Manual Work in the New Economy: Flexible Labor Markets in Silicon Valley (Information Age Series)

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In shaping this context of rapid change, it examines the increasingly important role of labor market intermediaries. These new labor dynamics, shaped by flexibility and intermediation, create difficult and contradictory conditions for workers. Some workers clearly thrive in this vibrant context, but many face high levels of insecurity amidst growing inequality. Free Returns We hope you are delighted with everything you buy from us. However, if you are not, we will refund or replace your order up to 30 days after purchase. Terms and exclusions apply; find out more from our Returns and Refunds Policy.

Recently Viewed. What we do know is that these platforms are in many cases disrupting the existing organization of economic activity by resetting entry barriers, changing the logic of value creation and value capture, playing regulatory arbitrage, repackaging work, or repositioning power in the economic system. As a starting place for discussion, we might ask the following questions about each platform or type of platform. How is value created?


The platform economy comprises a distinctly new set of economic relations that depend on the Internet, computation, and data. The ecosystem created by each platform is a source of value and sets the terms by which users can participate. Who captures the value? Indeed, what is the distribution of risks and rewards for the platform users? There are a variety of mechanisms with various implications for gains distribution. Platforms can transform work previously done by traditional employees into tasks performed by contractors, consigners, or quid pro quo workers—or create entirely new categories of work.

If the firm falters or fails, these individuals must find new employment. Although the vast majority of them are unsuccessful or marginally profitable, some can be enormously successful, and despite the fact that this phenomenon is as yet unmeasured, it is clearly creating many new opportunities for entrepreneurship.

Alan Krueger Says Even a Strong Labor Market Does Not Mean Enough Wage Growth

Some of these apps can become platforms themselves. Put differently, the consignment model has significant upside for participants, but it is accompanied by high risk. Who owns or controls the platform? The answer varies by platform, and the differences are important. The distribution of benefits differs considerably, for example, at these platforms: Wikipedia, where the network is managed by a consensus set of rules; the Danish Agricultural Cooperative platform, in which participant owners know one another and there are clear boundaries between inside owners and others; and Uber, in which the platform is owned by a small group of entrepreneurs and their venture capitalists and where the value will eventually be capitalized by the sale of a controlling interest through either acquisition or a stock offering.

How is work packaged and value created, and what percentage of work is now organized in these radically new ways? What happens to the organizational forms of work? Certainly, some workers, such as those employed by Microsoft, Google, LinkedIn, and Facebook, retain traditional employment relationships. Although these firms expect long working hours, they also provide considerable scheduling flexibility as well as a variety of free food, drinks, transportation, and other benefits that can make them appear to be corporate paradises.

By comparison, those who obtain work as gigs, consignments, or contracts through digital platforms have radically different experiences. Although they have control of their work hours, they rarely receive any other employee benefits. Conceptually, if not literally, Uber converts taxi company employees or former medallion owners into contractors, whose access to income is through the Uber platform, while removing government from the rate-setting equation.

Are these contractors mini-entrepreneurs, employees in all but name, or yet something else? Further, what is the proper employment category for individuals who hope to be one of the winners by producing apps, YouTube videos, or self-published books on Amazon? In these activities, there is a power law of returns by which a few big winners are remunerated by advertising, product placement payments, personal appearance fees, and even crowd-funding campaigns, while a very long tail of producers are creating the vast bulk of consigned content without monetary return.

Many are now concerned that rather than creating a new source of productivity we are legitimating a new form of putting out. Can Uber drivers be self-supporting contractors in a economy rather than stable workers in an employment economy, or are they just extremely vulnerable gig workers?

And, more broadly, as Ruth Collier asks, what will be the consequences for mass politics and political structures? Are we generating labor market flexibility, or a precariat that resembles a cyberized Downton Abbey replete with a small elite composed of the platform owners and a new and sizable underclass?

What sort of an economy and society will we create in the transition to digital platforms and the accompanying reorganization of significant portions of the global economy? And importantly, what choices will we have? Before we turn to the long list of issues, with each issue opening an array of questions and debates, two points need to be made. First, Larry Lessig famously claimed that code is law; that is, code represents binding restrictions on behavior.

Algorithms and platforms structure and constrain behavior; the law in the books is often difficult to apply or enforce in the digital world where action is possible only if it conforms to frameworks expressed in the code that shapes and directs behavior. Consider the fight between the Justice Department and Apple; the warrant has no meaning if it cannot be executed in code; for the warrant to be implemented, the code would have to be modified.

Platform entrepreneurs increasingly believe that if they possess a first-mover advantage, they can, in fact, remake existing law by creating new practices on their platforms that essentially establish new norms of behavior. Of course, this forces two sets of questions. First, who writes the code, and whose values are expressed in code? The code writers, taking Uber as an example, have already reshaped social behavior. Second, although public policies are obviously important, corporate strategies also have far-reaching effects.

Do companies view workers only as costs to be contained or as assets—even in an era of algorithms, data, and robots—to be developed and promoted? And equally important, are those assets directly tied to the firm? Who should bear the costs of their retention and upgrading? Acknowledging the constraints of code and the centrality of company choice in shaping outcomes, our platform future, the character of market, and the social logic established will depend on an array of policy choices. What market and social rules are appropriate for a platform economy and society? Our old labels and categories, not just old rules, are being thrown into disarray.

Read Work In The New Economy: Flexible Labor Markets In Silicon Valley

To begin sorting this out, let us start with the firm. In the late nineteenth century, the corporation emerged as a means of orchestrating economic activity and organizing markets. In the twenty-first century, we speculate that these functions will be taken on by the platform in the cloud. Uber has only about 1, employees and is already a global business.

Work in the New Economy Flexible Labor Markets in Silicon Valley

What policy and political issues arise when the orchestrators of economic activity are relatively small firms, rather than organizations as large as Ford Motor Company, General Electric, or General Motors—all of whom also require sophisticated supplier and distribution networks? It is evident that platforms open up many entrepreneurial opportunities. Some entrepreneurs, such as Robin Chase at Zipcar, envisioned an alternative social, not just economic, model because digitally enabled car sharing could dramatically reduce the incentive to own a car.

If that model spread widely, it might result in a drop in overall demand for auto production. This may or may not disrupt Hertz Zipcar was sold to Avis , but it might dramatically affect automakers. Indeed, automakers responded by developing partnerships with Uber and Lyft.

But many platforms by their very nature prove to be winner-take-all markets, in which only one or two companies survive, and the platform owner is able to appropriate a generous portion of the entire value created by all the users on the platform. More important, however, is that as the power is centralized, the platform owner can become a virtual monopolist.

In that case, the platform owner can squeeze the platform community—the drivers or customers on Lyft or Uber, the content providers, the consigners, the customers, essentially any of the participants in the ecosystem who are instrumental in creating the value in the first place. Perhaps competition among platforms in a similar domain, Uber and Lyft for example, might mute the consequences of the power inside the platform. In any case, a monopoly position or even a strong oligopoly might inhibit, or sharply constrain, further entrepreneurial efforts.

Policy and political interests among the players, even among the winners, are far from uniform. Consider such domains as antitrust policy, where the European Commission has done battle with U. Indeed, the wireless carriers have announced they will start blocking advertisements on smartphones, thereby directly attacking the Google and Facebook business models. As we have shown with Bryan Pon, the turbulent environment in the smartphone ecosystem is leading to complex competitive strategies that have technical, social, and political ramifications.


The question of outcomes goes beyond the question of whether digital platforms spawn entrepreneurs or monopolists. We need to ask whether a society organized around platform owners servicing mini-entrepreneurs, contractors, and gig workers portends an even more unequal society. Does the answer depend on the character of platforms or on the policies and politics of the platform economy?

The issues of entrepreneurship and those of work organization that we discussed earlier are tightly interwoven. The policies that we adopt now might determine the balances achieved later. If we want an entrepreneurial spirit to infuse the platform world, then we want risk-taking entrepreneurs, whether they are forming the platforms or seeking advantage as contractors or consigners within it.

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But what encourages risk? Fear, or a safety-net certainty that if a gamble fails, one can always play again? Similarly, if we want workers to accept the new arrangements, how do we assure them that if they accept the flexibility, they will not be the victims but rather the beneficiaries of the ever-greater social value and wealth that is being created? All studies of technology adoption have shown that those who believe they will be victims will resist; if they believe they will be beneficiaries, they may help facilitate the shift.