Trebor Scholz's New Report on Platform Cooperativism

The backlash to the corporate “sharing economy” is gaining momentum, and one key player is the movement to develop “platform cooperativism.” The New York Office of Rosa Luxemburg Stiftung has released a report critiquing the “sharing economy” and describing the alternatives. It’s called “Platform Cooperativism: Challenging the Corporate Sharing Economy” (pdf file). and it’s written by Trebor Scholz, an associate professor at the New School.

Scholz and journalist Nathan Schneider were co-organizers of a November 2015 conference that served as an historic flashpoint on this topic. People are starting to realize the many anti-social effects of the “gig economy,” as typified by Uber, Airbnb, TaskRabbit and Mechanical Turk, but the development of workable alternatives is barely underway.

The first half of the report addresses the many deficiencies of the so-called sharing economy. First of all, it’s not about sharing at all. It’s an “on-demand service economy” that relies on the same exploitative techniques of conventional capitalism, but with powerful tech enhancements.

While the system delivers amazing convenience and efficiencies, it also preys upon those who cannot obtain good-paying stable jobs with benefits. It re-introduces piecework on a massive scale, this time with sophisticated computer algorithms to ratchet down wages to below minimum wage. Since everyone is nominally considered an independent contractor, corporate platforms can shrug and exonerate themselves by saying that everyone is “free to choose” their working circumstances, in Milton Friedman’s classic phrase.

But as more jobs are sent abroad to countries that pay lower wages and have few worker protections, workers are in many cases victimized by a global race to the bottom. Corporate platforms act as lucrative intermediaries that shed the costs of conventional businesses – the capital infrastructure, regular paychecks and employee benefits.

In the report, Scholz notes that the gig economy financializes resources that were previously outside of the market. Our cars, our apartments, our private time – all can now be monetized through corporate platforms and made subordinate to market forces. In effect, this new system is “embedding extractive processes into social interactions” and “extending the deregulated free market into previously private areas of our lives,” writes Scholz.

It is not widely appreciated that a key element of the gig economy is to skirt the law if not overturn it. Illegality is a core element of the business model for companies like Uber, explains Scholz: First they ignore federal and state law for worker and consumer protections by creating a new kind of network-based marketplace relying on “independent contractors,” not “employees.” Then they invoke their growing customer base to persuade legislators that, as jobs-creators, they should not be subject to “archaic” regulations. Lobbying to thwart or roll back such protections is in fact a core element of the business strategies of Uber, Airbnb and Amazon.

Scholz explains that platform cooperativism as a humane alternative to the gig economy relies upon three strategies:

1. cloning the technological heart of Uber, Airbnb and others;
2. developing social solidarity in the ownership and management of the platforms; and
3. reframing the ideas of innovation and efficiency with an eye on benefiting all, not just delivering profits to the few.

He proceeds to introduce many types of cooperative platforms and the ways that they could or do run. They include city-owned platforms such as the Munibnb, now under development in Seoul, South Korea, as an Airbnb-like platform. But instead of siphoning away money to investors and encouraging “ghost neighborhoods” rented out to tourists, Munibnb would use profits to fund public services and give apartment owners higher rental fees.

Scholz also describes “produser-owned platforms” in which users are the producers (hence “produsers”), so that sites for stock photography or streaming music, for example, could be owned and managed as coops. Another example: Unions could create their own virtual hiring halls and turn profits into social benefit.

Scholz proposes ten basic principles for the management of platform cooperatives. They focus on such matters as ownership, decent pay and income security, transparency and data portability, appreciation and acknowledgment, a protective legal framework, and portable worker protections and benefits. This vision clearly requires more to make it real, such as new forms of financing for coops, such as crowdequity and small investors.

The Platform Cooperativism report does a great job of outlining a compelling agenda for countering the “sharing economy” with workable, democratically owned alternatives. Of course, the big challenge that remains is actually building this cooperative social economy.