The Gig Economy Makes Karl Marx’s Dreams Come True
And It’s All Capitalism’s Doing
MAX BORDERS August 04, 2015
In The German Ideology, Marx wrote,
For as soon as the distribution of labour comes into being, each man has a particular, exclusive sphere of activity, which is forced upon him and from which he cannot escape. He is a hunter, a fisherman, a herdsman, or a critical critic, and must remain so if he does not want to lose his means of livelihood; while in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.
The sharing or “gig” economy is not only disrupting the way people live and work; it’s dividing the left considerably.
On the one hand, you have the nostalgic leftists who want Joe to work a nine-to-five job and skip the fishing. You know, like people did in the 1950s.
As Freeman columnist Steve Horwitz writes, presidential candidate Hillary Clinton
longs for a time like the 1950s when workers had the structure of the corporate world and unions through which to lobby and negotiate for pay and benefits, rather than the so-called “gig” economy of so many modern freelance employees, such as Uber drivers. “This on-demand or so-called gig economy is creating exciting opportunities and unleashing innovation,” Clinton said, “but it’s also raising hard questions about workplace protection and what a good job will look like in the future.”
More confusing (or confused, perhaps) is Paul Mason’s writing in theGuardian. He lauds “postcapitalism,” which has all the hallmarks of a society Clinton is worried about:
Postcapitalism is possible because of three major changes information technology has brought about in the past 25 years. First, it has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages.
Bingo. The gig economy. But does it make sense to give capitalism a different name? I suppose one could. After all, Marx coined the term. But Marx’s definition of capitalism is a system based on private ownership of the means of production. Has that dynamic fundamentally changed?
Far from it. The sharing economy is simply decentralizing power by allowing ordinary people to use their own small-scale means of production. By solving coordination problems and lowering transaction costs, technology is augmenting capitalism.
Now, I’m not saying that there is nothing interesting going on in the electronic commons. Ideas are being configured and reconfigured in the networked economy. Many of those ideas are being taken out of the intellectual-property regime, thanks to open sourcing, and this can be a good thing. There are fierce debates about whether intellectual property (claims to property in ideas and in nonscarce goods) is justifiable. But passing over those debates, more and more open-source technologies are coming online for exploitation by everyone.
Do open sourcing and the creative commons take us to postcapitalism?
I don’t know. But fundamentally, as long as the process is voluntary and carried out peacefully by a community of cooperators, who cares what you call it? Should we be upset that the guy who founded Lyft is getting rich from the tech? Some people are, because they see the accumulation of wealth as taboo.
The Gig Economy Makes Karl Marx's Dreams Come True : The Freeman : Foundation for Economic Education
Capitalism Smothers the Sharing Economy
Chad Nelson | August 3rd, 2015
On his Café Hayek blog, Donald Boudreaux discusses the attacks governments around the world are waging against new “sharing economy” services such as Uber and Airbnb. Though it’s naïve to call Uber a part of the sharing economy, Boudreaux rightfully denounces the assaults, pointing out that these businesses offer a way for everyday people to turn their consumer goods into capital goods. Boudreaux recognizes that their business models shift ownership of the means of production away from “older” capital and into the hands of those formerly on the “periphery of those ranks.” He goes on to condemn government intervention which would smother the sharing economy, calling out the hypocrisy of those who in one breath decry the existing wealth gap, and in the next, attempt to suppress market forces that would achieve a more equitable distribution.
What’s missing from Boudreaux’s critique, among other things, is the role played by “private” enterprise in this global anti-competitive phenomenon.
Uber itself appears to have now become one of “today’s capitalists,” if it wasn’t one already. It has succumbed to the urge to strangle its other web-based competitors through political brinksmanship. It now works directly with local governments to craft ridesharing regulations. This serves not only to ingratiate it with bureaucrats, but also to hamstring genuine peer-to-peer ridesharing services that seek to route around Uber’s siphoning of funds from the driver-passenger transaction (as well as Uber’s well-documented mistreatment of its drivers). As it continues to grow, Uber seems destined to become more and more like FAR and the other capitalist creatures who will stop at nothing to snuff out any attempt to render them irrelevant.
The ‘gig economy’ is coming. What will it mean for work?
Hillary Clinton, whose recent speech raised concerns about the jobs of the future. Photograph: Robert F. Bukaty/AP
Not so long ago, the only people who looked for “gigs” were musicians. For the rest of us, once we outgrew our school dreams of rock stardom, we found “real” jobs that paid us a fixed salary every month, allowed us to take paid holidays and formed the basis for planning a stable future.
Today, more and more of us choose, instead, to make our living working gigs rather than full time. To the optimists, it promises a future of empowered entrepreneurs and boundless innovation. To the naysayers, it portends a dystopian future of disenfranchised workers hunting for their next wedge of piecework.
In the US, the “gig economy” is now so salient that the phrase and issues have entered the early exchanges of the presidential race. Earlier this month, as one frontrunner, Jeb Bush, took a well-publicised Uber ride to signal solidarity with the company, another, Hillary Clinton, was more cautious in her support. In a speech laying out her economic plan, she said: “This on-demand, or so-called gig, economy is creating exciting economies and unleashing innovation. But it is also raising hard questions about workplace protections and what a good job will look like in the future.”
Today’s digitally enabled gig economy was preceded by marketplaces such as ELance and oDesk, through which computer programmers and designers could make a living competing for short-term work assignments. But the gig economy isn’t just creating a new digital channel for freelance work. It is spawning a host of new economic activity. More than a million “makers” sell jewellery, clothing and accessories through the online marketplace Etsy. The short-term accommodation platforms Airbnb, Love Home Swap and onefinestay collectively have close to a million “hosts”.
This explosion of small-scale entrepreneurship might make one wonder whether we are returning to the economy of the 18th century, described by the economist Adam Smith in his book An Inquiry Into the Nature and Causes of the Wealth of Nations. The economy Smith described was a genuine market economy of individuals engaging in commerce with one another.
Over the following two centuries, however, the emergence of mass production and distribution yielded modern corporations. The entrepreneurs of Smith’s time gave way to the salaried employees of the 20th century.
A different technological revolution – the digital revolution – is partially responsible for the recent return to peer-to-peer exchange. Most of the new on-demand services rely on a population equipped with computers or GPS-enabled smartphones. Furthermore, the social capital we’ve digitised on Facebook and LinkedIn makes it easier to trust that semi-anonymous peer.
Does this suggest a shift towards a textbook market economy? Granted, Uber, Airbnb, Etsy and TaskRabbit are quite different from organisations such as Apple, BP or Sainsbury’s. Because you aren’t actually renting a space from Airbnb, taking a ride in a car owned by Uber or buying a product made by Etsy. The platform simply connects you with a provider of space, a driver of a vehicle or a seller who runs a virtual shop.
But these platforms are by no means merely the purveyors of Smith’s invisible hand. Rather, the hand they play in facilitating exchange is decidedly visible. Uber, not individual drivers, sets prices. Airbnb trains its hosts to be better providers of hospitality. Etsy facilitates seller community building. All of them provide user-generated feedback systems, creating a high-quality consumer experience. Much like an organisation building a brand might.
So it seems like we’ve invented a new institutional form – the peer-to-peer platform – a digitally powered hybrid between organising economic activity through the market and within the organisation. And because these platforms provide layers of trust, brand and expertise on demand, the need for specialising before you’re qualified to become a provider is reduced. Almost anyone with talent can become a part-time hotelier through Airbnb or an artisan retailer on the side through Etsy. Any reasonably competent driver can morph into a provider of commercial transportation by plugging into Uber or BlaBlaCar.
And providers don’t have to commit to full days of work. You can pick up your kids from school (and then switch to being an Uber driver). In the gig economy, the lines between personal and professional become increasingly blurred.
There’s certainly something empowering about being your own boss. With the right mindset, you can achieve a better work-life balance. But there’s also something empowering about a steady pay cheque, fixed work hours and company-provided benefits. It’s harder to plan your life longer term when you don’t know how much money you’re going to be making next year.
On the other hand, starting a new business has generally been an all-or-nothing proposition, requiring a significant appetite for risk. There are benefits to dipping your toes into the entrepreneurial waters by experimenting with a few gigs on the side. Perhaps this lowering of barriers to entrepreneurship will spur innovation across the economy.
Economist Thomas Piketty tells us that the main driver of sustained economic inequality over the past two centuries has been the concentration of wealth-producing “capital” in the hands of a few. This seems less likely if the economy is powered by millions of micro-entrepreneurs who own their businesses, rather than a small number of giant corporations.
But the latest generation of specialised labour platforms also raises the spectre of greater social inequality. We’ve now got apps through which providers will park your car (Luxe), buy and deliver your groceries (Instacart), and get you your drinks (Drizly). There’s a risk we might devolve into a society in which the on-demand many end up serving the privileged few.
In many countries, key slices of the social safety net are tied to full-time employment with a company or the government. Although the broader socioeconomic effects of the gig economy are as yet unclear, it is clear we must rethink the provision of our safety net, decoupling it from salaried jobs and making it more readily available to independent workers.
Arun Sundararajan is professor at New York University’s School of Business. His new book about crowd-based capitalism will be published by the MIT Press in 2016
The ‘gig economy’ is coming. What will it mean for work? | Arun Sundararajan | Comment is free | The Guardian
Never Mind the Sharing Economy: Here’s Platform Capitalism
By sebastian olma, October 16, 2014 at 8:39 pm.
1. A Backlash Against Sharing?
Just a few weeks ago, the British government announced its intention to “make the UK the global centre for the sharing economy.” As Business and Enterprise minister Matthew Hancock rejoiced: “By backing the sharing economy… we’re making sure that Britain is at the forefront of progress and by future proofing our economy we’re helping to protect the next generation.”
Yet, while policy makers and their advisers can hardly contain their enthusiasm, over the course of the last few months there has been a veritable surge of critical comments on the “sharing economy.” Mainstream media as well as the blogosphere are brimming with furious articles, warning us to not buy into the“sharing hype” or even attacking the supposed “sharing lie.” The American business magazine Forbes even talks about a “backlash against the sharing economy.”
2. To Share or Not to Share
Not unlike other contemporary policy fashions such as the creative industries or social innovation, the “sharing economy” throws together a variety of diverse and often unrelated phenomena; from massively funded technology start-ups like Uber and AirBnB to fair trade cooperatives, borrowing shops and hippie communes.
The first thing we need to understand about the “sharing economy” is that it has absolutely nothing to do with sharing in the sense you and I might think about it. The essence of sharing – if it has any meaning at all – is of course that it does not involve the exchange of money. Sharing only happens in the absence of market transactions. With regard to the poster boys and girls of the “sharing economy,” the very opposite is the case. These are digital platforms that roughly do two things: either making the old practice of re- and multi-using durable goods more efficient or expanding market exchange into economically uncharted territory of society.
However, none of this has anything to do with sharing! Matthew Yglesias, writing for the US business blog Slate.com,illustrates this fact as follows:
“My neighbor and I share a snow shovel because we share some stairs that need to be shovelled when it snows and we share responsibility for doing the work. If I owned the stairs and charged him a small fee every time he walked in or out of the house, that would be the opposite of sharing.”
This might sound trivial but given the confused usage of the notion of sharing, it seems appropriate to remind ourselves that helping each other out by sharing our resources is one thing while commodifying these resources by charging a fee for their use is quite another. And this gets us to the more innovative dimension of the “sharing economy.” Today, the “sharing economy” entails much more than just digital updates of second-hand exchange and rentals.
What companies like Uber, AirBnB, TaskRabbit or Postmates have in common is that they are platforms coordinating supply and demand of products and services that in their present form were previously unavailable on the market. Uber is a platform where people looking for a cab quickly find their non-, semi-, and real professional taxi driver.AirBnB allows people to sublet their houses, TaskRabbit connects supply and demand for chores, Postmates for deliveries, Instacart for grocery shopping. While it might be convenient to make use of these services, they have absolutely nothing to do with sharing. They stand for a digitally enabled expansion of the market economy, which, again, is the opposite of sharing. If someone does my shopping or drops me at the airport in exchange for a financial fee, how is this sharing? This situation doesn’t change if instead of money, one receives credits to be used at the issuing platform (a mistake that for the last few years has led to a rather annoying hype around “alternative currencies” based on the belief that the ‘evils’ of capitalism could be cured by replacing real money by a less efficient substitute).
3. Enter Platform Capitalism
In an attempt to overcome this confusion, Sascha Lobo, a German technology blogger for Der Spiegel, has recently suggested to drop the obscure notion of “sharing” altogether. “What is called sharing economy,” he argues, “is merely one aspect of a more general development, i.e., a new quality of the the digital economy: platform capitalism.” As Lobo emphasizes, platforms like Uber andAirBnB are more than just internet marketplaces. While marketplaces connect supply and demand between customers and companies, digital platforms connect customers to whatever. The platform is a generic ‘ecosystem’ able to link potential customers to anything and anyone, from private individuals to multinational corporations. Everyone can become a supplier for all sorts of products and services at the click of a button. This is the real innovation that companies of the platform capitalism variety have introduced. Again, this is miles away from sharing but instead represents an interesting mutation of the economic system due to the application of digital technology.
As one blogger puts it: “Sure, many of the old middlemen and retailers disappear but only to be replaced by much more powerful gatekeepers.”
In fact, the argument is quite an obscene one, particularly if it is made by the stakeholders of platform capitalism themselves. As globally operating digital platforms, these companies have the unique ability to cut across many regional markets and reconfigure traditionally specific markets for goods and services as generic customer-to-whatever ‘ecosystems’. It seems fairly obvious that the entire purpose of the platform business model is to reach a monopoly position, as this enables the respective platform to set and control the (considerably lower) standards upon which someone (preferably anyone) could become a supplier in the respective market. Instead of cutting out the middleman, digital platforms have the inherent tendency to become veritable Über-middlemen, i.e., monopolies with an unprecedented control over the markets they themselves create. In fact, calling these customer-to-whatever ecosystems “markets” often turns out to be a bit of a joke. For the clients of Uber & Co., price is not the result of the free play of supply and demand but of specific algorithms supposedly simulating the market mechanism. The effect of such algorithmic tampering with the market is demonstrated for instance by Uber’s surge pricing during periods of peak demand. It is not very difficult to see where this might be leading. Taking a cab to the hospital in, say, New York City during a snow storm might become unaffordable for some under conditions of mature platform capitalism.
4. Disruption and Regulation
This is not meant as an excuse to engage in the increasingly popular pastime of algorithm bashing. There is neither an algorithmic conspiracy here, nor are these companies selling out the ‘true spirit of the sharing economy’. They simply follow the logic of platform capitalism which at the moment is the logic of a digital gold rush, unhampered by any kind of government regulation. In a way, what we are seeing here is social innovation in its purest form, i.e., the creation of something that from a business perspective is even better than the so-called “blue ocean” (a competition-free market). And it is causing the famous disruption – so much so that cities like Amsterdam are raising the white flag as entire streets are turning into exclusive AirBnB zones. It should be clear that this doesn’t help an already overstrained housing market, let alone the local population’s quality of life. While taxi drivers’ protests against Uber and Lyft have been be laughed away as collateral innovation damage, the transformation of our cities into tax-free, urban versions of “Center Parcs” might be more difficult to stomach.
Regulation is important not only in order to prevent monopolies, fund the state and keep our cities liveable for their actual inhabitants but also to insure fair treatment of those we haven’t considered yet: the suppliers and vendors who sell their products and services on the digital platforms. If we are to believe the proponents of the “sharing economy,” then the opportunities are pretty amazing. As Brian Chesky, CEO and co-founder of Airbnb, puts it in Wall Street Journal:
“I want to live in a world where people can become entrepreneurs or micro-entrepreneurs and if we can lower the friction and inspire them to do that, especially in an economy like today, this is the promise of the sharing economy.”
According to Chesky, digital platforms are simply a reflection of our contemporary entrepreneurial lifestyle and anyway, they provide people with an extra opportunity for income in these times of economic crisis. Similarly, New York Magazine sees the “sharing economy” as an answer to our current economic predicament as well but is slightly less euphoric as to the potency of the sharing antidote:
“Tools that help people trust in the kindness of strangers might be the thing pushing hesitant sharing-economy participants over the threshold to adoption. But what’s getting them to the threshold in the first place is a damaged economy, and harmful public policy that has forced millions of people to look to odd jobs for sustenance.”
So which one is it then: inspired micro-entrepreneurs or odd jobs for sustenance?
5. Revolutionizing the World’s Labour Force
At the moment, it is still difficult to reach a fair conclusion on this question as the reports from the field are only starting to come in. Their is a fairly clear tendency though. Business magazine Fast Company, a publication known for its enthusiasm for everything innovative and digital, sent one of its writers for one month into the “sharing economy” to test the waters of entrepreneurial inspiration. The conclusion of her very interesting and extensive report is rather devastating:
“For one month, I became the “micro-entrepreneur” touted by companies like TaskRabbit, Postmates, and Airbnb. Instead of the labor revolution I had been promised, all I found was hard work, low pay, and a system that puts workers at a disadvantage.”
In fact, Sarah Kessler (that’s the name of the writer turned sharing Guinea pig) never made enough to get by at all despite being young, flexible and urban, i.e., part of the social cohort that is supposed to fare particularly well in the “sharing economy.” Similar concerns have been raised by the New York Times’ rather comprehensive journalistic analysis of the phenomenon. Yes, there is freedom to be found in platform capitalism but it is the precarious freedom of what the newspaper calls the “gig economy:”
“Many gigs may seem to offer decent pay. But they may not look that great after factoring in the time spent, expenses, insurance costs and taxes on self-employment earnings. ‘If you did the calculations, many of these people would be earning less than minimum wage,’ says Dean Baker, an economist who is the co-director of the Center for Economic and Policy Research in Washington. ‘You are getting people to self-exploit in ways we have regulations in place to prevent.’”
If one adds protesting Uber drivers and the fact that on top of miserable pay and lack of safety net one also misses the the social (!) aspect of sharing one’s work experience with coworkers, there isn’t really much awesomeness left for the sharing micro-entrepreneur. TaskRabbit’s CEO Leah Busque once said that the goal of her company was to “revolutionize the world’s labor force.” Unfortunately, it looks as though Mrs. Busque and her investors could accomplish what they set out to do. One might not agree with CUNY Professor Stanley Aronowitz, who refers to the ‘gigs’ offered the by “sharing economy” as “wage slavery in which all the cards are held, mediated by technology, by the employer, whether it is the intermediary company or the customer.” What does become increasingly obvious, though, is that platform capitalism is mounting an attack on the achievements of the labour movement – which for very good reasons we consider to be a pillar of modern, democratic civilization – and a very effective one at that. And here again, it is not that the “sharing economy” has gone off the the rails, it is simply the logic of platform capitalism. As Sacha Lobo puts it succinctly:
“By controlling their ecosystems, platforms create a stage on which every economic transaction can be turned into an auction. Nothing minimizes cost better than an auction – including the cost of labour. That’s why labour is the crucial societal aspect of platform capitalism. It is exactly here that we will have to decide whether to harness the enormous advantages of platform capitalism and the sharing economy or to create a ‘dumping market’ where the exploited amateurs only have the function to push professional prices down.”
I agree. The basis for such a decision needs to be a proper understanding of the reality of platform capitalism. The anger we have seen over the last few months directed against the “sharing economy” has a lot to do with the utterly unsubstantial claims and stories that are constantly churned out by the marketing machine of platform capitalism. Take John Zimmer, co-founder of Lyft, who told Wired earlier this year that the sharing economy bestows on us the gift of a revived community spirit. Referring to his visit to the Oglala Sioux reservation, he writes: “Their sense of community, of connection to each other and to their land, made me feel more happy and alive than I’ve ever felt. We now have the opportunity to use technology to help us get there.” No question, the pompous impertinence of this comparison is truly breathtaking. And yet, neither is this kind of rhetorical gymnastics the exception in the sharing-scene nor does it come unmotivated. Noam Scheiber of the New Republic explains the rationale behind the obscenities of Zimmer (and his kind) with great lucidity :
“For-profit “sharing” represents by far the fastest-growing source of un- and under-regulated commercial activity in the country. Calling it the modern equivalent of an ancient tribal custom is a rather ingenious rationale for keeping it that way. After all, if you’re a regulator, it’s easy to crack down on the commercial use of improperly zoned and insured property. But what kind of knuckle-dragger would crack down on making friends?”
6. The Sharing Economy: A Dumb Term that Deserves to Die!
The truth of the matter, though, as Nathan Schneider writes on Al-Jazeera America, is that “the sharing sector of the conventional economy built on venture capital and exploited labor is a multibillion dollar business, while the idea of a real sharing economy based on cooperatives, worker solidarity and democratic governance remains too much of an afterthought. If the sharing movement really wants to disrupt economic injustice, these should be its first priorities.”
I hope that it has become clear over the course of this little essay that it is in no way the intention of the “sharing economy” to “disrupt economic injustice.” The “sharing economy” does not exist. Or, in the words of the business writer Matthew Yglesias: “This is a dumb term, and it deserves to die.” One of the reasons why it doesn’t is that Silicon Valley’s powerful marketing machine that drives platform capitalism is beautifully adjusted to a global network of willing volunteers; from the one size fits all TED format to more thematically specific publications and conferences. Even well-meaning activist networks such as Shareable or the P2P-Foundation play a rather questionable role in keeping the myth of the “sharing-economy” alive.
This is not to say that there are no great initiatives and indeed businesses that are trying to use the power of digital technology or simply their imagination to practice forms of exchange that could actually be called sharing. They do exist and it is wonderful that they do. However, their value in the “sharing economy” as it is currently staged by the stakeholders of platform capitalism is that of providing an illegitimate ethical charge, a fig leave for an alarming mutation of our economy. I think they deserve better! Yet, in order to even have a chance at turning this development into something that might be legitimately called “sharing economy,” we need to be absolutely clear about the fact that platform capitalism does not even remotely resemble it.