Why Marxists should support Uber and AirBnB

Par Charles Hunter

Uberization is a new economic paradigm that upends classical structures of capital ownership

Opposition to services such as Uber and AirBnB has been picking up strength lately. Between the French successes in regulating the ride sharing service out of competing with taxis, Berlin and Barcelona’s outright bans on short-term housing rentals, and California’s attempts at classifying Uber operators as employees, we are well on our way to killing the benefits of these innovations before they start their extension to other industries. Those who adhere to a Marxist analysis should lament these successes, for they signal the successful defense of a mode of ownership of productive capital that they oppose. They are a modern day Gotha Program: capital buying its peace by bribing workers into supporting a sclerotic economic order.

Friends and foes of Marx alike should take care to differentiate Marxism from Communism. While the former constitutes a paradigm of economic and historical analysis, the latter is a would-be evolution, and solution to the internal contradictions that Marx discerns in what he calls capitalist modes of production. Communism isn’t the only such answer to flaws that Marx discerned in those economic systems. National Socialism, in particular through Corporatism, saw itself as a third way. The Distributism of the Church also aims to alleviate the same problems, though fortunately in a radically different way.

Critiques of Communism are abundant and effective, ranging from the practical experience of socialism that many countries underwent, to the issues of resource allocation underlined by von Mises, Hayek, and Friedman. Rebutting Marxism as a mode of analysis, however, is a far more involved process. If we shift away from the modern understanding of Capitalism as synonymous with free markets and private ownership of capital, and focus on the system described by Marx, in which there is a class of capital owners who use State coercion in order to prop up their falling profit margins at the expense of the majority of the population, then the analysis suddenly appears far more relevant to our state of affairs.

The United States are far from being a bastion of capitalism in the modern sense. They are becoming more and more capitalist in the Marxist sense. Walmart and Starbucks lobby for minimum wage increases, not because they care about their workers, but because doing so drives their smaller competitors out of business. Big banks that threaten the savings of workers through their recklessness support “too big to fail”, as it lowers the cost of their borrowing relative to their smaller competitors while providing government backing for their irresponsibility. Insurance companies loved Obamacare at first, when it promised them a law mandating that everyone buy their products. Now that government is putting pressure on their greatly increased profit margins, they’re trying to pull out. Those are only a few examples.

The alliance between industry and the State is always a cause for concern. A basic understanding of the profit motive that drives industry guarantees that a firm wouldn’t support something that hurts its bottom line. Maybe it hurts in the short run, but as businesses dream of being granted a quasi-monopoly by the State, anything that hurts the competition more than it hurts them is also fair game. That taxi companies and hotels seek to further regulatory efforts on Uber and AirBnb is therefore no surprise, as those two have done a tremendous job of driving down their profit margins. The city of Paris has imposed a half hour delay on the arrival of Uber drivers when they are hailed through the app, in order to make sure that the Parisian taxi system, saddled with burdensome medallion costs that prevent new entrants, retain some sort of advantage. Likewise, AirBnB hosts face increased regulatory scrutiny as hotels scramble make sure that the insane regulation they used to make competition expensive are applied to private homeowners as well.

But there is also another dimension at work here that makes the regulation of “uberization” a particularly important issue for he who believes in even the vaguest notion of conflict between a capitalist and a working class. In the classical Marxist understanding, capital isn’t simply “machines that allow people to produce things”; capital is the ownership of such property following a specific legal form. The “capitalist” is such because his machines are owned in accordance with a specific regulatory structure, and are recognized as capital by the State. The capitalist can therefore pay fewer taxes on his cabs, because they are “capital” and subject to “depreciation”. The worker who owns the exact same car, however, receives no favors from the government through it. The government doesn’t recognize that his car is as necessary to his economic activity as the taxi is to the taxi business. To Marx, this is one of the great instruments of the capitalists in class warfare: the ability to have their productive resources considered capital while making sure the worker’s similar machine isn’t.

Uber, and similar services, are doing a historically unprecedented work of democratizing access to capital. Through them, the average car owner now owns capital that he can use to the same economic ends as any capitalist, and his property is recognized as equally valuable. His ownership is suddenly protected and encouraged by a system that was used to devalue it. The same goes for those who own any other property touched by Uberization. Thusly, one facet of the phenomenon of exploitation is upended: the so-called “capitalist class” can no longer use its State enforced monopoly on the ownership of capital to make workers dependent upon its resources. It now has to contend with the fact that the worker can buy property and use it as capital to value his labor freely. Uberization puts the capitalist in competition with those who previously only had their labor to sell.

That isn’t to say that, from a strict Marxist stance, that businesses like AirBnB are a path towards transcending capitalism in the modern sense. These companies still receive rents and set the fees for their services. They do so because they offer the platform necessary for workers to put their capital to economic use. It is a necessary provision in the current absence of platforms that allow entrepreneurs such as drivers, hosts, etc, to put their property at the disposal of a broad market on their own exact terms. It is therefore important that there be strong competition between these services; that we do not allow, for example, Uber to lock out Lyft through some legal apparatus, lest we replicate the same usual schema. However, it is also important to note that, as the capital that these businesses possess is merely an electronic platform, a notoriety, it is far easier to compete with them than it is to compete with firms in an industry where one has to buy million dollar medallions to run a single cab.

Uberization is very likely to radically alter our economic paradigm for the better, and we must encourage its expansion to more industries. In order for this to happen, vigilance is necessary on two fronts. Great care must be placed in preventing traditional businesses from regulating away the economic advantages of Uberization, and we must make sure that the leaders of this movement do not themselves use government power in order to prevent new companies from competing with them. If those two conditions are secured, the State enforced monopoly over capital will be significantly eroded. Workers will have much greater power in negotiating the value of their output. We will shift away from the “capitalism” of Marx, and towards a system of greater free enterprise and respect for labor.