Uber: NOT the Networked Successor Economy You’re Looking For

An article at Medium (Tim O’Reilly, “Networks and the Nature of the Firm — What’s the Future of Work?” August 14) describes Uber and Airbnb as “textbook examples” of “the way that networks trump traditional forms of corporate organization, and how they are changing traditional ways of managing that organization.” Um, no.

What Uber and Airbnb are “textbook examples” of is what Michel Bauwens of the Foundation for P2P Alternatives calls “netarchical capitalism”: an intermediate organizational form in which the owners of proprietary platforms use them to extract value from the users. As a friend on Twitter observed the same day the article was written, the capitalists at Uber and Airbnb extract usury from workers’ use of their own physical capital.

In the early 20th century, technological historian Lewis Mumford coined the term “cultural pseudomorph” to describe the cooptation of new, liberatory technologies — technologies which opened the possibility of fundamentally new social and economic relations — into a preexisting, technologically superfluous institutional framework. His example was the central technology of the new neotechnic era — electrically powered machinery — which was ideally suited to a new economic model of relocalized craft production with machinery scaled to the flow of production, production flow scaled to orders, and small manufacturing shops sited near the point of consumption, all on a lean, demand-pull basis. Instead, thanks to an alliance between the capitalist state and the dominant economic players, electrical power was incorporated into mass production, a newer version of the paleotechnic Dark Satanic Mills of the 19th century. Mass production threw away all the efficiency advantages of scaling production to demand at the point of consumption, and instead built a model based on running enormously expensive, large-scale, specialized machinery full speed to produce large batches totally divorced from preexisting demand. This required all the inefficiencies of supply-push, batch-and-queue distribution — the cost of which more than offset the reduced unit costs of production in the factories themselves.

We saw it again in recent years, with attempts by global corporations to outsource actual production to small-scale job shops using cheap CNC machinery — which, again, is best suited to relocalized craft production — but using finance, marketing and ownership of patents and trademarks to retain a monopoly on distribution of the product.

Both these technological revolutions could be coopted into older, corporate institutional forms for a time; but that time is coming to an end with the rise of the open-source hardware, micromanufacturing and peer production movements.

And the Uber/Airbnb “sharing economy” model — another intermediate form that involves putting new wine in old bottles — is likewise unsustainable. In the case of “ride-sharing” services falsely so-called, the sharing economy is ideally suited to genuine p2p organizational forms — horizontal and open-source, owned and self-organized by the actual drivers and/or passengers themselves. Uber and Lyft, despite the fact that new network technologies render the corporate form entirely superfluous, are — just like Nike and Apple and other corporations that don’t actually produce anything any more — attempting to use “intellectual property” (in this case a proprietary, walled-garden app), enforced by their capitalist state, to enclose the new technologies of abundance and extract rent from them.

If you wonder how that’s going to work out for them, just ask the music industry.

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