Full disclosure: I’m a fan of Yanis Varoufakis. I thought he was cool at the start of my financial news career when he was the badass academic-turned-politician who improbably became Greece’s Finance Minister after the country went bankrupt, then told the “Troika” of European Union leaders negotiating Greece’s bailout that its terms were lousy. Then he quit his office after roughly six months and wrote a scathing doorstop of a book about it, “Adults in the Room.” I also thought it was fascinating that a self-described Marxist was negotiating a sovereign bailout in the aftermath of 2008, one of modern capitalism’s great crises.
When I admit to my fandom as we sit down for a zoom interview, he immediately tells me off. (This is exactly what I wanted.)
“I don’t want fans in life, you know,” he says. “Ever since I entered politics, I acquired two things that I never wanted to have: enemies and fans.” You see, Varoufakis insists, polarization is a greater problem than whether you’re left or right, whatever your beliefs are.
“Humanity’s escape from tribalism was the one thing that we could celebrate and now we are going back to a kind of tribalism,” he says. But that’s not why we’re here. We are here to talk about humanity’s escape from something else entirely: the economic system of capitalism. Because Varoufakis’ new book, now out in the U.S. after a European release in 2023, is his theory of “Technofeudalism: What Killed Capitalism.”
I am such a fan of Varoufakis that I had to write my own critique in the pages of Fortune, insisting that while his and others’ concept of technofeudalism is compelling, what we saw in 2023 was the return with a vengeance of “retro capitalism.” Supply chains and energy independence were the major economic stories of that year as inflation continued its long descent from a 40-year peak in 2022, while so far 2024 is showing that old-school automobiles are still the rage as the electric vehicle revolution stumbles out of the gates.
But when Varoufakis, at 62 years old a very distinguished type of provocateur, is sitting across from you on a Zoom call, it’s hard to argue some of his points. But it’s more fascinating to know what his friends and, yes, his fans had to say about his new book that argues capitalism has already been dead for over a decade, and we’re only just now beginning to realize it.
“I have to say I was expecting a far worse reception than I got,” he tells me, and he says the left (his own “tribe,” so to speak) was more upset with it, and not because they disagreed with it. “People on both left and right are wedded to the idea of capitalism” he says, likening it to “the air we breathe.”
He mentioned the case of an old-school Communist in London who confronted him. “He was spot on. He said, ‘I can’t accept what you’re saying, because if what you’re saying is right, then it’s not enough to organize auto workers and nurses.’” At least he was honest, Varoufakis adds. “He was saying that, you know, [your book is] making my life so unbearably difficult that I can’t possibly accept your premise.”
Here’s how Varoufakis broke down his own journey to realizing that capitalism died without (almost) anyone realizing it, how it has especially “poisoned” Gen Z, how the Fortune 500 is in danger of becoming the Fortune 7, and why we all need to act like one of this Gen Xers’ favorite bands, and “rationally” rage against the machine.
How the 2008 crash turned capitalism into a Soviet ‘wet dream’
Shortly after telling me about his Communist friend, Varoufakis clarifies that he’s not saying he’s like Adam Smith, the Scottish Enlightenment genius who saw the capitalist world to come with The Wealth of Nations, but he’s not not Adam Smith, either.
Feudalism had been the way of the world for hundreds of years, so who could really believe that free markets and capital would take over? Similarly, we are now living through a “great transformation whereby everything we took for granted is no longer,” he said, adding, “you’re not going to have many converts” to that idea, “at least not at the beginning.”
Varoufakis’ own mind rebelled at his conclusions. “It took me years before I accepted that, before I could say to myself that capitalism is dead. When I first said that to myself, I thought, ‘Come on, you’re being stupid.’”
But just consider: The Global Financial Crisis and the collapse of century-plus-old banks on Wall Street. Just like the crash of 1929 that brought on the Great Depression, says Varoufakis, the crash of 2008 got him worrying about the state of the world. Even still, he didn’t imagine that something would emerge that would be other than capitalism.
After his combustible, short-lived political career, Varoufakis tells me (as he details in his new book), he went back to his mathematical training and began really looking at the algorithms driving the major winners of post-crash capitalism: Big Tech. What he found wasn’t capitalism, wasn’t even a marketplace, at all.
“The moment you enter Amazon.com, you’ve exited capitalism,” he says, adding that it’s a trading platform, not a market, and you must not confuse the two. And here, the self-described Marxist appeals to the wisdom of not just Adam Smith, but also the arch-free-market economists Milton Friedman and Friedrich Hayek. “If they were alive, they would agree with me” that every market has to be decentralized, at least to some degree, he says.
“We all walk into a market, even if there’s only one seller, at least we can talk one to one another as buyers and exchange views.” For Amazon, Google, Facebook and all of what he calls “cloud capitalists,” there is no conversation of economic exchange that isn’t mediated by the algorithm, “which is owned by one man,” adding that such an outcome would be a “wet dream” of the Soviet Union’s State Planning Committee, or Gosplan. “If Gosplan had the algorithm, they would be over the moon, because it’s the ultimate in centralization.”
I have to ask him at this point about the major markets story of 2023 and early 2024, as the exceptional American stock market shook off its bear market and stormed into a bull run with the so-called “Magnificent Seven,” the tech companies that include the very same names Varoufakis accuses of ruining capitalism. Does he see their dominance of the stock market as a sign that he’s right or that he’s wrong? Of course, he says, it just shows that the Fortune 500 risks becoming irrelevant if all the value is going to accrue to the tech firms that operate their own fiefdoms. “It’s going to become the Fortune 7 very soon,” he says with a smile on his face.
The poisoning of Gen Z and ‘death of the liberal individual’
And this gets to why you are reading about a Marxist provocateur in the pages of Fortune magazine: He is also a committed individualist and, yes, a liberal.
This is not to say liberal in the recent American political context of center-left, or liberal in the Adam Smith sense of free markets being the most efficient, but liberal in the tradition of Enlightenment philosophers such as John Locke or Thomas Hobbes, prizing the importance of the individual in society. (To be clear, this is my interpretation of Varoufakis’ thought, not his own.)
Varoufakis does have an example of liberalism in his book: Ironically, it’s his father, a chemical engineer who was a committed Communist while being a very successful bourgeois capitalist, thriving within a system he was ideologically committed to overthrowing—much like his famous son today. Varoufakis writes movingly in Technofeudalism about how his father was the “personification of the liberal individual,” free to have his own political beliefs and his own hobbies, publishing articles on archeology, dabbling in metallurgy, teaching his son about the Greek mythology that animates his thinking even today.
This separation of work, leisure and hobbies is gone in the age of the algorithm, Varoufakis argues. Just look at Gen Z and the lie of Big Tech. The Silicon Valley mythology encourages the indulgence of self-expression, but how can you do that in a culture mediated by an algorithm owned by one man? “If you are an upper middle class kid. and you have aspirations for life, you know that every video you upload on TikTok, everything you write on Twitter, everything you put on Facebook is going to be thrown at you during a job interview.” There are only two reactions: apathy or inhibition.
In an argument that recalls Kyle Chayka’s Filterworld and Taylor Lorenz’s Extremely Online, Varoufakis says the digital native Gen Z generation is not being driven by a sense of “inner liberty,” but rather by what they think Google considers to be a free person. “There’s no nice, clean separation between work and play anymore. And that cannot leave that generation untouched. It really poisons their way of relating to one another, because even [that] is going to become part of their CV.”
It’s a “depressed society,” where aggregate demand is low, he says (agreeing with Larry Summers’ arguments about “secular stagnation”). Every effort by central banks to stimulate the economy goes largely to the cloud fiefdoms described in his book, as economic activity is sucked out of marketplaces into the trading platforms of the cloud. In the real world, the “cloud serfs” with depressed prospects face increased asset prices and a housing market that Varoufakis calls “unapproachable.”
The zeitgeist agrees with much of what Varoufakis says. From “quiet quitting” among western Gen Zers to “lying flat” in China to even the surgeon general’s remarks about the “loneliness epidemic,” the emerging culture of young adult professionals is one of grappling with mental health struggles, if not outright depression.
The Gen Z that Varoufakis sees are “alienated” people who are cynical because of the pervasive effects of social media on all of culture. “They get much older, much faster as a result of living in a social media world in which they are compelled to try to find an identity which in the end is not self-driven. That’s why I am talking about the death of the liberal individual, because then it’s no longer autonomous.”
He even waxes a bit nostalgic for the supposedly “tyrannical” days of mid-20th century capitalism, when to work for IBM, “you had to be dressed in the IBM way,” or to work for Toyota, “you had to sing the Toyota anthem.” In those times, you could be a corporate person during the day and an anarchist poet in the evening at night, he says, and that’s lost to us now.
So, I ask, what he describes sounds a lot like one of my favorite bands from the proto-digital 1990s: Rage Against The Machine. Does he want us to take that away from his book?
“I loved Rage Against The Machine,” he responds. “I’ve danced to many of those songs. So obviously my answer to you is yes,” but then he pauses and emphasizes that “It has to be a rational rage, a very moderate rage.” Every rebellion is pregnant with authoritarianism, he responds, and after all, he adds, he is a liberal.
“Some people think that sounds like a contradiction, to be liberal and left wing.” But the whole point of liberalism, he adds, is the importance of the autonomous individual.
It’s a message you could almost be a fan of.
