Platforms and the distribution of value towards US and China with Nick Srnicek

Nick Srnicek is a lecturer in digital economy at King’s College London and author of Platform Capitalism (Polity, 2016).. His research focuses on the evolving nature of the platform economy with particular focus on the nature of monopolies in this era, and also on “how artificial intelligence will exacerbate the issues we see today around digital monopolies”.

He also does research on post-work politics – i.e. the idea that society should be striving to reduce the amount of wage-labour that we have to do in order to maximise the amount of free time we have to freely choose what to do with our lives, especially through automation.

Can we estimate the global economic impact of the platform economy?

On the one hand, the impact is obvious – platform companies are the most valuable companies in the world, and in the pandemic, they are the only companies keeping stock markets afloat. 

On an everyday level, we all use the services of these platforms – for work, for socializing, for relaxation, and so on. So the impact of the platform economy has been immense.

However, quantifying their value is a much more difficult thing to do. Stock market valuations are notoriously subject to ‘animal spirits’, while the free nature of the user-facing services of platforms means that their value doesn’t show up in metrics like GDP. There’s a small army of economists and accountants trying to discern the quantitative value of the platform economy, but I think perhaps a more interesting question is about the distribution of value. 

The simple point to make here is that we have a global concentration of the biggest and most significant platforms in two countries: the US and China. Moreover, nearly every other digital service and start-up is in some way dependent on these planetary platforms – for example, by renting out server space from a cloud computing provider. 

The end result, it seems to me, is a significant redistribution of value towards the largest platforms and towards the geographical bases of their operations. So while the platform economy has had a clear and significant impact on the economy, it should be equally clear that they are further balancing the distribution of value towards a few companies and a few regions.

 

Will the application of big data, new algorithms, and cloud computing change the nature of work and the structure of the economy and to which extent?

Yes, and they already have, though not always in ways that are obvious to policymakers. Perhaps the biggest shift has been the nature of control within workplaces, with the move to more and more algorithmic forms of management. These new technologies have enabled a significant expansion of workplace surveillance, and in the case of much platform work, they are even being used to substitute for the traditional physical presence of a manager. 

Algorithms, for instance, tell delivery riders where to go, while the pay structure is set up in such a way that they have to routinely risk bodily harm to meet delivery demands. 

Ride-sharing drivers have been subject to significant surveillance, while a growing number of workers are also having companies surveil their social media activities for possible union support. These techniques are, at the moment, largely constrained to platform work – but the rise of remote work in the wake of Covid-19 is enabling this surveillance and control to extend to a broad new set of workers. 

There is already an industry of companies working to build software to monitor workers in their homes, and it’s not hard to imagine these techniques becoming normalized in the coming years (particularly as labour movements remain relatively weak in historical terms).

Will this lead to the platform capitalism you mention in your work?

The biggest companies in the world are already platforms – or in the case of Apple, quickly shifting to a more platform-oriented business model. This is not to say that every company will become “platformised”, but it is to say that a leading and important sector of the global economy is now based around this business model. Crucially, the platform tends to foster monopolization tendencies given its reliance on network effects. 

Combined with the wealth and resources of the biggest platforms, these monopolization tendencies are enabling them to expand their reach across the economy – a process which has been sped up by Covid-19 with social distancing, remote work, and track and trace programmes all giving renewed sustenance to these companies.

Advocates of the platform economy argue that producers can become proto-entrepreneurs able to work on flexible schedules and benefit from these platforms and that certain platforms can unlock the commercial value in underused personal assets. What’s your opinion on this?

It is true that platform workers themselves often invoke the flexibility of the work as a key benefit of it. However, this flexibility currently comes at the cost of an individualization of risk. What were once hard-fought gains in the collectivization of risk (e.g. unemployment, injury, sickness, etc.) are now being undermined by loopholes in employment law. 

Platform companies that rely on the ‘independent contractor’ model of employment are shirking their responsibilities, while the tax evasion that is endemic to platform companies is undermining the remnants of the welfare state.

Instead, it is individual workers who are having to take on the full brunt of risks – a weight that is incredibly heavy in normal times, let alone in the midst of a global pandemic. 

While there is a rhetoric of entrepreneurship, the truth is that these workers are just exploited employees by any other name.

How will the platform economy reshape our communities and social life?

The impacts are varied across the different types of platforms – the impacts of Uber are very different from the impacts of Facebook, for instance. So it is difficult to draw out general changes, but I believe what we are seeing in recent years is a greater awareness of the negatives imposed by these platforms. For many, the early years of the platform era were relatively benign – cheaper services, greater connectivity, more possibilities, and all the while the exploited workers behind these platforms were often invisible to the users. 

But the impact of platforms – particularly social media platforms – began to upset the liberal order in 2016 with events like the Brexit referendum and the election of Donald Trump, and it’s here where the media started to take more notice. 

Certain establishment beliefs about the world began to break down and platforms have taken a lot of the criticism for them: the apparent impacts of fake news, filter bubbles and echo chambers, data-driven political manipulation, and so on. I think many of these claims are often overstated, but it also seems clear that social media platforms have contributed to, for instance, the fostering of conspiracy narratives. The ease of posting material and sharing it online has enabled a wide range of bogus theories to spread widely.

At the same time – and we might take this to be a general principle – technology is not solely responsible for these negative impacts. We always need to look at broader social and economic changes to help account for the negative impacts associated with platforms. 

In the example of conspiracy theories, we need to look at why the public has a growing distrust of the media and politicians, we need to ask why people are drawn to these narratives (if social media is a supply-side factor, we also need to look at the demand-side), and how the continued fallout from the 2008 crisis has upset the worldviews of many. 

Likewise with Uber and the exploitation of its workers – the issue is not just a new platform technology, but also the impacts of surging unemployment in the wake of 2008, the funneling of investment capital into the tech world after central banks cut rates, and the aggressive lobbying by these companies to rewrite rules in their favour (Prop 22 in California being only the latest example). If we don’t take these broader elements into account, the risk is that we think simple changes to technology will rectify the problems we see everywhere today.

Can we still shape the ultimate impact of a techno-economic system and how?

The late sci-fi author Ursula K. Le Guin once famously said that “We live in capitalism, its power seems inescapable – but then, so did the divine right of kings. Any human power can be resisted and changed by human beings.” There is always the possibility to transform the ways in which we organise our societies and economies, even if significant structural hurdles militate against this change. 

There is no single solution, but I would instead suggest that what we have are a variety of little ways in which we can push the balance of our economies away from powerful platforms – platform cooperatives, public utility regulation, decentralised infrastructures, public alternatives, combined with future-oriented unions, noisy social movements, activist intellectuals, and sympathetic politicians can all work to push our current system towards the benefit of everyday people.