Volume 25, Number 2

The Decapitalizing of Capitalism

Fred Schepartz

Much is made of the so-called Sharing Economy. It’s the 21st-century high-tech wave of the future, leaving the old ways of doing things in the dust and relegating those relics to the dustbin of history.

At its best, it uses digital technology to more efficiently match buyers and sellers, and really, the Sharing Economy is most about sharing when it’s an interaction between individuals. But when it involves for-profit, commercial enterprises, it becomes more of a sham.

And, sad to say, it becomes about putting up with new and different types of exploitation because if one speaks up, one is standing in the way of innovation.

As an example, let us look at transportation in the so-called Sharing Economy.

For instance, there are the so-called ride sharing services Lyft and Uber, where one can hire a ride by creating an account on the Lyft or Uber smart phone apps (which entails entering one’s credit card number into the server). Once one creates an account, one can select a car from the app based on location as well as the driver’s profile.

And for those who want to drive for Lyft or Uber, they can either go to the app or the website and sign up. After passing a so-called background check, one can use one’s car to ferry people around.

There is much documented about things wrong with Lyft and Uber. For the purpose of this editorial I am going to focus on one basic point:

Both companies engage in a great deal of florid and bizarre rhetoric in order to distract from what it is they are actually doing. Drivers don’t collect fares from passengers; they receive donations. The people who get transported are not passengers; they are “friends.” All the driver is doing is “giving my friend a ride.”

Despite such absurd puffery, the simple reality is that the people who drive for these companies are employees, but they have to provide their own vehicle, they have to pay for their own gasoline and maintenance, they have to pay self-employment insurance and these companies expect the driver’s personal auto insurance to cover them if they get into an accident while logged into the app but not actually transporting a fare or on the way to pick up a fare (and it should be noted that insurance companies won’t cover such claims because one’s personal auto insurance is not intended to cover commercial activities).

Or let’s consider another example right here in Dane County.

Around 15 years ago, the state of Wisconsin mandated that the counties use Medical Assistance funds to pay for transportation for MA recipients to and from medical appointments. In Dane County, care providers were allowed to select the vendor of their choice, usually cab companies (and much of the time, Union Cab, a worker-owned-and-operated cab company where I work). The vendors would do the rides and bill the provider. The provider would be reimbursed by the county, and the county would be reimbursed by the state. Everyone got paid; MA recipients were given easy access to their healthcare. Overall, it was a system that worked, and the county was a lot healthier;.

That all changed three years ago when the state opted to go with a statewide broker to book the MA rides instead of allowing the counties to use the system that worked best for them. The brokers hired by the state are for-profit corporations based out-of-state. And these brokers are not about providing the best possible service for some of the most vulnerable members of the community; they are about maximizing profits.

In Dane County, the cab companies have either opted out or have been forced out of this new system. There’s much I can say about the preferred vendors, but I’ll stick to one point:

Many of these new vendors are so-called independent contractors who get hired to use their own vehicles to transport MA recipients. Once approved, they slap a magnetic sticker on the sides of their vehicle, and off they go. And guess what? They get dispatched calls through their smart phone.

I checked out the website for one of these companies and found that the driver must provide his or her own vehicle. The driver has to pay for the vehicle to be inspected. The driver must pay for fuel and maintenance. And the driver has to pay a pretty hefty fee each week to cover the liability insurance for the vehicle.

Frankly, I was amazed. Essentially, the driver is stuck with virtually all the capital costs. What did the owner have to pay? About as near as I can figure, the owner paid the fee to form a limited liability corporation. When I called the phone number on the Facebook page—the company doesn’t even have a website—I found myself talking with the owner’s mother. She gave me a number to call the actual owner, but when I called, all I got was voicemail.

So is this the real future of capitalism, using technology to pass most if not all the capital responsibility onto the worker?

It is not my intention to glorify capitalism, but if there is an upside it is that one can have a reasonable expectation that when someone opens a business in a particular place, they will provide capital that potentially adds wealth to the community. Granted, it is highly debatable as to whether whoever controls the capital does so in a responsible manner. They may pollute the atmosphere. They may poison the community. They may exploit the workforce.

Or they may provide means of production that results in a fair and equitable exchange between themselves and the community.

We can never say for sure if a business is adding value to the community through the addition of capital, but we can most definitely equivocate that a business that provides capital may add value to the community.

That’s not the case of the examples I cited. They add no value in terms of capital. Instead, these alleged examples of the Sharing Economy succeed in adding even greater exploitation of workers. Wages drop as workers are faced with the responsibilities of capital but not the benefits. And we see a race to the bottom where we don’t even have jobs anymore; we have piecework.

It should be noted that this is not necessarily a new thing. Workers in many instances have been expected to supply their own tools. And there are positive aspects to piecework in that the worker has much more control over the time and nature of the workday.

That said, I cannot stress enough that these enterprises are giving workers very little in terms of control of the means of production. All that is happening is that they are expected to provide the means of production but they have little say about how it is deployed, other than choosing when they will and will not put their vehicle on the road.

But who care about any of this? It’s all about the Sharing Economy and something new and something different. It’s about 21st-century technology, and if people figure out ways to eliminate overhead and streamline processes, well let’s give them a bow. They’re the smartest guys in the room and deserve to get all that comes to them. They are the new wave and therefore deserve a free pass.

In reality, this is not new. Since the beginning of the Industrial Revolution, technology has been an excuse for exploitation. One of the big mistakes of the post-revolutionary Soviet Union was the reliance on technocrats who ran the pre-revolution factories. These technocrats were not revolutionaries, and in fact, they saw workers as machines rather than people, and thus, despite the revolution, certain aspects of the exploitation of Russian workers changed very little.

And let’s not forget about the Luddites. They were English textile artisans who fought a losing battle against the labor-saving machines of the Industrial Revolution. It was not that they opposed all technology; as artists, they opposed the brave new world where their art would be supplanted by mass-produced crap.

The problem is that we all too often fetishize technology as well as those who create and utilize it. While I feel that it is important to respect intellect and intellectuals we must remember that the smartest guy in the room is not necessarily the wisest.