Monday, April 6, 2015

Uber deserves a fair chance in the marketplace

A while back, you might remember, the formidable Mike Konczal made a splash with a piece in the Nation titled “Socialize Uber.” His argument was simple: most of the capital used by Uber – the cars, the auto insurance – is paid for by the workers. Yet the workers don’t get any of the profits. (Actually, Uber probably doesn’t make any profits yet, but it collects something like $2 billion a year from drivers; it then blows most of that on marketing and lobbying.)

So the obvious answer is right there in the title: Socialize Uber. The company should be run as a worker cooperative.

At that point, Joe Wiesenthal of Business Insider posted a comment to Mike’s Facebook wall asking a reasonable question: “How do you go about turning Uber into a collective?” In response, I offered this:

the simplest way to turn Uber into a collective is just for cities to adopt regulatory codes for ridesharing that only permit ridesharing by worker-owned firms. Uber would then seamlessly transition into becoming a software provider.

Why am I posting this now, months later? One reason is that Mike just asked me to. But another reason is that I’d like to expand a little on the economics of this idea.

Suppose you were to pitch this concept – municipal laws that require ridesharing companies to be driver cooperatives – to Travis Kalanick, Uber’s charming CEO. I’m guessing he’d be opposed to it. But it's hard to see on what grounds he could object. Uber has always claimed that it doesn’t actually employ its drivers. Rather, the drivers are simply plucky entrepreneurs, and Uber merely sells a service that connects those entrepreneurs to customers via a sophisticated proprietary software system. Uber promises investors that it will soon be making mega-profits, but it also claims those profits merely represent a return on its technology and risk-bearing. Certainly the money doesn’t come from exploiting Uber’s workers. What workers? No, no – you see, the drivers are merely Uber’s business partners, and you can't exploit your business partner.

Well, in that case Kalanick should have no objection to what I’m proposing. Once these laws are passed, Uber can continue to sell its innovative software services at whatever price the market will bear, a price it will obviously set so as to ensure it is fully compensated for the technology and risk-bearing it’s already supplied. (Or, at least, it will hope the market will bear that price.) Except that now, Uber will be transacting with genuine business partners – worker cooperatives who are free to purchase software and service from the company (or one of its many competitors) in a free-market business transaction. Now it will be the workers who democratically set their own fares, determine their own work rules, and, of course, pocket any profits. And since Uber claims it already sets fares with the best interest of drivers in mind, it should have no reason to worry about losing its fare-setting control to them.  

Marx famously wrote that under capitalism, “the owner of money must meet in the market with the free laborer, free in the double sense, that as a free man he can dispose of his labor-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realization of his labor-power.” Perhaps soon, Uber, the owner of money, will have a taste of what it’s like to engage in that sort of “free” transaction: in this case, meeting in the market with a transactor who owns all the labor-power necessary for that money’s realization.

Or, to quote the Old Man again, this time addressing an 1864 meeting of workers on the subject of labor cooperatives:

The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart.

P.S.: In case anyone was wondering, there are many precedents for laws excluding certain kinds of owners from particular industries. Many states forbid corporations from engaging in certain kinds of farming; many exclude for-profit companies from certain kinds of gambling and credit counseling businesses; and federal restrictions on foreign ownership exist in a wide range of industries.