In response to a wave of bad behavior by the popular ride-sharing service Uber—with one executive suggesting digging up dirt on journalists who write negative articles about the company—many advocated a switch to Uber’s competitor, Lyft. But this approach ignores the fact that Uber’s abuses are baked into how “sharing” companies operate, a way of doing business that is shared by its competitors. More important, it misses a way to transform these companies that is right there in front of us: by socializing ownership among their workers.
Cutting through the marketing BS of Silicon Valley is a good goal for everyone, but the left in particular should debunk its definition of a “sharing economy.” Sharing, in this case, doesn’t mean “lending someone the use of something for free.” It also doesn’t match the Silicon Valley description of creating a large number of small-scale entrepreneurs or independent business owners.
Instead, what we see is the creation of a low-wage workforce under the ownership of tech companies. At Uber, this arrangement means that drivers have to pay for their own cars, maintenance and gas, while management sets the rates and terms of their labor, taking a hefty cut in the process. A crucial first step for reform is to get these drivers recognized as actual workers, with proper rights and proper insurance.
Now think about what the capitalist managers at Uber are doing with their cut of the company’s money. They are fighting regulators and hiring lobbyists in order to bring down the incumbent taxi-medallion business. They are also spending money on advertising, in order to get customers interested in using a ride-sharing service. These are both expensive projects, and they open the door for competitors. Newer ride-share ventures can piggyback on Uber’s success and take advantage of these new terms, with Uber having already spent all that initial money. This is called the “second-mover advantage,” and it explains why Uber is such a vicious company.
But after this initial project, what exactly are the capitalists at Uber contributing to the company? Almost all of the actual capital is already owned by the workers, in the form of cars that they pay for and maintain themselves. And these workers labor individually, doing the same tasks, so there’s no need for a management class to control their daily operations. The capital owners maintain the phone app, but app technology isn’t the major cost, and it’s getting cheaper and easier by the day.
Given that the workers already own all the capital in the form of their cars, why aren’t they collecting all the profits? Worker cooperatives are difficult to start when there’s massive capital needed up front, or when it’s necessary to coordinate a lot of different types of workers. But, as we’ve already shown, that’s not the case with Uber. In fact, if any set of companies deserves to have its rentiers euthanized, it’s those of the “sharing economy,” in which management relies heavily on the individual ownership of capital, providing only coordination and branding.
Click to enlarge (Credit: Tracy Loeffelholz Dunn)
Creating worker- and producer-owned cooperatives isn’t new. The Populists used them to respond to the rapid technological changes they faced in the late nineteenth century. Expanding telegraph and railroad systems placed workers at the mercy of terms set by faraway conglomerates. The Populist John Willits once said that the word cooperation “means more to us than any other word in the English language.” In a worker cooperative, profits stay within the firm and the workers themselves say what managerial decisions need to be carried out.
It takes an entrepreneur to start up ride-sharing, but not to run it as a firm. A worker collective is the obvious transition. Uber and the rest of the “sharing economy” companies will try to close the door behind them, either by putting their workers in binding contracts or by lobbying government officials to build their own set of industry protections. But a transition to workers’ owning their firms is necessary, economically smart, and one way for workers to gain power in the digital age. Because you know what worker-run firms do? Share. Mike Konczal