Core Idea
Automation is not just the replacement of labor by machines. In capitalism it becomes a structural tension because the system rewards labor-saving technology while also depending on wages to sustain demand.
How It Works
Firms want to reduce labor costs. Machines help them produce more with fewer workers, which looks like progress from the standpoint of efficiency and profit. But the same workers whose labor gets displaced are also consumers. If their wages disappear or weaken, the market for the output can weaken too.
That is why Varoufakis treats automation as a contradiction rather than a simple blessing or curse. The problem is not the machine itself. The problem is the social arrangement around the machine: who captures the productivity gains, who loses bargaining power, and whether the wider economy can remain stable when work is displaced faster than purchasing power is rebuilt.
Example
The chapter's "haunted machines" framing, borrowing from Frankenstein and The Matrix, makes the point memorable. The machines look threatening not because technology is evil, but because under current rules technical progress can deepen unemployment, weaken labor markets, and feed crisis.
Why It Matters
This concept keeps the reader from falling into a shallow technology debate. The real question is political: can productivity gains become shared freedom, or do they mainly intensify existing concentrations of power and instability? That makes automation a close cousin of economic reality vs political reality: the productive facts and the politically sellable story often diverge.