Editorial

Uberizing the World

We owe Fordism, the rationalization of factory work that changed the world, to Henry Ford. And now we owe Uberization, the transformation of the relationship between employers, employees, and customers, to Uber, a company founded in San Francisco in 2009. Today, it represents a move beyond capitalism made possible by mobile apps.
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© Antoine Moreau-Dusault

Uber was born in Paris, one winter evening in 2008, when two entrepreneurs, American Travis Kalanick and Canadian Garrett Camp, tried in vain to hail a cab on the street. Back home in the United States, they designed a smartphone app to connect customers with any willing driver with their own automobile. The drivers, who are recruited after taking a basic competency test and having the satisfactory condition of their vehicle checked, agree to meet their geolocalized customers within minutes. Thus, Uber owns no vehicles and employs no one; it is only a trade platform, a meeting place. Earnings from the ride are shared between the driver and the company. The idea was simple and ingenious, and it works: 16 million trips are completed each day across the world.

Some economists see this platform as the dawn of a new era, with the collaborative economy, or sharing economy, supposedly replacing the old capitalist model. But in economics, creation is destructive, and the new is always replacing the old. Uber therefore innovates and destroys. And who are the victims? Taxi drivers, a powerful and well-organized profession. In all metropolitan areas, their unions rightly point out that going head-to-head with Uber (and other services riding the same wave) is anti-competitive because it destroys the basis of their employment and distorts cost structures, since Uber drivers are guaranteed no wage, pay for no licenses or payroll charges, and receive no benefits. Uber has in fact swept away the notion of a labor contract, as well as the Code du Travail, the labor laws that the French hold so dear. For unions, Uber portends the end of their very existence.

The left, which tends to be anti-capitalist and anti-American, has taken notice and decided to defend the cause of the unions against the giant Uber. Meanwhile, President Emmanuel Macron supported Uber’s entry into the French market, seeing it as a model for the renovation of the market economy. Outside France, some European cities such as Berlin and Copenhagen have outlawed the app. Uber’s directors don’t much care, and are ready to flout the law and manipulate public opinion through the media to win the favor of political leaders, as revealed in the Uber Files, confidential internal documents leaked last July. Yes, Uber is violent, because the market is both efficient and brutal. As American economist Milton Friedman explained, the market is not a lesson in morality.

Beyond Uber’s strategic conquest at any cost, in the end it is consumers who will decide on the issue, and there is no doubt that Uber can count on them. After all, they have the votes of 93 million users across 10,000 cities in 71 countries. The app is an international success. By introducing competition in a monopolized sector of the economy, Uber has also forced traditional taxi businesses to innovate, pushing them to develop their own apps, for example. Will Uber therefore produce more happy customers than victims? Things are not so simple.

The slogan “everyone’s an entrepreneur,” so dear to the sharing economy, hides certain forms of exploitation: Uber drivers are poorly paid and have no rights. Certain cities, in Europe and the United States, have declared that Uber drivers are in fact employees and must be paid as such and enjoy the same rights as any other employees. This has often threatened Uber’s financial equilibrium and led to suspensions of its service. In California, according to Uber, 158,000 drivers could be taken off the roads because of these new regulations.

So, then, are we for or against Uber? It is important to think about the identity of Uber drivers. They are often recent immigrants, students, or political refugees, who have not found jobs in traditional businesses. Uber is their life raft, a way of finding a place in society. This role played by Uber, which is never mentioned and has not been quantified, but has been noticed by customers, should also be taken into consideration. The Uber question is not one of good or evil, nor of the absolute future of our economies. Remember that sharing platforms only represent a little over 1% of workers in the West. For now, we mostly remain employers and employees in line with the traditional model, and are far from all becoming freelancers overnight.

Still, this wild collaborative economy needs some rules, and the European Commission is working on the problem. It is in Brussels, insulated from demagoguery, that a new social contract will be born; it will allow drivers access to certain protections, yet without becoming employees. Uber will survive this, and other businesses of the same kind will be created and will prosper; we already have Lyft, TaskRabbit, Grubhub, Deliveroo, Instacart, Cajoo, and Courseur. The Uberization of the world (also known as plateformisation in French) will continue to advance, but slowly, balancing on a tightrope, as the saying goes.

 

Editorial published in the September 2022 issue of France-Amérique. Subscribe to the magazine.

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