Open Economy Watch: Cooperative Alternatives to Corporate Digital Gig Networks

Last week, Macabe Keliher raised the question of how the Democratic Party should respond to the rise of the digital gig economy embodied in Uber, TaskRabbit, and others. Keliher explains that–contrary to the Silicon Valley smarm that these new apps liberate workers from bosses–the reality for, say, an Uber driver or a task rabbit is daily low-pay work in low-skill jobs for a distant, centralized tech firm with no opportunity for advancement, further training, or creative input. However, as Keliher argues, the Democratic Party’s growing consensus that we should forcefully regulate these firms into the corporate welfare model of the mid-20th century, where large firms both structure the life and see to the welfare of their workers, is not optimal either, for it misses the opportunity these technological advances have provided to transition our economy from one predominantly based on wage labor to a higher form of free labor. The challenge, then, is to imagine how public policy can take the best of these new developments–transformative network technology that consumers love and producers are attracted to due to the ease of entry and potential for flexibility–while avoiding the worst–a new precariat class of workers, moving in and out of jobs that provide little security, growth, or personal fulfillment.

One under-explored answer to this challenge is the promotion of cooperative technology that replicates the consumer benefits of sharing networks like Uber, but rather than placing control of the networks in the hands of corporate managers, places control in the hands of each network’s workers. The decentralized structure of the digital gig economy is especially amenable to such a project. As The Nation’s Mike Konczal points out about Uber, for example, “almost all of the actual capital is already owned by the workers, in the form of cars that they pay for and maintain themselves.” Therefore, once the initial digital network has been built and popularized, the bulk of what corporate managers at companies like Uber contribute is advertising, lobbying for regulatory changes, and maintenance of their apps, which, as Konczal points out, are tasks that get “cheaper and easier by the day.” This is not a radical analysis. Digital gig startups pitch investors on the exact premise that they will be able to develop and popularize a decentralized network and then, with most moving parts and capital assets externalized to network participants, profit off of the increasingly simpler maintenance of the monopoly network.

Cooperative alternatives to these corporate networks could come in a range of forms. On one end of the spectrum are those that replicate the major elements of network technology but change the structure of the organization that maintains and promotes the technology. For example, one could replicate the Uber app–including its centrally managed pricing system, prescribed hiring process, and customer review system–but have the corporate management of the app’s network be replaced by cooperative management elected by its drivers and structured in a way to incorporate more network member input. Network management organized cooperatively would likely lead to a variety of benefits for members, including insurance, forums for dispute resolution, minimum workplace standards, pensions and health plans.

On the other end of the spectrum are empowering changes to the technology itself. For example, Airbnb is not cooperatively managed, but it lets users set their own prices, rules, and check-out times. Such are the signs of actual open markets–like eBay, Etsy, and Craigslist–as opposed to “networks” that centrally control the prices, rules, and network entry and exit processes (essentially, hiring and firing) of a decentralized workforce. By creating markets for gigs online that are more open, members are empowered to be entrepreneurial, using the technology for their own interests, rather than having the technology (and the corporate managers that profit from it) use the workers for its own interests.

For either of these alternative forms, the challenge, as Nic Wistreich points out, is “how to finance and build software that can rival shareholder-owned, VC and IPO-driven alternatives.” To date, cooperative technology has suffered from poor design and underfunded updating. Wistreich proposes that a sensible approach to reverse this trend would be to “create the environment for multiple people and coops to start trying to solve” these technological challenges: “collaborating and sharing code, costs, information or ideas where it is useful, and trusting that the outcomes will start to materialise when sufficient numbers of smart people are resourced and networked together to try and tackle some of these problems.”  In short, he explains, there is a need for a cooperative technology “incubator, with a core set of requirements, a guiding vision and core projects and APIs, but sufficient room for a range of outcomes and approaches to emerge in parallel.”

Such a project would be a concrete example of some of the programmatic goals outlined in the Open Economy section of the Democratic Alternative Intervention. For one, the open source projects that would come out of such a public incubator would be a response to our call to lower the barriers of entrepreneurship and “work to increase access to resources such as credit, technology, land, equipment, media, and technical skills” for new businesses.  Also, the entire project of providing cooperative alternatives in the pre-dominantly corporate digital gig network industry would support our call to “preserve and encourage economic diversity,” by “taking up the task of promoting the experimentation, development and growth of alternative market structures.”

Indeed, the Democratic Party need not respond to the corporate digital gig economy by calling for regulatory solutions that enforce a 20th-century corporate welfare model. It can imaginatively broaden its response to include, as Wistreich envisions, funding and organizing the environment that could produce cooperative alternatives. If it fails to do so, it will cede the goodwill generated from the technological benefits of digital gig networks to those who have little interest in ensuring those benefits are shared widely beyond distant, corporate managers.