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Monday, June 29, 2015

The “New Feudalism”?


At the dawn of the era of capitalism, when commodity production remained embedded in feudalism, many merchants established networks of disconnected peasant households desirous of extra incomes and possessing modest handiwork skills. They supplied these networks with raw materials and tools (capital), paid for the work, secured the products, and brought them to market, reaping a profit. This system of “cottage” or “putting out” commodity production was a factor in accumulating capital necessary for the later system of collecting workers under one roof, what we came to know as manufactory, a more efficient means of commodity production. In turn, primitive manufactory, with the further accumulation of capital and revolutionary changes in the productive forces, gave rise to an even more efficient system of production by joining human labor with machinery and seemingly inexhaustible and ever-available sources of power.
Just as the modern CEO and his or her corporate courtiers have inherited the role of the early merchant-entrepreneur, today's workers are the offspring of the peasant selling labor to the incipient capitalist.
Centuries after the proto-capitalism of putting out “jobs” to small, independent producers, the idea has returned. Ironically, twenty-first century capitalism is reviving the idea thanks to the ubiquitous technology of the smart phone and the computer. Modern entrepreneurs link services from isolated, unrelated providers with customers via the Internet. Arrangements and payments are made through the intermediary of an entrepreneurial organization that risks little and gains much. While the services have taken on tech-sounding brand names like Uber, Airbnb, Instacart, or TaskRabbit, advocates have dubbed the new enterprises “the sharing economy,” an expression that conjures the image of a utopian New Harmony of idealistic cooperators.
That would be a false image, however.
The “sharing economy” is nothing more than a new phase of monopoly capitalism in the service sector, a new mode of exploitation enabled by advances in the productive forces. As with the evolution of the factory system, higher forms of organization have concentrated industries and afforded higher rates of profit. Advances in technology have allowed a company like Uber to spread its corporate net both nationally and internationally, creating an enterprise much broader and more flexible than existing taxicab or other vehicle livery services. In a short time, the new wave of service start-ups have rivaled or surpassed in revenue or usage the long-standing traditionally organized business competitors. While their services rely upon dissociated, heterogeneous service providers, they are interlocked and dispatched with an efficiency only possible with the latest technological advances.
But even with these technological advances, it is the competitive edge won by lower prices that account for the explosive growth of the “sharing economy.” Customers are, first and foremost, flocking to Uber, Airbnb, etc. because they perceive a value. This has been especially appealing to those upper, upper-middle or want-to-be-upper stratum consumers who have been damaged by the economic crisis. The “sharing economy” thrives in the economic space between limousines (and taxis) and public transportation, between the Ritz-Carlton and Motel Six.
Lower prices are garnered in two very old-fashioned ways common to the history of capitalism: exploitation and side-stepping regulation.
By relying on informal employment and minimalist contracts, the “sharing economy” sidesteps the historically accumulated regulatory protections that have shaped the relevant industries (vehicle livery, hospitality, etc.) over many decades of practice. Without these protections, countless losses or injuries would have been suffered by both consumers and employees. Of course regulation comes at a price. Safety guarantees, training, maintaining humane working conditions, catastrophic insurance etc., all add to the costs of the final product. But billion-dollar corporations like Uber, hiding behind the “sharing” mantra, ignore or deny these regulations. And so far, corporate-friendly state and federal regulatory agencies have put up only meek resistance. Utility commissions and consumer protection agencies, always hesitant to step on corporate toes, have ignored the potential for abuse or negligence. Things will change dramatically when damages and legal actions begin to pile up.
But the “sharing” employment model adds even more to the bottom line. By using “free-lance” employees and selling the notion that they are independent contractors, “sharing economy” corporate moguls evade labor standards of any kind, depress payments on a whim, and allocate work on a totally capricious basis. As independent contractors, employees have virtually no supplemental workplace rights; the terms and conditions of employment are completely dictated by the boss. Wall Street Journal commentator Christopher Mims remarks how some have come to see the “sharing economy” as the “new feudalism” (How Everyone Misjudges the “Sharing” Economy, 5-24-2015). Given its commonalities with the 15th and 16th century putting-out system, one can appreciate the comparison.
In a Philadelphia study cited by Mims, Uber drivers, after expenses, averaged about ten dollars an hour. That figure will only go down when off-warranty repairs and damages and insurance liabilities catch up with extended usage. Moreover, Uber concedes that 51% of its drivers work less than 15 hours a week. And since Uber hires 20,000 new drivers a month internationally, per capita hours can only go down.
While Airbnb doesn't directly exploit workers, it does (or soon will) take jobs from the hospitality industry. Housekeepers, janitors, desk personnel, concierge, etc. are not part of the expenses associated with the Airbnb business model. Consequently, Airbnb enjoys a price competitive advantage (though the customers never really are assured of what he or she will get for the price). But like any competitive advantage, vultures are attracted. In many cities, speculators are purchasing properties explicitly to use for short-term Airbnb rentals. Others are counting on rentals to finance home purchases. Both practices are driving property values higher and higher, further feeding the ethnic and class cleansing of our major cities for the urban gentry.
As with the other elements of the “sharing economy,” the avoidance of regulatory protections, customary amenities, and consistent service will eventually challenge the business model. “Accidents,” sub-standard performance, and disputes are coming. When the aura of newness wears off, the attraction of lower costs will lose much of its glitz.
The workplace may change, but exploitation remains the same. How the labor movement responds will say a lot about the future of organized labor. Depressed labor costs, whether it nests in the fast-food industry or in the new “sharing economy,” imperils all of labor, organized or unorganized.
If labor leaders think that the Democrats will stem the dampening of wages and benefits, they should think again. David Plouffe, President Obama's former campaign manager now works for Uber and serves on its board of directors. Bill Clinton's long-time spokesperson, Matt McKenna, has also joined Uber. And then there is Jim Messina, head of Priorities USA Action, a super PAC associated with Hillary Clinton's Presidential aspirations. Messina works with both Uber and Airbnb to smooth the way with Democratic Party legislators. Fat chance Democratic leaders will stand in the way of the “sharing economy” juggernaut.
Let's hope organized labor has the foresight to tackle this emerging threat to working class living standards.

Zoltan Zigedy

3 comments:

Ed Cloonan said...

did not think zoltan found hope and or feelings useful in analysis for program

Anonymous said...

An excellent analysis of the economic effects app-based companies are having in the global marketplace from the standpoint of working people.

That being said, it seems like this business model will inevitably dominate in the same way the cottage industry model to which you compared it did. I don't see much resistance at least, as you said, from governments who are reticent to enforce their own regulations (the recent events in Paris notwithstanding).

What sort of concrete measures can organized labor take to address this?

Anonymous said...

Is it not true that national and global corporations can afford to ignore this type of criticism? Is it not because it is well-accepted that the so-called Left is only a relatively weak protest entity - 'movement' would probably be too strong a description.
Why the so-called Left seems always to be playing 'catch ups'. The Left is in danger of becoming a 'complaint and protest by-product', like a buzzing mosquito without proper direction, sting and even toxin, and only a nuisance likely to be swatted.
On that basis, this type of quasi and essentially meaningless protests can safely be ignored, by the people and corporate entities being criticised. Has the Left really been relegated to a mere protest entity? Where is the short, medium and long term strategic plans developed to counter the wrongs it identifies among our global predators and exploiters?
Do we know of any 'Left Wing Organisation' in the world today which is making the necessary effective sacrifices to bring into balance our progressively dysfunctional world? Largely brought about by our weakness in allowing those who can, to bringing us to this stage of our human existence.
Should we not talk less and act more showing meaningful results of the same?
Can we detect cowardice in the leadership and ranks of the Left during the twenty-first century? Corporations are prepared to pay the price - human and capital, to achieve their objectives. What price is our current protest entities prepared to pay, in order to become a credible movement again for change, and not left trailing behind like clumsy, bungling and comical manifestations?
While the Left enjoy acquired tastes of what extreme capitalism offers in all its forms, it will not truly search for, discover and implement alternatives to what is on offer today. Real Global Alternatives in order to offer wider choice to collectivity, which is humane, sustainable, just and egalitarian. Not utopia, but superior to what most of us have today.
And so, when we speak of a "New Feudalism" - every utterance of the same is a charge of emasculation of our so-called 'Progressive Movement' today. This emasculation has allowed 'the agenda' to be hijacked and dictated by predators and exploiters. As a result, this is generating openings to extremism probably in effect out of frustrations and cul-de-sac cognitions.
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