The Gig Economy – The Latest Innovation in Exploitation

 Written by: Duncan B. on 24 September 2021

The working class is no stranger to precarious employment. From the earliest days workers often lived with being employed day by day or even hour by hour. Workers could be hired and fired at the whim of the capitalist. Older workers remember having to line up outside wharves or railway yards hoping to get a day’s work. 

Workers have for many years faced casual employment in hospitality, retail, transport and warehousing. They often do the same job for the same employer working full-time hours, but are still classed as “casual.”

In recent years a new form of precarious employment has come into existence—the “gig” economy. The gig economy involves workers in short term work arrangements doing flexible, temporary or freelance jobs. The workers and employers are often connected through on-line platforms.

The gig economy covers many sectors of the economy including rideshare, food delivery, parcel delivery, personal care, performing tasks in people’s homes and freelancing jobs in areas such as information technology. Renting out spare capacity in accommodation, cars or caravans is another example.

Australians will be familiar with companies such as Uber, Deliveroo, Airtasker, and Air B&B. World-wide there are hundreds of companies covering various areas of the gig economy. About 7% of Australians participate in the gig economy. (Queensland University of Technology study, 2019.)

 Many people participate in the gig economy to earn extra income, but for many it is their only source of income. They juggle several ride share-driving or food delivery gigs with low paid casual jobs such as retail work or as cleaners or security guards to try to make ends meet.

The majority of the companies behind the gig economy are based in the US, although Airtasker, Menulog and Mable are Australian companies. Rideshare company DiDi is based in China and Deliveroo is a British company.

Exploitation is rife in the gig economy. For example, Amazon Flex pays people $108 to use their own cars to deliver 30-40 parcels in a four hour “block.” Drivers face being cut off from work for alleged “violations” without explanation. Food deliverers have been injured or killed on bicycles or motor bikes while delivering food. Ride share drivers have been assaulted and robbed during their shifts. Support workers complain of difficulty getting paid by on-line agencies.
The gig economy companies try to treat their workers as independent contractors, leaving them with minimum pay and none of the benefits or protection such as sick pay and workers’ compensation enjoyed by workers classed as employees.  

Gig workers are starting to organise in defence of their rights with the help of unions such as the Transport Workers’ Union. Recent court cases in Australia and the UK have gone in favour of gig workers being treated as employees. However in California, ride share companies Uber and Lyft are appealing against a court ruling which will make them treat their workers as employees rather than independent contractors.

No worker is safe! The wholesale closure of many manufacturing companies in Australia has led to the destruction of some of the most unionised and militant sections of the working class. Many skilled workers who enjoyed well paid jobs were forced into early retirement, unemployment or low paying jobs in the service sector. This is what happened when Alcoa closed its smelter in Geelong (Vic) in 2014. Workers were offered retraining as prison guards or aged-care workers. No doubt some had to go into the gig economy to survive.  

The changes to the workforce stemming from deindustrialisation and the rise of the gig economy pose challenges to working class organisations. They need to find new ways of organising and connecting with workers who today are more dispersed with the closure of the large factories and workshops which were the traditional places where organisation and recruitment once took place.

Retail Shopping - Back To The Future - But With A Difference

Written by: Ned K. on 25 April 2020

(Above: Still making home deliveries in the early 1970s - Nailsworth Bakery, Adelaide)

The impact of the Corona Virus has caused stagnation in some parts of the capitalist economy and acceleration in others. One example of the latter is in sections of the retail industry.

As a small child before I started going to school, I can remember the milkman, baker and greengrocer stopping at our home in a then outer city suburb. Home delivery was the way for basic food staples such as milk, bread vegetables and basic grocery items. The local butcher for eggs and meat was just round the corner. The greengrocer used to arrive in a truck with a canopy on the back. Mum would just walk out the front gate and buy direct what was needed. There was the occasional need for Mum to walk about 2 kms to the nearest tram stop and go the city to buy items not stocked by the greengrocer who came down or street every second day of the working week.

With the dominance of the motor car as the main form of transport, shopping centres started to dominate the retail market forcing the home delivery system out of business.

Over the decades, the shopping centres got bigger and bigger and the distances working families had to drive to a shopping centre for every item you can think of got longer and longer as urban sprawl occurred at amazing speed.

Then the internet enabled online shopping and home delivery. At first internet shopping appealed to capitalists who sold nonperishable goods from televisions to garden tools to books. US multinational Amazon led the way with home deliveries of these type of goods. With competition in retail supermarket trade in Australia with the arrival of companies like Aldi to compete with Coles and Woolworths, in particular, online shopping and home delivery competition spread to the perishable goods market.

The restriction on people's movements and social distancing has seen an explosion in online shopping and home deliveries. As capitalism destroyed check out assistants’ jobs in supermarkets through self-serve, it created new jobs in warehousing and home delivery drivers.

2020 is very much "back to the future" regarding retail shopping patterns. The Australian Financial Review of 23 April reported that Woolworths has doubled its online capacity by opening up a "pop up delivery hub" in Notting Hill in Melbourne. It has converted one of its liquor division warehouses in to a massive warehouse and pick up station for its new fleet of home delivery drivers.

However, unlike the home delivery baker of decades ago, these home delivery drivers are not directly employed. Woolworths has "enlisted" (a euphemism for contracted out) last mile delivery companies "Sherpa" and "Drive Yello" who have "signed up" (ABN self-employed with no basic worker rights) more than 5,000 drivers for increased demand! The contractors have to guarantee delivery no later than next day to maintain their contracts and a customer can order online up to forty items per delivery.

The supermarket corporations will undoubtedly be doing their profit sums to see if the acceleration of home delivery market is worth them promoting beyond the Corona Virus crisis. While petrol prices remain low, many people may still prefer the journey to the car parks of the crowded shopping centres. Or are we seeing the last decade of the shopping centres due to online shopping? If so, there is an opportunity for local community shopping strips to spring up which are based not on consumerism for consumerism's sake but a reclaiming of public space for people to mix and socialise.

Shopping centres have privatised public space as the malls through which people trudge to get to a retail shop and are the private property of the likes of Westfields. Years ago, when Mum went out in the street to buy vegetables from the greengrocer in his van, she and the neighbours met and talked in the "commons" of the public street. So maybe the end of shopping centres will not be a bad thing after all!

Deliveroo: Solidarity with Gig Economy Workers!

Written by: WSA on 23 November 2019 

Recently we published an article on the political economy of Uber and the gig economy by Marxist historian Humphrey McQueen. A couple of days ago, the Victorian/Tasmanian branch of the Transport Workers Union supported Uber Eats and Deliveroo drivers when they rallied outside Deliveroo HQ in Melbourne to demand the big multinational company sign up to a delivery workers’ Charter of Rights.

Also attending the rally were members of the Worker-Student Alliance and we reprint with permission this account of the rally from their fakebook page - Editors.

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(Above: Food delivery workers and supporters place demands on Deliveroo. Photo: Worker Student Alliance facebook page)

A crucial pillar of the gig economy in this modern age are up-and-coming food delivery services such as Deliveroo and Uber Eats who get away with wage theft and not compensating their workers for injuries sustained while working.

Billion dollar companies such as Deliveroo that have headquarters on the crowded end of Collins Street should not be able to give their CEOs bonuses, to pay out their shareholders and ignore the workers who make the excessive profits they make a reality.

These riders must endure peak-hour traffic, the contempt of dissatisfied customers and waiting times for meal preparation that they are not paid in recognition for.

The WSA stands with the TWU (Transport Workers’ Union) and with food delivery drivers. Many of these workers are international students who are suckered in by the rhetoric of these companies who label their work as self-employment. By this clever wording, Uber Eats and Deliveroo have sidestepped legislation such as awards and minimum wage laws that allow for workers to be safeguarded from exploitative practices by corporations, allowing them to pay workers as little as $6.00 AN HOUR.

In the face of ballooning costs of tertiary education, rent and bills, this is nowhere near enough.

They also avoid legislation on worker compensation, which is a massive deal for food delivery workers, with 1 in 4 workers suffering injuries while working such as in traffic accidents that lead to broken limbs. Moreover, according to the TWU, an average of $322 a week were ripped from the hands of these drivers and given back to their massive multinational employers! $322 is a huge deal for young adults, making the difference between living in poverty and not.

The dispute between these large multinational corporations is just another reminder of the nature of capitalism. Capitalism encourages a race-to-the-bottom in wages and conditions to make companies larger profits.

This always comes at the cost of working class people such as these food delivery drivers.

The WSA stands in solidarity with all workers in the gig economy and calls for an end to this system of massive exploitation!!
 

Uber

Humphrey McQueen                               11 October 2019

We reprint with permission of the author, Australian Marxist historian Humphrey McQueen, the text of his talk on Melbourne’s 3cr Solidarity Breakfast show on 28 September 2019.  In the talk, McQueen takes a look at the political economy of a major player in the gig economy, Uber.

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How Uber attracted capital in its several forms turns out to be neither innovative nor ingenious, merely delusional beyond the point of fraud.

Uber Technologies Inc. lost $20bn in the five years to 2019, despite revenues growing fivefold. Without forcing down the take-home pay of its ‘partners’, and purloining the ‘Safe Rides Fee’, Uber’s combined losses would exceed $US100bn. Not even a Wall Street so fevered as to over-subscribe an issue of 100-year Argentinian bonds could ignore those numbers so that Uber’s May 2019 IPO (1) came in at around half of its vaunted valuation of $120bn. (2)

Despite that flop, the chatterers still fail to grasp Uber’s master plan. (3) To cut through its ‘propaganda narrative’, we should ask exactly how, if at all, Uber differs from any other cab company, beyond recruiting a network of operatives on-line. That their labour provides a service rather than a physical object is now the case for a majority of wage-slaves in O.E.C.D. economies. Drivers for UberEats add value (4) to physical commodities but are a drain on the parent company’s bottom line. (5) Uber’s ‘secret ingredient’ is neither its smartphone app, which is much the same as cab companies have used for years; (6) nor its use of Greyball (7)  to obstruct law enforcement; nor in its copy-cat tax-dodges (8)  - were it ever to turn a profit.

Uber’s gambit in 2007-9 looks rather like the front-end of a Ponzi scheme for which Silicon Valley stumped up $US13 billion. In the text-book scam, funds from subsequent investors would have paid dividends to the initial subscribers. Instead of preying on the ‘greater fool’, Uber always intended to burn through the $13bn to subsidise fares and to extend service levels to reap monopoly profits after it had driven out competitors. Oligopolies resort to loss-leaders to retain market share: Uber blew that tactic out into a strategy for a new entrant to seize multiple markets in double-quick time from a standing start. A Libertarian Blitzkrieg from a monomaniacal Ubermensch did not pay. His downfall came in June 2017 when his backers insisted on going public to get back some of their investment.

What distinguishes Uber’s relationship with its workforce is that the company does not hold title over much of the equipment. (9) That expense is not ‘shared’ between the investors and their ‘partners’. The latter supply the fixed-capital with their late-model vehicles and also the circulating capital to keep them on the road. (10) Uber boosts its extraction of value by getting its capital equipment as a gift from its ‘partners’. This free-loading reverses how capital-within-capitalism continues to turn self-sufficient producers into wage-slaves by stripping them of productive property. (11) Its founder did not expect that his ‘partners’ could also use social media to fight back to secure benefits. They pressured the law to judge the ‘partnerships’ to be yet another expression of wage-slavery.
Uber’s pitch around its drivers’ becoming its ‘partners’ conceals how that social relationship has nothing in common with its partnership with Saudi Public Investment Fund. The owner-drivers will never be more than micro-businesses.

Protesting labour conditions and wage-cuts, however, will never penetrate the ‘actual inner movement’ (12) of the forms and circuits of capital accumulation (13). Uber exemplifies some while skating over their consequences in its PR releases. (14)

Coca-Cola Company, which outsourced its capital requirements from the 1890s by franchising bottling operations to family firms as large as itself.  (15) By contrast, Uber hitched a ride with the reconfiguration of the franchise into a device to extract rent by imposing all manner of predatory fees and obligations on franchise-holders. Those burdens corner them into underpaying their staff to ward off bankruptcy. 

To keep conning legislators, investors and the media, the ‘propaganda narrative’ had to keep rolling. A $500m. campaign to restore the corporation’s image laid another egg. (16) Grappling with losses of $US4.7bn in 2017, UBER’s new CEO came to realise that he had to go on pretending that it could finance vertical-liftoff aircraft (VLOL) as well as driverless cars (AV) (17) to prop-up the IPO. He suspended the latter project after a test vehicle killed a pedestrian in March 2018; but he had to revive that arm as part of the PR effort. He also promises that Uber Elevate will operate electric air-taxis ‘within five years.’ That’s a safer bet than Tesla’s one-way tickets to Mars. Hovering over such promises is the 2013 quip of PayPal’s Peter Thiel: ‘We wanted flying cars, instead we got 140 characters.’

Whatever is to be done?

Uber might manage the switch to driverless cars by taking one or other of two routes. Along R1, its ‘partners’ would borrow more to acquire the first generation of automatic vehicles which will be much more expensive and less reliable than their successors. (18) Since many of its U.S. ‘partners’ are sleeping on their backseats and getting by on food stamps, their access to credit will remain remote until sub-prime loans re-emerge from the swamp. On R2, the burden for the fixed-constant capital would rebound to Uber. (19) It would buy fleets of driverless vehicles from its production division with funds from cashing out more of its stock. The corporation then would be burdened with depreciation of its prime fixed asset. That outcome would drive its market valuation down further. Moreover, its share price would keep shrinking as cheaper and more efficient models roll out from rival auto-making oligopolies with established sales networks.

Given Uber’s record of record-breaking failures, its founders might be well advised to escape from the bother of running a business. It could unload shares before parking any take with a wealth-management fund such as BlackRock, that firm which shifts $US6.3 trillion on software known as ALADDIN for Asset Liability and Debt and Derivative Investment Network (20) . Global capital is not ruled by ALADDIN although many corporates rent time on that platform. (21) Nation-market-states are vulnerable to its algorithmic trades which are just about smart enough to track market trends. (22)

BlackRock and its ilk moved towards this pivotal place during the 1990s. At the time, excess capacity in production was blowing out to reappear as excess latent money-capital before the implosion of 2006-9. (23) This financialisation compounds the churn in working lives as most corporates continue to chase quarterly profit numbers. The ‘L’ in ‘long-term’ stands for loser.  The ‘p’ in an Uber ‘partnership’ flashes phoney, but never profit.

 

(1) An IPO or Initial Public Offering occurs when a private company is launched on the stock market with an offering of shares to institutional or individual investors.  It is a way for the company to raise capital – called equity capital - to help fund its operations, and to line the pockets of its start-up founders.
(2) Hubert Horan, “Will the Growth of Uber Increase Economic Welfare?,” Transportation Law Journal, 44, no. 1 (2017): 33-105; “Uber’s Path of Destruction,“ American Affairs, III, no. 2 (2019):108-33; with updates posted on Naked Capitalist..
(3) Mike Isaac, Super-Pumped: The Battle for Uber (New York: W.W. Norton, 2019).
(4) Karl Marx, Capital, II, (London: Penguin, 1978), 225-32.
(5) Forbes Asia, April 2019: 55-7.
(6) Nick Smicek does not quite get it, Platform Capitalism (Cambridge: Polity, 2017).
(7) Greyball is a tool used by Uber to identify law enforcement officers masquerading as “customers”. It helped Uber evade local regulations. See: https://www.theguardian.com/technology/2017/mar/03/uber-secret-program-greyball-resignation-ed-baker
(8) Brian O’Keefe and Marty Jones, “Uber’s Tax Shell Game,” Fortune, November 2015: 49-56.
(9) Constant capital is the capital vested in the materials used in production, as well as the machinery and equipment used in the production of commodities. Constant capital is fixed so long as the machinery etc is capable of being used, although it is decreasing in its value over time due to wear and tear. Other forms of capital required in the process of production are regarded as circulating constant capital. For why a vehicle on the road is fixed-constant capital while its fuel and load are circulating-constant  capitals, Marx, Capital, II, 242; my “Capital Refined,” www.surplusvalue.org.au/mcqueen/marxism
(10) As Marx observes: ‘A musical conductor need in no way be the owner of the instruments in his orchestra …,’ Capital, III, 511.
(11) Karl Marx, Capital, I (London: Penguin, 1976), 873-904.
(12) Karl Marx, Capital, III (London: penguin, 1981), 428.
(13) Capital accumulation is both the increase in profitability of a company and its need to increase its investment in constant capital rather than in variable capital, or wages.
(14) Michal Kalecki (with Adam Szeworski), “Economic Problems of Production Automation in Capitalist Countries,” Collected Works of Michal Kalecki, Capitalism, economic dynamics, vol. II, Jerzy Osiatynski (ed.) (Oxford: Clarendon Press, 1991): 374-85.
(15) See my The Essence of Capitalism (Sydney: Sceptre, 2001), chapter 5.
(16) Washington Post, August 29, 2019.
(17) Autonomous vehicles is a term also applied to driverless trucks and trains now widely used in mining.
(18) Marx, Capital, I, 528; Marx, Capital, II, 154 and 157. Military contracts bear the high first-run production costs of technologies to assist their commercialisation at prices which make new goods competitive with those from lower labour-times, Jane’s Defence Weekly (JDW), April 4, 2018: 28; cf. JDW, 56, April 24, 2019: 26-31. Japan Inc. has long spun-on from commodity production to equip its military on the cheap, Japan Defence Agency, The Defence of Japan, 1989 (Tokyo JDA, 1989), 142.
(19) Sheelah Kolhatkar, “Taking the Wheel,” New Yorker, April 9, 2018: 50-59; Marx makes a comparable point about road building, Marx-Engels Collected Works (M-ECW), vol. 28 (New York: International Publishers, 1986), 452ff.
(20) ALADDIN is an electronic system for the management of financial assets, much of which is fictional capital embedded in speculative promises of future gain (derivatives) or in repayments on loans (debt management). In 2013, it managed $11 trillion or 7.5% of the world’s financial assets. Last March, Europe’s largest bank, HSBC signed a deal to offer BlackRock’s Aladdin investment management software to the bank’s wealthy customers as the world’s largest asset manager sought to increase revenues by selling its technology.
(21) Forbes, December 26, 2017: 52-4. Perhaps because 11 percent of Blackrock’s employees are IT developers, it ranks towards the low end on the ‘Marx Ratio’ of executive salaries to staff wages, New York Times (NYT), May 22, 2018: B5.
(22) David Peetz and Georgina Murray, “Restructuring of Corporate Ownership in Australia through the Global Financial Crisis,” JAPE, no. 71 (2013): 76-103.
(23) Marx and Engels: ‘The crisis itself first breaks out in the field of speculation and only seizes hold of production later. Not over-production, but over-speculation, itself only a symptom of over-production, therefore appears to the superficial view as the causes of the crisis.’ M-ECW, vol.10 (Moscow: Progress Publishers, 1978), 490.
(24) The Economist, December 16, 2017: 58; March 10, 2018: 60.