The Gig Economy: Capitalism’s New Normal | Leftcom

The Gig Economy: Capitalism’s New Normal

One of Theresa May’s first acts as Prime Minister has been to set up a review into the situation of the 6 million or more people in the UK who “are not covered by the normal range of workplace rights” because they are either ‘self-employed’ in the so-called ‘gig’ economy or are employed in other forms of insecure and ‘flexible’ work on terms such as zero hour contracts. The common thread is that if you are ‘self-employed’, ‘freelance’ or simply short-term/part-time and maybe working for an agency you are not entitled to additional benefits such as sick pay, holiday pay, contributions to pension pots, etc. And of course the minimum wage does not apply to someone classed as self-employed.

Following a string of news reports and parliamentary enquiries into rich company directors with extravagant lifestyles who are indifferent to the fate of their workforce the political class is running scared. The Brexit vote has been interpreted as evidence of working class disaffection with the existing order: a problem which goes beyond how the Conservative Party holds itself together or extends its share of the vote. The ruling class as a whole (and not just in Britain) is keenly aware of the danger of passive disaffection turning into active hostility, particularly from low-paid workers who see no prospect of a shiny tomorrow.[1]

May’s declared intention to “bear down” on “irresponsible capitalists” owes more to the shared fears of today’s global capitalist class about the “populist backlash against globalisation” [Christine Lagarde, head of the IMF] than the One Nation Toryism of Disraeli in the nineteenth century. Leaks from behind the closed-door sessions at September’s meeting of the G20 (the world’s twenty richest states) reveal Barack Obama, Theresa May and her Australian and Canadian counterparts all emphasising the need to placate popular discontent. Malcolm Turnbull (Australian prime minister and former Goldman Sachs banker) warned on the need to “civilise capitalism” or as one official put it “If we do not address the issue of fairness, [it] could endanger the global economy.”[2]

How we got to now

Way back in the 1970’s and 80’s British industrial capitalism was slow to adopt the new technology needed to revive falling profit rates. This was due in no small part to resistance from the working class. Sector by sector, iconic battles were fought by workers desperate to hold on to what they had but few were aware of how high the stakes were. Across the whole of the advanced capitalist world the crisis of profitability demanded radical restructuring in order to raise productivity per worker. If this was not sufficient within a given national boundary (as with the bulk of UK shipbuilding for example), then new technology existed to be employed in another part of the world where labour power was cheaper. So, on the back of mass unemployment, deskilling, lower wages and reduced job security, the post-war trend towards workers taking a larger share of GDP went into quick reverse. The portion of GDP going to wages fell from a peak of 64% in the mid-1970s to a low of 52% by the mid-1990s. [3] This is not the full story because it doesn’t say how wages are distributed. But the fact is that the sharpest decline in living standards and increase in inequality came before the financial crash of 2008. It was a direct consequence of global capitalism’s attempts to deal with the return of the inbuilt threat to its existence which was supposed to be a thing of the past. In terms of daily life it meant for privatisation and isolation where wage workers were not even sure they were part of a class with different interests from the likes of shareholders, directors, managers … Many bought into the idea that the working class (defined as people who did heavy industrial work) no longer existed and began to believe that ‘home ownership’ and property speculation would provide them with a secure future even as they were mortgaged up to the hilt and steeped in credit card debt. The financial crisis of 2007-8 put paid to that. Moreover, massive state cutbacks in just about every aspect of social and welfare spending, postponement of the retirement age and the prospect of declining pensions coupled with wage freezes and outright pay cuts translate into a steady decrease in the quality of life. In fact, OECD figures show that real hourly wages in the UK dropped by over 10% between 2007 and 2015. No surprise then that workers now work longer hours than they used to. Likewise, the record number of people “in work” is due to financial necessity only exacerbated by the state policy of constant harassment and intimidation of people without jobs to force them into taking whatever rubbish is presented to them.

Today bosses in every sphere are embracing the possibilities of the latest technology to ‘improve productivity’. This is capitalist-speak for getting workers to produce more than they did before in a given time period which means the company gets more unpaid work out of each worker. It is the essence of capitalist exploitation. It doesn’t always mean lower pay. At the top end of the ‘value chain’ companies like Nissan, the biggest car-manufacturing firm in the UK, can invest in more robots, as they have done for welding of the new Infiniti luxury brand, to boost output without necessarily cutting wages or extending working hours. This is still increased exploitation and work on the production line remains intense and tiring. In fact the fundamental cause of the world capitalist crisis is at the top end of value production, where the rate of return on capital is now so low as to discourage further capital investment. Despite capitalism’s debt mountain (now equivalent to more than 2 years of global output) the world is awash with financial capital looking for higher rate of return on its investments. Increasingly finance is directed at services which have been farmed out, often from the state sector, and turned into businesses which can turn a financial profit but where little or no new value can be created.

Services now make up 80% of UK GDP. Alongside activities at the bottom end of the supply chain, such as warehouses and deliveries (so-called logistics), capital is turning to digital technology to devise ways of cheapening the cost and squeezing more out of workers in what are already low-paid, low-skilled, labour intensive sectors. In a modern version of Taylorism, where each task is broken down and strictly limited to a sequence of smaller, precisely timed actions which every worker must follow, today’s time and motion studies are conducted by computer geeks who devise apps based on algorithms which can monitor and control every step of a worker’s day, wherever the job happens to take him/her. Amazon is not the only company where warehouse workers have to follow instructions from handheld devices which instruct them where to go and what to ‘pick’ from shelves at the same time as monitoring the time they take. And it certainly does not exclude Amazon or the many other “logistics and distribution centres” which are springing up in the wake of online shopping from using sharp employment practices to lower the cost of its wages bill.[4]

Enter the gig economy

The ‘gig economy’, so-called because instead of going to the same place of work day-in day-out in order to earn a wage in order to live, working life becomes a series of work ‘gigs’: tasks offered to the freelancer at a set price which s/he always has the option of refusing. It couldn’t work without the ubiquitous mobile phone. But just because someone is summoned to a casual job by an app triggered by a computer algorithm doesn’t mean they are therefore self-employed, i.e. running their own business. Behind the apps are creative computer geeks turned hard-nosed capitalists with an eye for where the money is. Their whole strategy of using apps to provide them with a lucrative revenue stream is based on their denial that they employ people to work for them. It is crucial for their revenue stream that they have no responsibility to pay even a minimum wage, never mind national insurance, sick pay, holiday pay and so on. Nothing to do with us: ‘we just provide the platform which allows people the freedom to choose when to log on and work’, argue the likes of Travis Kalanick, co-founder and CEO of Uber, based in San Francisco.[5] And, sure enough, people who get paid for these digitally-announced gigs have to buy their own equipment for the job, just like any petty entrepreneur. For example Uber taxi drivers, who number 30,000 in London alone, have to provide their own car which complies with Uber specs, pay for their own training and licence etc, etc.

Above all they must have the Uber app – £5 per week for the official one – because without it you will have no customers. Passengers must pay the fare electronically and the payment (calculated by the Uber algorithm) is credited to Uber which takes off at least a 20% ‘service fee’ before crediting the driver’s bank account once a week. Drivers, sorry “partners”, have to make at least one trip a month to keep on the books. This kind of employment is certainly less monotonous than the old forty hours sentence for life occupations which dominated heavy industrial work decades ago. But it is no less capitalist exploitation for being precarious and for the boss appearing as an anonymous mobile app.

The question is posed about what the gig economy and the wider world of precarious employment mean for the revival of a working class fight back. Yet, just as it appears that the present generation of wage workers is facing a set of bosses who hold all the cards, a series of strikes in the summer by restaurant delivery couriers employed (they argue correctly) by companies Deliveroo (set up by Will Shu, ex-investment banker at Morgan Stanley) and Ubereats (a spin off of you know who) has challenged the complacency of these unscrupulous capitalists who are a product of a system in deep crisis and which is resorting to amassing financial profits at the same time as capitalism’s capacity to extract new value from the working class declines. In the real world this means we are in an era of increasingly vicious exploitation where the thirst for profits will push more and more employers to try and pay less than a living wage.

Deliveroo, which operates in 84 cities across 12 countries, has more than 20,000 ‘self-employed’ cyclists who deliver food for more than 16,000 restaurants on its books. Although it is good at attracting financial backing it has yet to make a profit. No doubt this has a lot to do with the sudden introduction of a pilot pay scheme amongst about 280 of its 3,000 London couriers. It spells a massive wage cut. Previously the couriers received £7 per hour, plus £1 commission for each delivery. Under the new scheme couriers have no base salary but instead receive £3.75 per delivery. OK during the lunch time and evening rush when you can make more than £7 an hour but it means that most of the time they earn less than the minimum wage. The heartening news is that this wasn’t taken lying down. Over the summer hundreds of Deliveroo workers organised their own protests and one-off ‘wildcat’ strikes. One of their demands is that they be paid £9.40 per hour – the London living wage. Although it looks as though Shu will get enough workers to sign up to his take it or leave it new contract, he’s had a shock, stating on Radio 4 that he was “sorry” that the trial had triggered protests.

He’s not the only capitalist who’s sorry. The Deliveroo workers’ fight inspired Ubereats couriers who came up against another wage-cut trick to organise their own “wildcat strike”. After initially paying £20 per hour, once Ubereats had recruited a core set of workers, the pay terms were changed to £3.30 per delivery, which means much lower pay. The workers used their mobiles and Facebook to organise their protests in conjunction with the Independent Workers Union of Great Britain (IWUGB) and the United Voices of the World Union. The first is a split from the modern version of the IWW (Industrial Workers of the World), and before that from mainstream unions in the TUC, we do not know the origins of the United Voices of the World. To the extent that they are using the grievances of precarious ‘gig economy’ workers to capture a membership that will allow them to get a foothold as the workers’ permanent legal representative they are not the way forward. As it is though, it is clear that by putting up their own fight, these most precarious of gig economy workers have shown the glimmer of a way forward to the rest of the working class.

It is not true that today’s extreme conditions of precarious employment suffered by the bottom 20 per cent of the workforce are simply a passing side effect of capitalist innovation which will eventually be ironed out. For the likes of Will Hutton (in The Guardian, 4.9.16) capitalism, “As ever is the bearer of the modern, the change agent whose innovations are welcome”. This is a complete misreading of the situation. Far from being the bearer of human progress, “today’s capitalism” is heading towards a catastrophic solution to the third global crisis of its existence where the only progressive outcome can be the overthrow of the entire system. Meanwhile, he is right about one thing: the gig economy is the yardstick for the new normal, i.e. for what sort of conditions of employment capitalism can get away with imposing on other sectors of the working class. Already the new junior doctors contract is reported to include on-call elements derived from the gig economy while the BBC and ITV now commission programmes according to perpetual undercutting gig-style terms.

The summer strikes of delivery workers should be seen as the first sign of a fight back by a new generation of the working class. They certainly scared the ruling class. (At the Tory Party conference Theresa May’s chief policy advisor, George Freeman, warned of “anti-capitalist riots” if the government did not intervene to make capitalism “more responsible”.) Recognising each other’s shared material interests is the first, necessary step towards independent political consciousness. This in turn will allow for a revolutionary organisation with a genuine anti-capitalist programme to mature within the everyday life of the working class. Meanwhile, we can only remind our readers that the only sure way to a socially just society is not the struggle for a fair day’s pay, but for the abolition of the wages’ system.

ER

Notes

[1] Although there are numerous interpretations of what the Brexit vote reveals about the working class, the Resolution Foundation has worked out that there is no correlation between the areas that voted heavily for Brexit and the areas that suffered the steepest wage falls in recent years. There is a correlation, however, between places that voted for Brexit and places where average pay is low and has been for decades. For example, 76 per cent of voters in Boston, eastern England, voted to leave the EU (the area with the lowest pay in the country) compared with 31 per cent of voters in Richmond upon Thames, the area with the highest pay.

[2] See G20 Leaders Urged to ‘civilise capitalism’, Tom Mitchell et.al. in Financial Times 6.9.16.

[3] See, for example, The TUC’s The Great Wages Grab, a study based on OECD figures.

[4] See Amazon – A Modern Capitalist Microcosm at www.leftcom.org/en/articles/2014-02-15

[5] See Wikipedia for more.

Friday, October 21, 2016

Comments

I am so impressed by this article that I am resuming commenting, hopefully to general benefit. A short part of my working life was on a data-processing self-employed basis on low income, but the flexibility of time was helpful to my situation. Absence of a contract meant that when I eventually asked for higher pay per hour, I was told that the firm would 'just have to let me go', so I went, and luckily (?!) found a waged job, from which I eventually resigned, only to go to another 'flexible' set-up. Anyway, if I and millions of others find that they don't have to get 'employment' in order to eat etc, if and when the wage system is abolished, as advocated by CWO, then with the element of fear removed, what motivation is there for workers to do any work, apart, of course, from the overall understanding that things need to be done to produce food and everything else ? Vouchers for time worked would be a controversial pain, liable to all sorts of rackets. If abolution of the wage system is the only solution to the capitalist system, then moneyless organisation needs to be very carefully assessed and explained, or workers won't 'buy' it ! I vaguely remember that maybe CWO has already explained as I now request, some time ago, but please repeat t for present day readers, and maybe update it. Cheers.

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