Tag Archives: economics

platforms make markets

Rob Horning again, on the hustle economy the gig economy the ubiquity of platforms as obligatory labour intermediaries:

The “hustle” platform seems like a mere means of distribution for the “creators” or “entrepreneurs” who own the means of production (their own bodies). But in fact the “hustle economy” scenario is not so different from working in a factory. The creators have labor power, which they effectively sell to the platforms, which control the means of producing the “things” that matter here: reaching potential customers at scale, sustaining a means of limiting access to goods, maintaining the business infrastructure that facilitates exchange, aggregating the supply of “creators” to create a sort of network effect that subordinates the value of individual creators to that of the entire catalog that a platform owns. Maybe the simpler way of saying that is platforms make markets. That is their product. They serve neoliberalism’s tendency to marketize any aspect of existence that has hitherto resisted it in the name of bringing the market’s “discipline” to wayward aspects of sociability.  In submitting to a platform, whatever “existing skills” a creator has are reformatted, warped to fit the scheme devised to exploit them for profit. I think Marx calls that “formal subsumption,” when a capitalist organization of production appropriates pre-existing skills and reshapes them so as to primarily valorize capital. Then, when the existence of Patreon, etc., is taken for granted, the new skills that can be acquired take the shape demanded or anticipated by those platforms, on their terms and to their benefit and for their continued survival (“real subsumption”). The platforms begin to produce the sorts of creators they need to profit.

It’s not at all different to working in a factory—in fact, it’s basically piecework, but piecework done for factories that have given up any pretense of producing a specific product or type of product to the end of capital accumulation; they’ll flog whatever the pieceworkers are able to produce. Or rather, they’ll provide a system whereby the pieceworker can flog that thing—and flog themselves—and cream off whatever the market will bear.

Work itself, when organized through platforms, is no longer “skilled,” but just abstract spare capacity that capital can take or leave when it needs it, dipping into the pool of reserve labor on its own terms. Patreon et al. bring that model to forms of work that otherwise seem resistant — the kinds of things contingent on one’s reputation or personal brand. “Anyone with noncommoditized skills can do this,” venture capitalist Li Jin tells Dewey — anyone can sell themselves on/to a platform. It’s no accident that VC types champion these models with deceptive rhetoric about inclusion and empowerment; the models are designed to line their pockets while impoverishing the world, and they work better when every possible person is exploited. That’s the beauty of scale.

Oooh, look: it’s our friend scale again! Which is, I think, the fundamental feature of platforms as a business model… and that’s related to the natural-monopoly tendency of infrastructures of distribution.

In short, all platforms are labor platforms. They turn “life” into “work” wherever possible, for “creators” and consumers alike, tracking and redistributing user behavior on the platforms’ terms. Commodification makes inroads in more and more aspects of everyday life and comes to dictate more and more of social relations. Why make friends when you can have followers? Why speak from outside a company’s paywall? The platforms are not offering a way to survive in a crisis; they are exploiting a crisis to introduce a regime that makes immiseration a permanent condition. The tides rise but never recede.

To return to a point I keep drifting away from (because easily distracted), the platform model is not the inevitable outcome of the natural-monopoly tendency in distributive systems—or at least it doesn’t have to be. (Capitalism’s incentive structures make it effectively inevitable, as Horning is pointing out above: “platforms make markets”.) However, the protocol model could achieve the same opportunities for the pieceworker, but without the proprietary capture and rake-off associated with a successfully scaled monopoly platform; the platform model in this case would look like a suite of open-source tools for website building and online payments, a fairly-priced postal service, and a search function that wasn’t massively biased in favour of platforms already within the search engine operator’s own value chains (for both uses of the term “value”). Protocols also make markets—but they make markets with freedoms-from as well as freedoms-to.

With the hopefully assumed caveat that it’s far from being a silver-bullet solution to this or any other socioeconomic challenge, we could really do with remembering what the rail barons were, and why so many states eventually decided to nationalise those early systems of distribution (which, you may recall, also included telegraphy, the forerunner of the communications infrastructures which we still erroneously refer to as “the internet”).

The natural-monopoly tendency of distribution networks can be a problem, but it’s also the source of their usefulness—their utility, you might say. Nationalisation, or some other form of common ownership, gives you the horizontality of the platform without the verticality of the associated value extraction chain; open protocols provide a level playing field that still permits for innovation at the producer level with regard to products and services, and for middle-men operators who have genuine value to add to the process.

But: you have to regulate the system in such a way that the middle-men can’t make themselves into an obligatory passage point—which is to say, you have to keep the infrastructure layer free from commercial interference, at minimum. Well-designed and constantly revised standards and regulations at that level can, in theory, make sure that the interface layer doesn’t ossify into a platform model.

(For an example of this sort of set-up, think of the road network, at least in the UK. It’s not without its flaws, certainly; nor has it avoided becoming a site of ideological economic interference. But in terms of being a transportation protocol which is effectively open to all users, provided they stay within the standards and regulations, it’s so exemplary as to be almost invisible. Admittedly, the neoliberal era has seen the assembly of de facto platform business models upon the road network, but that was achieved more through stock-market malarkey than actual competition. Effective and reliable distribution requires detailed knowledge of the last mile as well as the system as a whole; a national-scale firm can’t really do that, unless making a good job of the last mile is an imperative of its reason for existing. And because the last mile is the expensive bit, as well as the difficult bit, no national-scale distribution firm oriented toward shareholder returns will ever do it well, because it’s the easiest place to shave off your overheads. Effective and reliable networks of distribution, when seen as entire systems, are almost inevitably loss-making; if there is any point at all to the existence of the state, then providing that fundamental infrastructure for economic and informational exchange, and underwriting those losses as the unavoidable cost of having an economy, is surely it. I might even go so far as to say that the state is its infrastructure; all the other stuff is just platforms and protocols running on that network.)

We learned all this once before, in the era of the rail barons, but we allowed ourselves to forget it—because, as a friend put it earlier today, history never actually ended, per Fukuyama, but everyone nonetheless stopped paying it any heed. But it feels like we’re starting to remember it again, collectively, and to find ways of narrating this systemic causality that might help build the grass-roots political will for busting up the platform barons of the Valley, and the ideological scaffolding that they stand upon. The struggle will be long, and victory is far from assured—but nothing worth doing is ever easy, right?

the efficient universe

Synchronicity, serendipity, universal ordering… call it what you want, but sometimes you’re working on something, and out of nowhere a useful bit of info just drops into your lap or, in this case, your inbox. Joanne McNeil’s latest newsletter contains this little aside:

I was looking for a quote about efficiency in life…something said by a…an…economist? Someone not know for sentimentality? Something about…old shoes? Finally I plugged in the right search words and found it. here it is:

“I believe that one ought to have only as much market efficiency as one needs, because everything that we value in human life is within the realm of inefficiency—love, family, attachment, community, culture, old habits, comfortable old shoes.” — Edward Luttwak

I’m not sure when or how I first came across it, but it appears in Corey Robin’s The Reactionary Mind.

I’ve just started working on a thing—or what may turn out to be a number of things, or perhaps just a thread that runs through a number of things which I am and will be doing?—which revolves around the definition of the word “efficiency” as used by economists, as contrasted to the way the rest of us tend to use it. As such, that Luttwak quote is a gift, because it illustrates exactly the point I’m trying to work with, albeit in an unusually poetic and roundabout way.

Thanks, Joanne! Hopefully some random snippet that I throw out here will help someone else out, and I will get to pay the favour forward…

an almighty crash in the heart of the form

Lovable Marxist granddad David Harvey, getting in there early on neoliberalism’s final Wile E Coyote moment:

… contemporary capitalist economies are 70 or even 80 percent driven by consumerism. Consumer confidence and sentiment has over the past forty years become the key to the mobilization of effective demand and capital has become increasingly demand- and needs-driven. This source of economic energy has not been subject to wild fluctuations (with a few exceptions such as the Icelandic volcanic eruption that blocked trans-Atlantic flights for a couple of weeks). But COVID-19 is underpinning not a wild fluctuation but an almighty crash in the heart of the form of consumerism that dominates in the most affluent countries. The spiral form of endless capital accumulation is collapsing inward from one part of the world to every other. The only thing that can save it is a government funded and inspired mass consumerism conjured out of nothing. This will require socializing the whole of the economy in the United States, for example, without calling it socialism.

When I’ve mentioned this to other people over the last week or so they’ve pointed out—quite rightly—that “there are still other choices They could make”. Of course there are! But few of them, if any, are unlikely to end in anything short of mass deaths and some sort of violent insurrection. As such, the race is likely already on to find a way to rebadge in an acceptable manner the socialization that Harvey predicts, while building in assorted sunset clauses and escape hatches for capital and its minions.

Which means that, for those of us on the other side of the fence, the race is on to block those bolt-holes. This is the Last International, comrades—because there won’t be another chance like this, if indeed there’s any more chances at all.

nudge / hold / spin

Will Davies at the LRB, reviewing Justin E H Smith’s Irrationality:

Away from the frontiers and mythology of Enlightenment, the meaning of ‘rationality’ (and hence ‘irrationality’) becomes difficult to pin down. You can resort to the otherworldly ideas of logic and mathematics floating free from all politics and culture. But the academic study of ‘rational choice’ makes little sense once diverted from the kinds of strategic problem – war and profit – it has long been tasked with solving. When we reflect on how we actually live, it becomes all the harder to identify what an ‘irrational’ action or choice might be. Smith wonders ‘whether an anthropologist external to our cultural world would, in studying us, be able to make sharp distinctions among the horoscope, the personality quiz and the credit rating’, or even be able to tell ‘whether we ourselves clearly understand how they differ’. Equally, it isn’t clear how one would distinguish between the scientific societies of the 17th century, to which so much subsequent progress is owed, and, say, a website dedicated to picking through the evidence that vaccines cause autism. Understood purely as ‘culture’ or as ‘behaviour’, rationality becomes ritual or (as the nudgers have it) habit, and ‘irrationality’ is just a pejorative term for the habits we consider bad.