Age of ‘cloud fiefs’
Economist and former Greece finance minister argues that capitalism has been supplanted by a new tech-enabled system whose animating logic is not profits but rent-seeking
If you have ever asked Alexa to play a song, Siri to make a call, or Google to map a route, then you have engaged with an artificial intelligence (AI) system. These are just a small subset of everyday activities people do with their AI-powered products.
Madhumita Murgia’s Code Dependent lifts the veil hanging over humans that are building the base for AI’s super structure to stand on. Most of them are unaware that the very system they are building would soon gobble up their very livelihood.
Her book offers a cross-section view of tech’s bedrock — labelled data, humans building it, and the influence of automated systems on people. She throws light on the real AI stack, which has humans right at the bottom of the pyramid, without whose inputs, the current crop of AI tech wouldn’t stand.
Over the past decade, tech devices and software have become more intuitive, creative and powerful. Underpinning their advance is a confluence of four major forces: Big Data, algorithmic recommendation systems, innovation in chip design, and cash-rich Big Tech firms.
This potent mix is redefining the way people interact with technology and is bringing humans much closer to machines than they were ever before in recorded history. Of these four powerful forces, Big Data is the most crucial ingredient in concocting a powerful AI system.
Lumps of data mean
Cnothing unless someone slices and dices them down to manageable parts. And that act of cutting datasets down to specific parts can be done only after categorising and labelling content.
If a self-driving car adjusts its steering wheel after noticing a sign post, that means it was trained on a dataset that contained labelled information on roads and signposts. This labelling makes the car’s advanced driver-assistance system (ADAS) adept at manoeuvring diverse terrains. The process of labelling parts in a dataset is called data annotation.
In some ways, this job is like the data-entry operator’s job of outsourcing and the offshoring era that began in the early 2000s that enriched corporations in the developed world by exploiting cheap labour in the Global South.
Two decades later, large tech firms in the developed world are exploiting cheap human labour in lower-income countries to enrich themselves and build massive AI models. They are outsourcing the data labelling task to firms based in developing nations. ChatGPT-maker OpenAI is a client of one such firm based in Nigeria.
The Microsoft-backed company hired Sama, a digital outsourcing firm, for labelling support. OpenAI’s chatbots are fast. They hammer out replies to prompts within seconds after a user hits send. That’s because its transformer efficiently arranges tokenised words and phrases to put together a meaningful and coherent response.
But, if those responses do not include toxic or graphic text snippets, then that’s because the Nigeria-based apitalism’s death has been foretold many times over. For some, it is the destiny of the proletariat to finish off capitalism. For others, like Raghuram Rajan, the capitalists themselves are shoving the knife in. And for the economist who, as Greece’s finance minister, battled Europe’s financial establishment (and lost), capitalism has been killed off by ‘cloud capitalists’, or ‘cloudalists’, a mutant of the old capitalist class that has liberated itself from the twin imperatives of capitalism — market competition and profit. In Technofeudalism:
What Killed Capitalism, Varoufakis argues that capitalism has been supplanted by a new tech-enabled system whose animating logic is not competition, wage labour, and profit-seeking but market monopoly, unpaid labour, and rent-seeking — reminiscent of a state of affairs that preceded capitalism, which we know as feudalism.
The thesis that digital technology has transformed capitalism into a company’s employees labelled such terms to ensure OpenAI’s algorithm doesn’t pick them up in its responses.
While most people may be aware of the number of parameters large language models (LLMs) are trained on, very few people know how such training happens and what sorts of inputs these models receive. A large proportion of people, including those developing such systems, see AI’s decision-making ability as a black-box. version of feudalism is not new. Way back in 2014, when the Internet of Things and Big Data occupied positions in the hype-index currently held by AI and the Metaverse, science fiction author Bruce Sterling wrote that “a materialised network society” marked by relentless data capture is ushering in an era of digital feudalism where people “are like the woolly livestock of a feudal demesne, grazing under the watchful eye of barons in their hilltop Cloud castles.”
Since then, several writers have advanced similar theses. For Varoufakis, three phenomena – the privatisation of the Internet, the sustained quantitative easing in the decade after the 2008 financial crisis, and the rise of China as an economic powerhouse — were instrumental in the emergence of an ecosystem where profits took a backseat. Instead, they incentivised burning cash to build market dominance, or “cloud fiefs” — a fair description of what digital overlords such as Facebook, Amazon, and Uber have done.
However, Varoufakis’ conceptual framework rests on equating platforms freely appropriating users’
For example, when a group of researchers began developing COVID-19 diagnostic software, they used pneumonia chest X-ray data in the control group, which included data of children aged 1 to 5. The machine learning model, instead of differentiating pneumonia from COVID-19 based on the X-rays, wrongly distinguished children from adults.
The AI black-box
This is just one of many instances of AI exposing its black-box nature, confounding scientists, and researchers. Take the case of algorithmic profiling, a machine learning-based system that helps law enforcement agencies quantify a citizen’s inclination to commit a crime.
In the book, Murgia documents how ProKid, an algorithmic profiling software, was used by the Dutch police to predict a youth’s propensity to commit crime simply based on data from their “previous contacts with the police, their addresses, their relationships and their roles as a witness or victim.”
Such use of AI shows how an individual’s quality of agency is shrinking, disempowering them and making them lose their sense of free will and ability change themselves.
Murgia’s book is an essential read, particularly at a time when lawmakers around the world are drafting legislations around AI. While the book does not offer solutions to the problems manifest in the system, it offers a new perspective to visualise the AI stack through the lens of human actors. And the most important part to start with is ‘data’.
Over the past decade, tech devices and software have become more intuitive, creative and powerful. Underpinning their advance is a confluence of four major forces: Big Data, algorithmic recommendation systems, innovation in chip design, and cash-rich Big Tech firms
data/content-creation with medieval barons freely appropriating the peasants’ produce, a problematic leap. Contemporary capitalism certainly displays feudal characteristics. But are they due to algorithms, or are they intrinsic to a particularly virulent strain of capitalism that has become globally dominant — the neoliberal strain?
Let’s take Varoufakis’s primary argument that cloudalists accumulate wealth from rent, not profit. As he notes, rent, unlike profit, is not vulnerable to market competition, because it “flows from privileged access to things in fixed supply, like fertile soil or land containing fossil fuels.” Profit, on the other hand, flows to those who produce things that otherwise would not have existed, such as a car or phone, and since someone else can make a better car or a phone, profits are vulnerable to competition.
The arch cloudalist Amazon, for instance, has privileged access to consumers’ attention. So it charges manufacturers — Varoufakis calls them ‘vassal capitalists’ — rent for selling their wares on its ‘market place’, and likewise Google gets a cut from every sale on its Playstore. Are the likes of Google and Amazon therefore comparable to medieval barons who made no investments in capital goods but lazed around all year only to seize the fruits of their serfs’ labour? Not really, because both these cloudalists have huge R&D budgets and they keep releasing new products. While the rent they charge may be insulated from market pressure, their other businesses — advertising in the case of Google and Facebook — do remain vulnerable to competition.
Intellectual property
Also, medieval serfs had to swear fealty to their overlords. They did not have the freedom to up and leave, like Varoufakis’ ‘cloud serfs’ can, from say, Tik Tok to YouTube, or Uber to Ola. In fact, the supreme enabler of rent-seeking in the
Technofeudalism: What Killed Capitalism
Yanis Varoufakis Bodley Head algorithmic age is not so much digital tech as the expanding empire of intellectual property — a gift of neoliberalism that is gobbling up the commons just as the ‘Enclosures’ did at the birth of the market society.
A flawed understanding of capitalism in the age of AI risks flawed prescriptions for political action, and surely enough, Varoufakis ends up advocating an alliance between ‘cloud serfs’ and ‘vassal capitalists’, assuming a convergence of interests, if not solidarity, between them because both pay rent to parasitic cloudalists. Seriously, capitalists and users/workers combining to overthrow cloud capitalists? Even a libertarian Marxist, as Varoufakis likes to call himself, would rather prefer old school class politics.
Varoufakis is at his best explaining the history and mechanics of capitalism and how a broken financial system is perverting it in ways that inevitably produce upward redistribution of wealth, greater concentration of power, and sharpening inequality. He is less convincing in his attempts to formulate a launch pad for effective counter-politics.