12/24/2014 11:02 am ET Updated Dec 06, 2017

Hey Cabbies, Apps Are Cheap!


I threatened in a recent post to write more about how the Sharing Economy and the social sector could, in some fashion, enhance each other. But ever since, the more I've read and thought about it, the more frustrated I've felt that this mutual enhancement is to be discovered.

All the recent Uber crap just seemed to underlie an ineluctable point: Behind every prosperous sharing economy company, sits a smart capitalist maximizing profits. If part of the sharing economy speaks to the human need to share and part of the sharing economy speaks to the human desire to save money and maximize convenience, the people who own the companies are utilizing the first part to fuel the second part, and deriving immense profit therefrom. And whatever you may think of capitalism as an organizing principle, it is most emphatically not sharing. This is what Marxists would call a "contradiction."

While we're at it, remember all that stuff about the 'means of production'? Think about Uber, Lyft, Airbnb, Task Rabbit, Next Door, even the revered Etsy and compare them to traditional companies. The owner of a factory owns the building and machines. Even more so, he controls all the work processes that connect supply to demand. Likewise, the owner of a financial services firm owns the computers and terminals and, on some level, the connections through which the intellectual capital of the firm can reach customers.

What does a sharing economy company own? An application that allows people to pool their labor and assets conveniently and economically. And a brand built on that application. Uber, for example, disintermediates traditional cab companies by inserting itself as the intermediary.

So here is a very interesting idea in a Nation article by Mike Konczal and Bryce Covert called, "Socialize Uber; It's easier than you think." What I particularly like is the notion of the 'second user advantage.'

Now think about what the capitalist managers at Uber are doing with their cut of the company's money. They are fighting regulators and hiring lobbyists in order to bring down the incumbent taxi-medallion business. They are also spending money on advertising, in order to get customers interested in using a ride-sharing service. These are both expensive projects, and they open the door for competitors. Newer ride-share ventures can piggyback on Uber's success and take advantage of these new terms, with Uber having already spent all that initial money. This is called 'the second-mover advantage,' and it explains why Uber is such a vicious company.

What has Uber's ascent taught us? I would say we have learned: (1) People will climb into cars driven by just about anybody not holding a knife between his teeth if...(2) you can get a car when you need it at a reasonable price.

Lyft tries hard to sell the warmer, fuzzier part of the Sharing scene. The pink mustache. The first bump. The sit next to the driver and talk about Lyfe. But Lyft doesn't come close to Uber's ubiquity and seems to be somewhat more expensive.

Uber's bad press made me think more about my own car hiring predilections. The fact is that when I use cabs (infrequently) I want to get from Place A to Place B safely and for the lowest possible cost. The bottom line is that I perceive Uber to be faster and cheaper than Lyft and I know that both are faster and cheaper than calling a traditional cab. I can't rationalize protecting cabbies' livelihoods (i.e. medallion owners' profits) as a major consideration, and while there was a brief moment when I loved Lyft's mustache and driver-bonding, that has passed. So has Uber captured my trade, regardless of whether I'm holding my nose?

Per Konczal and Covert, not necessarily. Let's disintermediate Uber! Apps are easy. Even the taxi companies have apps now. What's tough is the rigor of setting up a working workers' collective. But the incentive is there. All the drivers are unhappy, it seems. The cabbies are seeing their secure livelihoods vanish. The Uber and Lyft drivers feel squeezed by their companies' quest for profits. Sure, there are some happy part-time drivers who relish the flexibility and for whom the income is at least somewhat discretionary, but for any driver who is, say, supporting a family on his or her take-home, it doesn't matter whether it's Uber, Lyft, or Yellow -- it's a tough slog to make it work economically. They have become "landless peasants" to use Leo Mirani's apt phrase from his recent piece in Quartz.

But they are landless peasants who own their cars! (The cabbies usually own cars too, though not their cabs). A workers' collective, that didn't have to build investors' and owners' equity, should be able to compete economically. And that slice of the Sharing Economy that actually values sharing (as long as it gets its rides on time and at a decent price!) could stop holding its nose.

As Konczal and Covert say, "... a transition to workers' owning their firms is necessary, economically smart, and one way for workers to gain power in the digital age. Because you know what worker-run firms do? Share."

Or per Tony Greenham, head of finance and business at the New Economics Foundation (as quoted in this excellent article in the Guardian)...

What I would be impressed by is the 'sharing economy' companies trying to get social justice. The whole concept of sharing isn't very compatible with the accumulation of private capital, after all what's irreversible is the technological element. But maybe some of these platforms would be more socially responsible if they were owned by the users, rather than venture capitalists in Silicon Valley.

In June, cabbies all over Europe struck and blocked traffic in opposition to Uber. By so doing they handed Uber massive publicity, annoyed the public (a.k.a. their customers) and appeared themselves to be self-servingly impervious to the reasons Uber has succeeded. As workers, they were essentially defending their bosses' right to profit. They'd be better served creating their own alternative.

(Photo tagged for noncommercial reuse by Luke MacGregor/Reuters.)