance extracts cloud rent from every transaction in their cloud fiefdoms. But Big Finance’s hold on the populace goes way beyond just extracting toll. A handful of huge global wealth (aggregating and) management firms (Blackrock, Vanguard etc.) own the majority of shares in Fortune 500 companies. They use that power to influence the corporate culture of these companies and thus program the likes/dislikes of their customers (i.e. set “social norm” for the populace).
Sadly, the EU is still stuck in the age of industrialization and lacks such cloud capital. There is no European equivalence of X or Weibo, Amazon or Alibaba. This is why VW — now discarded by China after all the technologies had been transferred — is facing existential threat, watching Tesla and BYD duke it out for future dominance. Elon Musk’s purchase of Twitter now makes perfect sense. It is way more than owning a platform to enable free speech. It is about owning a cloud fiefdom to enable cloud commerce and digital capital flow (think his PayPal roots). It will be fascinating to watch the evolution of X’s interaction with marketplace platforms like Uber, Airbnb, and Patreon going forward.
Like the fiefdoms of old, cloud fiefdoms aim to reward the corporate overlords who enslave by addiction sold as “convenience”. An economy of cloud fiefdoms does not produce, but simply monitors and controls behavior and transfers wealth from serfs to overlords. It can also be weaponized to penalize, — as in the case of China’s use of its “social scoring” system to deny financial access and the right to consume. With progressive erosion of independent thinking, free will, and thus democracy, the populace in an economy of cloud fiefdoms will eventually turn zombie. That’s the plan.
Though squabbling over the spoils, Big Tech (Silicon Valley) and Big Finance (Wall Street) are increasingly collaborating with Big Government on the same cartelism. As a result, the U.S. increasingly move toward China-style central planning and control. In China, WeChat is not just a social networking platform but by design also a payment processing system, thereby enabling social scoring and government control. In the U.S., major banks are all working with the Central Bank to implement private CBDC, achieving the same end. The only difference is, the architects behind the U.S. case are the oligarchs, — the 1% neo-feudal lords with the vast majority of the wealth and enormous sway over politicians and thus policies.
This brings us to the subject of “What is money?” Some define “money” by its “required attributes”: Fungible, divisible medium of exchange; store of value, etc. Others define it as a “commodity chosen by the marketplace that extinguishes debt”. These definitions reflect what people want money to be, but not what it actually is. Money has always been a stealth means for the reigning power to extract energy out of the subjects (and control their behavior short of outright enslaving them). A king pays (as opposed to forcing) people to fight in his army. He then requires the them to pay tax with the same money. That money de facto becomes the standard medium of exchange for all goods and services in that Kingdom. It matters not if the king edicts that money to be stones, sticks or seashells, — as long as it cannot be easily counterfeited. People worry about new forms of digital currencies and payment systems that will enable social scoring and government control. Fact is, they have been living in a monetary matrix all along. Worse, the matrix is a Hotel California which constantly promotes debt, — a contractual right to extract energy in the future.
In the end, China’s challenge of the U.S. hegemony is not about one state annihilating another by military force. It is about one state’s cloud fiefdom(s) coopting the serfs of another state. Will 1.3 billion people wind up shopping on Amazon and seeing the world through American eyes? Or will Pinduoduo (under a sexier brand name) gain power over 340M American shoppers and voters? World War 3 is already in progress, — in the form of trade war, currency war, “hybrid” (information) war and cyber war. These wars are all about class struggle across — not between — nation states. Both China and American capitalists have prospered immensely at great expense to the working class of both. Case in point: Elon Musk works with both American and Chinese politicians.
What prevented outright feudalism and allowed relative free market capitalism in the United States was its huge middle class. The hollowing of its middle class through deindustrialization and globalization in the 1980s polarized the United States both financially and politically. The ever larger lower 99% now look at the ever smaller upper 1% and conclude capitalism no longer works and extreme socialism (aka post-modernism) is the answer. They see themselves as victims of racism, gender-ism, age-ism and mistake government directed wealth re-distribution (aka socialism/communism) as the answer. They fail to see the socialism already in place in China hasn’t helped its 99% and the 1% in both America and China benefited greatly at the expense of the 99%.
Meanwhile, a key element in the war between cloud fiefdoms is control over the Monetary Highway, — a cross-border, interbank financial payment and settlement system that allows individuals and businesses on different financial platforms to seamlessly transact with each other in different currencies, worldwide. For nearly half a century, the “Monetary Highway” used by the world is SWIFT. Project mBridge is its replacement in the coming age of CBDCs. China is planning on supplanting it with its own BRICS system. The challenge for both camps is settlement, — transaction already take place at the speed of light now. Whoever comes up with speedier settlement (obviously involving blockchain and cryptocurrencies) without sacrificing reliability and security will control the Monetary Highway, — the “ledger” of international money flow and stock.
Against the backdrop of failing fiat currencies all over the world after half a century of wanton money printing by all, China and the U.S. are both near-ready to initiate a global currency reset. Thucydides’ Trap is at work: War is unavoidable between an irresistible rising power and an immovable reigning power and there is a first strike advantage at control over the Monetary Highway. Think of it this way: Ever since Reagan’s de-industrialization and financialization, the U.S. no longer produced. But it has been able to export paper (U.S. dollars) printed out of thin air for physical goods and services, — simply because it enjoys the exorbitant privilege of the U.S. dollar hegemony. That privilege is now coming to an end (punctuated by the end of the Petrodollar System). But the U.S. is trying to replace it with control of the Monetary Highway through which capital and commerce flow (a la Amazon).
War between cloud feudal lords is scary enough. More scary is their collusion and unification, making for one big cloud fiefdom (i.e. a unipolar digital world order) presiding over all serfs on earth. That is the vision of the World Economic Forum, — which all freedom fighters are desperately resisting.
