Uberfication: an idea from the past

I learned a new and rather ugly word this week: uberfication. It came up in a discussion of new patterns of work and employment and checking on the internet I find that it is a term which has been in use for a year or so now. It derives from the taxi firm Uber which has developed a model for taxi hire in which customers use a mobile phone app to match their journey requirements to the availability of an Uber driver. This has caused protests from taxi drivers all over the world, most recently in Rio de Janeiro just yesterday, because Uber drivers are exempt from the licensing and many of the regulations of established taxi firms and drivers who are thus having their livelihoods threatened.

Uberfication refers to the application of the same, or similar, business model to a range of businesses and activities with many websites referring to the uberfication of everything, examples ranging from dog walking to doctors. Other terms for the same phenomenon are the ‘gig economy’, the ‘on-demand economy’ or the ‘platform economy’ (the point being that a platform such as Uber does not provide services but connects customer demand to a supplier, who provides a service as if engaged to play a gig) or the more cosy-sounding ‘micro-entrepreneurship’.

This business model has three defining features. The most obvious is a technological one, the mobile phone app that enables the connection between demand and supply to be made, including differential pricing according to levels of demand and supply at the moment that the transaction is agreed. The second is that it enables the avoidance of most or all of the regulations that apply to conventional providers of the service. The third is that those providing the service are not employees of any company but are independent contractors or self-employed agents (or, if you prefer, ‘micro-entrepreneurs’).

Although the word is a new to me, the underlying idea is one discussed at several places in my book and on this blog. The ‘flexibilization’ of work has been underway for some time now, leading increasingly to a ‘precariat’ (p.117 of book) whose work is insecure, often characterized by zero-hours contracts and without much or anything in the way of fringe benefits such as pensions, sick pay or maternity/paternity pay. Uberfication is an intensified form of this, since the independent contractors have no employment rights at all: they are not employed, so such rights are irrelevant.

Unsurprisingly uberfication is beginning to find its way onto the political agenda, at least in the United States. For the free market right it is a splendid development, bypassing state regulation and ‘vested interests’ and promoting an Ayn Rand type vision of autonomous self-determining individuals, freely contracting with each other in a pure(ish) market (only pure-ish because there is some evidence that prices are manipulated by controlling supply at times of peak demand). For the left, the concern is that employment rights are eroded, insecurity increased and, for that matter, buying power diminished (in other words, this isn’t an anti-capitalist point, it’s a Keynesian point: if workers don’t have strong and secure earnings then where does demand come from?).

One way of looking at this in organization theory terms is a shift from ‘hierarchy’ to ‘market’. In brief, the idea here (associated with the economist Oliver Williamson but also, in a different way, the business historian Alfred Chandler) is that there are different ways of co-ordinating human activity, which come into play according to specific cost conditions, allied to particular technological conditions. One way is via a market of individual contractors (the invisible hand, as Adam Smith called it), the other is through internal hierarchies within firms (the visible hand, as Chandler dubbed it in his book of that name). Following that account, uberfication substitutes market for hierarchy. However, it should not be forgotten that the way that co-ordination occurs does not just arise ‘naturally’ from cost and technology but depends on the political decisions we make and the legal systems through which we enact those decisions (hence the many legal challenges to Uber, most recently in Canada).

We can see this as a new technologically-mediated moment in the long-term hollowing-out of the social contract that sustained at least Western economies and societies in the post-1945 era which, along with erosions of the welfare state, makes for an increasingly insecure existence as I have written about several times on this blog. But although the technology may be new, the idea, and its consequences, are not: in very many ways it is reminiscent of the ‘putting-out system’ of the early industrial period (and still to be found in many parts of the world today). In this system subcontracting to individuals and families working within their homes was a way of bypassing the restrictions of the medieval guild system.

Of course the idealised image of uberfication is one in which people have complete flexibility of work and complete control of their destinies with no manager telling them what to do. And that may fine for some people, especially when they are young and healthy. But as a general model of employment it means low wages, no security and no protections. Stripped of its technological glitz it means a life rather like that depicted in the long poem written by Thomas Hood in 1843, The Song of the Shirt, which is about the putting-out system in the garment trade. The link to the full text is here, but just to quote the closing stanza:

Stitch! stitch! stitch!
In poverty, hunger, and dirt,
And still with a voice of dolorous pitch,--
Would that its tone could reach the Rich!--
She sang this "Song of the Shirt!

I began my last post with a reference to the saying that history always repeats itself but never in the same way. Here, I will finish with another aphorism, usually attributed (in a number of variants) to the Spanish-American philosopher George Santayana: those who don’t learn from history are doomed to repeat it.