Uber Eats worker – Pixabay License

The rapid growth of the ‘sharing’ or ‘platform’ economy, with the rise of well-known brands such as Zipcar, Uber, Airbnb, or CouchSurfing, has generated enthusiasm and concerns about precarious work. In my new article in the Journal of Social Philosophy, I investigate, from a broadly liberal egalitarian perspective, how public administrations should regulate these new kinds of economic organizations in a way that respects principles of justice and maximizes the prospects of the least advantaged. In particular, I argue that preventing unfair inequalities could require changing the kind of organizations running these platforms.

A driving motivation of this research project is to contribute to the renewed and much-needed attention that political philosophy is giving to the different forms and ownership structures of economic organizations, and their respective impact on the distribution of resources in society. Recent examples include the work of Elizabeth Anderson, Abraham Singer, or Martin O’Neill.

One contribution of the article is to make organizational transformations central to our understanding of the platform economy. I use theories of organizations to distinguish and shed light on two processes facilitated by information technologies. First, I investigate the replacement of private goods with club goods: a car-renting organization like Zipcar, for example, proposes to replace your ownership of a ‘car’, an excludable and rival private good, with a ‘membership’ to the Zipcar club giving you access to the use of a car. While clubs have always existed, information technologies improve the capacity of organizations running clubs to manage the shared use of goods by facilitating user coordination in real-time, thus reducing coordination costs and congestion. This means that for a given pool of goods, clubs can now include more members, thus reducing the per capita cost of the pool and the membership cost. This also allows sharing a wider variety of goods in new ways such as kick scooters.

Second, I investigate the creation of new markets through online platforms. Platforms allow market agents to gather, pool, and analyze market information about suppliers and consumers in much more effective ways which reduce the costs of contracting directly on the market. This allows firms to externalize more transactions previously performed within their organization to market contractors. The distributive effects of such ‘creative destruction’ are more complex. It can negatively affect the worst off in at least three ways: a. good jobs are replaced by more precarious ones and the risk of fluctuating demand is shifted from firms to contractors, b. workers having to change occupation face transition costs, and c. existing regulations and social protections are disrupted.

A second contribution of the article consists in clearly distinguishing two distributive strategies to mitigate inequalities resulting from these organizational transformations. Following a mitigating strategy, public administrations could simply implement policies such as redistributive taxation, public investments to improve the labor market, retraining programs, and adapted social protections to compensate people on the losing side of these market disruptions. But they could also go further with an organizational strategy: in addition to the previous mitigating policies, public administrations could aim at changing the kind of organizations running clubs and platforms.

In the article, I briefly give reasons to believe that clubs have mostly positive distributive effects: they cut the cost of accessing various goods and thus improve the least well-off’s purchasing power. Therefore, in my view, public administrations have little reason to change the kind of organizations running these clubs and they might only need to help the least well-off get access to club goods through targeted subsidies to reduce the membership cost, support for new service points in poorer neighborhoods, and training in digital literacy.

By contrast, I argue that the mitigating strategy may be insufficient to limit unfair inequalities created by online platforms and we may need to change the organizations running them. This strategy includes subsidies supporting more egalitarian cooperative platforms (of contractors and users) to help them outcompete current investor-owned platforms as well as more intrusive policies aiming at breaking the monopolistic tendencies of large platforms by making contractors’ and users’ reputational data portable to alternative platforms to improve competition.

The article ends with a discussion of the merits of the organizational strategy and an important challenge. Indeed, the liberal presumption of formal freedom could lead us to believe that the organizational strategy’s more intrusive policies are justified only if they are necessary to realize justice and maximize the prospects of the least well-off; so, if changing the organizations running platforms is not absolutely necessary to maximize the situation of the least-well-off (if mitigating policies are sufficient and/or if promoting coops is inefficient) then, more interventionist policies may not be justified. In the paper, I outline the kind of arguments needed to respond to this challenge but more research is needed to reach a definitive conclusion regarding the necessity of the organizational strategy.

Thomas Ferretti

I am a guest lecturer and researcher in philosophy at the London School of Economics (UK). I specialize in moral and political philosophy, business ethics, and AI ethics. My research is interdisciplinary and focuses on three main areas: theories of distributive justice, fairness within economic organizations, and the ethics of AI. I hold a Ph.D. in Philosophy from UCLouvain (BEL, 2016). Read more: https://www.thomasferretti.com/