In short, a platform business provides some sort of infrastructure other businesses can build on. Things like the iOS created by Apple, Amazon’s e-commerce marketplace, and Facebook’s ad bidding marketplace. That’s a very crude summary. For more, read the book, and also another book that nicely complements Platform Capitalism: Platform Revolution.
There are many things to be said about the concepts Srnicek describes. For example, the shift towards data as the economy’s “raw material” and platforms’ tendency to seek monopoly positions.
I want to pick out one topic from the book, lean platforms and the gig economy, for an attempt to put this in context with the realities of emerging markets.
In Srnicek’s classification of platform types, Uber and Airbnb are “lean”. They take the platform concept to the extreme and outsource as much as possible to third parties. Uber owns no cars, employs no drivers, etc.
This tendency towards outsourcing and independent contractor-type work instead of permanent employment has been labeled the “Gig Economy”.
Outsourcing workers, Srnicek writes, helps platforms save about 30 percent by cutting benefits, overtime, and sick days. Lean platforms are the ideal expression of capitalism – workers are paid by the task. A form of wages Marx described as “the most in harmony with the capitalist mode of production.”
Srnicek argues that with the lean platform model, we’re pretty much back the old-fashioned model of day laborers (agriculture, dock workers, construction), where people show up at the site (or app) in hope of finding a job for the day.
Forward not backward
With the US or Europe as a backdrop, the “gigification” of work looks like a step back from better days of full employment.
Srnicek points out that in 2005 in the US, 10.1%of the workforce was in alternative employment (temp agencies, independent contractors). By 2015, this was 15.8% of labor force.
Between 2005 and 2015 the US labor market added 9.1 million jobs. There was a net gain, but between 2005 and 2015 the plus came entirely from these types of “alternative arrangement” positions.
Overall the trend in the US is towards more precarious work, and it’s even more visible in the UK, says Srnicek.
Unfortunately, though, most of the academic work on this topic seems to be Western-centric. Is there anyone studying gigification in emerging markets?
I think the premise is a different one here. Just look at labor statistics in Indonesia.
Unemployment is quite low at roughly 5% and it’s been in decline. However, bear in mind that full-time, contractual employment is so rare that it doesn’t even factor into the definition of unemployment. Doing something for money is already enough to classify you as employed.
Gigging is the norm in Indonesia. Full employment, whether white collar or blue collar, has not even reached 40% of the workforce.
Micro, small, and medium enterprises already make up more than 60% of the country’s GDP, platform enabled or not. More than 90% of the workforce works in these MSME. And take note that these are often unregistered, informal, family-run businesses.
In this scenario, optimistically speaking, platforms might really provide better opportunities and more security than what’s available now. A step away from, not towards more precarity. Leapfrogging the outdated phase of full-time work, to a nation of thriving micro-entrepreneurs who are in charge of their own destinies but secure at the same time.
The pessimist might argue the rise of tech-enabled gigging platforms in a world used to nothing but gigs only formalizes an inherently exploitative system. People are kept in their place are and contribute to a growing concentration of wealth in the hand of platform owners.
PS I have both books, Platform Capitalism and Platform Revolution as PDFs. If you struggle to pay for books, but are interested in reading them, please hit me up.
Around the Internet
Here’s a service I’ve come to enjoy a lot, Blendle. It’s a media aggregator – you pay for individual stories instead of subscribing to an entire publication. Like an iTunes for articles if you will.
You create an account, put some money in your wallet (can top up with PayPal). If you top up for more than US$10, it’s free. If you only take the US$5 package you pay 30 cents on top.
Then you browse and pay a couple of cents per article you read. It has publications like New York Times, The Economist, and Wall Street Journal in there, among others, which makes it worth it for me. (No Wired though, unfortunately)
Blendle is made by a team in Holland. The user experience is top notch. The recommendation engine is decent. More of it please. This is a completely voluntary endorsment.
That ‘s all for this week, thanks for dropping by.