Klarna recently announced a partnership with DoorDash to allow customers to use its payment plans when buying food deliveries.
How is this going to end? Who knows. But it certainly doesn't fill me with confidence. Can we compare the 2008 crash and sub-prime mortgage loans to paying off our dinners in instalments? Definitely not. Is that what I'm going to do? Yes, sort of. Is it going to make any sense come the end of this exercise? Not a chance! Will my economics and understanding of the 2008 crash be completely wrong and misguided by movies, media and the way in which I see the world today? Absolutely! Let's do it.
Now immediately, it is worth noting that applying for a mortgage (no matter how risky à la sub-primes) is totally different to Klarna-ing your dinner. Sub-prime mortgages were being given to people who would ordinarily not qualify for a mortgage. It is a sure-thing today that in order to get a mortgage, or to even consider buying a home – that you need 1. a big stack of cash. 2. a good credit score. 3. probably a stable job etc. etc. Before 2008 though, these sub-primes were going to anyone who fancied them. Bankers got greedy (more so than usual) and crashed the economy. Anyway, back to financing a pizza.
Essentially getting a loan to buy some food from a delivery service is not really one that can be rejected. Even if those paying off these loans miss their payments, or look set to miss them (bad credit score, bad record of loan repayments etc) – it isn't exactly the biggest loss. But, what if we imagine for a moment that there are shedloads of extremely unreliable customers – maybe they're even colluding together in this scheme – who simply do not pay back their Klarna loans. Say these people buy up as many deliveries as they can, using these loans and not paying them back. If this went on and on for a long while and debts weren't repaid, then MAYBE there could be a mini-crash. But not really. Still, it is crazy and maybe funny that this is now technically more of a possibility. Is it funny? I'm really not sure.
On the whole, this is yet another development of the current economic system which feels quite dystopian. Rapidly increasing wealth inequality is whittling away at the middle class. Moving towards models where we have to pay for everything in instalments or subscriptions is going to lead to lots of people actually OWNING less and less.
This is why I agree with a lot of theories that argue this is a new economic system and is not the capitalism we have become accustomed to. If no one other than the elite classes can own things, that is not capitalism. Private property as a concept is at the heart of the capitalist ideology, so to strip that from most people, is a direct change in system. This is a new beast altogether.
New labels have been floated around, like Varoufakis' 'techno-feudalism' which I do quite like. Maybe some sort of capital-feudalism is broader and easier to understand? I can certainly see the feudalism side of this. Going back to a system where there is GENUINELY none or very little potential for social mobility – not that this is rife at the moment. They own the land, the property, all major businesses which are crucial to our livelihoods and NOW, they own cloud capital. We are simply living on land, food and services owned by an increasingly small group of very very wealthy people and organisations – akin to that of monarchs. Maybe we should name it Capitalism+, as if it is a subscription service in itself.
I should explain that cloud capital refers to (and I'm likely somewhat butchering this) the digital capital owned by big tech firms who are expanding into every possible digital realm, owning all of our data, and being involved in nearly every digital action, purchase or discussion that goes on. They're buying up undersea cables, the AI-sphere, satellite connectivity, social media and more.
This is how these actors become the top of this new feudal system. Everything we do, everything any smaller, non-tech business does, will at some point rely on these big tech firms. I try to imagine this as them taking a form of rent from us all, for just existing, personal data being the main example of this. I think this is another reason the feudalism comparison arises, we will become the peasants and knights living on their land. The knights may feel they have some more autonomy, likely because of their wealth or education, but in reality, they are also completely subject to the whims of this ruling class.
But yeah, this new system doesn't feel great. Not so inspired by it personally. Yet our Governments are falling straight in line with it because at the end of the day, money talks for most of these self-proclaimed public servants. Brutal times.
But we have to fight back where we can. Despite this being a bit of a gloomy end to the post, let's try to have hope. We can change things.
