Andrei Rogobete: “Democratic Capitalism at a Crossroads: Technological Change and the Future of Politics” by Charles Boix

Charles Boix is Professor of Politics and Public Affairs at Princeton University. His primary research interests are in political economy and comparative politics, with a particular emphasis on empirical democratic theory. Previous notable publications include Political Parties, Growth and Equality (Cambridge University Press, 1998), Democracy and Redistribution (Cambridge University Press, 2003), and Political Order and Inequality (Cambridge University Press, 2015).

In Democratic Capitalism at a Crossroads Charles Boix seeks to explore both the historical chapters of democratic free-market tensions and current issues facing capitalism within western democracies. The author divides the narrative into three main eras: 19th century Manchester capitalism, 20th century Detroit capitalism, and the current 21st century Silicon Valley-based model of capitalism. The final chapters consider the implications of these forms of capitalism on the future workforce, in particular with respect to automation, the rate of technological change, income distribution and politics (or the role of government more broadly).

Charles Boix’s thesis is that, “the consequences of today’s technological changes […] are not set in stone. They will work their way into the economy through their direct (although, at this point, still uncertain) impact on the demand for different types of labour and on the cost and ownership of capital.  Yet they will also depend on the institutional and political strategies we follow in response to those technological transformations” (page 3).

The book is well-written and comprehensively researched. The author does a commendable job of avoiding the clichés that often surround the topic of technology and maintains both nuance and a satisfactory degree of objectivity. We will touch upon some of the more intriguing points made throughout the book.

Chapters 1-3 explore the impact of technology on society and politics from a historical perspective. Chapter 2 dedicates a fair amount of attention (and rightly so), to the first industrial revolution. Boix points out that automatization brought by a new class of comparatively poorly skilled labour that replaced “…an old class of artisans and highly skilled operators” (page 57). In 20th Century capitalism however, the advent of technology (and automisation more specifically), led to a further replacement of low skilled workers with semi-skilled workers – albeit in much lower numbers. This new workforce of semi-skilled labour was needed to oversee, maintain, and repair the machinery in operation. Yet perhaps the most important consequence of the process of automisation was the arrival of “… new layers of white-collar, relatively well-paid jobs – from accounting departments to car dealerships” (page 59).

This in effect resulted in a new form of Corporatism whereby the relationship between employees, trade unions and the employers are far more interwoven than before. An interesting point is made in chapter 3 whereby the continual development of a company’s human capital became a vested interest for the company itself. Henry Ford for instance invested heavily in the education of his workforce. He established the Ford English School to teach English to recently arrived immigrants and he even established a “…Sociological Department, with about two hundred employees, to ensure that the family lives and overall behaviour of his factory workers did not deviate from a clear set of norms such as thriftiness, continence, and basic hygiene” (page 78).

Chapters 4-6 move the conversation to the contemporary debate around technology, artificial intelligence (AI), and its impact on the labour markets and consequently, on democracy itself. Charles Boix rightly points out the difference between simple AI and machine learning. The key form of impact here is that while computers/AI displaced routinable jobs at a large scale, they have “…hardly replaced nonroutine jobs” (page 103). Though this may be changing with machine learning.

Boix acknowledges in Chapter 6 that, ultimately, we cannot predict the impact of technological change or indeed “…depict the society it will give birth to…” (page 180). Therefore, any future policy responses must be made in a piecemeal fashion (ibid.). The chapter concludes the book with a few tentative proposals for reform. Rather unexpectedly, Universal Basic Income (UBI) is presented as one such proposal – yet the arguments made against UBI seem more convincing than those in favour. For instance, the author claims that UBI has two main advantages: “First, it may free individuals from routine, repetitive tasks, allowing them to engage in more creative and inventive professional paths. Second, it should reduce poverty and arguably, equalise conditions” (page 206). Perhaps the keywords here are ‘may’ and ‘should’ – one cannot help but feel that this is mere wishful thinking.

On the challenges of UBI, Boix acknowledges a rather lengthy list: UBI cannot be tailored to individual needs, it distorts the incentives that people have to work, it may keep the pre-existing structure of inequality in place, it reduces the need for schooling, it enables firms to offer lower wages, it affects the inner motivations and ambitions of youngsters, it can create antagonism between those that are earning against those that are not (pages 207-208). We don’t have space to go into further detail here, and surely each reader will make up their own mind – but it is a strange and slightly disappointing end to an otherwise interesting book.

In summary, Democratic Capitalism at a Crossroads is an engaging read about the impact of technological change on the transformation of labour markets, society and indeed, democratic systems themselves. It is accessible to the educated reader and while some might take issue with certain sections of the book, the author does a laudable job of curtailing his more subjective opinions by also presenting the counterarguments. One result is that some readers may find the counterarguments more compelling than the main arguments themselves (UBI is a case in point). This might not necessarily be a bad thing. The book is a recommended read to those looking to expand their knowledge of the intersection between technology, the economy, and democracy.

 

“Democratic Capitalism at the Crossroads” by Carles Boix was first published in 2021 by Princeton University Press, ISBN: 9780691216898, 272pp.


Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

 

 

 

 

 Andrei Rogobete: “Humans as a Service” by Jeremias Prassl

Jeremias Prassl is a Fellow of Magdalen College and an Associate Professor in the Faculty of Law at Oxford University. He advises public and private sector organisations on regulating the gig economy. In his book entitled Humans as a Service, Prassl re-evaluates the merits and pitfalls of the “gig economy” and seeks to discover ways that society might benefit from the gig economy without falling into “extreme forms” of labour force commodification (page 4).

For those of you wondering what the “gig economy” is, Prassl describes it as “…an ever-growing number of start-ups, […] online platforms and mobile apps [that] connect consumers, businesses, and workers – often for jobs lasting no longer than a few minutes” (page 2). The term “gig” invokes an artist’s gig for a time-limited and (usually) one-off performance.

This new and growing space labelled as the “gig economy” poses both opportunities and challenges.  On one hand the digital space has enabled an unparalleled level of growth and innovation in the exchange of goods, services and other forms of capital at instant speeds – creating value for all participants (page 3). On the other hand, critics argue that a deregulated gig economy leads to a commodification of labour whereby “those with money will be able to […] hire those without money by forcing an online bidding war to see who will charge the least for their labour” (Ibid.).

The book seems to be written with the “educated reader” in mind. The author makes extensive use of practical examples whilst limiting overuse of legal jargon, which makes the book accessible to the specialist and non-specialist alike. The contents are structured among six main chapters and while we will not detail each in part here, we will touch upon some of the key points that may warrant further discussion.

Chapters I and II lay out the foundations of the gig economy: its internal workings, the role of digitalisation, the role of regulation (or lack thereof), and so on. Prassl points out that large actors within the gig economy are mistakenly given the benefit of the doubt when found guilty of mistreating their employees (or contractors). This is largely done by hiding under the “innovation” banner and perhaps abusing the public’s perception of innovation as a natural industry disruptor. Once section in the second chapter highlights the discrepancy between the authorities’ response to Mike Ashley’s Sports Direct zero-hours contracts scandal, and the ill treatment of ride sharing drivers for Lyft & Co. in the US (page 41-42). Prassl asks, “Why, then, is it that Mike Ashley was (rightly) subjected to parliamentary humiliation, whereas the sharing economy is celebrated by its very own cross-party caucus in the US Congress?” (Ibid.).

Chapters III and IV continue the discussion and look at life within the gig economy and the dilemmas that innovation can give rise to, particularly in respect to applying the appropriate level of regulation. Prassl points out an “innovation paradox”: “…it is undoubtedly true that key elements behind the rise of the sharing economy are completely new – first and foremost, their reliance on the internet, smartphone apps and digital platforms […] When it comes to work in the on-demand economy, on the other hand, the story is a very different one” (page 72). It is the capacity to accurately differentiate between the truly novel and the outwardly novel that policymakers will need if they are to develop an appropriate regulatory framework.

Chapters V and VI conclude the discussion by looking at various approaches of harnessing the benefits of the gig economy whilst restoring and protecting workers’ rights. Prassl argues that a key element is ensuring that everyone plays by the same rules, “…we need to redress structural imbalances and create a level playing field – with employment law at its foundation” (page 119).

To conclude, Humans as a Service by Jeremias Prassl is a great overview of the opportunities and challenges that the gig economy brings for all stakeholders involved. However, (and given that this piece of work is primarily written from a legal perspective), one cannot help but feel that insufficient voice has been given to the non-legal (or non-regulatory) solutions to the problems facing the gig economy. Some of these might include: allowing for market corrections and re-structuring, online reputation management, the implications of reputation damage, the increasing role of independent reviews in online decision-making, and so on. This would encompass a much broader discussion that the book sorely misses.

That is not to say these are unequivocal answers – yet a more thorough investigation into the non-regulatory means of transforming the gig economy would have benefited the book greatly. If readers can look beyond the “regulation is the answer” approach (which no doubt, some will), Humans as a Service is a good and informative read. It is just a shame that it missed the opportunity of being an excellent read. Perhaps an economist’s response to the book would help – let’s hope that we see such endeavour in the future.

 

Prassl, Jeremias. “Humans as a Service: The Promise and Perils of Work in the Gig Economy” was first published in 2018 by Oxford University Press (ISBN:9780192517388). 199pp.


Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

 

 

 

Anne Devlin: “The Social Dilemma” by Jeff Orlowski

This documentary is structured around interviews of tech experts who were pioneers at leading social media platforms and who came to realise that something important went wrong at some point. These views are expressed through a fictitious drama showing the impact of social media on the different members of a family. It is easily accessible to non-social media aficionados and articulates issues that most of us have intuitively perceived without being able to find the common thread running through them.

This Netflix documentary opens on a sombre note with an ominous quote from Sophocles, “nothing vast enters the life of mortals without a curse”, which is somewhat disconcerting. Unlike Greek tragedies, The Social Dilemma finishes on a carefully hopeful note whereby with greater awareness of the problem and willingness to discuss the issues, it can be fixed. But what exactly is the problem?

The realisation that the tech industry lost its way, making no room for ethical design or even questioning the moral implications, is clearly linked to the monetisation of the social media platforms. Their business model is unveiled and brought back to its essence: if you’re not paying for the product then you are the product. As Jaron Lanier, the American computer philosophy writer, puts it: “It is the gradual, slight, imperceptible change in your own behaviour and perception that is the product.” And the more you are using the platform, the more data feeds the system and therefore the better the prediction of your action. The picture starts getting really scary when you realise that cognitive psychology, especially how to persuade people, is built into the technology itself, deliberately exploiting vulnerability in human psychology. Tristan Harris puts it powerfully when he highlights that people usually recognise the danger when technology will overwhelm the human intelligence. An earlier moment is, however, perhaps more dangerous, namely when technology overwhelms human weaknesses, overpowering human nature and breeding among other things addiction, polarisation, and radicalisation.

Algorithms are originally programmed to a certain definition of success. If it is to maximise revenue, computer learning will improve and optimise towards that goal with no ethical constraints or concerns. Maximising engagement, growth and advertising targets will make algorithms ruthlessly manipulate our emotions and behaviours without us even being aware of it. As fake news travels six times faster on Twitter than the truth, the system has a bias towards disinformation as it makes more money for the company. A systematically individually customised information flow, designed by algorithms to maximise your engagement or watch time, sows division in society: people cannot hear a different opinion since they are being fed the one side of the story which their profile establishes they want to hear. Polarisation, going down rabbit holes, conspiracy theories, and radicalisation are all common manifestations of technology’s ability to destabilise the fabric of society. While we witness a technology-led assault on democracy, we should also worry about the use of technology by totalitarian regimes.

To conclude, this documentary highlights the fundamental issue that systems of algorithms are void of ethical consideration. Their ultimate goal is to maximise profit. AI cannot know what Truth is but people need to have a common perception of reality in order to live together. The positive note comes from the realisation by the tech experts, spearheaded by Tristan Harris, that they do have a moral responsibility to fix it. That starts with a conversation about what the problem is, which is exactly what this documentary succinctly achieves. It will be a difficult journey since any reform of the system will chart a collision course with the current business model of the powerful social media giants. Technology is a great force for good, but the moral dilemmas raised by the social media platforms need to be addressed transparently.

 

The Social Dilemma is directed by Jeff Orlowski and was first released on Netflix on 9th September 2020.


Anne Devlin is a director of Terra Solar II, a former oil trader with BP and a member of the Board of CEME.

 

 

 

 

 

 

 

 

Richard Turnbull: The Rise of the Robots & The Second Machine Age

 

Optimist or pessimist?

We stand on the edge of a technological revolution which is proceeding at an exponential pace and which will impact and alter our work and indeed our way of life in ways we can hardly imagine. The paradox of technological advance and of artificial intelligence is well recognized. Do these developments enhance human well-being and welfare to the benefit of all or is the threat posed to employment so dramatic that the traditional responses of education, reskilling and training will be insufficient to protect us? Some commentators refer to the present period of technological change as ‘the fourth industrial revolution.’ The first represented the move to mechanisation, the second, the introduction of electrical power, the third, digitisation and automation. The change we are now experience is one of exponential speed in processing, the impact of connectivity and access to knowledge that is transformational.

In The Rise of the Robots, Martin Ford essentially argues we are ill-equipped and poorly prepared to face the onslaught heading our way. His two main arguments proceed as follows. First, a change in the types of job which will be affected. The advance of digitisation has alerted society to the possibilities of automating routine processes – hence the advent of robotic methods in production replacing the traditional methods of assembly-line production in, for example, the car industry. This is a familiar story and the usual response is to educate, train and reskill. Ford argues that the problem now is that “the machines are coming for the high-wage, high-skill jobs as well” (page 27). Higher education and knowledge skills which traditionally attracted a premium will no longer protect the worker, so much so, he argues that “the ongoing race between technology and education may well be approaching the endgame” (page 124). Indeed, many professions will find that increasingly capable machines will take on many of the tasks previously seen as exclusive to certain professions such as the law. This is then linked to his second argument, that the ability to replicate and scale machine intelligence will “create winner-take-all scenarios’ with ‘dramatic implications for both the economy and society” (page 82). One example here would be the dominance of a very small number of book distribution platforms effectively eliminating all competition. To return to the example of the law, it is not that the high-street lawyer has digitised conveyancing documents; rather it is the speed and extent of access of processing power that can identify cases and precedents in an instant previously requiring hours in a legal library.

Martin Ford, then, is a pessimist. He understands and appreciates that technological advance has largely driven a more prosperous society. However, on this occasion, he thinks it will be different.

Erik Brynjolfsson and Andrew McAfee are optimists. In The Second Machine Age they do not deny the challenges but establish a framework that argues that “the transformations brought about by digital technology will be profoundly beneficial ones” (page 9), adding that “innovation is also the most important force that makes our society wealthier” (page 72) and “technological progress typically helps even the poorest people around the world” (page 168). They recognise the challenge to employment but remain convinced that “acquiring an excellent education is the best way to not be left behind as technology races ahead” (page 199). Brynjolfsson and McAffee agree with Ford that there are few jobs which will be left untouched by the scaling of digital power. However, they have more confidence in the innovative elements of the human person and human adaptability and flexibility which will enable humanity to seize the opportunities. Importantly, they also point out that despite the rhetoric “digital labour is still far from a complete substitute for human labour. Robots and computers, as powerful and capable as they are, are not about to take all of our jobs” (page 206). They argue that the best way to tackle the labour force challenges is to grow the economy and to encourage entrepreneurship – “entrepreneurship is the best way to create jobs and opportunity” (page 214).

How are we to assess these two approaches?

First, we need to recognise, as the authors of both these books do, that the shift we are experiencing is profound and will have enormous implications for business, industry and society as a whole. We cannot bury our head in the sand.

Secondly, the impact on employment and how we have traditionally responded points up many of the inadequacies of our education systems. If the optimism of Brynjolfsson and McAfee is to be the prevailing argument then life-long education and technical education will need to come back to the fore. What about reducing college degrees to 2-years and allowing the ‘third year’ to be credited to a personal training account to be accessed and used over the course of a person’s working career?

Thirdly, the nature of the human person cannot be overlooked. Humanity is endowed, by God, with ingenuity and creativity which will find expression in innovation and entrepreneurship. These activities are part of the very expression of the human character.

The issues are real and serious. Both of these books, and I recommend reading both together as it were, represent serious thought and insight and present the challenges in a well-researched and thought-provoking manner. For a Christian believer, optimism must win the day because of the nature of God and of the human person. However, the road will be bumpy, and for that optimism to prevail requires a degree of self-awareness, policy changes and collaboration across disciplines which have not been the recent characteristics of our society. However, to allow Brynjolfsson and McAfee the last word, the progress of digital technologies remain “the best economic news on the planet” (page xiii).

 

 

The Second Machine Age by Erik Brynjolfsson & Andrew McAfee was published in 2014 by W.W. Norton (ISBN:978-0-393-35064-7), 306pp

The Rise of the Robots by Martin Ford was first published in 2015 by OneWorld (ISBN: 978-1-78074848-1), 334pp


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.

 

 

 

 

 

Andrei Rogobete: “The Ethical Algorithm” by Michael Kearns & Aaron Roth

The Royal Academy of Engineering predicts that algorithms or Artificial Intelligence (AI), will become prevalent in “…most, if not all, aspects of decision-making” (April 2017). Algorithms benefit from a growing presence in key areas such as government, healthcare, education, financial industries, and of course, technology. Yet this is for good reason: they are highly efficient and effective, certainly far more than the average person. This is particularly true when dealing with large amounts of data where algorithms simplify complexities and present them in a more digestible, applicable form. In sectors such healthcare, algorithms quite literally save lives.

However, increasingly complex and penetrative algorithms can lead to some less desirable outcomes. They may lack nuance to changing scenarios, they may be unable to deal with subjectivity, or in certain cases their output may appear brutish.

This raises serious ethical and moral questions: can a degree of morality or ethical values be implemented within algorithms? Can they be made to reflect societal views and norms?  Can we even agree on any particular set of ‘common values’?  If so, how or to what degree might they be implemented within the structure of algorithms? These are just a few of the broader questions raised by “The Ethical Algorithm: the science of socially aware algorithm design” by Michael Kearns and Aaron Roth.

The authors bring together a comprehensive list of credentials. Dr Kearns has spent his career in the field of computer science and worked with AT&T Bell Labs where he was appointed head of the AI department. Dr Kearns is currently a Professor at the University of Pennsylvania and Chair of the National Center within the Department of Computer and Information Sciences. Dr Routh also has a background in computer science and is currently Associate Professor at the University of Pennsylvania. His research interests include Data Privacy, Game Theory, Machine Learning, and Algorithms.

The aim of the book is to dive “…headfirst into the emerging science of designing social constraints directly into algorithms, and the consequences and trade-offs that emerge” (page 16). More specifically, the book argues that in order to, “…make informed decisions we need to be able to understand the consequences of deploying certain kinds of algorithms and the costs associated with constraining them in various ways” – whilst acknowledging that technology alone may not be able to “…solve complicated social problems” (ibid).

An intriguing truth is that we are the data (page 2). We are not just users of data but through our activity we become creators of data. More importantly, the data in turn is being used to make decisions about us and sometimes, as the book points out, these can be very “consequential” decisions.

The structure of the book is devised in six chapters and the language is aimed at a non-specialist audience. However, there some “technical “parts that may require more of the reader’s attention and time. This will likely cause prospective readers to go through certain sections or chapters at a differing pace.

Chapters I and II look at issues surrounding privacy and the concept of ‘fairness’ within algorithmic design. There is an interesting reflection on how Netflix has used movie preferences of users to potentially reveal highly sensitive information such as sexual orientation, political affiliation and personal interests (pages 24-26). It demonstrates how an initial privacy agreement can rather quickly escalate into a much greater issue with significant consequences.

Chapters III and IV further the discussion by attempting to analyse various social outcomes of algorithmic design. This section also considers some of the shortcomings of the scientific data on algorithms. The internal structures of common navigation apps such as Google Maps and Waze are discussed and it becomes quite intriguing to discover how they can coordinate traffic around congested areas to yield the best possible outcomes in terms of time and distance of travel. For instance, the ‘Maxwell Solution’ (page 105) poses an algorithmic conundrum: the quickest route of each individual driver is not congruent with the quickest route for all drivers collectively.

Chapter V and the Conclusions reflect on the societal and ethical implications. The authors themselves recognise that algorithms are playing an increasing role in people’s lives. In new technologies such as autonomous transportation, healthcare, or defence, there may be decisions that “…we never want algorithms to make, period – even if they make them ‘better’ than humans” (page 176). It is argued for instance that the decision to kill another human being should never be taken solely by an algorithm (page 178).

“The Ethical Algorithm” by Michael Kearns & Aaron Roth is recommended for anyone with an interest in technology and the ethical implications of our increasing use of algorithms. That is not to say that it is flawless – one can sense that at various points throughout the book the authors become overly zealous in viewing the world exclusively through a computer science lens. Everything becomes a problem that computer science can fix (or at least try).

We must be realistic that there is a fine line between automation and human input. Managed poorly, it can result in catastrophes like the crash of two brand new Boeing 737-Max 8 jets. We all want to increase efficiency but what is the exact cost of losing the ‘human touch’?  Indeed, can we even agree on exact “societal norms” and “values”? Not only are they constantly evolving concepts, but they are also highly subjective in parts. Does this mean that certain algorithms would have to be continuously updated to “reflect” society’s shared values? And who is to determine what these values are? These are questions that require careful consideration and thorough answers. It is for our benefit because one thing is for sure: algorithms will play an increasing role in the public and private spheres.

 

“The Ethical Algorithm” by Michael Kearns & Aaron Roth was published in 2019 by Oxford University Press, (ISBN 0190948205, 9780190948207), 232 pp.


Andrei Rogobete

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

 

 

 

 

 

 

Richard Godden: “Platform Capitalism” by Nick Srnicek

 

Those who have studied modern technology based or enabled companies will doubtless consider Platform Capitalism to be superficial. Srnicek does not provide any worked through suggestions that will be useful either to the makers of public policy or to those involved in the management of business and many of his conclusions are contentious and appear to be based more on his prior left-wing accelerationist philosophical position than on the evidence presented in this book.

And yet: the book is interesting and thought provoking. Leaving aside the eccentric use (or, rather, minimal use) of paragraphing, Srnicek has an engaging style and presents a readable and helpful overview of the impact of technology on economic activity and of the strategy of technology companies. The book is short (l29 small pages) and can easily be read carefully in a couple of evenings. It is worth devoting this time to it.

Srnicek’s subject is the effect of digital technology on capitalism. He claims that “the platform” has emerged as a new business model and his aim is “to set these platforms in the context of a larger economic history, understand them as a means to generate profit, and outline some tendencies they produce as a result” (page 6). After a reasonably orthodox (if very obviously left-wing) review of economic and business trends since the 1970’s (primarily focussed on the USA and UK), he moves on to consider the emergence of “platforms”, which he defines as “digital infrastructures that enable two or more groups to interact” (page 43). He distinguishes five types of these: advertising platforms (e.g. the Google search engine), which allow their owners to extract information on users, undertake analysis, and use the product of this to sell advertising space; cloud platforms (e.g. Amazon Web Services), which comprise hardware and software that is rented out to digital-dependent businesses; industrial platforms (e.g. that of GE), which comprise the hardware and software necessary to transform traditional manufacturing; product platforms (e.g. that of Rolls Royce), which transform a traditional good into a service; and lean platforms (e.g. that of Uber), which are like product platforms but whose owners attempt to reduce their ownership of assets to a minimum.

The analysis of each of these business models is much the most interesting part of Platform Capitalism. Srnicek concludes, perhaps surprisingly, that lean platforms “seem likely to fall apart in coming years” (page 88) but he recognises that the other types of platform are here to stay. He sees some benefits in this (e.g. better products for customers) but his main focus is on the concerns to which the emergence of platforms gives rise.

His biggest concern is the perceived monopolistic tendency of platform capitalism. He returns to this on a number of occasions and asks “Will competition survive in the digital era, or are we headed for a new monopoly capitalism?” (page 94). This is certainly a question that needs to be addressed but, Srnicek’s analysis points to various factors that suggest that there will continue to be significant competition among the platform providers. Nonetheless, his prognosis is bleak. “Let us be clear,” he says, “this is ….. the concentration of ownership” and, he continues, “Far from being mere owners of information, these companies are becoming owners of the infrastructures of society” (page 92). This is surely unduly apocalyptic.

Srnicek’s other major concern relates to labour. It is here that his left-wing philosophy is most apparent. He points to some real concerns (e.g. the mis-labelling of employees as independent contractors with a view to avoiding employment protections) and he dismisses the absurd idea that user-created data comprises the exploiting of free labour. However, he makes many statements that rely on assumptions that are at best dubious. For example, his suggestion that “In a healthy economy [people such as Uber drivers] would have no need to be micro-tasking, as they would have proper jobs” (page 82) seems to be based on the assumption that the job market of, perhaps, 50 to 70 years ago is the only acceptable model and smacks of left-wing nostalgia for the days of manufacturing-based factory capitalism. Likewise, his suggestion that companies such as Airbnb have “off-loaded costs from their balance sheet and shifted them to their workers” (page 83) suggests preference for the rigidities of integrated corporate monoliths over the more flexible models permitted by modern technology.

The book also suffers in some places from loose use of terminology. For example, Srnicek several times mentions (with apparent disapproval) the “cross-subsidisation” that he believes is inherent in some platform business models (e.g. Googles) that involve providing a free service that enables advertising space to be sold. This use of the term is eccentric. Google is no more involved in cross-subsidisation than are the owners of commercial television stations or free local newspapers that have historically survived by selling advertising space. It is hard to see what is wrong with the Google “cross-subsidisation” model from a competitive or any other point of view.

More seriously, Srnicek’s frequent attacks on “tax evasion” are mis-directed. Many people are rightly concerned about tax evasion but he confuses illegal evasion with legitimate tax minimisation. In particular, he seems unaware that, pursuant to express US law, US corporations may legally avoid the payment of US tax on foreign profits for so long as these are not repatriated. He may not like the relevant US legislation but there is logic behind it and, in any event, companies can hardly be criticised for making use of it. His statement that “The leaders of tax evasion have …… been tech companies” (page 59) followed by a list of well-known names, without any supporting evidence, is both disturbing and disappointing.

The final section of the book (relating to what the future may hold) is less disturbing but equally disappointing. One idea is piled on another. In less than two pages, there are suggestions of: co-operative platforms; anti-trust action; regulation of, or even the banning of, lean platforms; co-ordinated action on tax; the creation of “platforms owned and controlled by the people”, which must nonetheless be “independent of the surveillance State apparatus”; “post capitalist platforms” (whatever they might be); and the collectivisation of platforms (pages 127/8). None of these ideas is explored and one may doubt the realism of at least some of them and the practical benefits of others.

This is a pity because there are many issues arising from “platform capitalism” that should be explored by both policy makers and those involved in business. What are the implications for privacy and, indeed, personal freedom and how should we respond to these? What kind of protections for “workers” are practicable and appropriate in a digital world? Where do the responsibilities of the platform companies to employees, customers, suppliers and others begin and end and how can they best discharge them? What kinds of regulatory regimes (if any) are needed for this kind of company and how can they be imposed in a digital, cross-border world? Generally, what does responsible digital business look like?

Srnicek fails to offer any insights into these matters. None-the-less, his analysis of the platform companies is important because it should help others to do so. It should also help all of us to note the way in which the business world is moving and avoid suggesting outdated solutions to modern business problems.

 

“Platform Capitalism” was first published in 2017 by Polity Press (ISBN 1509504869, 9781509504862), 120pp.


Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.