Beating short-term security in the sharing economy

The ambition of a co-operatively owned sharing economy is here – but without government support it’s in danger of being wiped out by the tide of platform capitalism.

Max Dovey
5 November 2016

This article was first posted by MoneyLab. It appears here as part of our focus on Platform Co-ops and the forthcoming open2017 conference.

Last month I witnessed a chanting mob of disgruntled Deliveroo riders who had gathered outside the company’s headquarters in London to protest against an intended pay cut that would reduce their hourly wage from £7 (€ 8.30) to £3.75 (€4.45) per delivery.

The demonstration was the latest eruption of employee dissent within the on-demand economy as workers respond to severe wage cuts and other challenges to their employment rights.

 the firm has recently seen strikes relating to its payment structures. CC Max Dovey

A Deliveroo driver: the firm has recently seen strikes relating to its payment structures. CC Max Dovey

Platforms such as Uber and Deliveroo operate at the forefront of the recently established ‘gig economy’. As the popularity of on-demand apps increases, more and more young people are attracted by the short, flexible working arrangements offered by these platforms. Uber claims to have over 160,000 drivers globally, while the food delivery company Foodora has gone from 3 to 600 employees in the Netherlands in under a year.

However, rapid expansion comes with hidden costs. Many on demand companies circumvent traditional employment rights by hiring staff as independent contractors on zero hour contracts that give employees little or no entitlement to holiday, sick cover or changes to pay. In addition, freelancers (or independent contractors) are required to possess their own insurance, complete their own taxes and encouraged to work on a fixed rate rather than an hourly or minimum wage.

By offloading the traditional maintenance costs of running a business to individual employees, on-demand business can reduce usual costs and avoid the legal accountability that accompanies long-term contracts. The Deliveroo drivers on strike in London celebrated a small success in their protests and the managers offered to postpone the intended paycut until further notice.

Undoubtedly we will witness more protests like this, as the on-demand economy expands in a wider context of ongoing austerity cut backs and youth unemployment, many find the casual work offered to anyone with a smart phone short term relief from the ongoing search for full time recruitment. Do strikes and mass walk-outs like these signal the beginning of a workers’ crisis in the on-demand economy or can the rights of the worker be improved to prevent the share economy depending on an exasperated and exploited on-demand employee?

One possible resolution is the reintroduction of workers’ co-operatives and common ownership in business and platform services. Platform co-operativism, a term introduced by Trebor Scholz and Nathan Schneider from the New School in New York, presents a practical solution for workers, business and start-ups in the digital economy.

Workers’ co-ops were introduced after the industrial revolution in an attempt to manage business more democratically and protect the rights of the worker. While some of the most successful examples of workers co-ops exist in the wholefoods sector (see Suma & Essential Trading), the concept is undergoing a renaissance among start-up businesses and digital platforms.

Fairmondo, established in 2013, is a p2p marketplace similar to Ebay that aims to create a ‘fair economy’ by distributing its profits between all of its members. After crowdfunding the investment capital needed to get going, Fairmondo then established a set of rules titled co-operative 2.0. These guidelines include only making decisions with 9/10 consensus, distributing profit evenly between its members and even publishing all their accounting online.

A similar co-operative venture is the lift sharing service Lazooz which attempts to turn shared transportation like Uber into a co-operatively owned platform, while using a crypto-currency token system to reward drivers and passengers equally. Peerby, a sharing platform based in Amsterdam, has also used crowdfunding to restructure the traditional start-up model and turn all investors into equitable shareholders of the business.

Platform Co-operativism is becoming a movement.

Platform Co-operativism is becoming a movement.

Platform co-operatives present a viable alternative to on-demand capitalism but their success deeply depends on their scale and diversity. Working co-ops in the past have been known to limit participation in order to protect themselves from market expansion and this unfortunately can lead to a few privileged members preventing diverse inclusivity.

Can platform co-ops now utilize the network to become more a more inclusive and democratic collective organization than the co-operatives of the past? Currently, the aim is to raise awareness about these alternatives to start up businesses and national governments in order to protect and improve the standard of work for the low-waged, on-demand worker.

And some political parties seem to be listening. In August, Jeremy Corbyn, the leader of the Labour Party in the United Kingdom, put platform co-operativism at the center of his Digital Democracy Manifesto in an attempt to re-establish trade unions in the digital economy.

The ambition to create a co-operatively owned version of the share economy is there, but I fear that without governments offering support to co-operatives they are at danger of getting wiped out in the tide of on-demand platform capitalism. If forced to compete with other apps without government subsidies, tax reliefs or other incentives, platform co-ops may be forced to market their values only to compete and offer an ethical or ‘worker conscious’ alternative.

This could potentially lead to a rise in sustainable consumer choices in the on-demand app market, similar to the rise of organic produce or locally sourced food, making the platform co-op little more than an ethical alternative to the platform monopolies of Uber and Deliveroo. In this scenario, the important values of the platform co-operative (commonly owned, collectively governed) become fetishized buzzwords with little or no structural change to employment rights, worker unionization and collective organization.

In order to avoid the commodification of co-operative values regional governments should look to support the growth of platform co-ops and continue to discuss how the trade union can be updated and incorporated into crowdfunded and crowdowned enterprises.

The ideas are already beginning to take hold in cities that have already been damaged by the affects of share economy businesses such as Berlin, which has a strict limit on Airbnb rentals, and Rio de Janeiro, which banned Uber all together last year. In areas such as these, where the repercussions of unregulated digital platforms have already impacted social welfare, the platform co-op may offer a promising sanctuary from the destructive expansion of on-demand capitalism.

Trebor Scholz will present Platform co-operativism at MoneyLab #3 Failing Better, 1 - 2 December 2016, Pakhuis de Zwijger

tickets: bit.do/moneylab3 –  Info: networkcultures.org/moneylab

Open Democracy is a media partner for Open 2017 – a two day conference on Platform Cooperatives being organised in conjunction with Goldsmiths University on 16 - 17 February 2017. Get your ticket with our 10% partner discount here


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