High-tech exploitation is still exploitation

In the so-called “sharing economy,” it isn’t the profits that are being shared. What is being shared are ways of putting old models of weakening labor protections in new “high tech” wrapping.

“Sharing economy” enterprises designating employees as “independent contractors” so that workers are left without legal protections, and undercutting competition through insisting that laws and regulations don’t apply to them, really aren’t new or “innovative.” But it’s Silicon Valley companies that are doing this — so, hurray!, it’s now exciting and, oh yes, disruptive! Quaint, archaic standards such as minimum wages and labor- and consumer-law protections are so old-fashioned that Silicon Valley billionaires are doing us all a favor by disrupting our ability to keep them.

That “sharing economy” enterprises are focal points of a new technology-stock bubble is another reason to question the hype surrounding them. While waiting for the right moment for an initial public offering, the poster child for the “sharing economy,” Uber Technologies Inc., has had no trouble attracting investors, and is now valued at US$51 billion. Not bad for a company that claims to be nothing but an app — except for when it claims to be hiring drivers when its interests dictate. (More on that below.) To put that valuation in perspective, it is higher than 80 percent of S&P 500 companies — an index selected from among the largest companies listed on U.S. stock exchanges. This for a company founded in 2009.

"Nothing is nothing" photo by Darwin Bell, San Francisco

“Nothing is nothing” photo by Darwin Bell, San Francisco

How Uber’s valuation matches up with its income is impossible to say as the company does not reveal its financial results. A report in TechCrunch says that Uber may be pulling in more than $1 billion in gross receipts per year, and estimates Uber’s cut of that revenue to be about $213 million. (Uber takes a 20 percent cut from its drivers, but some drivers say it takes an additional cut for “fees”) Between its revenue and the $5 billion in funding it has received, the company could afford to hire its drivers as employees, but instead spends its money on attack advertising.

The company launched a multi-media fusillade of attack ads last month when New York City Mayor Bill de Blasio dared suggest regulations observed by others might apply to it, including a bombardment of television ads and robo-calls. (I received two. They didn’t work.) True to form, Mayor de Blasio, the Obama of New York City who is carrying out former billionaire Mayor Michael Bloomberg’s fourth term, backed down.

Uber vehemently opposed a proposed one-year cap of one percent growth in its drivers (which would have applied to all companies) despite already having more registered cars than all of the city’s yellow-cab companies combined, and in contrast to the hard cap that exists on the number of yellow-cab permits. When not attacking the mayor, Uber’s attacks were concentrated on yellow-cab companies and drivers.

Driving down wages for low-wage taxi drivers

Who are the taxi drivers whom Uber wishes you to believe are privileged and should be subjected to more competition? A New York City yellow cab driver pays the company that owns the cab $100 or more at the start of a 12-hour shift, pays for gas and is subject to consumer regulations. The driver spends the first hours of his or her shift covering these daily expenses. The New York Taxi Workers Alliance summarizes the situation for taxi drivers this way:

“Drivers are earning less and working longer, some days earning below the minimum wage. Right now, after 12-hour shifts, with no overtime pay, taxi drivers make $10-12 an hour in take home pay. More traffic and more cars competing for the same fares will drive incomes deeper into poverty levels. … In its ‘disruption’ playbook, meanwhile, Uber tells drivers to pick up illegally as a way to overwhelm local enforcement and break down regulators, and promises to pay the fines. Drivers desperate for work risk time in jail and for immigrants, loss of naturalized citizenship, while brand Uber claims innovation. Drivers are used and discarded. …

Uber seeks to decimate the regulated taxi industry and replace it with a transportation monopoly of no consumer protections and no full-time work for drivers. For Uber, drivers aren’t just Independent Contractors, they, quite frankly, are not workers at all. Why tip, or require commercial insurance or registration, or comply under federal or state transportation or labor laws when this is ‘just a side thing.’ Low Uber fares — when they are not price surging — are aimed at out-competing taxis and justified by calling the income supplemental. Taxis aren’t the only target, as they also aim their sights on dismantling public transportation, by proclaiming to be cheaper than buses in Chicago and LA and faster than an ambulance. If they gain a monopoly, the purpose of low fares will have been served and price surging will be the norm.”

The “disruption” or “innovation” that this promises is the Wal-Martization of transportation. In fact, the corporate law firm that Wal-Mart Stores Inc. used to successfully defeat a discrimination class action (Wal-Mart v. Dukes) by women employees, Gibson, Dunn & Crutcher, has been hired by Uber to fight its California drivers who say they are improperly classified as independent contractors instead of as employees. Not exactly the defender of working-class drivers Uber claims to be in its propaganda.

A San Francisco federal judge and the California Labor Commission separately ruled earlier this year that Uber drivers are employees, rulings the company continues to contest. But when it was sued for alleged text spamming, Uber claimed the messages were legal because they were hiring solicitations. But how can Uber “recruit” if it is nothing more than a software provider as it claims?

The degradation of working conditions through the “sharing economy” is of course not limited to one company. A provider of home-cleaning services, Homejoy, has closed itself rather than contest lawsuits seeking to have its “independent contractors” be re-classified as employees. Grocery-delivery service Instacart and courier Shyp have reclassified some of their workers as employees in the face of lawsuits.

A lottery economy facilitates inequality

The founders of these companies and the speculators who sink millions into them hope to be the winners in what has become a lottery economy. Only a minuscule percentage of inventions become commercially successful — a director of public affairs for the U.S. Patent & Trademark Office said a decade ago that 99.8 percent of issued patents are not commercially viable. A small number of those commercially viable ideas are worth millions or billions to its creators. This is similar to the art world, where a minuscule number of artists sell works for millions while the overwhelming majority of artists earn little or nothing.

But are the entrepreneurs who win the lottery really worth so much more than everybody else? None of these corporate lottery winners created their successful company on their own. There are engineers who design the product’s physical form, assembly-line workers who assemble the product and advertising agencies that create the demand for the product. Then there is the social structure that enabled the millionaire to become wealthy through an invention or the creation of a popular product or through rising to the top of a large corporation or simply through being a popular entertainer or athlete (although most inherited their money through luck of birth).

The mythology of the solo genius justifies massive inequality because the “solo genius” single-handedly created a popular product and thus single-handedly brought prosperity upon the land. For such selfless services, the solo genius must be compensated with fantastic wealth. But why should Facebook founder Mark Zuckerberg amass $18 billion and so many others get nothing? Why should Apple Inc. accumulate unprecedented wealth while conditions in the sweatshops that produce its gadgets are sufficiently grim to cause a wave of suicides?

Why should those who stand to make gigantic fortunes from whatever “sharing economy” enterprise is the one that wins the lottery make fortunes on the backs of working people struggling to survive?

At the end of the day, what computers and apps do is shift consumer spending from one merchant to another. The rider who uses an Uber black car is substituting that service for a taxi; the shopper who buys online is substituting for a local store. Just as Wal-Mart seeks to monopolize low-end retail, thereby sending money into the bulging wallets of the multi-billionaire Walton family instead of re-circulating the money through local spending, “sharing economy” enterprises are seeking to vacuum up as much money as possible, with speculators salivating over the potential profits.

Billionaire Silicon Valley libertarians are attempting to become wealthier at the expense of working people. That’s not disruption, that’s capitalism as usual.

Freedom for capital, not people

Libertarianism is a philosophy of might makes right. The natural philosophy for the age of neoliberalism, as well demonstrated by the Koch brothers, but also, it would appear, a justification for the ugliest elements of United States history.

Consider the following words of Ayn Rand:

“Now, I don’t care to discuss the alleged complaints American Indians have against this country. I believe, with good reason, the most unsympathetic Hollywood portrayal of Indians and what they did to the white man. They had no right to a country merely because they were born here and then acted like savages. The white man did not conquer this country. …

Since the Indians did not have the concept of property or property rights — they didn’t have a settled society, they had predominantly nomadic tribal ‘cultures’ — they didn’t have rights to the land, and there was no reason for anyone to grant them rights that they had not conceived of and were not using. …

What were they fighting for, in opposing the white man on this continent? For their wish to continue a primitive existence; for their ‘right’ to keep part of the earth untouched — to keep everybody out so they could live like animals or cavemen. Any European who brought with him an element of civilization had the right to take over this continent, and it’s great that some of them did. The racist Indians today — those who condemn America — do not respect individual rights.”

A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.

A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.

The occasion for Ayn Rand’s cold-blooded, racist words was her speech to the graduating class of the U.S. Military Academy at West Point on March 6, 1974. She said the above during the question-and-answer session, but the text of the actual talk wasn’t much more humane. During her talk, among many head-slappers, the infamous philosopher of greed said:

“Something called ‘the military-industrial complex’ — which is a myth or worse — is being blamed for all of this country’s troubles. Bloody college hoodlums scream demands that R.O.T.C. units be banned from college campuses. Our defense budget is being attacked, denounced and undercut by people who claim that financial priority should be given to ecological rose gardens and to classes in esthetic self-expression for the residents of the slums.”

Civilizing them with a gun

I recall someone named Dwight Eisenhower raising concerns about a “military-industrial complex.” It seems to me he was in a position to know what he was talking about, even if he waited until the end of his career to provide a warning after devoting so much of it building up said complex.

At the time of the West Point talk, three million Vietnamese were dead due to a war nearing its conclusion. Was it valid to protest? Among other feats, the U.S. leveled major cities — 77% of the buildings in Hue, one of Vietnam’s biggest cities, were completely destroyed. Dams were blasted away, allowing salt water from the South China Sea to flood farmland, making the growing of food impossible.

In South Vietnam, 9,000 of 15,000 hamlets were damaged or destroyed, as were 25 million acres of farmland and 12 million acres of forest. Killed were 1.5 million cattle. In North Vietnam, 34 of the largest 36 cities suffered significant damage, with 15 completely razed, while 4,000 of about 5,800 communes were damaged. More than 1 million acres of farmland and 400,000 cattle were destroyed in the North. (These statistics are from Manufacturing Consent by Noam Chomsky and Edward S. Herman.)

The Vietnamese were ungrateful for this exemplary treatment, in the imperialist mind, similar to the ungrateful Native Americans who are “racist” because they have failed to appreciate the lessons in civilization they were being taught while the subjects of a genocide.

I don’t see why the above words of Ayn Rand should be considered any different than Nazi pronouncements on Jews.

Domination in the age of financialization

Although there is a temptation to think of libertarians as young conservatives who want to smoke marijuana — a picture sometimes true of libertarian followers — when libertarian leaders talk about “freedom,” what is really meant is freedom for the holders of capital to pursue profit maximization without limits. The cult of the market is a logical expression of the extreme individualism embodied in libertarianism.

One of the most influential articulators of that was Friedrich Hayek. The Austrian School economist asserted that solidarity, benevolence and a desire to work for the betterment of one’s community are “primitive instincts” and that human civilization consists of a long struggle against those ideals. “The discipline of the market” is the provider of civilization and progress, he wrote.

Thus, unregulated capitalism is “civilization” and anything else is a product of “primitive” group instincts that have survived from our prehistoric hunter/gatherer ancestors in the Hayekian worldview.

From these ideas, it is a small step to the concepts of “money equals speech” and “corporations are people” promulgated by the U.S. Supreme Court. This is an extension of “shareholder rights” to the political sphere — the more you own, the more say you have. A form of conquest and domination for the age of financialization.

If there is no community, no common interest, then why can’t someone, anyone, take whatever they want from the less strong? Give Ayn Rand credit for one thing: She stripped away all the accretions of individualist verbiage, all the rarefied theory of orthodox economics, and enunciated with unusual clarity what lies at the core of capitalist triumphalism. It hasn’t served the world very well.

The trojan horse of Ron Paul-style libertarianism

By Pete Dolack

The Occupy movement has brought together people from a variety of places along the political spectrum, generally somewhere on the Left. The main exception are Ron Paul followers — or perhaps it might be more accurate to say Ron Paul fanatics, as “follower” falls well short of capturing the zeal of those whom the Texas libertarian attracts.

But what is it that attracts Ron Paul followers who, in whatever disjointed fashion, align themselves with the Occupy movement and articulate what is perhaps the most basic Occupy critique: Corporations have far too much power.

Let’s start with the basic libertarian philosophy, which boils down to “government is always bad.” (Ron Paul followers thus would seem to be more at home among tea partiers or the business wing of the Republican Party, where indeed many gravitate.) To put a bit of flesh on the bones, libertarianism can be described as a belief in complete freedom of commerce, of minimal government involvement in the economy or social affairs, and of allowing the “market” to determine economic and social outcomes. An intellectually honest libertarian, then, would be against government laws interfering in adults’ personal lives. The typical conservative opposes government regulations, but only when it comes to commerce; such beliefs suddenly vanish when it comes to social issues, and thus we have the towering hypocrisy of Republicans thundering against government simultaneous with demands that government control women’s bodies, regulate what happens in the bedroom and decide who can or can’t have a full legal partnership with the person they love.

Representative Paul is not consistent, either — he, too, believes that women are not capable of making decisions about their own bodies and thus opposes abortion. The again, if one sees women as simply carriers of fetuses, and thus lesser beings or commodities rather than full-fledged human beings, maybe it isn’t necessarily inconsistent. (One clue as to why his followers skew heavily toward men. Actually, straight White men, as will see presently.) And his belief in ending military adventures overseas is based on old-fashioned isolationism, not on any notion of solidarity or of a common humanity.

It pays to check under the hood. Having spent many days at the Occupy Wall Street encampment in New York City’s financial district, I did have the chance to talk to a few Ron Paul followers; there always seemed to be one among the sign-holders that daily lined the Broadway side of the encampment. Reluctant as I am to generalize, they were consistently the most fixed in their beliefs. What none of those to whom I talked would consider is what the result would be should their libertarian utopia actually be implemented.

A brief sojourn on the nature of power in a capitalist country. A short-hand way of describing power relations might be that the possessors of capital rule. The system is called “capitalism” and those who succeed in it accumulate a massive amount of capital. Any one person, no matter how industrious, can only do so much work, so businesses are formed and employees hired. When the business gets big enough, it is incorporated as a corporation. (There are many suffixes, but let’s stick to one word.) The founder, the founder’s immediate top executives, and eventually their successors, run the corporation to make money. The corporation has to produce a product or service that customers are willing to buy, yes, but to do so in a manner that enables the executives at the top to earn big money and, if the company is big enough to be listed on a stock exchange, the shareholders are expecting a share of the profits, too.

This pot of money is created because the executives pay the employees much less than the value of what they produce. The difference between the value produced and the wage paid is the source of corporate profit, the extraordinary salaries and bonuses paid to those at the top and the dividends paid out to shareholders.

Those few who benefit from the work others perform — the one percent, to use the Occupy Wall Street formulation — quite naturally like the arrangement. And since we have the most greedy lusting for ever bigger pots of money, and competition between the executives of the corporation and the shareholders of the corporation as to which gets the bigger portion of the pot, ways must be found to extract more money (i.e, “capital”). Competition plays an indispensable role; if a corporation doesn’t increase its profits, the financiers who constitute most of the shareholders will dump its stock and buy the competitors’ stock. The competitor will be better positioned, and might put the first corporation out of business. There are various paths to boosting profits, but ultimately the corporation has to cut costs. At first, cost-cutting can be done through buying machinery or developing more efficient production techniques. But competitors will do the same. Given enough time, the path to boosting profits must rest on reducing the cost of labor — cutting wages, cutting benefits and moving production to countries with much lower labor costs. We are paying the collective price for all this right now.

As more money concentrates into fewer hands, an elite develops that accumulates more money than it can possibly spend on yachts, mansions and other luxuries. Some of their money will spent on buying political influence — “market forces” work in their favor, but they want to be sure that “political forces” do so as well. There may be vastly more working people than elites, but those elites have the money to give to political office holders, to buy and control mass media outlets, to create “think tanks” and other institutions to disseminate their preferred message, and (because of their ability to make big donations) to control non-economic institutions such as schools. We working people sure can’t do any of that.

The only check against that process — which accelerates as more flows to the top, leaving still less for everybody else — is political and social activism. But as the power of the one percent grows, and the struggle of working people to survive becomes more acute, the ability of the elites to further bend the rules in their favor and the difficulty of working people to influence public policy increases, the power of corporations steadily grows. A corporation is not an abstract entity — it is an organization that is run in a dictatorial fashion from the top, and the structure that enables the concentration of wealth. The corporation is simply the legal entity to accomplish that, as would be the case with or without the added benefit of “corporate personhood.”

Now, back to libertarianism. If corporate power (really the concentrated power of a minuscule elite) has become so strong despite the checks and balances built into the modern political system, and that power continues to strengthen, what would happen if the checks and balances were removed? What would happen if we allowed “markets” to determine all outcomes? The answer should be obvious. A “free market paradise” such as that advocated by Rep. Paul and other libertarians, would mean the end of what is left of our social safety net. No more minimum wage, no more Social Security, no more laws against discrimination in the workplace, no more safety rules, no more consumer-protection laws, no more environmental protection. Indeed, Rep. Paul again said the Civil Rights Act of 1964 was wrong because it “destroyed the principle of private property,” according to a Jan. 1, 2012, report in The Huffington Post.

One Ron Paul supporter I talked to was certain that “property rights” would safeguard us in lieu of laws enforced by government. We’re a few blocks from the Hudson River, I said to him, then asked what would stop a chemical company from building a plant on the river, dumping its waste into the river and belching toxic substances from smokestacks. “Property rights” would come to the rescue, he replied, because the “owner” wouldn’t allow that. The owner of the property would be the company operating the hypothetical chemical plant, and it is precisely “property rights” that would enable the company to build the plant and the lack of government oversight that would enable it to pollute in a dangerous manner. To this answer, he replied that “the owner of the river wouldn’t allow that to happen.”

The river does not have an “owner,” I pointed out, and I should have added that, without any government, there would not be an official entity to defend the integrity of the river. He didn’t have a response, and allowed the discussion to lapse. His belief that there should not be a federal government rested on a conviction that state government would be better because it is more local. He might have wished that a state government might be the “owner” of the river (although his actual belief system would require that the river should have a private owner), but that would be no good here, either, because the Hudson is, after all, half in New York and half in New Jersey as it nears its outlet. Pollution is not likely to observe state boundaries. And rivers should not be privatized.

This conversation had begun when I asked him what he thought of the racism in Ron Paul’s newsletters of the past; they were full of vicious White-supremacist and homophobic comments. His answer was a near perfect neologism: “I could write anything under your name and send it out without your knowing.” I replied that wouldn’t be possible as I would swiftly take legal and other action against someone doing that and put a fast end to it. Rep. Paul’s claims that he had no knowledge of what went out under his name for a period of several years is quite simply as lame an excuse as could be put forth — and his followers blindly repeat it. What we have here is the “true believer” syndrome: I want to believe it, therefore it is. Such a thing is hardly unknown elsewhere, it must be admitted, but rarely does it achieve such perfection. Incidentally, the above conversation was by no means the most fruitless; other Ron Paul followers were still more relentless. (I’ll take up “End the Fed” in a future post.)

Part of the confusion arises from the demonization of that concept known as “government.” The “government” is not a disembodied entity somehow detached from society, but rather is a reflection of the social forces within society. In a society in which “free markets” are the basis on which most outcomes are decided, those people and institutions that accumulate the most money — and therefore control employment, bend the political process to their preferred outcome and wield their wealth to influence or control other institutions — will be the decisive agents. Their decisions will be to benefit themselves, inevitably at the expense of everybody else.

Such dominance does not mean absolute control. Popular pressure can, on occasion, assert itself as last month’s online campaign to halt the Stop Online Piracy Act demonstrated. But sweeping away government — or reducing government to two functions (enforcing contracts and maintaining a military force) as Chicago School ideologues demand — means that the “market” will determine all outcomes. The “market” would mean concentrated corporate power would decide all outcomes, especially economic outcomes. Life would be much harder than it is now, with no recourse.

That industrialists and financiers would love such an outcome is quite understandable. What isn’t is why any working person would want it. And the scenario just sketched it precisely what libertarians, Ron Paul included, would deliver if they actually were handed power.

The magic elixir that makes so many working people believe that government is source of all problems (although it was a corporation that laid you off or moved your job to the Global South) is that mystical word “freedom.”

“Freedom” is equated with individualism — but as a specific form of individualism that is shorn of responsibility. Industrialists and financiers are presented as individuals to be emulated, and their special interests are presented as the interest of all of society. More wealth for the rich (regardless of the specific ideologies used to promote that goal, including demands for ever lower taxes) is advertised as good for everybody despite the shredding of social safety nets that accompanies the concentration of wealth. Those who have the most — obtained on the backs of those with far less — have no responsibility to the society that enabled them to amass such wealth.

Imposing harsher working conditions is another aspect of this individualistic “freedom,” but freedom for who? “Freedom” for industrialists and financiers is freedom to rule over, control and exploit others; “justice” is the unfettered ability to enjoy this freedom, a justice reflected in legal structures. Working people are “free” to compete in a race to the bottom set up by capitalists — this is the freedom loftily extolled across the corporate media.

Utopias have a way of becoming dystopias, and the corporate utopia on offer by libertarians — be they in the Cato Institute, in corporate boardrooms, in the tea parties or in the Ron Paul campaign — is a most dystopian trojan horse.