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What is Techno Feudalism? How tech giants and pandemic have increased the gap between rich poor

What is Techno Feudalism? How tech giants and pandemic have increased the gap between rich poor


  • GS 3 || Economy || Services || IT

Why in news?

  • Recently Australia has passed a law forcing Google and Facebook to pay news publications under a News Media Bargaining Code law.


  • Facebook, Apple, Netflix,etc have been facing flak from many countries lately. In the US, the Justice Department has sued monopolist Google for violating the Antitrust Laws.
  • The department has filed a complaint against Google to restore competition in Search And Search Advertising markets. Even India has bordered on antitrust investigations against Google over the smart TV market recently.
  • As per YanisVaroufakis, ” Capitalism has morphed itself into what he calls Techno Feudalism.”

What is Techno Feudalism?

  • Techno Feudalism is being practiced by various big companies as they have three basics in their hands
    • Sheer computing power
    • The unprecedented concentration of economic power in a few private hands
    • The ability of tech-aristocracy to shape society

The transition from Medieval monarchy to Age of Techno Feudalism


  • Medieval Monarchy:Dual government made of the king and the Pope
  • Medieval Feudalism
    • Later, there was a feudalistic society. The King owned all land but had feudal lords govern parts of it on his behalf.
    • The King delegated civic and military authority to various people as he saw fit. As a result, there were numerous power centres at the time.
    • In India, for example, 552 princely states exemplified feudalism at its finest. Because it had a hierarchy and tax breaks, feudalism gave birth to inequality.
  • Industrialization and Capitalism
    • This was the age of the Rule of Law.
    • Concepts like Liberty, Fraternity, and Equality of opportunity were being propagated this time.
  • Techno Feudalism:Power is concentrated within a few big companies,although we have Liberty, freedom,equality.
    • These companies have made a feudalistic society in various countries and thus they dare to disobey the laws of the lands they function in.

Some instances of growing inequality

  • Income and wealth inequality has risen in practically all major advanced economies over the past two to three decades. It has risen particularly sharply in the United States.
  • Income distribution trends are more mixed in emerging economies but many of them have also experienced rising inequality, including some major emerging economies such as China and India.

Similarities between Old and techno- Feudalism

  • Old Feudalism
    • Old feudalism rested on control of the
    • The old feudal class enjoyed privileges & exemptions to accumulate arbitrary powers.
    • Old feudalism was based on the doctrine of birth-based inequality.
    • Old feudal fiefdoms were small and deliberately fragmented.
    • The old feudal class presented itself as the champion of liberty against the tyranny of the king.
  • Techno Feudalism
    • Techno-feudalism rests on control over digital real estate.
    • Techno-feudalism looks for privileges & exemptions (Bypass data localization and tax compliance)
    • Techno-feudalism fetishizes meritocracy but maintains top of the tech-aristocracy.
    • Techno-Feudalism has Big tech monopoly, they own the market.
    • Techno-feudalism positions itself as upholding liberty against the State.

Tech giants and increased inequality in society

  • Prevalent Corruption-Like old feudalism, techno-feudalism corrupts and subverts the law and all branches of government.
  • More control and Capture of digital real estate
  • Just like the old feudal class, the new tech-aristocracy is constantly engaged in a turf war to capture more digital real estate and augment its control over data and emerging technologies such as artificial intelligence (AI).
    • Search engine Google’s shares recently hit a record high of over $700, making it one of the most valuable companies in the world, second only to that other tech giant Apple.
    • The moves have fired up the tech-heavy Nasdaq index and taken it back to the giddy heights of the dot-com bubble 15 years ago.
    • Monopoly and the hunger for power
  • The Big Tech companies resemble the East India Company.
  • They exercise monopoly power, are rich, indulge in corrupt practices and subversion of the system while refusing to pay legitimate taxes or follow sovereign laws.
    • The problem with this is that just about the only means left to fund digital products is advertising, a sector where revenues are increasingly dominated by a handful of companies such as Google and Facebook.
  • Big companies are paying out too much to shareholders when they should be investing more.
    • In the US in 1919, a case against Henry Ford was brought before the Michigan supreme court by the Dodge brothers, a minority shareholder.
      • They challenged Ford’s decision to reinvest the firm’s profits to expand the business and pay better wages, which they felt contradicted the purposes of the corporation maximizing shareholder return. The court ruled that Ford owed a duty to his shareholders and ordered him to pay a special dividend.
  • There are clear parallels with the modern-day tension between Apple and its activist investor Carl Icahn, who campaigned to encourage the iPhone maker to increase returns to shareholders.
  • Intervention in local politics
    • New tech-aristocracy has the ability that has made them too powerful for any country to handle.
    • They have the power to intervene in local politics and unseat governments via subtle manipulation of political discourse by leveraging their control over data and means of communication.
  • Stakes in press and media
    • New tech aristocracy has acquired stakes in newspapers, magazines, and new means of entertainment such as over-the-top (OTT) platforms and promote anarchist and woke ideas while deflecting attention from the concentration of power by the new tech-aristocracy.
  • Enjoying arbitrary powers
    • Tech-aristocracy enjoys arbitrary powers in matters of free speech. It has imposed its private laws and acting as judge, jury, and executioner and recreating a world eerily similar to medieval feudalism.

Way forward

  • Keeping pace with the growing competition
    • As technology transforms the world of business, policies, and institutions governing markets must keep pace.
    • Competition policies should be revamped for the digital age to ensure that markets provide an open and level playing field for firms, keep competition strong, and check the growth of monopolistic structures.
  • More profits need to be redirected away from shareholders and reinvested in plants, processes, and people if technology is not to exacerbate inequality.
  • Broaden capital ownership
    • New thinking is needed on ways to broaden capital ownership and reform corporate governance to reflect wider stakeholder interests.
  • Strengthening of digital infrastructure
    • The foundation of digital infrastructure and digital literacy must be strengthened to expand access to new opportunities.
    • The digital divide remains wide between groups within economies and is wider still between economies at different levels of development.
  • Investment in education and training
    • Investment in education and training must be boosted, with stronger programs for worker upskilling, reskilling, and lifelong learning that respond to shifts in the demand for skills.
    • This will require innovation in the content, delivery, and financing of (re)training, including new models of public-private partnerships.
  • Persistent inequalities in access to education and training must be addressed.
  • Strengthening of social safety nets
    • Labor market policies should shift to a more forward-looking focus on improving workers’ mobility, helping them to move to new and better jobs rather than seeking to protect existing jobs being rendered obsolete by changing technology.
    • The pandemic has exposed weaknesses in social safety nets.
  • At the international level, not only must past gains in establishing a rules-based international trading system be shielded from the rise of protectionist sentiment, new disciplines need to be devised for the next phase of globalization led by digital flows to ensure open access and fair competition. International cooperation on tax matters becomes even more important given the new tax challenges of the digital economy.


  • Inequality was bad and the COVID-19 pandemic is making it worse. The immediate priority is to protect the disadvantaged and the vulnerable from the health and economic impacts of the crisis. But policies must also address the deeper, structural drivers of the rise in inequality.
  • It is very difficult to predict the future as technological transformations are something that cannot be stopped. But at least starting a discussion on how to control & direct the transformation.