Why Has the Economy Gotten so...Weird?

How quantitative easing led to the rise of technofeudalism.

Have you felt weird about the state of things recently?

I don’t just mean in the wake of COVID, the various wars, the instability of every government around the world. Related, yes, but only tangentially so. I’m referring more specifically to the economy.

For years, I’ve wondered how we’ve decoupled the fundamentals from the market to such a large degree. How are these profitless tech zombies still shambling forward, and why does our entire stock market seem to depend on their undead march? How do companies like Tesla become such big bubbles built on endless promises despite a clear inability to follow through on said promises? Why aren’t they worried about having enough customers, who will Uber for the Uber drivers, and how come this is all starting to feel like a snake swallowing its own tail?

by Evangeline Gallagher

Then, in 2020, we were told to brace ourselves for the biggest economic recession since World War II. And yet, like many, I found myself far more impacted in terms of my health (mentally and less so physically) than economically. The DoorDashers didn’t stop coming, I happily maintained employment because despite stagnant wages I could spend more time doing the things I wanted to, and for a second there, housing even became more affordable.

You might look at the inflation we’re currently going through and assume it’s a knock-on effect from COVID: We injected so much money into the economy to maintain a sense of normalcy then, we’re paying the piper now. But the story’s older than that, the methods we used to address COVID are older than that; it’s more entrenched in the sinister reality of neoliberalism and capitalism’s inevitable ends, more of Obama’s fault than the left would like to admit, more difficult to overcome than the ways we’ve had to overcome the faults of capitalism.

Because believe it or not, we’re leaving capitalism in the dust—at least as it’s traditionally understood and defined—and are embracing an economic system that’s both as old as it is new. To understand why and how, take a trip with me down memory lane to where it all truly began: The year 2008.

Obama, Ya Fucked It: The Birth of America’s QE Craze

It’s September, 2008 and Viva la Vida by Coldplay is changing your fucking life. “I used to rule the world,” Chris Martin croons, perhaps not fully realizing the timely nature of his horseshit soft alternative rock. A new age of kings, the financiers who in their infinite wisdom built a bubble out of the very homes we live in, were threatened for the first time since their coke-fueled spending kicked into high gear in the ‘80s.

The housing market was in freefall. Everyone was looking for a lifeboat.

An entire generation of bankers and investors, who had won their crusade against regulation and kept the government’s prying eyes out of their shady backroom deals, would be brought to their knees if not for an upstart, relatively unknown incoming president: Barack Obama. And man, he was cool as shit, wasn’t he?

The Bush administration was already acting fast to recover and concocted a plan—the great Bank Bailout Heist of 2008 (errr, sorry, the Emergency Economic Stabilization Act of 2008). Some corporate entities, they said, had simply become “too big to fail.” Despite their reckless behavior, we needed them, right? And so it was as elegant of a solution as it was complex of a problem: Inject billions into banks and other corporate entities to keep the ship afloat.

If you’ve been watching the news lately, you might have a very good question: “But Mr. Bread Line, sir, I thought the government printing money is what causes inflation? Isn’t that why my dang eggs are so dang expensive?”

With few tools to stimulate the economy without straight-up printing money and giving it out to people directly, the Bush administration hatched a plan that the incoming President Obama co-signed. Obama would join Bush, so long as they promised to do their best and protect consumers, by turning to a sort of financial black magic: Quantitative easing, or QE.

Here’s the quick and dirty of it. Interest rates are generally what speed up or slow down an economy, and because the lenders (big banks) were out of money, they couldn’t exactly lend it at an enticing rate to borrowers. And if borrowers can’t lend money at reasonable rates, how are they expected to start new businesses, buy property, or grow the economy?

To get money back into the hands of banks so it could then find its way back into the hands of employers and “wealth creators,” the government turned to the bond market.

Bonds are essentially debt: Agreements to borrow money and pay it back at a certain date. The big banks borrow money from the biggest bank of them all, the United States government, and create bonds by doing so. With QE, the government purchases that debt from financial institutions, giving them the funds they need to continue lending and keeping borrowers happy, who then reinvest that money back into the market.

However, this creates a bit of an issue in that it also boosts the price of assets like real estate and stocks. If the entire point of QE is to enable borrowers to invest, they naturally invest in things they believe will give them reliable returns like the stock market and real estate. More investors buy housing and stocks, so the price of those assets goes up.

The government is managing a housing crisis by empowering the very lenders who got us into the mess to snatch up even more housing, and this go around, they could add the even-riskier big tech stocks onto the platter.

A snake eating its own tail.

The big issue at hand with QE is the same fundamental issue behind 2008: We’re not putting money into the hands of average people, who would reinvest that money into their own homes. We’re not putting money into the hands of entities, whether private or public, that focus on public goods like the infrastructure and transportation projects this country desperately needs. We’re not even putting money into the hands of small businesses, who could at least become competitors to the giants we’ve built.

The second time we’ve leveraged QE the most to pump money into the economy? The COVID-19 pandemic. All those tax breaks, interest-free loans, and stimulus checks had to come from somewhere. And it had to work without making people fear the price of gas and groceries going up.

We’re once again lining Wall Street’s pockets. But this time we’ve made something even bigger, which by the logic of Wall Street corporatists like Bush, Obama, Trump, and Biden means it’s even more difficult to imagine its failing. This time, we’ve built the technofeudalist state—one logical endpoint of rampant capitalism that is itself anti-capitalist, and I don’t mean that as a good thing.

Big Tech and the Rise of Technofeudalism

Bigger than the banks, bigger than the mortgage lenders—bigger than them all—looms Big Tech. Just like it was at the precipice of the Dot-com Bubble, Big Tech continues to make promises it simply cannot follow through on.

At the dawn of the new age, investors were left wondering basic questions like, “Wait, how the fuck is Pets.com ever going to make the amount of money that we poured into it?” So too must we wonder about how the hell Spotify will ever turn a reliable profit that doesn’t rely on artist exploitation, if Uber can ever make money without dehumanizing its drivers, if Nvidia’s chips really will result in an AI boom or if we’ve already hit the climax of what this wave of artificial intelligence can promise us.

Despite these fundamental questions about the economic viability of Big Tech, they show no signs of slowing down. Indeed, they seem bolstered not just by the investor class and Wall Street, but have become entangled with the government itself.

QE didn’t just keep the economy afloat; it made endless speculation the default business model. With cheap and abundant credit on tap, profitability isn’t just irrelevant—it’s optional. The system is built to fuel growth, not sustainability. Big Tech secures endless financing from government-backed lenders, then repackages it and sells it as the illusion of infinite growth. It’s precisely why hucksters like Elon Musk can claim that Twitter will become an “everything app.” He’ll continue getting the cash injections he needs by borrowing more and more money, and more money means more growth, so he will grow forever… right?

Thanks to the endless credit on tap, even the most absurd business models can be propped up indefinitely.

When companies can grow indefinitely without turning a profit, are we still in capitalism? Former Greek Minister of Finance and libertarian Marxist Yanis Varoufakis believes this kind of risky, speculative investment in Big Tech—and the ways it has become decoupled from labor and profits—is a sign that capitalism is coming to its end, and I’m inclined to agree.

Let’s contrast the traditional capitalism of the 20th century to what we have now.

Capital, the Foundation of Capitalism (SURPRISE!)

Since its inception, capitalism intended to distribute capital better than feudalism did. Feudalism was a system wherein power over capital was determined by who owned land, a specific kind of capital, and those land owners then exerted that power over laborers to command them to create wealth in the form of farming, mining, what have you.

Capitalism, regardless of how you may feel about it, widened that system to empower more capital owners. In capitalism, owning land is insufficient regarding empowerment—it’s more about whether you own capital at all. Under feudalism, owning a ship made you a vassal, still beholden to a lord. Under capitalism, that ship makes you an entrepreneur—at least in theory.

Capital is anything that can generate value for its owner: tools, facilities, land, money, stocks, credit, so on. If it can be used to generate more capital, it is capital.

Capitalism required that cycle—capital generating more capital—to be carried out not by peasants who are sworn to servitude, but by wage laborers. A laborer enters into a contract with the capitalist, uses their labor to create more capital, the capitalist reinvests, and the cycle continues.

But in our current technofeudalist system, people create capital without entering that contract and without even realizing they’re creating capital. The kind of data collection that drives our recommendation algorithms also creates capital in the form of user data. You are doing unpaid labor by surrendering your data to Big Tech, allowing them to turn that capital into more wealth for themselves, while we cede more and more power to this new ruling class.

Markets, or the Exchange of Goods and Services

Normally, capitalism would require the use of markets. We can think of a physical market as an appropriate place to start thinking about this: Various stands filled with goods that can be exchanged for money. If people visiting the market want apples, they’ll find the best apple salesperson they can (whether “best” for them means freshest quality, best perceived value, etc.), and supply and demand becomes the ultimate kingmaker.

In our increasingly technofeudalist society, markets have been supplanted by the mirage of markets; not only does Big Tech tell us what it thinks we should spend our money on, but it also creates the very platforms where we make our purchases.

Going back to the example of the physical market, it would be like if that market had decided—absent supply and demand—which apple sellers you want to buy apples from. Even worse, Big Tech doesn’t just prioritize the apple sellers for you, it actually owns the entire platform wherein the apples are sold. Amazon doesn’t just tell you what products to buy, it’s a self-contained hierarchical system where the CEO decides what you see and buy. This system is much more akin to the lords of feudalism, who choose what is best for you and call the shots of what goods get distributed, than the capitalism of yore.

Profits, the Fuel Behind the Fire of Capitalism

Capitalism’s constant growth has to come from somewhere, and under normal circumstances, it comes from profits. A company “breaks even”—creating more excess capital than it uses—then reinvests those profits into the market.

The real kicker is that, as alluded to, these companies don’t even make money. And if they do, it’s by exploiting labor or bending the rules.

Meta? The profits come from advertising, which again requires you to do unpaid labor by providing them with the data they need to overcharge advertising companies on the promise that they’ll get the ads right where they need to be.

Spotify? Recently profitable, but only after slashing their payouts for the artists their platform relies on.

Uber? Profitable but also relies on advertising, plus it has helped chip away at the momentum behind public transit by keeping prices low most of the time, so they operate at a loss, but then surge prices when people need it the most.

Tesla? Wouldn’t be profitable without carbon credits, which are direct government subsidies.

DoorDash, Lyft, OpenAI? All losing money.

Even the companies that are profitable are certainly not worth what they’re valued at on the stock exchange. That’s because Wall Street recognizes that profitability no longer matters; you don’t have to invest in the fundamentals of a business, you just have to invest in the guarantee that the money printer will never stop.

It’s as simple as matching that infinite money printer with infinite promises. Amazon will have human-free grocery stores, Tesla will have human-free taxis, Spotify will have human-free music. Yay.

Just as we’ve effectively kicked markets to the curb, we’ve replaced profits as the driver of capitalism. State money drives it now, and Big Tech has replaced the market. That’s certainly not what I’d call capitalism but something far more dangerous.

The Difficult Path Before Us

The real question may not be how to rein Big Tech in but whether they should exist at all: Can we even begin approaching this issue without serious, heavy conversations about whether Amazon, Google, or the Elon Empire serve the public? If their focus is no longer on providing value to its consumers but instead continuing this endless cycle of abuse in the name of growth, should we even entertain talks about how to regulate them, or should we shutter their doors entirely?

It’s a scary thought. So much of our lives are dictated by these companies that we struggle to imagine what would form in the vacuum created by their absence. But remember that it was once impossible for the peasant to imagine life without a lord, and remember the triumphant ability of humanity to band together, solve problems, and create a better tomorrow. Do not fear them, for they should fear you.

A specter is haunting America—the specter of Technofeudalism.

But unlike Marx, I do think this ghost needs to be busted.