Yanis Varoufakis’s “Technofeudalism: What Killed Capitalism?”
Monday (October 2), I'll be in Boise to host an event with VE Schwab. On October 7–8, I'm in Milan to keynote Wired Nextfest.
Socialists have been hotly anticipating the end of capitalism since at least 1848, when Marx and Engels published The Communist Manifesto - but the Manifesto also reminds us that capitalism is only too happy to reinvent itself during its crises, coming back in new forms, over and over again:
Now, in Technofeudalism: What Killed Capitalism, Yanis Varoufakis - the "libertarian Marxist" former finance minister of Greece - makes an excellent case that capitalism died a decade ago, turning into a new form of feudalism: technofeudalism:
To understand where Varoufakis is coming from, you need to go beyond the colloquial meanings of "capitalism" and "feudalism." Capitalism isn't just "a system where we buy and sell things." It's a system where capital rules the roost: the richest, most powerful people are those who coerce workers into using their capital (factories, tools, vehicles, etc) to create income in the form of profits.
By contrast, a feudal society is one organized around people who own things, charging others to use them to produce goods and services. In a feudal society, the most important form of income isn't profit, it's rent. To quote Varoufakis: "rent flows from privileged access to things in fixed supply" (land, fossil fuels, etc). Profit comes from "entrepreneurial people who have invested in things that wouldn't have otherwise existed."
This distinction is subtle, but important: "Profit is vulnerable to market competition, rent is not." If you have a coffee shop, then every other coffee shop that opens on your block is a competitive threat that could erode your margins. But if you own the building the coffee shop owner rents, then every other coffee shop that opens on the block raises the property values and the amount of rent you can charge.
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.
Rents are not vulnerable to competition, so rentiers don't need to plow their rents into new technology to keep the money coming in. The capitalist that leases the oil field needs to invest in new pumps and refining to stay competitive with other oil companies. But the rentier of the oil field doesn't have to do anything: either the capitalist tenant will invest in more capital and make the field more valuable, or they will lose out to another capitalist who'll replace them. Either way, the rentier gets more rent.
So when capitalists get richer, they spend some of that money on new capital, but when rentiers get richer, them spend money on more assets they can rent to capitalists. The "everything rally" made all kinds of capital more valuable, and companies that were transitioning to a feudal footing turned around and handed that money to their investors in stock buybacks and dividends, rather than spending the money on R&D, or new plants, or new technology.
The tech companies, though, were the exception. They invested in "cloud capital" - the servers, lines, and services that everyone else would have to pay rent on in order to practice capitalism.
Think of Amazon: Varoufakis likens shopping on Amazon to visiting a bustling city center filled with shops run by independent capitalists. However, all of those capitalists are subservient to a feudal lord: Jeff Bezos, who takes 51 cents out of every dollar they bring in, and furthermore gets to decide which products they can sell and how those products must be displayed:
The postcapitalist, technofeudal world isn't a world without capitalism, then. It's a world where capitalists are subservient to feudalists ("cloudalists" in Varoufakis's thesis), as are the rest of us the cloud peons, from the social media users and performers who fill the technofuedalists' siloes with "content" to the regular users whose media diet is dictated by the cloudalists' recommendation systems:
A defining feature of cloudalism is the ability of the rentier lord to destroy any capitalist vassal's business with the click of a mouse. If Google kicks your business out of the search index, or if Facebook blocks your publication, or if Twitter shadowbans mentions of your product, or if Apple pulls your app from the store, you're toast.
Capitalists "still have the power to command labor from the majority who are reliant on wages," but they are still mere vassals to the cloudalists. Even the most energetic capitalist can't escape paying rent, thanks in large part to "IP," which I claim is best understood as "laws that let a company reach beyond its walls to dictate the conduct of competitors, critics and customers":
https://locusmag.com/2020/09/cory-doctorow-ip/
Varoufakis points to ways that the cloudalists can cement their gains: for example, "green" energy doesn't rely on land-leases (like fossil fuels), but it does rely on networked grids and data-protocols that can be loaded up with IP, either or both of which can be turned into chokepoints for feudal rent-extraction. To make things worse, Varoufakis argues that cloudalists won't be able to muster the degree of coordination and patience needed to actually resolve the climate emergency - they'll not only extract rent from every source of renewables, but they'll also silo them in ways that make them incapable of doing the things we need them to do.
Energy is just one of the technofeudal implications that Varoufakis explores in this book: there are also lengthy and fascinating sections on geopolitics, monetary policy, and the New Cold War. Technofeudalism - and the struggle to produce a dominant fiefdom - is a very useful lens for understanding US/Chinese tech wars.
Though Varoufakis is laying out a technical and even esoteric argument here, he takes great pains to make it accessible. The book is structured as a long open letter to his father, a chemical engineer and leftist who was a political prisoner during the fascist takeover of Greece. The framing device works very well, especially if you've read Talking To My Daughter About the Economy, Varoufakis's 2018 radical economics primer in the form of a letter to his young daughter:
At the very end of the book, Varoufakis calls for "a cloud rebellion to overthrow technofeudalism." This section is very short - and short on details. That's not a knock against the book: there are plenty of very good books that consist primarily or entirely of analysis of the problems with a system, without having to lay out a detailed program for solving those problems.
But for what it's worth, I think there is a way to plan and execute a "cloud rebellion" - a way to use laws, technology, reverse-engineering and human rights frameworks to shatter the platforms and seize the means of computation. I lay out that program in The Internet Con: How the Seize the Means of Computation, a book I published with Verso Books a couple weeks ago:
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
They're handing out patents for "inventions" that don't exist
Today (Oct 16) I'm in Minneapolis, keynoting the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing. Thursday (Oct 19), I'm in Charleston, WV to give the 41st annual McCreight Lecture in the Humanities. And on Friday (Oct 20), I'm at Charleston's Taylor Books from 12h-14h.
Patent trolls produce nothing except lawsuits. Unlike real capitalist enterprises, a patent troll does not “practice” the art in its patent portfolio — it seeks out productive enterprises that are making things that real people use, and then uses legal threats to extract rents from them.
One of the most prolific patent trolls of the twenty-first century is Landmark Technology, whose U.S. Patent №7,010,508 nominally covers virtually anything you might do in the course of operating an online business: having a homepage, letting a customer login to your site, or having pages where customers can view and order products.
Landmark shook down more than a thousand productive businesses for $65,000 license-fees it demanded on threat of a patent lawsuit.
But that reign of terror is almost certainly over. When Landmark tried to get $65,000 out of Binders.com, the victim’s owner, NAPCO, went to court to invalidate Landmark’s patent, which never should have issued.
A North Carolina court agreed, and killed Landmark’s patent. Landmark faces further punishments in Washington State, where the attorney general has sued the company for violating state consumer protection laws in a case that has been removed to federal court.
Landmark’s patent contains “means-plus-function” claims. These a rentier’s superweapon, in which a patent can lay a claim over an invention without inventing or describing it. These claims are almost entirely used in software patents, something that has been blessed by the Federal Circuit, America’s most authoritative patent court.
A means-plus-function patent lets an “inventor” patent something they don’t know how to do. If these patents applied to pharma, a company could get a patent on “an arrangement of atoms that cure cancer,” without specifying that arrangement of atoms. Anyone who actually did cure cancer would have to pay rent to the patent-holder.
-A Major Defeat For Technofeudalism: We euthanized some rentiers.
My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!
Tomorrow (Nov 4), I'm keynoting the Hackaday Supercon in Pasadena, CA.
The thing is, any feed or search result is "algorithmic." "Just show me the things posted by people I follow in reverse-chronological order" is an algorithm. "Just show me products that have this SKU" is an algorithm. "Alphabetical sort" is an algorithm. "Random sort" is an algorithm.
Any process that involves more information than you can take in at a glance or digest in a moment needs some kind of sense-making. It needs to be put in some kind of order. There's always gonna be an algorithm.
But that's not what we mean by "the algorithm" (TM). When we talk about "the algorithm," we mean a system for ordering information that uses complex criteria that are not precisely known to us, and than can't be easily divined through an examination of the ordering.
There's an idea that a "good" algorithm is one that does not seek to deceive or harm us. When you search for a specific part number, you want exact matches for that search at the top of the results. It's fine if those results include third-party parts that are compatible with the part you're searching for, so long as they're clearly labeled. There's room for argument about how to order those results – do highly rated third-party parts go above the OEM part? How should the algorithm trade off price and quality?
It's hard to come up with an objective standard to resolve these fine-grained differences, but search technologists have tried. Think of Google: they have a patent on "long clicks." A "long click" is when you search for something and then don't search for it again for quite some time, the implication being that you've found what you were looking for. Google Search ads operate a "pay per click" model, and there's an argument that this aligns Google's ad division's interests with search quality: if the ad division only gets paid when you click a link, they will militate for placing ads that users want to click on.
Platforms are inextricably bound up in this algorithmic information sorting business. Platforms have emerged as the endemic form of internet-based business, which is ironic, because a platform is just an intermediary – a company that connects different groups to each other. The internet's great promise was "disintermediation" – getting rid of intermediaries. We did that, and then we got a whole bunch of new intermediaries.
Usually, those groups can be sorted into two buckets: "business customers" (drivers, merchants, advertisers, publishers, creative workers, etc) and "end users" (riders, shoppers, consumers, audiences, etc). Platforms also sometimes connect end users to each other: think of dating sites, or interest-based forums on Reddit. Either way, a platform's job is to make these connections, and that means platforms are always in the algorithm business.
Whether that's matching a driver and a rider, or an advertiser and a consumer, or a reader and a mix of content from social feeds they're subscribed to and other sources of information on the service, the platform has to make a call as to what you're going to see or do.
These choices are enormously consequential. In the theory of Surveillance Capitalism, these choices take on an almost supernatural quality, where "Big Data" can be used to guess your response to all the different ways of pitching an idea or product to you, in order to select the optimal pitch that bypasses your critical faculties and actually controls your actions, robbing you of "the right to a future tense."
I don't think much of this hypothesis. Every claim to mind control – from Rasputin to MK Ultra to neurolinguistic programming to pick-up artists – has turned out to be bullshit. Besides, you don't need to believe in mind control to explain the ways that algorithms shape our beliefs and actions. When a single company dominates the information landscape – say, when Google controls 90% of your searches – then Google's sorting can deprive you of access to information without you knowing it.
If every "locksmith" listed on Google Maps is a fake referral business, you might conclude that there are no more reputable storefront locksmiths in existence. What's more, this belief is a form of self-fulfilling prophecy: if Google Maps never shows anyone a real locksmith, all the real locksmiths will eventually go bust.
If you never see a social media update from a news source you follow, you might forget that the source exists, or assume they've gone under. If you see a flood of viral videos of smash-and-grab shoplifter gangs and never see a news story about wage theft, you might assume that the former is common and the latter is rare (in reality, shoplifting hasn't risen appreciably, while wage-theft is off the charts).
In the theory of Surveillance Capitalism, the algorithm was invented to make advertisers richer, and then went on to pervert the news (by incentivizing "clickbait") and finally destroyed our politics when its persuasive powers were hijacked by Steve Bannon, Cambridge Analytica, and QAnon grifters to turn millions of vulnerable people into swivel-eyed loons, racists and conspiratorialists.
As I've written, I think this theory gives the ad-tech sector both too much and too little credit, and draws an artificial line between ad-tech and other platform businesses that obscures the connection between all forms of platform decay, from Uber to HBO to Google Search to Twitter to Apple and beyond:
As a counter to Surveillance Capitalism, I've proposed a theory of platform decay called enshittification, which identifies how the market power of monopoly platforms, combined with the flexibility of digital tools, combined with regulatory capture, allows platforms to abuse both business-customers and end-users, by depriving them of alternatives, then "twiddling" the knobs that determine the rules of the platform without fearing sanction under privacy, labor or consumer protection law, and finally, blocking digital self-help measures like ad-blockers, alternative clients, scrapers, reverse engineering, jailbreaking, and other tech guerrilla warfare tactics:
One important distinction between Surveillance Capitalism and enshittification is that enshittification posits that the platform is bad for everyone. Surveillance Capitalism starts from the assumption that surveillance advertising is devastatingly effective (which explains how your racist Facebook uncles got turned into Jan 6 QAnons), and concludes that advertisers must be well-served by the surveillance system.
But advertisers – and other business customers – are very poorly served by platforms. Procter and Gamble reduced its annual surveillance advertising budget from $100m//year to $0/year and saw a 0% reduction in sales. The supposed laser-focused targeting and superhuman message refinement just don't work very well – first, because the tech companies are run by bullshitters whose marketing copy is nonsense, and second because these companies are monopolies who can abuse their customers without losing money.
The point of enshittification is to lock end-users to the platform, then use those locked-in users as bait for business customers, who will also become locked to the platform. Once everyone is holding everyone else hostage, the platform uses the flexibility of digital services to play a variety of algorithmic games to shift value from everyone to the business's shareholders. This flexibility is supercharged by the failure of regulators to enforce privacy, labor and consumer protection standards against the companies, and by these companies' ability to insist that regulators punish end-users, competitors, tinkerers and other third parties to mod, reverse, hack or jailbreak their products and services to block their abuse.
Enshittification needs The Algorithm. When Uber wants to steal from its drivers, it can just do an old-fashioned wage theft, but eventually it will face the music for that kind of scam:
The best way to steal from drivers is with algorithmic wage discrimination. That's when Uber offers occassional, selective drivers higher rates than it gives to drivers who are fully locked to its platform and take every ride the app offers. The less selective a driver becomes, the lower the premium the app offers goes, but if a driver starts refusing rides, the wage offer climbs again. This isn't the mind-control of Surveillance Capitalism, it's just fraud, shaving fractional pennies off your paycheck in the hopes that you won't notice. The goal is to get drivers to abandon the other side-hustles that allow them to be so choosy about when they drive Uber, and then, once the driver is fully committed, to crank the wage-dial down to the lowest possible setting:
This is the same game that Facebook played with publishers on the way to its enshittification: when Facebook began aggressively courting publishers, any short snippet republished from the publisher's website to a Facebook feed was likely to be recommended to large numbers of readers. Facebook offered publishers a vast traffic funnel that drove millions of readers to their sites.
But as publishers became more dependent on that traffic, Facebook's algorithm started downranking short excerpts in favor of medium-length ones, building slowly to fulltext Facebook posts that were fully substitutive for the publisher's own web offerings. Like Uber's wage algorithm, Facebook's recommendation engine played its targets like fish on a line.
When publishers responded to declining reach for short excerpts by stepping back from Facebook, Facebook goosed the traffic for their existing posts, sending fresh floods of readers to the publisher's site. When the publisher returned to Facebook, the algorithm once again set to coaxing the publishers into posting ever-larger fractions of their work to Facebook, until, finally, the publisher was totally locked into Facebook. Facebook then started charging publishers for "boosting" – not just to be included in algorithmic recommendations, but to reach their own subscribers.
Enshittification is modern, high-tech enabled, monopolistic form of rent seeking. Rent-seeking is a subtle and important idea from economics, one that is increasingly relevant to our modern economy. For economists, a "rent" is income you get from owning a "factor of production" – something that someone else needs to make or do something.
Rents are not "profits." Profit is income you get from making or doing something. Rent is income you get from owning something needed to make a profit. People who earn their income from rents are called rentiers. If you make your income from profits, you're a "capitalist."
Capitalists and rentiers are in irreconcilable combat with each other. A capitalist wants access to their factors of production at the lowest possible price, whereas rentiers want those prices to be as high as possible. A phone manufacturer wants to be able to make phones as cheaply as possible, while a patent-troll wants to own a patent that the phone manufacturer needs to license in order to make phones. The manufacturer is a capitalism, the troll is a rentier.
The troll might even decide that the best strategy for maximizing their rents is to exclusively license their patents to a single manufacturer and try to eliminate all other phones from the market. This will allow the chosen manufacturer to charge more and also allow the troll to get higher rents. Every capitalist except the chosen manufacturer loses. So do people who want to buy phones. Eventually, even the chosen manufacturer will lose, because the rentier can demand an ever-greater share of their profits in rent.
Digital technology enables all kinds of rent extraction. The more digitized an industry is, the more rent-seeking it becomes. Think of cars, which harvest your data, block third-party repair and parts, and force you to buy everything from acceleration to seat-heaters as a monthly subscription:
The cloud is especially prone to rent-seeking, as Yanis Varoufakis writes in his new book, Technofeudalism, where he explains how "cloudalists" have found ways to lock all kinds of productive enterprise into using cloud-based resources from which ever-increasing rents can be extracted:
The endless malleability of digitization makes for endless variety in rent-seeking, and cataloging all the different forms of digital rent-extraction is a major project in this Age of Enshittification. "Algorithmic Attention Rents: A theory of digital platform market power," a new UCL Institute for Innovation and Public Purpose paper by Tim O'Reilly, Ilan Strauss and Mariana Mazzucato, pins down one of these forms:
The "attention rents" referenced in the paper's title are bait-and-switch scams in which a platform deliberately enshittifies its recommendations, search results or feeds to show you things that are not the thing you asked to see, expect to see, or want to see. They don't do this out of sadism! The point is to extract rent – from you (wasted time, suboptimal outcomes) and from business customers (extracting rents for "boosting," jumbling good results in among scammy or low-quality results).
The authors cite several examples of these attention rents. Much of the paper is given over to Amazon's so-called "advertising" product, a $31b/year program that charges sellers to have their products placed above the items that Amazon's own search engine predicts you will want to buy:
This is a form of gladiatorial combat that pits sellers against each other, forcing them to surrender an ever-larger share of their profits in rent to Amazon for pride of place. Amazon uses a variety of deceptive labels ("Highly Rated – Sponsored") to get you to click on these products, but most of all, they rely two factors. First, Amazon has a long history of surfacing good results in response to queries, which makes buying whatever's at the top of a list a good bet. Second, there's just so many possible results that it takes a lot of work to sift through the probably-adequate stuff at the top of the listings and get to the actually-good stuff down below.
Amazon spent decades subsidizing its sellers' goods – an illegal practice known as "predatory pricing" that enforcers have increasingly turned a blind eye to since the Reagan administration. This has left it with few competitors:
The lack of competing retail outlets lets Amazon impose other rent-seeking conditions on its sellers. For example, Amazon has a "most favored nation" requirement that forces companies that raise their prices on Amazon to raise their prices everywhere else, which makes everything you buy more expensive, whether that's a Walmart, Target, a mom-and-pop store, or direct from the manufacturer:
But everyone loses in this "two-sided market." Amazon used "junk ads" to juice its ad-revenue: these are ads that are objectively bad matches for your search, like showing you a Seattle Seahawks jersey in response to a search for LA Lakers merch:
The more of these junk ads Amazon showed, the more revenue it got from sellers – and the more the person selling a Lakers jersey had to pay to show up at the top of your search, and the more they had to charge you to cover those ad expenses, and the more they had to charge for it everywhere else, too.
The authors describe this process as a transformation between "attention rents" (misdirecting your attention) to "pecuniary rents" (making money). That's important: despite decades of rhetoric about the "attention economy," attention isn't money. As I wrote in my enshittification essay:
You can't use attention as a medium of exchange. You can't use it as a store of value. You can't use it as a unit of account. Attention is like cryptocurrency: a worthless token that is only valuable to the extent that you can trick or coerce someone into parting with "fiat" currency in exchange for it. You have to "monetize" it – that is, you have to exchange the fake money for real money.
The authors come up with some clever techniques for quantifying the ways that this scam harms users. For example, they count the number of places that an advertised product rises in search results, relative to where it would show up in an "organic" search. These quantifications are instructive, but they're also a kind of subtweet at the judiciary.
In 2018, SCOTUS's ruling in American Express v Ohio changed antitrust law for two-sided markets by insisting that so long as one side of a two-sided market was better off as the result of anticompetitive actions, there was no antitrust violation:
For platforms, that means that it's OK to screw over sellers, advertisers, performers and other business customers, so long as the end-users are better off: "Go ahead, cheat the Uber drivers, so long as you split the booty with Uber riders."
But in the absence of competition, regulation or self-help measures, platforms cheat everyone – that's the point of enshittification. The attention rents that Amazon's payola scheme extract from shoppers translate into higher prices, worse goods, and lower profits for platform sellers. In other words, Amazon's conduct is so sleazy that it even threads the infinitesimal needle that the Supremes created in American Express.
Here's another algorithmic pecuniary rent: Amazon figured out which of its major rivals used an automated price-matching algorithm, and then cataloged which products they had in common with those sellers. Then, under a program called Project Nessie, Amazon jacked up the prices of those products, knowing that as soon as they raised the prices on Amazon, the prices would go up everywhere else, so Amazon wouldn't lose customers to cheaper alternatives. That scam made Amazon at least a billion dollars:
This is a great example of how enshittification – rent-seeking on digital platforms – is different from analog rent-seeking. The speed and flexibility with which Amazon and its rivals altered their prices requires digitization. Digitization also let Amazon crank the price-gouging dial to zero whenever they worried that regulators were investigating the program.
So what do we do about it? After years of being made to look like fumblers and clowns by Big Tech, regulators and enforcers – and even lawmakers – have decided to get serious.
The neoliberal narrative of government helplessness and incompetence would have you believe that this will go nowhere. Governments aren't as powerful as giant corporations, and regulators aren't as smart as the supergeniuses of Big Tech. They don't stand a chance.
But that's a counsel of despair and a cheap trick. Weaker US governments have taken on stronger oligarchies and won – think of the defeat of JD Rockefeller and the breakup of Standard Oil in 1911. The people who pulled that off weren't wizards. They were just determined public servants, with political will behind them. There is a growing, forceful public will to end the rein of Big Tech, and there are some determined public servants surfing that will.
In this paper, the authors try to give those enforcers ammo to bring to court and to the public. For example, Amazon claims that its algorithm surfaces the products that make the public happy, without the need for competitive pressure to keep it sharp. But as the paper points out, the only successful new rival ecommerce platform – Tiktok – has found an audience for an entirely new category of goods: dupes, "lower-cost products that have the same or better features than higher cost branded products."
The authors also identify "dark patterns" that platforms use to trick users into consuming feeds that have a higher volume of things that the company profits from, and a lower volume of things that users want to see. For example, platforms routinely switch users from a "following" feed – consisting of things posted by people the user asked to hear from – with an algorithmic "For You" feed, filled with the things the company's shareholders wish the users had asked to see.
Calling this a "dark pattern" reveals just how hollow and self-aggrandizing that term is. "Dark pattern" usually means "fraud." If I ask to see posts from people I like, and you show me posts from people who'll pay you for my attention instead, that's not a sophisticated sleight of hand – it's just a scam. It's the social media equivalent of the eBay seller who sends you an iPhone box with a bunch of gravel inside it instead of an iPhone. Tech bros came up with "dark pattern" as a way of flattering themselves by draping themselves in the mantle of dopamine-hacking wizards, rather than unimaginative con-artists who use a computer to rip people off.
These For You algorithmic feeds aren't just a way to increase the load of sponsored posts in a feed – they're also part of the multi-sided ripoff of enshittified platforms. A For You feed allows platforms to trick publishers and performers into thinking that they are "good at the platform," which both convinces to optimize their production for that platform, and also turns them into Judas Goats who conspicuously brag about how great the platform is for people like them, which brings their peers in, too.
In Veena Dubal's essential paper on algorithmic wage discrimination, she describes how Uber drivers whom the algorithm has favored with (temporary) high per-ride rates brag on driver forums about their skill with the app, bringing in other drivers who blame their lower wages on their failure to "use the app right":
If you go down to the midway at your county fair, you'll spot some poor sucker walking around all day with a giant teddy bear that they won by throwing three balls in a peach basket.
The peach-basket is a rigged game. The carny can use a hidden switch to force the balls to bounce out of the basket. No one wins a giant teddy bear unless the carny wants them to win it. Why did the carny let the sucker win the giant teddy bear? So that he'd carry it around all day, convincing other suckers to put down five bucks for their chance to win one:
The carny allocated a giant teddy bear to that poor sucker the way that platforms allocate surpluses to key performers – as a convincer in a "Big Store" con, a way to rope in other suckers who'll make content for the platform, anchoring themselves and their audiences to it.
Platform can't run the giant teddy-bear con unless there's a For You feed. Some platforms – like Tiktok – tempt users into a For You feed by making it as useful as possible, then salting it with doses of enshittification:
Other platforms use the (ugh) "dark pattern" of simply flipping your preference from a "following" feed to a "For You" feed. Either way, the platform can't let anyone keep the giant teddy-bear. Once you've tempted, say, sports bros into piling into the platform with the promise of millions of free eyeballs, you need to withdraw the algorithm's favor for their content so you can give it to, say, astrologers. Of course, the more locked-in the users are, the more shit you can pile into that feed without worrying about them going elsewhere, and the more giant teddy-bears you can give away to more business users so you can lock them in and start extracting rent.
For regulators, the possibility of a "good" algorithmic feed presents a serious challenge: when a feed is bad, how can a regulator tell if its low quality is due to the platform's incompetence at blocking spammers or guessing what users want, or whether it's because the platform is extracting rents?
The paper includes a suite of recommendations, including one that I really liked:
Regulators, working with cooperative industry players, would define reportable metrics based on those that are actually used by the platforms themselves to manage search, social media, e-commerce, and other algorithmic relevancy and recommendation engines.
In other words: find out how the companies themselves measure their performance. Find out what KPIs executives have to hit in order to earn their annual bonuses and use those to figure out what the company's performance is – ad load, ratio of organic clicks to ad clicks, average click-through on the first organic result, etc.
They also recommend some hard rules, like reserving a portion of the top of the screen for "organic" search results, and requiring exact matches to show up as the top result.
I've proposed something similar, applicable across multiple kinds of digital businesses: an end-to-end principle for online services. The end-to-end principle is as old as the internet, and it decrees that the role of an intermediary should be to deliver data from willing senders to willing receivers as quickly and reliably as possible. When we apply this principle to your ISP, we call it Net Neutrality. For services, E2E would mean that if I subscribed to your feed, the service would have a duty to deliver it to me. If I hoisted your email out of my spam folder, none of your future emails should land there. If I search for your product and there's an exact match, that should be the top result:
One interesting wrinkle to framing platform degradation as a failure to connect willing senders and receivers is that it places a whole host of conduct within the regulatory remit of the FTC. Section 5 of the FTC Act contains a broad prohibition against "unfair and deceptive" practices:
That means that the FTC doesn't need any further authorization from Congress to enforce an end to end rule: they can simply propose and pass that rule, on the grounds that telling someone that you'll show them the feeds that they ask for and then not doing so is "unfair and deceptive."
Some of the other proposals in the paper also fit neatly into Section 5 powers, like a "sticky" feed preference. If I tell a service to show me a feed of the people I follow and they switch it to a For You feed, that's plainly unfair and deceptive.
All of this raises the question of what a post-Big-Tech feed would look like. In "How To Break Up Amazon" for The Sling, Peter Carstensen and Darren Bush sketch out some visions for this:
https://www.thesling.org/how-to-break-up-amazon/
They imagine a "condo" model for Amazon, where the sellers collectively own the Amazon storefront, a model similar to capacity rights on natural gas pipelines, or to patent pools. They see two different ways that search-result order could be determined in such a system:
"specific premium placement could go to those vendors that value the placement the most [with revenue] shared among the owners of the condo"
or
"leave it to owners themselves to create joint ventures to promote products"
Note that both of these proposals are compatible with an end-to-end rule and the other regulatory proposals in the paper. Indeed, all these policies are easier to enforce against weaker companies that can't afford to maintain the pretense that they are headquartered in some distant regulatory haven, or pay massive salaries to ex-regulators to work the refs on their behalf:
The re-emergence of intermediaries on the internet after its initial rush of disintermediation tells us something important about how we relate to one another. Some authors might be up for directly selling books to their audiences, and some drivers might be up for creating their own taxi service, and some merchants might want to run their own storefronts, but there's plenty of people with something they want to offer us who don't have the will or skill to do it all. Not everyone wants to be a sysadmin, a security auditor, a payment processor, a software engineer, a CFO, a tax-preparer and everything else that goes into running a business. Some people just want to sell you a book. Or find a date. Or teach an online class.
Intermediation isn't intrinsically wicked. Intermediaries fall into pits of enshitffication and other forms of rent-seeking when they aren't disciplined by competitors, by regulators, or by their own users' ability to block their bad conduct (with ad-blockers, say, or other self-help measures). We need intermediaries, and intermediaries don't have to turn into rent-seeking feudal warlords. That only happens if we let it happen.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Unity's feudal gambit as class struggle between rentiers and capitalists
Today (Oct 16) I'm in Minneapolis, keynoting the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing. Thursday (Oct 19), I'm in Charleston, WV to give the 41st annual McCreight Lecture in the Humanities. And on Friday (Oct 20), I'm at Charleston's Taylor Books from 12h-14h.
The outcome of this struggle is what determines whether the digital society is capitalist or feudalistic. Think of the recent grab by games toolsmith Unity, who have long extracted rents from the capitalists who used their tools to make games. Unity is “software as a service,” which means that you have to buy again it every month, for so long as your capitalist enterprise is in business.
The capitalists who rent Unity’s tools had resigned themselves to this, but then Unity went one step further, and demanded a royalty (a word with decidedly feudal origins!) every time a game made with Unity’s tools was distributed. The outcry was ferocious, and Unity eventually backed down, but even as they did, company executives insisted that they would continue to pursue a “sustainable system” for “shared success.”
“Shared success” is a pure expression of feudalism. Unity was not proposing a joint venture, where they would supply the capital to produce games and share the risk of that capital being competed away by a better games-maker.
Instead, Unity wants a rentier’s bargain: if the capitalist it rents do does well, so does Unity. But if the capitalist does badly — if a games-maker loses out to a competitor who is also a tenant of Unity’s IP — then unity also does well. Heads capitalists lose, tails the rentier wins.
When Unity speaks of this system being “sustainable,” they mean that they will seek to maximize the total amount of profits made by capitalists who rent its tools. Because the higher the total profits are, the more rent it can extract.
Profits are highest where competition is lowest. It’s in Unity’s interest for a single company — or a cartel of companies — to control entire genres or modes of games, and to be protected from innovators who might enter the market with better offers. Unity wants to pick some winners and bind them to its fields.
-A Major Defeat For Technofeudalism: We euthanized some rentiers.
My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!
Today (Oct 16) I'm in Minneapolis, keynoting the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing. Thursday (Oct 19), I'm in Charleston, WV to give the 41st annual McCreight Lecture in the Humanities. And on Friday (Oct 20), I'm at Charleston's Taylor Books from 12h-14h.
When we think of class struggle, we rightly focus on the struggle between workers and bosses. Class struggle is held back by “false consciousness.” We’re told that American workers are allergic to socialism because they view themselves as “temporarily embarrassed millionaires,” who throw their lot in with their bosses because they want to join their ranks.
In reality, America has virtually no upward social mobility; an American who changes class is generally a middle class person who becomes poor, or a poor person who becomes homeless.
But there’s another important class struggle, within the ruling class. That’s the struggle between capitalists and rentiers. Capitalists want to own the means of production and utilize it without paying rentiers, both so they can enrich themselves and so they can invest in superior production.
Rentiers want to own the things capitalists must use so they can cream off the profits without doing anything to produce them.
The struggle between capitalists and rentiers is rife with false consciousness. Capitalists hate capitalism. Not every worker sees themself as a temporarily embarrassed millionaire, but every capitalist sees themself as a temporarily embarrassed rentier.
Capitalists loathe competition. That’s why Peter Thiel says “competition is for losers” and Warren Buffet continuously salivates over investment in firms with “moats and walls” that prevent competitors from entering the market.
The landlord who owns a building with a coffee shop does well even if that coffee shop goes out of business when a competing shop takes away all their business. Indeed, the landlord benefits from this situation: having a vacant storefront to rent just as a neighborhood is blowing up thanks to a hot new coffee shop is an opportunity to raise the rent. “Passive income” is income that is protected from competition.
-A Major Defeat For Technofeudalism: We euthanized some rentiers.
My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!
A Major Defeat For Technofeudalism: We euthanized some rentiers
Today (Oct 16) I'm in Minneapolis, keynoting the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing. Thursday (Oct 19), I'm in Charleston, WV to give the 41st annual McCreight Lecture in the Humanities. And on Friday (Oct 20), I'm at Charleston's Taylor Books from 12h-14h.
Rent is income you get from owning something, rather than utilizing it. Under feudalism and manorialism, a hereditary lord owned land. Owning land provided a steady stream of income, in the form of rents.
Like profits, rents came from workers. Peasants were bound by law to the lord’s land. By default, a peasant born on a lord’s estate couldn’t move elsewhere without permission, and neither could that peasant’s descendants.
Peasants owned the capital used in their work. A peasant might own livestock, agricultural instruments and other tools and factors that went into making the land productive.
Feudal lords didn’t have to worry about competition in the form of superior peasant production on neighboring estates. If your neighbor’s peasants invented a better way to make the land productive, you could have your peasants copy it.
What’s more, feudal lords didn’t think much of peasants. They didn’t re-invest some of the rents their peasants paid by buying them better tools, or by offering stipends to peasant workers to go off and experiment with better production methods.
When it came to production, feudalism was stable, or, less charitably, stagnant. There were fallow years and fair ones, but there was no goad that drove a feudal system’s powerful people towards investment and improvement.
A feudal land grew richer by conquering another land, not by inventing new ways of producing. Feudal invention is focused on conquest, not increasing capacity.
-A Major Defeat For Technofeudalism: We euthanized some rentiers.
My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!
(Wrote this elsewhere, and figured people here might appreciate it.)
It's unfortunate that his [Tolkien's] heirs are ruining his legacy. JRRT himself stood on the shoulders of giants - the creators of the folk stories and legends on which he based much of his own work. He was never shy or deceptive about that fact, to his credit. The people running the Tolkien Estate (at least since Christopher died) work relentlessly to prevent anyone else from honoring his oeuvre the same way, even as they add nothing to it themselves. It's the worst kind of dog-in-the-manger behavior, and I'm sure the great man himself would have no patience for it either.
