The “Sharing” Economy is based on a Fissured Workplace

Paul Sweeney: Uber and Airbnb are not the Sharing Economy. Instead, they represent a rapid increase in the “Fissured Workplace”. 

This “sharing” is large businesses shedding their employees and sourcing labour through "a complex network" of external entities, creating intermediaries between the workers and profiting from that work.

The fissured workplace is developing between a ruthless breed of capitalists, a shrinking elite of core workers, and the rest. 

Authoritarian Capitalism

Nat O'Connor: A Wall Street Journal article raises the question of whether authoritarian capitalism is a robust alternative to liberal democratic capitalism.

In the first ten years after the Berlin Wall fell, there was an initial rush of democratization, but since 1999 to 2009 there has not been an increase in the proportion of liberal democracies in the world (which remains at 46 percent). And countries such as China and Russia, as well as highly developed countries like Singapore, are examples of resilient authoritiarian regimes despite the fact that they adopted capitalist economic systems.

I think this is an important 'big picture' question. For example, it challenges the long-held assumption that global free trade with non-democratic regimes is OK. It was always assumed that internal prosperity and a growing middle class would lead to more freedoms and ultimately democracy in those countries. (Note, I wouldn't throw out this argument just yet, but it is open to challenge as the evidence develops).

One particularly interesting comment came from Prof. Francis Fukuyama. Talking about China's unexpected success at developing a capitalist economy while keeping one-party rule, Prof. Fukuyama said: "They've mastered economic development under authoritarian circumstances, and you can argue they've done it faster because they're authoritarian,"

If it is the case (and it's an 'if') that authoritarian regimes can be more effecient at capitalism than liberal democracies, than we perhaps need to make it very clear that we are not willing to sacrifice democratic freedoms for more efficiency. This may sound obvious, but it is not an argument that has been much discussed or fully articulated, because of the assumption that liberal democracies have the most efficient capitalist economies. That is, we've never had a situation where the indicators of capitalist success were in tension with the indicators of democratic strength.

Of course, the relative 'success' of capitalist economies around the world depends on how they are measured. And much of the success enjoyed by China and Russia may rely on GDP growth measures (which include for example polluting industries, resource depletion, arms manufacturing and poor labour conditions) rather than more nuanced socio-economic measurements. This in turn reinforces the arguments for finding and developing other ways of measuring economic performance and social progress, such as the recent work of Stiglitz, Sen and Foutoussi.

We may ultimately need alternatives to GDP, not just to direct our economies in a more progressive direction, but also to explain why we regulate capitalism to protect democracy.

Ostriches, Democracy and Dr. Fitzgerald

Michael Taft: Dr. Garret Fitzgerald is not impressed with the notion that if the majority of legislators believe that Government proposals are wrong or misguided, they should vote against them. No, according to the good Dr.Fitzgerald, whatever legislators think of Government policy, whether on NAMA or public expenditure cuts, they should just bite their lip and support it. Because if the Government is defeated a destabilising effect will set in, leading to the takeover of the country by the IMF, the withdrawal of lending by international markets and our inevitable enslavement in the economic salt-mines. Our only salvation is to shut up and support Fianna Fail. Dr. Fitzgerald has spoken.

This is the extreme edge of the TINA argument (‘There Is No Alternative’,) and Dr. Fitzgerald has been hanging around at the extreme edges of late. In a previous column, he attacked anyone who dared question the desirability of the McCarthy Committee proposals:

‘. . . there is an air of total unreality about most of what has been said and written by many of those who have attacked these proposals and who are still in absolute denial about the scale of the crisis we currently face . . . We are at present a country of ostriches. It is time for everyone to wake up to reality.’

Unreality. Absolute denial. Ostriches. Wake Up. Well, I guess that puts some of us in our place. Dr. Fitzgerald was at it again in his most recent column – this time raising all manner of woe and betide if anyone dared to exercise their democratic responsibility.

‘Responsible opposition is vital if the State is to be kept out of the IMF’s hands . . . No worse fate could befall an opposition than to precipitate themselves into government by defeating measures, the rejection of which could throw our State into the hands of the IMF.’

Dr. Fitzgerald has moved from a legitimate position of supporting the McCarthy Committee proposals and NAMA, to a more extreme position that anyone opposed to such is risking opening the door to the IMF. Okay, a bit robust but it’s a tough debate. However, it turns near-hysterical when such a position denounces the democratic process itself – the very idea of the politics of choice.

For instance, if opposition parties can mobilise public opinion to such an extent that the Government is prevented from implementing the McCarthy Report or setting up NAMA; this would no doubt precipitate an early election. In such a scenario, people may wish to support an alternative approach and elect a government that reflects that desire. It is this process that is deeply disturbing to Dr. Fitzgerald. In any other country, it would be called democracy.

A wry take on NAMA and other links

"All citizens shall extemporise pompous and reactionary views on dole scroungers, trade unions, pampered schoolchildren and other social parasites who, unlike themselves, are a “burden on the nation”. Read the rest of Fintan O'Toole's wry take on the draft NAMA legislation here. And - also in the Irish Times - Tom Geraghty of the PSEU throws some light on public sector pay. Finally, John Keane has an interesting piece in yesterday's Guardian, arguing that a failure of democracy gave rise to a failure of markets.

Get ready for the next big thing

Sli Eile: This is the conclusion of a writer in the current edition of that internationally respectable journal, Foreign Policy, under ‘Why bad times lead to great ideas’: If the 1930s gave us plastic, the 1940s nuclear power and the 1970s/80s micro-computers then it could be argued that economic destruction played its part in laying the seeds for entirely new discoveries and innovations. However, with destruction came mass poverty, homelessness and unemployment in US of the early 1930s. And the ultimate fruit of the 1929 crash – along with other factors – was 1939-1945.

We shouldn’t take Western liberal democracy for granted. We should protect (what is valuable within it) and change it by extending democracy in the workplace, in corporate regulation and in empowerment of citizens and various communities. That way, the boom-bust-boom cycle doesn’t necessarily have to destroy individuals, communities and societies in its relentless march. The 20th Century saw the failure of various forms of socialism and now capitalism. Marx was about half right. What next? A new political economy based on human values can offer something.

Leo Panitch writes a thought-provoking piece (all of which is worth reading but here is a key passage):

Despite the depth of our current predicament, Marx would have no illusions that economic catastrophe would itself bring about change. He knew very well that capitalism, by its nature, breeds and fosters social isolation. Such a system, he wrote, “leaves no other nexus between man and man than naked self-interest, than callous ‘cash payment.’” Indeed, capitalism leaves societies mired “in the icy water of egotistical calculation.” The resulting social isolation creates passivity in the face of personal crises, from factory layoffs to home foreclosures. So, too, does this isolation impede communities of active, informed citizens from coming together to take up radical alternatives to capitalism.

Marx would ask first and foremost how to overcome this all-consuming social passivity. He thought that unions and workers’ parties developing in his time were a step forward. Thus in Das Kapital he wrote that the “immediate aim” was “the organization of the proletarians into a class” whose “first task” would be “to win the battle for democracy.” Today, he would encourage the formation of new collective identities, associations, and institutions within which people could resist the capitalist status quo and begin deciding how to better fulfill their needs.

Provocatively, Panitch writes:

Marx would insist that, to find solutions to global problems such as climate change, we need to break with the logic of capitalist markets rather than use state institutions to reinforce them.

Surely we can do better than this?

Sli Eile: Writing in the Irish Times, Michael Casey a former chief economist with the Central Bank argues that a ‘Change of Government will not solve our economic woes’. He goes on to list seven reasons why there is little an alternative Government can do:

We lack the power to devalue currency or change interest rates (just as well?)

Public finances are stuck between a hard rock and a hard place (cut and be damned or reflate and be damned, it is said)

Social partnership will not, cannot, deliver an ‘appropriate incomes policy’ (what would that look like if it included all incomes?)

Public Sector reform will take years (if not decades?) to deliver

Toxic Banking is a poisoned chalice and nobody wants to drink from it (before, during or after NAMA has run its course in 20 something)

‘No political party has formulated an alternative industrial policy’ (not entirely true actually)

‘Most important economic decisions are made in Brussels, Frankfurt and Washington’ (it used to be London, and that was a key argument for joining the Common Market’)

And there the article ends. Is that all that there is to say? One may argue with many of the above claims, but there is an underlying truth – business as usual is gone and in a post-recession world we are left standing on our own two feet. I contest that these two feet should be:

- A new economic policy based on internationally traded services and products with completely new indigenous public, private and community enterprises;

- A new social and democratic contract that will replace the existing model of partnership and ensure the provision of a basic income for all and a 21st century European level of public services.

But how will this be paid for? And how will we dig ourselves out of the present financial hole? And where will be the political momentum come from?

What has progressive economics to offer? What could contributors to this blog suggest? What have non-readers who prefer to read irisheconomy.ie to say?

What is the minimum that a progressive coalition of economists, thinkers, politicians and social commentators and activists could agree on? Let's see. How about a set of ‘contestable’ statements to start a debate:

1 Banking – get this right as a top priority. It is a complex area but you don’t need to be a financial whiz kid to arrive at an obvious conclusion – only full ownership and control of Banking by the State can save this sector and the rest of the economy. Why wait for it to happen, and then say it is our only option. I appreciate that not everyone agrees with this …..

2 Fiscal policy – public finances are in dire straits and nobody denies this (at least since the start of this year). So, let's raid the rich (and not so rich) with much higher capital, new property, local residential and high-income taxes, while closing as many of the tax loopholes and reliefs which have long outlived their economic usefulness (if they every really had any). At the same time increase (yes!) public spending in a planned and strategic way to improve public services, capital infrastructure and job-retention and training while increasing public borrowing through a brokered ‘off-balance’ approach.

3 Jobs – a fiscal stimulus carefully targeted and forensically tested could arrest at least some of the jobs haemorrhage. Although there are no magic solutions, let's accelerate a programme of investment in select areas of research and development and link these to new enterprises – temporarily nationalising those firms that still have a viable future but are about to close, aiding firms in trouble through a new credit agency, converting unused land banks into productive social use and identifying potentially new growth areas for international services such as education, health and green technology. Fine Gael have made some valuable proposals in regard to a slate of new State companies and green technology (Rebuilding Ireland - a New Era for the Irish Economy)

4 Public Services - we need more, and not less, by way of health, education and protection against poverty. We are still among the most prosperous countries in the world but we need to move from being a society of nouveau riche and haves and have nots to a society where citizens and communities share the cost of providing an acceptable level of income, nurture, care and protection.

5 Reform of Corporations and Public Services
Linked to a reformed and enhanced public service is the need to democratise institutions (as well as reform public sector institutions, work practices and responsiveness). Our education and health sectors (to take just two examples) remain profoundly undemocratic and exclusionist in spite of all the talk about customers and inclusion. Likewise, the workplace needs to become a place where skills, team-working and decision-making are not the preserve of the shareholders or the managerial elite. Openness, transparency and accountability must reach into every public, private and voluntary organisations (but especially those in receipt of State subsidies or in charge of delivering some part of public or social services).

A new deal for a new Ireland. Five principles to start a national and international/EU debate. Who is up for it? Comments, disagreements, suggestions?

Or should we resign ourselves to waiting out the storm and someone else (IMF, ECB, EIB, ECion, London, Washington) will bail us out eventually ….? Surely we can do better than this.