Technofeudalism In Pakistan: Examining The Legal ‘Superstructure’ Through The Marxist Theory

Introduction: an explanation of Technofeudalism for the purposes of delimiting the scope of this article

In his book Technofeudalism: what killed capitalism, Yanis Varoufakis advances the hypothesis that capitalism, as traditionally understood, is being supplanted by a new economic order; dominated not by markets in the classical sense but by digital platforms that function as private domains of economic extraction; akin to the feudal order that preceded market economies of scale: whereby the landed gentry and lords (“Zamindars/Jaghirdars” in terms familiar to South Asia) would extract wealth as tribute from the labor of serfs and peasants who subsisted on and worked the lands of their lords. The shared characteristic to the past being entrenched social hierarchies and a lack of social mobility. Yanis Varoufakis foretells of a bleak future and the economic inequity of an oblique present where “cloud capital” has displaced traditional or ‘terrestrial’ capital: by which he refers mostly to the rise of Silicon Valley and emergence of large corporations that utilize machine learning algorithms in order to maximize engagement in an attention economy, and inhabit the lucrative online space, as well as those that develop related technologies, have supplanted traditional corporations and conglomerates in the finance sector, and industrial manufacturing as the primary economic drivers and engines in developed or advanced economies – contributing to a larger share of economic activity.

He describes that in the economic order that emerged after the 2008 financial crisis led to a system in which cloud capital overtook traditional capital and has engaged in exploitative rent collection on online domains in two forms; firstly, websites and applications on the internet: where cloud capital extracts a share of the wealth in the form of a platform fee – akin to a rent – from traditional capitalists and workers and users operating on those applications that both produce content for those online sites or render services through those websites e.g. Uber drivers, YouTube content creators: whom Yanis terms ‘cloud proles’. Second those who consume content and products and services offered on those websites (termed ‘cloud serfs’): who engage with the powerful machine learning algorithms deployed by cloud capital which are designed to capture user data and information to improve marketability and advertising that is more targeted and precise: the term serf is chosen to reflect upon how the algorithms improve themselves using the data that is provided by the serfs interacting on their platforms. He further exemplifies that this rent extraction takes money out of the circular flow of capital and this has contributed in large part to central banks being necessitated to print more money which has led to economic inflation as well as contributed to economic inequity as the revenue generated is not reinvested into the business in a traditionally understood sense; but much of it goes towards ‘stock buy-backs’: with companies buying back some of the shares that are publicly issued to inflate the price of the share – artificially stimulating demand. Leading in-turn to a ballooning of the net worth of these dominant companies. He further adduces that in such a system: profit for these companies itself has become optional rather than a necessity as under healthy competitive markets. The shift is not merely technological but structural, altering the relationship between work and labour, ownership, and democratic sovereignty.

It must be acknowledged that as an explanation of the current economic and political phenomenon, even amongst Marxist academic circles, Varoufakis’ theory is not completely accepted and alternative postulates do exist (such as ‘Platform Capitalism’ by Nick Srnicek), but they do share commonalities in explaining economic distress as a result of the reorientation of developed economies after 2008 finding the culprits to be the same ‘big-tech’ businesses. In the article I shall rely on the relatively popularized and accredited explanation of Yanis in order to explain the current economic order and how, according to terms in Marxist analytical theory and jurisprudence, the law has acted as a part of the ‘superstructure’ in fermenting and preserving the ‘base’ (economic conditions). It must also be clarified that this is not an endeavor in exploring economic viability of the Varoufakis’ diagnosis or his prescribed reforms (though they have not been without critique such as in the work and interviews of Steve Keen who has remained a critic of Varoufakis’ work); neither is this article going to delve into political science or strategies. It will however delve into legal definitions and formalism under which the system operates and evaluate precisely how conducive the current system is to change – in the context of the constitution of the Islamic Republic of Pakistan.

While much of the discussion surrounding Technofeudalism has centred on advanced economies, the implications for the third world, per Varoufakis, have been more acute. Peripheral economies, already characterised by debt dependency, informal labour markets, and regulatory fragility, may experience the transition differently. The concern is not only platform monopolisation but the destabilisation of labour markets under accelerating artificial intelligence (AI). Varoufakis has acknowledged AI in various interviews to be a factor that may exacerbate the problems. Large language models and automation systems threaten not merely manual or repetitive work but cognitive and professional occupations traditionally considered secure. Legal research, software development, financial analysis, journalism, and administrative functions are increasingly susceptible to partial or full automation. Apart from white collar jobs automation is also being pursued increasingly in blue collar spaces, as may be evident form the influx of investment received, at least in the United States and China, to the development of AI technologies and the construction of infrastructure in the form of data centers. The investment has primarily been garnered off the promises of AI tech companies to deliver on a scale of automation that could potentially replace human labour. If labour ceases to be the principal conduit of income distribution, then both economic and legal frameworks premised on wage centrality are called into question.

Varoufakis proposes broad responses: first, a reclassification of data and its ownership as well as a greater degree of autonomy and bigger share of the economic pie for those who work for these corporations; second, a restructuring of finance away from speculative markets and discouraging rent-based extraction; and third, a democratisation of corporate governance. These reforms culminate in a distributive mechanism he describes as a “universal basic dividend” (UBD), conceptually distinct though prima facie similar to contemporary universal basic income (UBI) proposals such as those advanced by Sam Altman the CEO of Open AI one of the organizations at the forefront of the expected economic transformation. Asides from these the article will also delve into the question of market competition and competition law and how it may have reacted to the challenges presented by platform capital. So, how conducive is the constitutional and legal order of Pakistan to such a paradigm shift? A through line for much of the discussion surrounding these concepts will be reference to Articles 38 and 3 of the Constitution of Pakistan 1973: which imposes a positive obligation upon the state to promote and protect the ‘economic and social well-being of the people’. The constitutional language of Article 38 reflects the economic realities of the twentieth century, speaking in terms of employers, employees and the concentration of productive resources and economic engines such as distribution. Yet the underlying concern for preventing excessive concentrations of economic power and ensuring an equitable distribution of its benefits remains strikingly relevant in the digital age; it only has to be malleable enough to reflect the realities and concentrations that arise in the present age as Varoufakis and contemporaries have argued.

Data ownership and ‘cloud serfs’

Central to Yanis Varoufakis’ thesis is the claim that data generated by users constitutes a new form of capital appropriated by platform corporations. Present legal regimes generally treat such data as subject to corporate control through contractual consent models embedded in terms-of-service agreements. The asymmetry between individual users and platforms, however, renders this consent largely formal. Users routinely agree to extensive data collection practices without meaningful appreciation of the extent to which their activity is monetised. A company such as Meta Platforms illustrates this process clearly. Platforms collect behavioural information including viewing habits, engagement duration, search activity, purchasing interests, and interaction patterns. Algorithms then analyse this information in order to maximise user engagement and tailor advertising with increasing precision. In effect, user participation itself becomes economically productive, generating value for the platform.

Different jurisdictions conceptualise data differently. In the United States, legislation such as the California Consumer Privacy Act 2018 defines “personal information” broadly as information capable of being associated with a consumer or household. The emphasis remains largely consumer-protection oriented, granting rights of access or deletion without recognising proprietary ownership in data itself. The European Union adopts a more rights-oriented framework through the General Data Protection Regulation 2018, which defines “personal data” as “any information relating to an identified or identifiable natural person.” The GDPR affords stronger rights of access, portability, and processing control, though it similarly stops short of recognising users as co-owners of value generated through platform exploitation.

Pakistan’s regulation of data remains fragmented across multiple statutory instruments rather than consolidated within a single comprehensive data governance framework. The Electronic Transactions Ordinance 2002 primarily conceptualizes data as electronically stored “information,” “records,” and “communications” capable of legal recognition and evidentiary use, while the Prevention of Electronic Crimes Act 2016 approaches data through the language of authorization, access, interference, and cyber-security by criminalizing unauthorized acquisition or manipulation of data. More recent draft legislation, particularly the proposed Personal Data Protection Bill, borrows heavily from the European GDPR model by introducing categories such as “data subject,” “data controller,” and “data processor,” thereby framing data as an object of regulatory control and privacy protection rather than classical property. Across these statutes, data is variously treated as information, electronic records, protected digital material, or personal information linked to individual privacy interests. Curiously, however, Pakistani law stops short of explicitly recognizing proprietary ownership over data itself. No statute clearly states whether personal data is owned by the individual to whom it relates, by the entity that collects and processes it, or by neither. The result is a legally ambiguous environment in which corporations frequently exercise effective control and monetization powers over user data despite the absence of any formally articulated ownership regime.

Contemporary data protection regimes generally conceptualise personal data through the lens of privacy rather than ownership. Pakistan’s proposed Personal Data Protection framework follows a model heavily influenced by the European Union’s General Data Protection Regulation (GDPR). Its terminology distinguishes between the “data subject”, namely the individual to whom information relates, the “data controller”, being the entity that determines the purposes and means of processing, and the “data processor”, which undertakes processing activities on behalf of the controller. The framework grants a range of rights to data subjects, including rights relating to consent, correction of inaccurate information, and the erasure of data no longer required for legitimate purposes. Significantly, however, the legislation refrains from answering a more fundamental question: who owns personal data. The emphasis instead falls upon regulation of access, use and retention. Data is therefore treated simultaneously as a privacy interest and as a regulated informational asset, but not as a proprietary object in the conventional sense.

The omission is not accidental. The definition of “personal data” is deliberately broad and technologically neutral, allowing the law to accommodate emerging forms of digital information and permitting judicial interpretation to evolve alongside technological change. Likewise, the legislation places obligations upon controllers to process data lawfully and to delete information once it ceases to be necessary for the purposes for which it was collected. Yet even where extensive obligations are imposed upon controllers, they are not characterised as owners of data. Rather, they occupy a position resembling stewardship. The resulting framework resembles an arraignment similar to a trust in which the ‘controller’ exercises extensive powers over information generated by others without acquiring an explicit proprietary entitlement to it.

Judicial treatment of informational privacy in Pakistan has similarly developed under the rubric of fundamental rights. Article 14 of the Constitution, which guarantees the dignity of man and the privacy of home, has received an increasingly expansive interpretation. Courts have recognised that constitutional protections may extend beyond physical spaces and encompass broader concerns relating to personal autonomy and informational privacy. An illustrative discussion appears in Muhammad Rahmat-Ullah v The State and another (2024), which emphasised the constitutional significance of privacy and individual dignity in the digital age. The prevailing judicial tendency to frame disputes concerning personal information as questions of privacy and constitutional protection rather than ownership. The debate consequently remains focused upon preventing intrusion and misuse rather than determining entitlement to the economic value generated from data.

This orientation is by no means unique to Pakistan. Comparable frameworks have been adopted throughout the Muslim world. The Saudi Personal Data Protection Law, the UAE Federal Personal Data Protection Law and Qatar’s data protection regime all employ variants of the controller-subject model inherited from the GDPR. Across these jurisdictions, the dominant concern remains lawful processing and protection of privacy interests rather than allocation of proprietary rights in information. Attempts to reconcile these protections with Islamic legal principles have likewise concentrated upon privacy. Denny Suwondo, for example, argues that contemporary data protection norms find support in classical Islamic teachings concerning confidentiality, secrecy and respect for personal affairs, drawing analogies from Qur’anic injunctions and Prophetic traditions discouraging unwarranted intrusion into the private lives of others. Such scholarship provides a persuasive basis for recognising privacy as an Islamic legal value. It does not, however, resolve the separate question of ownership.

For present purposes, privacy is only part of the story. The issue addressed in this article is with regards to Varoufakis’ postulation is whether they possess a claim to the value generated from their participation in digital ecosystems. Social media platforms and digital marketplaces derive value not merely from information voluntarily disclosed by users but from continuous acts of engagement: searching, scrolling, liking, posting, viewing and interacting. These activities produce behavioural datasets that are subsequently organised, analysed and monetised through sophisticated algorithmic systems. Moreover, the platforms themselves contribute substantial infrastructure, including servers, software architecture, content moderation systems and technological innovation. The resulting value is therefore neither solely the product of individual users nor exclusively the creation of the platform. Rather, it emerges from a continuous interaction between collective participation and corporate organisation.

Viewed through this lens, the relationship begins to resemble an expanded conception of amanah or trusteeship. Users entrust information and behavioural patterns to digital platforms, while platforms exercise practical control over the collection, processing and monetisation of those resources. Yet the analogy is imperfect. Traditional notions of trust focus primarily upon safeguarding entrusted property. The modern digital economy transforms entrusted information into a productive asset capable of generating substantial rents – for instance through targeting advertising that has been helped by the algorithm’s sophisticated data collection or through acting as a platform on which other companies run their business, advertise their software a google Play-store or Appple’s Appstore for example. The legal challenge therefore lies in determining whether existing categories of trust and stewardship are sufficient to account for this economic reality and could they be reposed to for some form of legal action or whether a more fundamental reconceptualization, through legislation, is required.

One possible response, and one broadly consistent with the constitutional aspirations reflected in Article 38, is to reclassify certain forms of data as collectively generated assets. Article 38(a) directs the State to prevent the concentration of wealth and the means of production and distribution in the hands of a few to the detriment of the general interest, whilst ensuring an equitable adjustment of rights between employers and employees. Although drafted in the context of an industrial economy, the provision raises an obvious contemporary question: how should these principles apply where value is generated through the collective participation of millions of users interacting within digital platforms? Under a model of collective data generation, users would retain an economic interest in the value produced through the aggregation and use of their information and content without necessarily exercising direct managerial control over the platforms themselves. The proposal resembles neither traditional shareholder ownership nor complete communal ownership. Rather, it recognises that digital value creation arises through a combination of user participation and corporate investment. Those who contribute to the generation of data, the so-called cloud serfs, would consequently possess a claim not to corporate governance as such, but to a share in the economic rents derived from their collective activity. Such an arrangement arguably speaks to Article 38’s concern with excessive concentrations of economic power, equitable economic participation and the reduction of distributive disparities.

Nevertheless, Articles 203D, 203E and 227 of the Constitution require that any proposed restructuring of economic relations be capable of reconciliation with the principles of Islamic jurisprudence. Viewed through that lens, the argument intersects with concepts of trusteeship (amanah), reciprocity and unjust enrichment. Islamic law unquestionably recognises the legitimacy of profit arising from lawful enterprise, entrepreneurial initiative and productive investment. Digital platforms therefore cannot be denied remuneration merely because they provide the infrastructure through which online interaction occurs. Traditional concepts of rentier capital generation and rent based wealth generation are not outright prohibited in Islam there may be qualifications but they are perfectly permissible. Said qualifications are defined by the term of Riba which traces back to the Quranic Commandment in Surah al Bakr. Equally, Islamic jurisprudence has long displayed concern for arrangements that permit one party to appropriate disproportionate value from the efforts of another or generate gain without meaningful reciprocal contribution. The relevant inquiry is therefore not whether rent based profit itself is permissible, but whether the exclusive appropriation of value generated through collective participation can be justified as a matter of substantive fairness and if Islam may permit if not encourage state intervention to force a more equitable arrangement.

The difficulty of that inquiry is reflected in Pakistan’s riba jurisprudence. In both M. Akram Khan v Government of Pakistan and Dr Mahmood-ur-Rahman Faisal v Government of Pakistan, the courts repeatedly emphasised the importance of examining the economic substance of transactions rather than their formal labels. The prohibition of riba, reflected both in Article 38(f) and the broader constitutional commitment to an Islamic economic order, was treated not as a technical objection to particular contractual forms but as a response to unjustified gain and exploitative economic arrangements. Although those decisions concerned financial transactions rather than digital platforms, the underlying methodology remains instructive. The question is not how a relationship is characterised but how value is actually created, distributed and appropriated. The key components and a description of riba itself will follow in the discussion pertaining to financial speculation but for our current purposes it may be simply understood that the interpretation of the courts identified could also be reposed as stating that; wealth may lawfully increase through trade, partnership and risk-sharing, but not through a guaranteed return on money merely by virtue of ownership and the passage of time. Varoufakis’ concern with rent extraction in digital markets is not wholly alien to either the constitutional objectives embodied in Article 38 or the distributive principles underlying Islamic jurisprudence. Both perspectives invite scrutiny of whether economic rewards correspond to productive contribution or instead represent the unilateral appropriation of value generated through the participation of others. This is where we may then transition into Varoufakis’ proposals for how this arrangement of fairer share of the pie may be ensured through ‘Universal Basic Dividend’ explored later.

The idea of ‘cloud proles’ as explored in the context of platform-workers

As discussed in the introduction, Varoufakis’ critique is ultimately directed not at technology itself but at the distribution of the value generated through digital participation. Article 38 of the Constitution once more becomes a centerpiece for contextualizing the discussion around ideals of equitable wealth distribution and the economic engines of production and distribution.  Reclassifying data as a collectively generated asset would therefore seek to ensure a more equitable allocation of the rents extracted through platform-mediated activity, whether by users whose engagement fuels algorithmic systems or by workers whose labour is organised through digital platforms. This alignment of a more equitable compromise between the platforms and While such proposals remain largely theoretical in the context of data ownership, analogous developments can already be observed in labour regulation. International organisations such as the International Labour Organization have increasingly advocated for extending employment and social protection frameworks to ‘platform workers’, recognising that digital intermediation should not operate to exclude contributors from the economic benefits and protections associated with their labour. These reflect a broader recognition that digital platforms generate value through collective participation and that existing legal categories may require adaptation to ensure a more equitable distribution of the resulting benefits.

As noted above, the significance of Varoufakis’ thesis lies less in its terminology than in its insistence that digital platforms derive value from collective participation while retaining disproportionate control over its distribution. Although proposals for user dividends or proprietary interests in data remain largely theoretical, more modest attempts to address this imbalance are beginning to emerge in labour regulation. By way of example, the Punjab Labour Code 2026, influenced in part by contemporary International Labour Organization initiatives concerning platform work, adopts an expansive conception of the “worker” that encompasses labour performed through digital platforms and algorithmically mediated systems. More significantly, it introduces protections aimed specifically at platform workers, including transparency obligations regarding automated monitoring and decision-making systems, rights relating to data portability, and guarantees of collective organisation.

The requirement of transparency concerning algorithmic decision-making is particularly noteworthy. Traditional labour law assumed that managerial authority was exercised openly through identifiable supervisors. And these could be scrutinized under the common law conception of breaches of fiduciary duty, or otherwise through statutorily imposed obligation/s pertaining to the particular circumstance of engagement, failing that perhaps through the regular lens of contractual obligations and breach. As Varoufakis identifies, platform economies increasingly replace such visible control with proprietary algorithms that determine task allocation, remuneration, performance ratings and even access to future work. By recognising a right to information regarding these systems, the Code implicitly acknowledges that algorithms may operate as instruments of economic governance and that their exercise of power ought not remain entirely opaque. In this respect, the legislation reflects a growing awareness that control over digital infrastructure can translate into control over livelihoods.

The trajectory is further reflected in international efforts to extend social protections traditionally associated with employment to workers engaged through digital platforms. The International Labour Organization has repeatedly highlighted the risks posed by algorithmic management, contractual fragmentation and the exclusion of platform workers from conventional labour protections. Discussions in Pakistan have likewise tabled proposals for extending social security mechanisms, including EOBI coverage, to platform workers. Such reforms do not go so far as to recognise ownership interests in data or participation in platform rents. They nevertheless represent an emerging recognition that value in the digital economy is generated through the coordinated efforts of large numbers of workers and users, and that legal frameworks may require adaptation to ensure a more equitable distribution of the resulting benefits.

Recent scholarship on platform labour has similarly questioned the assumption that digital platforms operate merely as passive intermediaries between independent economic actors. Usman Nafees argues that contemporary platform work reproduces familiar structures of dependency whilst simultaneously evading many of the legal institutions historically developed to regulate them. Although workers are formally characterised as independent contractors, platforms retain substantial influence over access to customers, allocation of work, remuneration structures and performance evaluation through proprietary digital systems. The rhetoric of flexibility and entrepreneurship consequently obscures a deeper relationship of economic dependence in which risks are transferred to workers while meaningful control remains concentrated in the hands of platform operators. Equally significant is the fact that platform workers generate more than labour alone. Every completed task, customer interaction, rating and behavioural metric contributes to datasets that remain under platform control and may subsequently be monetised for commercial advantage. Workers therefore produce not only services but also information, reputation and behavioural data, all of which become economically valuable assets within the platform ecosystem.

Nafees further observes that authority within platform economies is increasingly exercised through algorithmic systems rather than conventional managerial hierarchies. Task allocation, performance evaluation, pricing structures and even continued access to work may be determined by opaque automated processes operating beyond the scrutiny of those subject to them. Control is exercised through code rather than commands and through digital architecture rather than identifiable supervisors. This insight bears directly upon the concerns raised by Varoufakis. Value is generated through the aggregation of information through participation f the user base and the gig-workers or platform workers themselves: the collection of behavioral data: yet control over the infrastructure through which that value is produced remains concentrated in a small number of corporate actors, the resulting imbalance resembles a form of rent extraction grounded not merely in ownership of productive assets but in ownership of the digital environment itself. This also lends itself into a conversation relating to participation of workers in corporate governance.

These concerns are no longer confined to academic commentary. Emerging labour reforms increasingly acknowledge that algorithmic governance constitutes a genuine form of managerial power capable of affecting livelihoods, remuneration and working conditions. The Punjab Labour Code offers a notable illustration of this evolving approach. Moving beyond the traditional binary of employee and independent contractor, it expressly recognises labour performed through digital platforms and algorithmically mediated systems while extending protections directed at the realities of platform work. Particularly noteworthy are provisions concerning transparency in automated monitoring and decision-making (s241), data portability (s242) and collective organisation (s237). By treating algorithmic systems as legitimate objects of legal scrutiny, the Code implicitly recognises that digital platforms do not merely facilitate economic activity but actively organise and govern it. In doing so, it reflects a broader willingness to confront the asymmetries of power that arise where participation is collective but control over the infrastructure, data and decision-making processes remains concentrated elsewhere.

Finance, Speculation, and Regulatory Deficits

Varoufakis references the 2008 financial crisis as evidence of systemic fragility produced by speculative finance. His critique extends to contemporary financial instruments that operate in regulatory grey zones, including technology-driven credit systems and “buy now, pay later” models — some operated by platform corporations themselves.

Pakistan’s financial system has grappled with its own speculative and debt-driven vulnerabilities. The constitutional mandate to align laws with Islamic injunctions has prompted sustained judicial and advisory engagement with interest-based finance. The Federal Shariat Court and the Supreme Court of Pakistan have addressed the permissibility of interest and the contours of Islamic banking structures. While reform has progressed incrementally, a fully interest-free financial system has not materialised.

Varoufakis’ call for restraining speculative finance resonates with longstanding Islamic critiques of riba (usury: though Pakistani law doctrinally distinguishes the term from riba) and excessive uncertainty (gharar). Yet implementation raises complex questions. Regulating speculative instruments more aggressively would require legislative recalibration and potentially stronger oversight of fintech platforms. The feasibility of such reform in a globalised financial system is uncertain, but its legal permissibility within Pakistan’s constitutional framework appears uncontroversial, provided it aligns with both statutory authority and Islamic mandates.

The constitutional (Article 38(f)) commitment to eliminating riba from Pakistan’s economic system has never been merely a question of doctrinal interpretation. Rather, it has represented an attempt to reconcile the normative demands of Islamic jurisprudence with a financial architecture deeply integrated into global credit markets. As early as the 1990s, the Federal Shariat Court declared substantial portions of Pakistan’s interest-based legal framework repugnant to the injunctions of Islam. The matter culminated in the landmark judgment of the Shariat Appellate Bench in 1999, which affirmed the prohibition and directed a phased transformation of the financial system. Yet the ambitious timetable envisaged by the Court was never fully implemented. As Salman Akram Raja observed in his reflections on the aftermath of the judgment, the challenge was never simply identifying impermissible transactions but restructuring an economy whose institutions, borrowing practices and regulatory mechanisms had become dependent upon interest-bearing finance. The history of the ensuing decades reveals a recurring pattern of constitutional aspiration colliding with economic reality.

The palpable tension permeates throughout the Federal Shariat Court’s 2022 judgment, which revisits a constitutional promise that had remained unresolved for more than thirty years. The judgment chronicles a succession of commissions, committees, policy initiatives and reform efforts, many of which acknowledged the desirability of eliminating riba while simultaneously recognising the immense practical difficulties involved. Review petitions, reversals, gradualist approaches to Islamic banking and the emergence of hybrid financial products all reflected an underlying dilemma: modern states operate within a global financial system structured around debt markets, sovereign borrowing, liquidity management and interest benchmarks. Pakistan’s obligations to international creditors, its reliance upon public borrowing and its integration into transnational financial arrangements rendered any abrupt transition exceptionally difficult. The Court’s repeated frustration is therefore directed not merely at private actors but at the state itself, which despite constitutional obligations and multiple declaration and reaffirmations continued to participate in and facilitate interest-based financial arrangements.

At the heart of the judgment lies a particular conception of economic justice. The Court insists that lawful gain must ordinarily be connected to productive activity, entrepreneurial effort and the assumption of genuine commercial risk. In its discussion of riba, the Court repeatedly emphasises the importance of counter-value, risk participation and reciprocal exchange. Wealth should be generated through trade, partnership and productive enterprise rather than through the mere passage of time or the ownership of money itself. Money, according to the Court’s reasoning, is not a commodity capable of generating a return by virtue of its own existence; it is a medium of exchange whose value derives from its function within productive economic activity. The charging of interest therefore becomes objectionable because it guarantees a return to capital irrespective of the outcome of the underlying enterprise, insulating one party from risk while transferring that burden to another.

The normative vision advanced by the Court consequently privileges partnership structures, profit-and-loss sharing arrangements, trade-based financing and entrepreneurial participation. Returns are justified where capital is exposed to uncertainty and linked to productive activity. Such reasoning bears a striking resemblance to broader critiques of financialization that question whether ownership alone should entitle its holder to an assured stream of income disconnected from productive contribution. Although emerging from entirely different intellectual traditions, both the Court’s reasoning and contemporary critiques of rent extraction challenge the assumption that capital ought automatically to command returns merely by virtue of its ownership. In that limited sense, the concerns articulated by thinkers such as Varoufakis are not wholly alien to the logic underpinning the prohibition of riba. Both approaches scrutinize economic arrangements that permit value to accrue through control over assets rather than participation in productive enterprise.

The difficulty, however, lies in the fact that contemporary capitalism is organised around precisely those mechanisms that the judgment treats with suspicion. Modern financial systems depend upon the abstraction of debt into tradable instruments, the management of liquidity through interest-bearing facilities, sovereign bond markets, predictable rates of return and the monetisation of time itself. Financial intermediation allows capital to circulate independently of particular productive ventures, while states rely upon credit markets to finance deficits and stabilise economic activity. Pakistan’s economy is no exception. Public borrowing, banking operations, external financing arrangements and domestic credit markets all function through assumptions fundamentally different from those envisaged by the Court’s preferred model. Consequently, the judgment stages a direct confrontation between two competing visions of economic order: on one hand, an Islamic moral economy in which finance remains embedded within productive activity and social relations; on the other, a financialized system in which debt, liquidity and credit markets perform indispensable structural functions. Varoufakis too identifies that the conditional lending of aid by international financial institutions such as the International Monetary Fund can impose cumbersome limitations on the ability of states to reform and enact economic policies.

For that reason, the elimination of riba cannot be understood as a matter of merely relabelling contracts or substituting Islamic terminology for conventional financial instruments. The challenge identified repeatedly throughout the jurisprudence is systemic rather than semantic. If interest is to be removed in any meaningful sense, fundamental questions immediately arise concerning deficit financing, central banking operations, monetary policy, lender-of-last-resort facilities, benchmark rates and the management of liquidity within financial markets. What mechanisms replace sovereign debt instruments? How is capital allocated in the absence of interest-based benchmarks? How are savings mobilised and credit distributed while preserving principles of risk-sharing and productive participation? These questions reveal why implementation repeatedly stalled despite broad agreement regarding constitutional objectives. The obstacle has never been a lack of doctrinal condemnation but rather the inertia of a global economic order whose institutions remain deeply dependent upon the very practices the Constitution seeks ultimately to depose.

Pakistan’s encounter with digital consumer finance has thus far been shaped less by comprehensive legislative design than by reactive regulatory intervention. The most prominent example emerged during the proliferation of mobile lending applications between 2020 and 2023. Numerous digital lenders offered instant unsecured credit through smartphone applications while simultaneously seeking extensive access to borrowers’ contacts, photographs, location data and other personal information. Allegations soon surfaced that some operators were employing coercive recovery methods, including contacting family members and acquaintances, public shaming and threats involving personal data obtained through the applications themselves. In response, the Securities and Exchange Commission of Pakistan introduced a dedicated regulatory framework for Digital Lending Non-Banking Finance Companies (DL-NBFCs) under the broader NBFC regime, requiring licensing, disclosure obligations and restrictions on data collection practices. Enforcement efforts were supplemented by investigations undertaken by the Federal Investigation Agency and the blocking of unauthorised applications by the Pakistan Telecommunication Authority. The debacle demonstrated that the principal source of abuse was not merely the charging of interest but the combination of credit provision with surveillance capabilities, targeting those vulnerable portions of the populous who would be most susceptible to such predatory lending practices – exacerbated by a form of information-asymmetry unavailable to traditional lenders.

The regulatory response was nevertheless piecemeal. Rather than establishing a comprehensive statutory regime governing digital consumer credit, Pakistan largely relied upon the existing framework contained within the Non-Banking Finance Companies (Establishment and Regulation) Rules and the specialised directions issued by the SECP for digital lending entities. These measures were directed principally towards licensing, disclosure requirements, limits on lending practices and restrictions upon intrusive access to consumer data. While necessary, such interventions addressed the most visible abuses without fully confronting the broader economic questions raised by algorithmic lending, behavioural profiling and the increasing integration of personal data into credit assessment and debt recovery mechanisms. Consequently, regulation developed as a corrective response to scandal rather than as part of a coherent theory of digital finance.

A similar uncertainty surrounds Buy-Now-Pay-Later (BNPL) products. In jurisdictions such as the United Kingdom, Australia and the United States, regulators have increasingly expressed concern regarding consumer over-indebtedness, inadequate affordability assessments, opaque fee structures and the ability of BNPL providers to evade regulatory obligations by presenting themselves as technology platforms rather than credit providers. Pakistan has yet to witness comparable regulatory scrutiny despite the growth of providers such as QisstPay and KalPay. Instead, BNPL services remain largely accommodated within the existing NBFC framework and general financial-services regulation. The result is not a complete legal vacuum but a regulatory architecture that was designed primarily for conventional lending arrangements rather than platform-mediated consumer credit. As occurred in other jurisdictions, innovation has largely preceded the development of bespoke supervisory standards.

What fills the resulting gap is a fragmented collection of consumer-protection and e-commerce measures that were largely designed for an earlier commercial environment. Abeer Sheikh in a recent article notes that consumer rights remain principally governed through provincial enactments such as the Punjab Consumer Protection Act 2005 and the Sindh Consumer Protection Act 2014, while electronic transactions derive legal recognition from the Electronic Transactions Ordinance 2002. The regulation on consumer protection in Punjab does not ‘contemplate digital transactions or online market places’. Recent federal proposals concerning e-commerce regulation have sought to improve disclosure requirements, complaint mechanisms and consumer remedies. Yet these instruments remain principally concerned with the transaction itself: whether goods correspond to their description, whether refunds are available, whether advertisements are misleading and whether contractual terms have been adequately disclosed. They are considerably less equipped to address the forms of power increasingly exercised by digital platforms. Questions such as how consumer data may be utilised for behavioural profiling, whether algorithms are steering consumers toward particular financial products, how creditworthiness is assessed through digital footprints, or who bears responsibility when automated systems generate discriminatory or harmful outcomes often fall between regulatory categories.

The distinction is significant. Traditional consumer law assumes that the principal imbalance lies between a seller and a purchaser engaged in an identifiable transaction. Platform economies, by contrast, derive much of their value from controlling information flows rather than merely facilitating exchanges. Online marketplaces curate visibility through recommendation systems; BNPL providers may rely upon proprietary risk-scoring mechanisms; digital lenders increasingly utilise behavioural and personal data in assessing and managing borrowers; and social-media platforms shape consumer behaviour through targeted advertising and algorithmic engagement strategies. In each instance, the transaction visible to the consumer represents only a fraction of the underlying economic relationship. The legal system consequently regulates the purchase, the loan or the advertisement, while the infrastructure that shapes the consumer’s choices (though the use of powerful algorithms as Varoufakis may remark) often remains comparatively opaque. This is the regulatory challenge highlighted by contemporary critiques of platform capitalism: economic power is increasingly exercised not through ownership of the goods being exchanged but through ownership and control of the digital architecture through which exchange takes place, where algorithms can stimulate demand and connect economic products to prospective customers in methods seldom seen or heard of before.

Consequently, Pakistan’s current framework may be described as a legal vacuum; but also, characterised by regulatory dispersion. Financial regulators supervise lending entities, telecommunications regulators oversee access to digital services, consumer-protection authorities address unfair trade practices and proposed e-commerce reforms seek to improve transactional accountability. What remains largely absent is an integrated framework capable of addressing the intersection of data extraction, algorithmic decision-making and consumer finance. The challenge is therefore no longer simply one of consumer protection in the conventional sense, but of determining how law should respond when economic leverage is generated through the accumulation of information and control over digital infrastructure rather than through the traditional ownership of capital alone.

Democratising the corporation

A further proposal advanced by Varoufakis involves restructuring corporate governance to reduce concentrated shareholder control and introduce democratic participation by workers or stakeholders. This departs from conventional models, including those embedded in Pakistan’s Companies Act 2017, which in turn substantially borrows from the Anglo-American model for corporate governance. Therefore: corporate governance in Pakistan operates on principles of shareholder primacy. Importing a radically democratic model which seeks to include employees in the decision making reserved mostly for the shareholder through the General Meeting in the current model would necessitate the upheaval of foundational assumptions regarding director’s fiduciary duties, ownership rights, and board authority.

Some Islamic economists have argued that principles of consultation (shūrā), partnership (mushārakah), risk-sharing and distributive justice are more readily reflected in cooperative or participatory forms of economic organization than in purely shareholder-dominated corporate structures (the works of Muhamad Nejatullah Siddiqui and Umer Chapra suggest so). Others maintain that the modern corporation is merely a juridical vehicle capable of serving a variety of normative ends and is not inherently inconsistent with Islamic jurisprudence, provided that its operations comply with broader Shariah principles concerning fairness, accountability and the prohibition of exploitative gain (an illustration perhaps in the Accounting and Auditing Organization for Islamic Financial Institutions presenting its devised code of conduct as well as what will be discussed later: the corporate guidelines of the SECP). Reform in this domain would involve not only statutory amendment but careful consideration of commercial consequences. Unilateral departure from internationally familiar corporate structures may affect investment confidence and ease of doing business. While macroeconomic evaluation lies beyond the present scope, the legal system must weigh domestic normative commitments against transnational commercial integration.

The Pakistani corporate governance framework remains firmly rooted within the Anglo-American conception of the corporation. The Companies Act 2017 borrows the architecture of separate corporate personality, board-centric management and shareholder ownership. Management of the company’s affairs is vested in the board of directors, while directors are subject to codified fiduciary obligations requiring them to act in good faith, in accordanc with the memorandum of association, exercise powers for proper purposes and promote the interests of the company. Sections 204–208 of the Act embody these duties and largely reflect orthodox common-law principles. They do not however, refer to statutory duties for directors to take into consideration stakeholder interests – as could otherwise be found in s172 of the Companies Act of 2006 in the United Kingdom in what is there referred to as ‘enlightened shareholder value’. The corporation is therefore conceived primarily as an entity governed through the relationship between shareholders and directors, with the latter accountable for the stewardship of corporate assets and the former serving as the ultimate beneficiaries of corporate success.

Although, directors owe duties to the company rather than directly to individual shareholders, the underlying governance model assumes that shareholder oversight, disclosure obligations and market discipline will constrain managerial misconduct. Pakistani law consequently focuses upon fiduciary accountability, minority shareholder remedies and transparency rather than direct participation by employees, consumers or communities in corporate decision-making. This orientation mirrors developments in both the United Kingdom and the United States, where corporate governance reforms have traditionally sought to improve oversight of managerial power without fundamentally redistributing governance rights beyond shareholders. As a result, stakeholder interests are generally protected indirectly through their contribution to the long-term interests of the company rather than as independent interests possessing enforceable governance rights of their own.

The evolution of the field of corporate governance in Pakistan has largely been reactive, emerging not from an express commitment to stakeholder participation or board independence, but from recurring episodes of corporate failure, public-sector mismanagement and declining investor confidence. Under the Companies Ordinance 1984, governance was primarily concerned with company administration and legal compliance: convening meetings, maintaining records, prescribing director qualifications and regulating corporate procedures. The dominant assumption remained that concentrated ownership and shareholder monitoring would provide adequate discipline. In practice, however, Pakistan’s corporate landscape was characterised by family-controlled enterprises, weak minority shareholder influence and limited external oversight. A succession of controversies involving both public and private entities (including disputes surrounding Oil and Gas Development Company Limited, National Insurance Company Limited, Pakistan International Airlines, Pakistan Telecommunication Company Limited, Karachi Electric Supply Company and several major listed corporations) exposed recurring weaknesses in disclosure practices, board oversight, internal controls and accountability mechanisms. Collectively, these episodes revealed that formal compliance with company law did not necessarily translate into effective governance and that concentrated managerial or controlling-shareholder power could persist largely unchecked. The resulting crisis of confidence mirrored developments that had earlier prompted the Cadbury and Hampel committee reforms in the United Kingdom: governance ceased to be viewed merely as an internal corporate matter and increasingly became a prerequisite for investor protection, market credibility and economic development.

The reforms that followed demonstrate a gradual but significant transformation in the architecture of corporate oversight. The establishment of the Securities and Exchange Commission of Pakistan in 1999 marked a decisive shift away from purely administrative company regulation towards an integrated governance framework informed by international best practices – and limited government oversight and monitoring. The first Code of Corporate Governance in 2002 introduced concepts largely absent from the 1984 regime, including independent oversight, specialised board committees, enhanced disclosure obligations and professionalisation of directorship. Subsequent reforms deepened these changes. The 2012 revisions restricted executive dominance by limiting executive directors on boards, required independent directors and reinforced the separation of the offices of chairman and chief executive. The Companies Act 2017 and the subsequent governance regulations expanded the model further through mandatory female representation, stricter eligibility requirements for directors, enhanced auditor independence and a growing emphasis upon risk management, whistleblowing, ethics, sustainability and ESG oversight. By the time of the 2019 Code, corporate governance had evolved from a narrow concern with procedural compliance into a broader framework directed at board effectiveness, transparency and long-term organisational resilience. Yet the underlying logic remained distinctly Anglo-American: rather than redistributing power among stakeholders, the reforms sought to improve the quality of decision-making by those already in control through disclosure, independent scrutiny and market discipline. Governance thus evolved from supervision of corporate form to supervision of corporate power, without fundamentally altering the shareholder-centred character of the corporation itself.

Nevertheless, stakeholder considerations have increasingly entered Pakistani corporate governance discourse through the Listed Companies (Code of Corporate Governance) Regulations 2019. Regulation 10 requires boards to establish policies concerning environmental, social and governance (ESG) matters, sustainability, health and safety, corporate social responsibility and social welfare initiatives, while also promoting an ethical corporate culture and maintaining systems for addressing grievances and misconduct. Regulation 14 further requires management to place before the board matters relating to labour disputes, environmental incidents, whistleblowing complaints, health and safety practices, ESG implementation and corporate social responsibility activities. The significance of these provisions lies in their recognition that corporations affect constituencies extending beyond shareholders alone. Employees, communities, consumers and the environment are no longer treated as entirely external concerns but are incorporated into the governance process as matters requiring board oversight and strategic consideration.

Yet the strategy adopted by the Code remains markedly different from the participatory arrangements advocated by Varoufakis. The SECP’s 2019 Code explicitly embraces a “comply or explain” model, seeking to protect stakeholder interests through disclosure obligations, governance structures and reputational incentives rather than direct participation in corporate decision-making. Employees, communities and other stakeholders are recognised as constituencies whose interests’ boards ought to consider, but they are not granted enforceable governance rights, representation on boards or meaningful influence over the distribution of corporate surplus. This reflects the broader Anglo-American tradition of corporate governance, which seeks to improve the conduct of those already exercising power rather than redistribute power itself. Varoufakis proceeds from a different premise: if productive value is generated collectively by workers, consumers and users, then those contributors ought to possess a corresponding role in determining how enterprises are governed and how their gains are allocated. The distinction is therefore not merely institutional but conceptual. Stakeholder governance asks directors to take broader interests into account; workplace democracy seeks to transform stakeholders into participants in corporate power itself.

The limitations of the prevailing model have been the subject of sustained criticism. Reviews led by John Kay in 2012 and John Kingman, the Kingman Review of 2018, together with work produced by bodies such as the High Pay Centre, have questioned the assumption that disclosure and market discipline alone can reliably align corporate conduct with long-term economic welfare. Modern capital markets are characterised by fragmented ownership, layers of financial intermediation and incentives that frequently reward short-term performance over productive investment. As a result, shareholders and institutional investors may have limited incentives to engage substantively with governance, while boards remain under pressure to prioritise immediate returns, dividend distributions and share-price performance especially with regards to the business practices of companies operating in the domain of  ‘private equity’ as observed by economist such as Kayla Scanlon. Critics argue that such incentives encourage underinvestment in workforce development, innovation and long-term productive capacity while exacerbating economic inequality and contributing to increasingly bifurcated or “K-shaped” patterns of growth in which gains accrue disproportionately to holders of capital. These concerns resonate strongly with the constitutional aspirations embodied in Article 38 of the Constitution, which calls for the prevention of excessive concentrations of wealth, the equitable adjustment of rights between employers and employees and the reduction of disparities in income and earnings aimed towards the goal of sustainability. Although contemporary governance codes increasingly employ the language of ESG, sustainability and stakeholder engagement, enforcement remains mediated principally through shareholder preferences and reputational pressures. Stakeholders consequently remain beneficiaries of managerial discretion rather than holders of enforceable rights, leaving unresolved the broader question of whether a system organised around shareholder primacy can adequately fulfil the constitutional commitment to equitable economic participation in the twenty-first century.

On a final note, Islamic commercial jurisprudence does not appear to furnish a definitive answer to the contemporary question of corporate governance. While principles of consultation (shūrā), partnership (mushārakah), profit-and-loss sharing and distributive justice have led some contemporary scholars – as mentioned above – to favour more participatory forms of economic organisation, the classical madurabah trade caravan cases discussed by the Federal Shariat Court in the judgments on riba may also be somewhat illustrative. The apportionment of risk and profit share was in those cases contractually determined and not tied to investment or initial capital share. The findings of the court with regards to one example may be summarized as such; a mushārakah remains valid even where partners contribute equal capital but agree to unequal profit shares, because profit allocation is a matter of contract and commercial contribution, provided no partner is guaranteed a fixed return irrespective of the venture’s outcome. It may be concluded at some stretch of the principle that Islamic jurisprudence per se does not seem to prescribe a fixed relationship between capital ownership and managerial control. Consequently, while Islamic principles may accommodate greater employee participation in ownership or governance, they do not necessarily require it; and in the same vein, neither, do they render shareholder-oriented corporations inherently impermissible. The remaining salient inquiry is whether the distribution of power, profit and responsibility within the firm reflects a fair and consensual allocation of the burdens and benefits of enterprise – which is inherently a political one.

The Universal Basic Dividend or Universal Basic Income Schemes and Islamic Distributive Ethics

Varoufakis’ universal basic dividend differs from certain UBI proposals in that it derives funding from collective ownership of cloud capital rather than general taxation alone. In contrast, proposals associated with figures such as Sam Altman often envision redistributive taxation of AI-generated profits to fund unconditional payments. From a legal standpoint, both models raise similar questions: can the state institute an unconditional income mechanism detached from labour? Would such a scheme constitute an impermissible form of wealth transfer, or would it represent a legitimate exercise of public authority?

If increasing proportions of economic value can be generated through ownership of digital infrastructure, algorithmic systems and data assets rather than through conventional labour, the challenge becomes how the resulting prosperity is to be shared. The Constitution seems to recognize that economic outcomes cannot be left entirely to market forces; Article 38 directs the State to secure the social and economic well-being of the people, reduce disparities in income and earnings, provide facilities for work and adequate livelihood, establish systems of social security and prevent excessive concentrations of wealth. Although framed in the language of a twentieth-century industrial economy, these commitments may be recontextualized to speak to contemporary concerns regarding technological displacement, platform-mediated labour and widening economic inequality. The constitutional question is transforms from whether redistribution is permissible, to how distributive mechanisms ought to evolve where traditional assumptions concerning employment and productive participation are increasingly challenged.

These constitutional commitments possess deep roots within the Islamic intellectual tradition. Long before the emergence of the modern welfare state, Islamic jurisprudence developed institutions directed towards poverty alleviation, social solidarity and distributive justice. Zakat constituted a mandatory transfer of wealth rather than a purely voluntary act of charity, while institutions and practices such as sadaqah, waqf and the Bayt al-Mal reflected the understanding that wealth carried social obligations extending beyond the individual owner. Classical jurists frequently linked these obligations to the preservation of human dignity and the prevention of destitution, themes which later found expression in the broader objectives (maqasid) of the Shariah. Modern Islamic economists such as Nejatullah Siddiqi and Umer Chapra have similarly argued that markets alone cannot secure social justice and that the state may legitimately intervene to reduce deprivation, provide social protection and ensure a more equitable distribution of economic opportunity. Consequently, the notion that government bears responsibility for economic welfare is not an innovation imported from contemporary social democracy but one that finds support in both constitutional and Islamic traditions.

Pakistan’s own welfare architecture reflects this dual inheritance. The Zakat and Ushr Ordinance 1980 represented an attempt to institutionalise Islamic redistribution through state-administered mechanisms directed towards poverty relief and subsistence support. More recently, programmes such as the Benazir Income Support Programme and the Ehsaas Programme have sought to provide income support to vulnerable households on a scale previously unknown in Pakistan’s history. These initiatives differ in design and political context, yet they share an underlying premise: that public institutions may legitimately redistribute resources in pursuit of social welfare and economic stability. The challenge identified by international observers is not the absence of welfare programmes but their fragmentation. According to the International Labour Organization, Pakistan possesses a diverse array of social protection mechanisms, including EOBI, provincial social insurance schemes, welfare funds and targeted cash-transfer programmes. Yet, coverage remains incomplete, particularly because substantial portions of the workforce operate within the informal economy and consequently remain outside contributory systems tied to formal employment. The result is a patchwork of protection rather than a genuinely universal social protection framework.

Regardless, an emphasis upon social welfare is still reflected in constitutional jurisprudence. In Nematullah v Chairman Governing Body the Supreme Court characterised the welfare of the people as one of the central purposes of government and linked labour protections to the effective realisation of broader constitutional objectives. The Court’s reasoning is noteworthy because it treats workers not merely as individual contractual actors but as participants in institutional arrangements necessary for the fulfilment of constitutional commitments. Rights are thus understood as components of a wider constitutional order rather than isolated entitlements. Similarly, in Elahi Cotton Mills the Supreme Court adopted an expansive understanding of the state’s fiscal powers, emphasising that taxation is an essential instrument through which governments discharge public responsibilities. Although the principles of policy – as are traditionally understood to be – remain largely non-justiciable, the Court treated them as constitutionally significant guides for legislative action and public administration. Taken together, these decisions support the proposition that the state may mobilise resources and design redistributive institutions in pursuit of the social and economic objectives embodied in Article 38. Of course, the requirement of legislative enactments to materialize such hypothetical measures would still remain, but such political change would be conducive to the constitutional structure of the state.

The more difficult question concerns their design and justification. Varoufakis’ proposal for a universal dividend funded by rents derived from cloud capital proceeds from the observation that contemporary digital platforms increasingly generate wealth through network effects, data extraction and control over infrastructure rather than through conventional productive activity. In one sense, this diagnosis resembles the problem confronted by the Supreme Court in Elahi Cotton Mills. There, the Court accepted presumptive taxation because the underlying economic reality could not always be accurately observed through traditional categories of income and profit. This is parallel to Varoufakis who argues that traditional concepts such as wages, profit and productive capital no longer fully capture how value is created and appropriated within digital markets. Both recognise the challenge posed to inherited legal categorizations and assumptions by evolving economic realities and financial practices. The Court prioritised fiscal practicality, not all too dissimilar from some of Varoufakis’ proposals: particularly with regards to the idea of taxation targeting the revenue of platform capital rather than simply profit: because for some of these corporations’ profit-seeking itself unlike traditional capitalism has become unnecessary. Both the judgement and Varoufakis acknowledge the premise that legal and economic concepts must remain responsive to changing structures of accumulation.

At the same time, Islamic distributive ethics introduce an important qualification. While Islamic jurisprudence exhibits strong support for poverty alleviation, social security and public welfare, it has also traditionally attached significance to productive activity, self-reliance and reciprocal contribution. The oft-cited hadith that “the upper hand is better than the lower hand” reflects a preference for economic participation rather than permanent dependency. Consequently, although there is substantial support for social assistance directed towards need, vulnerability and dignity, a universal and unconditional entitlement detached entirely from contribution remains contested. We had explored such possibilities earlier by allegory to Riba judgements that were discussed having drawn parallels to the work of Varoufakis which questions the unregulated creation of wealth through rent extraction and fixed returns by platform capital. Here the discussion turns on its head; whether the creation of something beyond a social safety net – the creation of a universal basic stipend can be reconciled with Islamic thought and its emphasis on work and the product of labor? In order to answer such a query what must be considered is the conceptions thereof. A universal stiped has been envisioned in two forms, Varoufakis’ conception recognizes that there is an input from the userbase interacting and contributing by providing data on platforms and digital spaces of platform capital, he posits that there is to be a proprietary interest and value to be attached to this data, therefore the contribution and is part of the process for wealth that is generated by cloud capital. A recognition of this contribution could lead to an entitlement to a share of the wealth created in the form of a ‘universal basic dividend’. Conversely the proposal of the ‘universal basic income’ is far more self-explanatory and involves the government providing a stimulus or payment to each individual, funding would all the same be derived from taxation or public ownership from assets of corporations – minimum income irrespective of employment status. The both appear facsimiles of the same concept but to conclude such would be to the dismay of Varoufakis. It must be considered that the rationale or logic underpinning the former (UBD) is also one that more closely aligns to the dictates of Islam as UBD defines the entitlement of a stipend by its concatenation to the work/contribution of users (cloud serfs) within the ecosystem of cloud capital and recognizes it as a for of renumeration or well dividend that is a share for the user for the wealth they have helped create.

To summarize, if automation were genuinely capable of eliminating substantial sectors of human labour, distributive mechanisms of some kind may become necessary simply to preserve economic participation and social stability. Yet any such arrangement would need to reconcile two commitments that coexist within both constitutional and Islamic thought: the obligation to protect individuals from destitution and the continuing belief that productive participation remains a desirable foundation for economic life. The challenge is therefore not whether redistribution should occur, but how it may be structured in a manner consistent with dignity, solidarity and meaningful participation in the economy.

However, it would be overly reductionist to conclude that the question of universal basic income or dividends to merely a query as simple as the quandary that has been described above. The institution of such mechanisms is grounded in a slew of sociological considerations. The political incentive that is required to institute such changes is the first one, not to mention the agency and influence of platform capital itself. The other aspect relates to the difficulty in imagining a sociological and economic order where human labor is replaced en masse as being the primary conduit for the generation of most substantive economic activity and production. As to whether this is something that governments would be willing to allow. There are psychological considerations as well with the era of possibilities being truly uncharted waters.

The problem regarding competition law

One final aspect to consider about Varoufakis’ theory and the regulation of platform capital relates to competition law; historically, competition law emerged as a response to the concentration of economic power associated with nineteenth and early twentieth-century industrial monopolies. Railroads, oil conglomerates and industrial trusts demonstrated that markets left entirely unchecked could produce private concentrations of power capable of distorting competition and subordinating smaller markets. Modern antitrust regimes consequently developed around the preservation of competitive markets, prevention of abusive dominance and protection of consumer welfare. Pakistan’s own competition regime reflects this intellectual inheritance. The transition from the comparatively weak Monopolies and Restrictive Trade Practices Ordinance 1970 to the far more expansive Competition Act 2010 represented what United Nations Commission on Trade and Development (UNCTAD) described as a “fundamental redesign” of Pakistan’s approach to market regulation. The Competition Act introduced prohibitions on abuse of dominance, anti-competitive agreements and deceptive marketing practices, alongside merger-control mechanisms and broad investigative powers vested in the Competition Commission of Pakistan. International assessments by UNCTAD and the Organization for Economic Cooperation and Development have generally portrayed the Competition Commission of Pakistan (CCP) as a proactive regulator possessing powers comparable to many mature competition authorities, including the authority to conduct investigations, compel production of documents, impose substantial penalties, prohibit mergers and even apply the statute extraterritorially where foreign conduct affects Pakistani markets. The CCP in fact does occasionally refer to article 38 of the constitution as well in its regulatory measures and forays against monopolistic dominance of markets. Historically it has had to balance that desire with its mandate to also ensure free trade as encapsulated and guaranteed right under Article 18 of the constitution.

The underlying logic of the regime is significant. The Competition Act concerns itself with concentrations of economic power capable of permitting private and public (many public companies are also subject to the provisions of the act) firms to act independently of competitive constraints. Section 3 of the Act prohibits abuse of dominant position, whilst sections 4 and 10 address anti-competitive agreements and deceptive marketing respectively. Section 11 establishes merger-control powers permitting the CCP to prohibit or condition transactions likely substantially to lessen competition. The statute’s conception of dominance focuses upon the ability of an undertaking to behave independently of competitors, consumers and suppliers. This concern with infrastructural control and market dependency bears an obvious resemblance to the anxieties underlying contemporary critiques of platform capitalism. Competition lawyers describe network effects, gatekeeper power, ecosystem lock-in and barriers to entry; Varoufakis speaks instead of cloud capital, digital fiefdoms and platform dependency. The vocabulary differs, but the underlying concern is strikingly similar: control over infrastructure increasingly generates economic power independently of traditional productive activity. Yet despite the breadth of the statutory framework, the practical limitations of enforcement remain substantial. UNCTAD observed that the CCP’s activism was repeatedly frustrated by chronic funding shortages, limited institutional capacity and, above all, judicial delay. By 2013 hundreds of cases remained pending before courts, with litigation frequently freezing enforcement actions before they could be meaningfully implemented.

The rise of platform corporations has however revealed conceptual difficulties. Conventional competition law was developed primarily with relatively discrete markets in mind: cartels, price fixing, monopolisation and exclusionary conduct within identifiable sectors of the economy. Platform corporations increasingly operate simultaneously across multiple layers of economic activity. This problem was articulated most prominently by Lina Khan in her influential article ‘Amazon’s Antitrust Paradox’ and later through enforcement actions brought by the American Federal Trade Commission (FTC) against Amazon. The concern was not simply that Amazon charged excessive prices, but that it occupied multiple layers of the digital ecosystem simultaneously: functioning as marketplace operator, retailer, logistics provider, advertising intermediary, cloud-services provider and repository of vast quantities of behavioral data; through these mechanisms and the algorithmic curation of search results, advertising visibility and product recommendations, Amazon allegedly acquired the ability to preference its own commercial interests over those of third-party sellers operating on the platform. The FTC alleged that Amazon could utilise the vast quantities of transactional and behavioural data generated by independent vendors to identify commercially successful products, introduce competing Amazon-branded alternatives and strategically prioritise those products within the platform ecosystem – sequestering, cornering and eventually driving of competitors or alternatively offering to buy the competitor’s business outright. Sellers dependent upon Amazon for access to consumers were therefore often compelled to utilise Amazon-controlled fulfilment, logistics and advertising services in order to maintain visibility and competitiveness. The allegation advanced by the FTC was essentially that Amazon possessed the capacity to shape the competitive environment itself through self-preferencing, infrastructural control and ecosystem dependency of the other products listed on its platform. Yet the difficulty of translating these concerns into successful legal interventions – the decision had been appealed by the FTC – demonstrates the limitations of orthodox antitrust tools. Traditional consumer-welfare analysis struggles where dominant platforms often provide low-cost or ostensibly “free” services while deriving power from network effects, data concentration and infrastructural dependence rather than straightforward monopoly pricing. Critics such as Richard Pierce have consequently argued that attempts to expand antitrust beyond conventional economic metrics risk undermining conceptual certainty in competition law itself.

Likewise, the CCP’s experience reflects many of the same tensions, albeit on a smaller scale. Although the CCP’s formative years focused primarily upon traditional sectors such as cement, sugar, banking and telecoms, recent cases reveal increasing awareness of the distinctive dynamics of digital markets. The merger between Uber and Careem is particularly illustrative. Rather than analysing the transaction as a conventional transport-sector merger, the CCP expressly recognised ride-hailing as a multi-sided digital platform market shaped by network effects, algorithmic coordination, rider-driver matching systems and control over map and behavioural data. The Commission escalated the matter into a rare Phase II review and ultimately approved the merger subject to extensive behavioural remedies, including restrictions upon exclusivity arrangements, caps upon fare increases and service fees, obligations relating to innovation and, most significantly, data-access and portability requirements. The CCP expressly recognised that accumulated informational infrastructure could operate as a barrier to entry and entrench platform dominance. Likewise, disputes involving platforms such as OLX and PakWheels required the Commission to confront the realities of multi-sided digital marketplaces which interact with user-generated content in complex ways. The algorithms themselves are difficult to predict despite generic conclusions about patterns of behavior and capable of stupefying even those who built and maintain them; obfuscating matters and making it difficult to identify if truly provisions such as s10 of the Competition Act had been violated with regards to deceptive or poached marketing. Although these cases remained within orthodox competition-law categories such as dominance, deceptive marketing and consumer welfare, they nevertheless reveal an emerging recognition that digital power increasingly arises from ownership and control of the infrastructure through which economic activity is organized rather differently from traditional industrial production alone.

At the same time, these cases also illustrate why Varoufakis remains sceptical that competition law can fully resolve the problem of platform capital. The CCP, much like the FTC under Lina Khan, continues to operate upon the assumption that competition can ultimately be restored through improved enforcement, behavioural remedies and market correction. Varoufakis’ critique is more radical. His argument is not simply that certain firms have become excessively dominant, but that the underlying structure of economic organisation has itself shifted away from classical market competition and toward forms of infrastructural dependency sustained through data extraction, network effects and control over digital ecosystems. In that sense, contemporary competition law seems to have diagnosed and encountered a challenge that was identified by the likes of Varoufakis but remains convinced in a remedy that can be achieved through simple reorientation and increasingly proactive enforcement and regulation. Varoufakis on the other hand questions whether the market paradigm itself remains sufficient to describe how economic power now operates.

The proposals associated with technofeudal critiques of contemporary capitalism would, if pursued, require significant legislative and institutional innovation in Pakistan. While few of the reforms discussed in this article appear legally inconceivable, others would still necessitate reconsideration of established doctrines relating to property, contract, corporate governance and market regulation. The principal difficulty is therefore not one of legal possibility but of practical implementation. Any substantial reconfiguration of the relationship between data, labour, capital and ownership would need to operate within the constraints imposed by existing constitutional arrangements, regulatory capacity, fiscal realities and Pakistan’s integration into regional and global markets. This last point is key and presents the most likely roadmap for how such change may transpire.

At the same time, the questions raised by Varoufakis cannot be dismissed solely because one remains unconvinced by his broader diagnosis of technofeudalism. Developments in artificial intelligence, platform-mediated labour, data-driven markets and digital finance have generated distributive concerns that increasingly challenge legal categories developed for an earlier economic era. Whether these developments ultimately represent a transformation of capitalism or merely its evolution, legal systems will likely be required to revisit longstanding assumptions regarding labour, ownership, competition, welfare and economic participation. The constitutional commitments embodied in Articles 38 and 3 of the Constitution, together with Pakistan’s broader commitment to an Islamic social order, provide an existing normative framework through which such questions may be examined.

This article has not sought to endorse Varoufakis’ theory in its entirety it attempts to present a portrayal of how conducive the current legal ecosystem is to such radical change and the compatibility of these proposals to the framework of Pakistan’s constitutional order and tradition. It has used that theory as a lens through which to examine contemporary Pakistani law and constitutionalism. In doing so, it has identified a number of points at which existing legal doctrines already engage with concerns relating to economic concentration, distributive justice, platform dependency and the relationship between productive contribution and economic reward. Equally, it has highlighted the limits of current regulatory and institutional arrangements in responding to emerging forms of digital and platform-based power. It has also been limited in its extent and elaboration of Pakistani legal doctrine and presented the law in more abstract and broader brush strokes.

Ultimately, the significance of Varoufakis’ work may lie less in whether technofeudalism is accepted as an accurate description of contemporary economic life and more in the questions it compels legal systems to confront. As economic activity becomes increasingly mediated by digital infrastructures, data and algorithmic systems, the challenge for Pakistan will not simply be one of technological adaptation, but of determining how constitutional commitments to welfare, equity and economic participation are to be realised under changing economic conditions.

 

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Pierce RJ Jr, ‘FTC v Amazon Should Be Khan v Khan’ Yale Journal on Regulation: Notice & Comment (2 October 2023) https://www.yalejreg.com/nc/ftc-v-amazon-should-be-khan-v-khan-by-richard-j-pierce-jr/ accessed 2 May 2026

Sheikh A, ‘From Cart to Court: Why Pakistan’s E-Commerce Laws Are Failing Consumers’ LEAP Pakistan (30 April 2025) https://leappakistan.com/from-cart-to-court-why-pakistans-e-commerce-laws-are-failing-consumers/ accessed 4 May 2026

WEBSITES AND INSTITUTIONAL MATERIALS

Competition Commission of Pakistan, ‘Mission Statement’ https://cc.gov.pk/home/func_mission_statement accessed 3 May 2026

KalPay, ‘KalPay’ https://kalpayfinancials.com accessed 1 May 2026

QistBazaar, ‘Qist Bazaar’ https://qistbazaar.pk accessed 1 May 2026

AUDIO-VISUAL SOURCES

Age of Economics, ‘Steve Keen for Age of Economics’ (YouTube, 2023) https://www.youtube.com/watch?v=_i8DPZ0ykJg accessed 2 May 2026

Institute of Art and Ideas, ‘How to Fight Back against Big Tech and the New Oligarchs | Yanis Varoufakis Q&A’ (YouTube, 2023) https://www.youtube.com/watch?v=yXIMJr8buGc accessed 25 April 2026

Institute of Art and Ideas, ‘The Real Reason Elon Musk Bought Twitter | Yanis Varoufakis on the Future of Capitalism’ (YouTube, 2022) https://www.youtube.com/watch?v=P_TMuVQPfxw accessed 4 January 2026