Socialist Appeal - British section of the International Marxist Tendency

In the second part of his article on the rise of the sharing economy, Adam Booth examines the impact that new technologies and business models will have on the nature of work and jobs. The trend under capitalism is towards more precarious employment and rising inequality.

In the first part of this three-part series, Adam Booth looked at the sharing economy, with the rise of companies like Uber and AirBnB. In the second part, we examine the impact that new technologies and business models will have on the nature of work and jobs. The trend under capitalism is towards more precarious employment and rising inequality.

In the third and final part, we will be reviewing Paul Mason's new book, PostCapitalism, on the role of information technology within capitalism, and we will examine the way forward for society in the face of such enormous technological potential.

[Read part one]

“Micro-Entrepreneurs” or “Precariat”?

Alongside the prolific rise of the “sharing” economy is the equally meteoric rise of the “on-demand” economy. The focus of such on-demand services has thus far mainly been on the benefits to consumers, with enthusiasts gushing about the wonders of being able to order a cheap cleaner to their apartment or a low-cost taxi-ride at 2am with nothing more than the touch of an iPhone.

This aspect of on-demand apps is not really so revolutionary. In reality, they are nothing more than a glorified Yellow Pages (a giant local telephone directory of businesses organised according to the services they offer). The difference is that in the world of the on-demand economy, a business can be anything or anyone – even just a solitary person providing a specific service (or variety of services). As such, through companies like TaskRabbit, customers can request any service imaginable from the ever-growing population of “taskers” who have signed up to offer their time and skills.

Libertarian capitalists, meanwhile, have extolled the virtues of the on-demand economy for its workers. The on-demand economy (also referred to as the “gig economy”), so we are told, offers a new young generation the chance to break from the tradition of the 9am-5pm working day and from the shackles of being employed by a single business. Young workers just want “freedom”, you see: freedom to choose when to work and what trade to ply. No longer must we be defined by a single occupation, forced to carry out the same monotonous tasks every hour of every day; now the modern worker can be a jack of all trades, developing themselves as a rounded individual with multiple passions and pursuits.

These “free” workers are, it is said, the dynamic driving force behind the on-demand economy; “micro-entrepreneurs” who are pushing capitalism forward with their creativity and ingenuity. The beauty of the on-demand economy is that now anyone can start their own business, be their own boss, and be a “self-made” man.

There is, however, again a vast chasm separating this promise from the reality. As the New York Times notes in an article entitled “In the sharing economy, workers find both freedom and uncertainty”:

“In a climate of continuing high unemployment, however, [on-demand workers] are less micro-entrepreneurs than micro-earners. They often work seven-day weeks, trying to assemble a living wage from a series of one-off gigs. They have little recourse when the services for which they are on call change their business models or pay rates. To reduce the risks, many workers toggle among multiple services.”

Far from being empowered by the on-demand (gig) economy, therefore, these workers are having to resort to freelance work precisely because the capitalist crisis and resultant lack of jobs have taken their power away. These self-employed “taskers” do not represent an aspiring army of entrepreneurs, but are in fact the opposite: the most precarious layer of the working class, still forced to sell their labour power – the only commodity they truly own.

The difference now is that such workers must sell their labour power in smaller and smaller quantities, without any certainty or security; without the guarantee of a contract or of earning enough to live. Companies like TaskRabbit, the Jacobin quips, are just a “glorified temp agency”.

The rise of the self-employed “gig” worker, in this respect, mirrors the rise of the zero-hour contract. It is a return to the “time wages” and “piece wages” that Marx describes in Capital. As the New York Times comments in the same article as above:

Piecemeal labor is hardly a new phenomenon. But as expedited by technology and packaged as apps, it has taken on a shinier veneer under new rubrics: the sharing economy, the peer economy, the collaborative economy, the gig economy.”

High unemployment, competition for jobs, and the downward pressure on wages have served to intensify the race to the bottom for workers, creating even more precarious terms and conditions. A new term has even been coined to describe those suffering under the emergence of such extremely precarious employment: “The Precariat”. As the NYT goes on to explain:

“If these marketplaces are gaining traction with workers, labour economists say, it is because many people who can’t find stable employment feel compelled to take on ad hoc tasks. In July, 9.7 million Americans were unemployed, and an additional 7.5 million were working part-time jobs because they could not find full-time work, according to estimates from the Bureau of Labor Statistics…”

“With piecemeal gigs easier to obtain than long-term employment, a new class of labourer, dependent on precarious work and wages, is emerging. In place of the ‘proletariat,’ Guy Standing, a labour economist, calls them the ‘precariat’…”

“…The companies essentially channel one-off tasks to the fastest taker or lowest bidder, he says, pitting workers against one another in a kind of labour elimination match.”

Whilst the benefits of the on-demand economy for consumers have been lauded, it is the benefits for the capitalists that are far clearer to see. No need for businesses to provide sick pay and holiday pay, or to contribute towards national insurance and pensions. Indeed, this tendency towards classifying workers as “self-employed” has already been seen in Britain, where the number of self-employed workers has been on the rise since the onset of the 2008 crisis, and unions have fought against “bogus” self-employment by companies in the construction industry, who are trying to cut labour costs by outsourcing and employing “self-employed” workers through agencies.

More importantly, by signing up individually and interacting through the portal of an app, workers in the on-demand economy have been isolated and atomised – taken out of the collective environment of the workplace and the tendency towards organisation that this cultivates. Atomised and devoid of organisation, Über’s drivers and TaskRabbit’s “taskers” are raw material for exploitation by the capitalists, as the NYT stresses:

Uber has raised more than $1.5 billion from investors; Lyft has raised $333 million; and TaskRabbit, $38 million. Part of the attraction for investors is that the companies can avoid huge employee payrolls by effectively functioning as labour brokers.”

Like the “sharing” economy, then, the on-demand economy is not a revolutionary, progressive development in the lifecycle of capitalism, but is yet another dystopian reflection of the senile and crisis-ridden nature of the system. It is the same old story of exploitation, inequality, and insecurity re-packaged and re-booted for the smart-phone generation.

On the one hand, we see a “race against the machine”, with workers facing the threat of “technological unemployment” as a result of information technology and automation. One study by Oxford University academics predicted that almost half of all jobs in the advanced capitalist world would be made obsolete by 2034 due to automation, including many white collar jobs such as accountants and estate agents. In the process, a whole swathe of unemployed, highly-educated youth has been created; young people who cannot find a job, and must therefore hunt around for insecure, precarious work.

As an article on highlights:

“…we’re standing at an intersection where over-educated, under-experienced knowledge workers are meeting an influx of task-based gigs. It seems today’s oversupply of knowledge workers only has one interim career option: become a gig worker….

“So what happens when the over-educated, under-skilled knowledge worker enters the sharing economy? They give us a lift to the airport or deliver dog food on demand. At least until driving is automated.”

On the other hand, alongside the competition between workers and technology, there is the intensification of the competition between workers. And these are two sides of the same coin: those thrown out of work – in the short term by the crisis and in the long term by automation – are forced to compete against one-another. The result is an ever-widening chasm between the super-rich and the rest. Precarious self-employment, zero-hour contracts, and piecemeal wages: this is the real future of work under capitalism for the 99%.

Alienation and exploitation

work to liveWith the rise of on-demand services fuelled by an abundance of self-employed individuals, the capitalists have created the ultimate libertarian rat-race: pure competition between workers, spoon-fed the myth that they have been “freed” from the obligations of fixed-term contracts and set hours.

It is true, however, that some young workers have bought into this rhetoric of “freedom” and “liberation” peddled by the capitalists at the head of the on-demand economy. But this does not prove the strength of bourgeois libertarian ideas. Rather, the embracement of the freelance lifestyle reflects the opposite: the alienation from work that many experience as a result of their experiences toiling away in mind-numbing jobs within giant, faceless capitalist corporations. As the NYT explains:

“Gigs hold out the prospect of self-management and variety, with workers taking on diverse assignments of their choice and carving out their own schedules. Rather than toiling at the behest of some faceless corporation, they work for their peers.”

Instead of being just another cog in the machine, there is a strong desire to be in control of our own lives – something we evidently are not when working 9-to-5 and selling our labour power to the major monopolies that are really in control of society. The decision – the “choice” – to work in the on-demand economy, therefore, is being taken by many as an act of rebellion; a stand against the system.

But this rebellion is that of the individual – and as individuals we are powerless. Whilst a few might find a personal, temporary salvation under life as a “tasker”, there is no salvation for the vast majority down this path of intensified competition. Freelance work doesn’t give us any real control – not as long as the banks and big businesses remain in private hands, making all the most important decisions in society. And even on the individual level, all that self-employment and freelance work does is substitute the crushing domination and exploitation of one worker by one company for a lifetime of insecurity, competition and precariousness.

At the same time as alienating workers from work, the on-demand and “sharing” economies have increased our alienation from each other. Our interactions with one-another now increasingly take place through an app and a list of prices or profiles. Marx explained throughout his writings how such alienation was inherent within a society dominated by money and commodities. Now everything has been – or can be – commodified, turning all human relations into money relations.

As anarchist anthropologist David Graeber notes, capitalism today seems to be characterised by a proliferation of “bullshit jobs” – seemingly pointless, skull-crushingly boring jobs that play no socially useful role. But as the Economist explains in their response to Graeber, such jobs do play a role in society – capitalist businesses do not employ people and spend money on labour costs unnecessarily, for this would bite into their profits. Many of the jobs that Graeber identifies as being “bullshit” are in sectors that are clearly only necessary under capitalism, due to competition and private ownership: the bloated legal sector; advertising and marketing; financial houses and hedge funds, etc. And clearly such jobs and sectors would disappear under a socialist society, with labour time freed up in the process to be channelled into addressing important needs such as scientific research, healthcare, education, and green energy.

What the abundance of “bullshit jobs” really demonstrates, the Economist notes, is the immense and unfathomable levels of division of labour that modern capitalism has created in the economy, with processes in production divided up and broken down into the most repetitive and seemingly trivial tasks. It is this incredible division of labour, with workers slaving away purely in the interests of the bosses’ profits, that has led to the heightened sensation of alienation that workers today feel towards their jobs.

As Marx and Engels explain in the German Ideology:

“…the division of labour offers us the first example of how, as long as man remains in natural society, that is, as long as a cleavage exists between the particular and the common interest, as long, therefore, as activity is not voluntarily, but naturally, divided, man’s own deed becomes an alien power opposed to him, which enslaves him instead of being controlled by him. 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…” (our emphasis)

Under socialism, as Marx and Engels continue to explain, however:

“…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.” (our emphasis)

Indeed, for many, the promise of “variety”, “freedom”, and “liberation” offered by the self-employment of the on-demand economy might even sound like Marx and Engels’ maxim above about socialism and the ability “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”.

But as Engels stresses elsewhere (in Socialism: Utopian and Scientific), the “ascent of man from the kingdom of necessity to the kingdom of freedom” is only possible when “anarchy in social production is replaced by systematic, definite organisation”; only then does “the struggle for individual existence disappear”; only then is humanity “finally marked off from the rest of the animal kingdom, and emerges from mere animal conditions of existence into really human ones.”

Only when humanity is free are we all free individually. Only when there is a democratic and rational plan of production can we guarantee everyone a secure future, with a house, a job and a decent wage. And only when we are control of the means of production – of the technology and wealth in society – are we really in control of our own lives.

“The whole sphere of the conditions of life which environ man, and which have hitherto ruled man, now comes under the dominion and control of man, who for the first time becomes the real, conscious lord of nature, because he has now become master of his own social organisation. The laws of his own social action, hitherto standing face-to-face with man as laws of Nature foreign to, and dominating him, will then be used with full understanding, and so mastered by him. Man's own social organization, hitherto confronting him as a necessity imposed by Nature and history, now becomes the result of his own free action.” (Engels, Socialism: Utopian and Scientific)

Why now?

innovationThe fact that the on-demand and “sharing” economies have risen to prominence in the wake of the 2008 crash is no coincidence. For starters, as explained above, it is the swelling ranks of the “reserve army of labour” and the permanent scar of mass unemployment that has fuelled the seemingly endless supply of cheap, self-employed labour that the on-demand economy is so reliant upon.

As Jeff Tennery of highlights:

“Back in 2008, when the market crashed and full-time jobs evaporated, millennials graduating from college were left with few secure employment opportunities. This particular group had very little choice but to move into their parents’ basement and work entry-level jobs that did not match their degrees or interests.”

Meanwhile, the demand for on-demand services has picked up; not because people are richer or “lazier”, but rather because people have become desperate for convenience and leisure. Despite the proliferation of “time saving” devices, we are more busy, stressed, and anxious than ever. The increased productivity offered by automation and technology has meant bigger profits for a tiny elite, not more leisure time for the masses. All the benefits have been concentrated at the top, both in terms of time and money.

Workers everywhere are so squeezed for time by the intense pace and rhythm of life under capitalism, that they are willing to pay someone else for even the most basic of services. Time has become a luxury for the privileged. Hence the appeal of the on-demand economy for ordinary people.

In terms of the “sharing” economy, it is clear that the ongoing crisis of capitalism has impoverished millions and shaken up lifestyles. As a result, people are searching out cheaper, alternative ways of living and consuming. Working class families – previously reliant on an expanding credit bubble to make any major purchases – are now forced to rent (sorry, “share”), as the Economist notes:

“It is surely no coincidence that many peer-to-peer rental firms were founded between 2008 and 2010, in the aftermath of the global financial crisis. Some see sharing, with its mantra that ‘access trumps ownership’, as a post-crisis antidote to materialism and overconsumption.”

For techno-utopians, the rise of the “sharing” / on-demand economy is merely the realisation of a good idea come true. Some clever coders and enthusiastic entrepreneurs bashed heads and – voilà! – a new economy was born!

But what the above demonstrates, by contrast, is that the technology behind the “sharing”/on-demand economy does not just fall from the sky, like manna from heaven. As Marxists, we are materialists – that is, we understand that any ideas in society (including those of science and technology) can only operate within the limits imposed by material conditions. In other words, for any technology to take hold in society, the material conditions for its growth and development must exist.

A common example given to prove this point is that of the steam engine. Despite claims that it was James Watt, the Scottish engineer, who developed the steam engine, it was in fact Hero of Alexandra, an ancient Greek mathematician, who is first credited with having invented a steam-powered engine. But Hero’s steam engine, invented at the turn of the first millennium, was nothing more than a toy.

Within an economy based on an abundant supply of slaves, tools to improve productivity – such as the steam engine – would play no role. Only with the development of capitalism and wage-labour, whereby the worker’s ability to work for a definite period of time is purchased (rather than buying the worker themselves, as is the case under slavery), was there an incentive to invest in productivity-enhancing devices and techniques.

In the case of the “sharing” / on-demand economy, as explained above, the crash and crisis were necessary to create the conditions that these new business models could thrive in: mass unemployment; austerity and impoverishment; and growing inequality. In this respect, the rise of the “sharing” economy and the on-demand economy is not the product of any individual genius, as the capitalists would like to claim, but – again – a reflection of the impasse, stagnation, and crisis of the capitalist system.

“Small is beautiful”

monopolyWith the growth of the “sharing” / on-demand economy, there has been a re-emergence of the “small is beautiful” rhetoric that was popular in previous decades. The idea then, embraced by the liberal bourgeoisie and petit-bourgeoisie, was that the economy would be driven forward not by giant multinationals, but by a wave of smaller, more innovative businesses.

The rise of the internet and app based economy, where start-ups can reach valuations of billions with only a skeleton staff, has given the “small is beautiful” movement a new lease of life. Like the American gold rushes of the 19th Century, the promise is made today that any budding young entrepreneur can get rich quick – all they need is a good idea and a bundle of enthusiasm and audacity. There’s gold in them thar hills!

But such jubilant and euphoric calls are frequently heard at the beginning of every new bubble. Marx highlighted the nature and dynamics of such bubbles in Capital, which arise from the anarchic nature of the capitalist market: a new market opens up; early pioneers make super-profits in the absence of competition; a herd mentality sets in as hordes of investors pile in, afraid of missing the party; the sector becomes bloated with excess capacity; and crisis sets in as the capitalists find they are over-burdened with debts they cannot pay back, as a result of borrowing money on the assumption of profits that can never be realised.

This is the pattern of every bubble, from the earliest recorded cases, such as the Dutch tulip mania of the 1600s, to the modern case of American shale gas. Now with cash hoards piling up in the hands of the capitalists, but without any avenue for profitable investment, stock market prices and the amounts of money being thrown at start-ups are becoming increasingly separated from the real state of the economy.

One doesn’t have to go back many years to find the most recent example in the tech industry: that of the dotcom bubble at the turn of the new millennium – a bubble that burst, leaving a sharp economic downturn in its wake.

Today, new info-tech-based companies are being valued at eye-watering amounts. Pinterest, WhatsApp, Snapchat, and Instagram have been valued at $11bn, $19bn, $20bn, and $35bn respectively – and yet none have any source of income. All the signs of another tech-bubble are there; again, another reflection of the enormous overproduction that exists on a world scale, and the dearth of genuinely profitable places for the rich to put their money.

Investors, meanwhile, are pouring money into the “sharing” / on-demand economy. AirBnB and Uber, valued at $26bn and $41bn respectively, have raised over $8bn in funds respectively, without yet actually making a profit for their investors. All this money is being gained from investors on the promise that these companies will solidify a monopoly position for themselves and will eventually, therefore, be able to make super-profits in the not-too-distant future.

Indeed, the fact that companies such as AirBnB and Uber must establish themselves as monopolies before they can make a profit is a powerful punch in the face of the “small is beautiful” argument. The tech industry, so often lauded for its dynamic and fast-growing start-ups is still – like every other sector – dominated by monopolies. Apple, Google, Facebook, and Amazon: all of these household names and giant multinationals have a near-monopolistic hold in their respective markets. And, as the purchase of WhatsApp and Instagram by Facebook show, the small will always end up being swallowed up by the big.

The same is true of the “sharing” economy. For example, Zipcar, a car “sharing” company and early pioneer of the “sharing” economy, was bought up by Avis, a massive multinational car-hire company, in early 2013. Meanwhile, whilst companies like AirBnB promote themselves as being a platform for ordinary people to make a bit of money on the side by renting out their spare rooms, one study of AirBnB’s business in New York found that approximately 50% of AirBnB’s revenue generated in the Big Apple came from those with multiple listings – i.e. landlords. Similarly, three-quarters of AirBnB’s business is for whole-home rentals – clearly not a case of ordinary people making some pocket money on the side.

The Economist highlights this perspective of big business domination over the “sharing” / on-demand economy:

What looks like a disruptive new model will probably end up being mixed into existing models and embraced by incumbents, as has often happened before. Tim O’Reilly of O’Reilly Media, a long-term watcher of internet trends, says such consolidation is inevitable. “When new markets come in, they often look more democratising than they end up becoming,” he says. The idea of renting from a person rather than a faceless company will survive, even if the early idealism of the sharing economy does not.” (our emphasis)

The “sharing” / on-demand economy gives the illusion of de-centralisation, because of its peer-to-peer nature, because work is outsourced to the self-employed, and because interaction is through an app; but the reality is that these markets are still dominated by monopolies. Furthermore, although they are peer-to-peer, there is still an incredible level of planning and centralisation involved, as there is inside any big business: planning of production internally, for the sake of increasing efficiency, decreasing costs, and boosting profits.

This is yet another absurd contradiction of capitalism: enormous levels of planning inside companies in terms of labour, infrastructure, and resources (all in the name of profits, of course); but yet complete anarchy between companies, with the allocation of resources on a societal scale left to the “invisible hand” of the market.

Like in any profit-seeking company, planning and centralisation most certainly exists within the major monopolies of the “sharing” / on-demand economy, such as AirBnB and Über; the difference is that much of this planning is automatic (due to intelligent software and algorithms) and spatially distributed. A plan is still in operation; it just isn’t under one roof, clearly identifiable and visible, as it is in the case of a factory or office.

Above all, this serves to demonstrate the potential for planning the whole economy in a rational and democratic way, if only such monopolies were taken out of private hands and placed under common ownership. Companies such as AirBnB and TaskRabbit prove that the technology exists today to have a genuinely democratic plan of production; to be able to actually share out the wealth and resources in society in an efficient and equitable way; for ordinary people to be able to directly participate in the running of society, without the need for a bureaucratic state apparatus.

Everywhere we look, our lives are dominated by monopolies; and it is these giant multinationals who currently make all the real decisions in society. The introduction of the internet, social media, and smart-phones has done nothing to change this. We may be more networked to one-another than ever, but the networks are still all owned and control by big business. One only has to look at the media industry – owned by oligarchs, and dominated by just a handful of companies – to see how, despite a plethora of independent blogs, etc., the news and information we receive is still the product of a group of gangsters, such as Murdoch and co.

At the same time, inequality is rising and wealth is more concentrated than ever, as demonstrated by recent figures from Oxfam, who reported that by the end of 2015 the richest 1% worldwide are predicted to have as much wealth as the rest of the planet’s population put together.

All of this is a stunning vindication of Marx’s analysis of capitalism; of how the laws and dynamics of competition necessarily lead to concentration and centralisation; of the organic tendency for the free market to turn into its monopolistic opposite. For all the talk of “small is beautiful”, it seems that the world is still very much dominated by the big.

Part three -->>