Michel Bauwens: Uber ‘should be regulated like rest of the economy’

Michel Bauwens [P2P Foundation]

Enterprises like Uber and Airbnb “basically suck value out of the local economy” by trying to work around social laws and other regulations, says Michel Bauwens. But simply banning them would be short-sighted, he told euractiv.com.

Michel Bauwens is an active writer, researcher and conference speaker on the subject of technology, culture and business innovation. Bauwens founded the P2P Foundation, a global organisation of researchers working in collaboration in the exploration of peer production, governance, and property.

He spoke to EURACTIV’s Publisher and Editor, Frédéric Simon, on the sidelines of a conference in Brussels organised by the European Trade Union Institute (ETUI), titled: “Shaping the new world of work. The Impact of digitalisation and robotisation“.

Most of the debate now around the sharing economy has focused around taxation and social protection. Taxi drivers in Brussels and Paris for instance have been complaining about unfair competition from Uber drivers, saying they do not pay social security. What is your view on this? Should Uber drivers be regulated like taxi drivers?

As a general principle, yes. These new models like Uber and Airbnb are not competing on a level playing field, they try to operate around labour laws. So there’s a good case to be made about creating a level playing field.

But there’s more to it. Looking at it from the perspective of self-employed workers, they don’t have secure income, they’re precarious. And they need special protection because they don’t have fixed incomes. So a balance needs to be found.

Some Uber drivers actually have a fixed income. They may be “official” taxi drivers during the day and work in the evening to earn more.

I’m sure this is the case but, overall, the average wage of an Uber driver is $13 an hour. And that’s assuming they have a full-time job and most of them don’t. You have to look at the interest of all workers, not just salaried workers but also independent workers.

Different countries or cities have adopted different approaches about regulating Uber or Airbnb, some of them opting for outright bans. What do you think? Is that a sensible thing to do?

Having Uber or Airbnb in a city is the same as having a huge supermarket: it will destroy the local alternatives and will basically suck value out of the local economy. So I think there is a legitimate concern.

What’s not a good idea is to prohibit something new just to protect some old form of business. Because then you’re just blocking any type of innovation possible.

An approach I like is what Seoul did. They banned Uber but only temporarily, in order to give time to the local economy to develop local applications. In Seoul, they were not just defending the old system but actually allowing the new economy to grow locally before all that value gets captured by outside investors. So in my view, that’s a legitimate way to do it.

Another way is what’s been done in Taiwan where there have been multi-stakeholder negotiations between the taxi drivers, users associations and the government. So when Uber went in, it wasn’t in a Wild West kind of way, it was done in a way that was acceptable to the different stakeholders in that country.

Helsinki is another example. The objective there is to have a car-free city in ten years’ time, and the taxi drivers, Uber drivers, and the bus system – everything is considered in one systemic approach.

So there’s more than one way to deal with it, which in my view is legitimate.

These applications are so successful because they’re cheap and provide a great service. If these services fall under normal social and taxation laws, isn’t that going to kill the sharing economy?

Every sector has to recognise its true social and environmental costs. And the big danger of an unregulated Uber economy is that you don’t get that.

For example, one of the big claims of the sharing economy is that it brings environmental benefits by getting under-utilised resources to work more efficiently. But this doesn’t always work in practice. In Madison, Wisconsin, the taxi drivers lost one-third of their income, which led to the creation of a precarious class of Uber drivers who only get $13 an hour. And all these drivers are competing with each other driving around at night – hundreds of empty cars hoping to get that one ride – which only makes air pollution worse.

So I would disagree with that argument. A lot of those savings are made by externalising costs to other actors. Uber and Airbnb do not invest in infrastructure. So no wonder they are more competitive – they don’t have to build hotels or buy taxi licences.

So you should also look beyond the surface for those externalisations going on. And with the ecological crisis, it’s certainly something we pay attention to.

You sound rather critical. Do you see any upside with the rise of the sharing economy?

I see a lot of upsides but only on the condition that it’s not just a profit-making machine that is beneficial only to shareholders in California. It should become something that is regulated like the rest of the economy where you have to take account of social and environmental costs and benefits.

That’s the only thing I’m saying. I’m not arguing against the model itself but against the ultra-neo-liberal interpretation of it. They argue everything is going to be fine, but most of the time, it’s not the case.

The sharing economy often involves part-time work with people changing hats during the day. You may be employer or employee at different times depending on your activity. This also means having insurance policies to cover for these different types of activities. So how can regulators deal with this complexity, without entangling the sector in red tape?

It’s a difficult question. Over time, I think we need to have a universal statute. The dichotomy between a well-protected salaried class and precarious independent workers doesn’t hold in the long run. Every worker should have the right to a pension, a health insurance, etc. It’s not healthy to have a race to the bottom. So instead of abolishing existing protections, we should upgrade the precarious.

One good solution is what Smart is doing in Belgium. Smart is a fast-growing social organisation with 75,000 members who have created a mutual fund for their freelance members. This means, for example, that members get all their invoices paid within a week through this guarantee fund.

They also created a virtual salary. So if you have a certain minimum income, then you are officially considered to be on a salary but you don’t have the subordination link. You are an independent worker and you can decide about your own life. And at the same time, you enjoy the protection of the welfare state. So that’s the way forward – creating labour mutuals that can respond to these new social conditions.

You argue in a book that the peer-to-peer economy will “save the world” by opening a new economic era that you call “post-capitalism”. Can you briefly describe what this is about?

There are two kinds of peer-to-peer economies emerging. The first is the sharing economy, which is more like a distributed marketplace, where people directly lend and exchange using platforms like Uber and Airbnb. The platform, in this case, is private, it is not a common platform.

The alternative that I and others propose to that model are the “platform cooperatives” which are indexed in the ‘internet of ownership’ website maintained by Nathan Schneider. There are already at least around 250 of the platform coops – such as Uber driver coops – where drivers  or others involved in such exchange and sharing mechanisms would own their own platform and re-invest the profits into their own network and capacities.

Another form of the networked economy is the commons economy. This happens when knowledge workers mutualise their productive knowledge and do free software or  open-design.

This means the knowledge to produce and access the software or designs is actually a free social good that can be used by everyone. It is produced by contributors, not by labour under the command of a company. And it creates a commons , not commodities for sale, as you can’t sell something that is abundantly and cheaply reproducible.

That’s important because in this model, the core of this economy – the value-creation – is already outside the logic of commodity labour and  products. It is already post-capitalist at the core. And then around this core you have all these entrepreneurial coalitions, for example in the Linux economy, that operate in a marketplace without destroying that openness and that shared resource.

That economy already represents one-sixth of GDP in the US according to a report called the fair use economy report. That is interesting, because in this commons economy, the market has to actually take into account the community and the shared resource without the possibility of externalising the social and environmental costs. And I think that presents fundamental progress for society, because the market actually has to be disciplined to this new logic.

That means no more concentrated ownership of the production tools, right?

It depends. What happens outside the commons is still open for contention. For example, the Linux economy is still very much dominated by large companies like IBM even though they have to adapt to the free software community and its rules and norms.

Personally, I would advocate distributed ownership – “platform coops” for example. And there is also a new type of what I call “ethical entrepreneurial coalitions” like Enspiral in New Zealand, Sensorica in Canada, Ethos in the UK, Las Indias in Spain.

These are new types of organisations that are very much in harmony with this idea of having the “commons” at the core of their existence. They are ‘entre-donneurs’, ‘givers in between’, rather than ‘entre-preneurs’ ,i.e ‘takers in between’. It represents the necessary shift that our economy and civilisation have to take, to ‘re-generative’ models, instead of extractive models.

Whether you can create business and economies that add value to a commons, both as a community or as a human resource (community) that is the key question of our times.

I guess we’re only at the beginning of this entrepreneurial revolution. What are the main milestones that will bring us into this new era? Does it rely on technological developments in things like digital infrastructure, or software?

Today we have a bit of a paradox. The most technologically advanced sectors of the economy already work with Linux and open-source software by default. You could call them open design companies. A lot of new companies today already use this model, especially in areas like drones. And it operates mostly at the level of knowledge exchange for the moment.

A big step forward is when you start doing this also at the level of physical production. In other words, moving towards open supply chains and open book accounting. This model has the same effect as automation with robots, software is a form of production that you create only once, and can be copied forever, replacing human labour.

Isn’t that what’s being called industry 4.0?

Yes, that is certainly a new model. We also call it cosmo-localisation referring to how it changes our conceptions of time and space. In this model, “what is light is global and what is heavy is local”. So the idea is to cooperate globally on knowledge exchange but at the same time have methods which allow you to have much more local methods of production using distributed manufacturing and micro factories with 3D-printing type machines.

You produce locally, but based on global knowledge. You replace economies of scale, which destroy the environment, with economies of scope, doing more with the same.

Because one of the big issues around climate change and resource depletion is transport and the carbon emissions associated with it. Essentially, the GDP of transport is bigger than the GDP of production – three quarters of everything we buy is actually transport, according to a recent study. So if you want a carbon-light economy, you absolutely need to move to such a model which allows dramatically reducing transportation costs. Imagine that the cod fished in Boston, goes to China for processing, before being sent back to the restaurants in the city; or that each tennis ball in Wimbledon represents 80,000 miles of transport. These are absurdities we can no longer afford.

So an open-source circle economy is using micro-manufacturing closer to the place of need. It’s pretty much for the future at this stage but there are some pilot programmes and lots of prototyping going on, such as the wikispeed cars, the wikihouses – there are plenty of projects today which show how this could work.

As the “four cheaps” on which contemporary neo-liberal globalisation counts are disappearing (labour, food, raw material and energy), that should give room for these new models to grow.

Broadening the subject even further, we’ve seen many sectors of the economy being radically transformed by the digital revolution. But politics seems to be immune from change. We still rely on ancient methods like popular referendums for instance to make important decisions, which doesn’t always lead to enlightened decisions. How do you see transformation in the political sphere with those new collaborative work methods?

I would say two things. The first is that the crisis of democracy results from the trans-nationalisation of the economy while democratic processes remain chiefly at the level of nation states. The reason it doesn’t work is simply because nation states cannot change those economic realities which are imposed by global financial capital and multinational organisations.

That is not going to be solved technologically but via cooperation between cities – direct transnational cooperation for example on climate change because the nation states are not doing their work and so cities are now taking over and doing it themselves. And it doesn’t matter whether the cities are in Europe or Asia, they already cooperate within those networks. There are many other civic organisations, p2p entrepreneurial coalitions, and open design communities, that can scale globally to create a level of global governance that is trans-national instead of just inter-national.

You may have read that a majority of the world population now considers itself cosmopolitan, including citizens of Global South countries such as Nigeria, according to recent polls. This is very significant as a shift.

The other thing is what you mentioned – we still use batch-processing for democracy. This means voting every four years for the person we dislike the least, often with a binary option.  

So I think there we need to upgrade our technical capacities to start experimenting forms of democracy like the liquid feedback system, which allow much more fine decision-making.

I’m not sure how this will come about but I’ve seen lots of communities that are experimenting on their own networks. For example at the P2P Foundation, we use Loomio, which is an open-source decision-making tools which allows you to choose between 15 or so decision-making mechanisms.

But it’s hard to see at this stage how we could apply this at the nation-state level. So here also we must start at the local level, but with a trans-local and trans-national vision.