Pluralistic: Yanis Varoufakis’s “Technofeudalism: What Killed Capitalism?” (28 Sep 2023) – Pluralistic: Daily links from Cory Doctorow

#politics #capitalism #technofeudalism

The capitalist revolution – extolled and condemned in the Manifesto – was led by people who valorized profits as the heroic returns for making something new in this world, and who condemned rents as a parasitic drain on the true producers whose entrepreneurial spirits would enrich us all. The "free markets" extolled by Adam Smith weren't free from regulation – they were free from rents:

But rents, Varoufakis writes, "survived only parasitically on, and in the shadows of, profit." That is, rentiers (people whose wealth comes from rents) were a small rump of the economy, slightly suspect and on the periphery of any consideration of how to organize our society. But all that changed in 2008, when the world's central banks addressed the Great Financial Crisis by bailing out not just the banks, but the bankers, funneling trillions to the people whose reckless behavior brought the world to the brink of economic ruin.

Suddenly, these wealthy people, and their banks, experienced enormous wealth-gains without profits. Their businesses lost billions in profits (the cost of offering the business's products and services vastly exceeded the money people spent on those products and services). But the business still had billions more at the end of the year than they'd had at the start: billions in public money, funneled to them by central banks.

This kicked off the "everything rally" in which every kind of asset – real estate, art, stocks, bonds, even monkey JPEGs – ballooned in value. That's exactly what you'd expect from an economy where rents dominate over profits. Feudal rentiers don't need to invest to keep making money – remember, their wealth comes from owning things that other people invest in to make money.

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital