Cooperatives 4.0 – a ‘fair trade’ alternative to the exploitative gig economy?


One of the biggest challenges in the United States is the increasingly tense battle between the growing numbers of ‘gig workers’ – independent contractors, often on short-term contracts or working on a job-by-job basis – and the massive, investor-owned, on-demand technology platforms that are taking over a greater share of the nation’s work.

This past year has seen Uber driver strikes across the country, Seattle’s recent move to allow gig drivers to unionise, and a stronger push to figure out a better system to define gig workers.

This is being driven by a clear fact – that the on-demand revolution has failed to empower workers. The United States now has record wealth inequality, stagnant wages for middle and lower class Americans, and more independent contractors than ever before.

“Income inequality is at the core of so many social problems,” says Joshua Danielson, one of the co-founders of the Loconomics Cooperative, which is on a mission to “use technology, shared ownership and community to grow local economies” when it launches in California later this year.

“[On-demand] platforms are turning into giant temp agencies, and instead of hundreds of owners, it’s just one. Do people need to be billionaires on the backs of low-wage workers?”

This is the reality, as just a few platforms owned by the wealthy – Amazon, Uber and AirBnB, for example – dominate the on-demand economy. Their goal is not to maximise how much workers get paid, but to maximise returns for investors. This is why the wealth these platforms generate has not yet trickled down to the ones who are – through their coding, driving or physically exhausting work in warehouses – doing the actual work.

The gig economy is concentrated with companies that are now hiring legions of lawyers to remake policy and laws in their favour.

“Right now the orientation [in the gig economy] is all towards large monopolies, one big Uber in every space,” says Nathan Schneider, a journalist and media studies scholar-in-residence at the University of Colorado Boulder. “It’s kind of a winner-take-all mentality.”

However, there is hope, as a growing number of developers, organisations and entrepreneurs are looking to take an age-old idea – worker-owned cooperatives – and transform them into cooperative platforms, creating innovative tools for worker empowerment in the digital age.

Cooperative platforms

Cooperatives themselves have existed for decades, and are a proven model to both empower workers and ensure fair wages. But they tend to be local – a grocery store, a bakery – which is partly the point. It keeps money in the community and creates a direct, often overlapping, connection between workers and consumers.

“The modern cooperative movement emerged as an attempt to create a bulwark and to empower people who were being left behind,” Schneider tells Equal Times. It already makes up a significant segment of the economy, with over 29,000 cooperatives in operation in every congressional district across the United States, according to the International Cooperative Alliance.

This model, in which decisions are made collaboratively and, often through consensus, is the opposite of how things are done in Big Tech, where speed, design and user-experience metrics are key to creating a successful platform.

This is one reason that open-source software has yet to become an alternative to corporate-owned software, particularly in the world of mobile technology where most on-demand economy platforms can be found.

“Every time I try to install open source software, it crashes, and that has to change,” says Trebor Scholz, a gig economy expert and associate professor of culture and media at the New School in New York City. “We really have to understand that we must offer a competitive user experience to match [apps like] Uber.”

What Scholz would like to see are cooperative platforms that are a mix of open-source foundations, non-profits and traditional co-ops. It would be worker-owned, rely on open-source technology and be transparently run, removing two of the key issues with on-demand platforms: the high-stakes profit motive and the lack of space for workers’ voices.

Scholz also believes that there is consumer demand for this, pointing to the fair trade and organic movements, in which consumers pay more for ethical products.

“What has been missing from the debate about the future of work is an approach that offers people something that they can wholeheartedly embrace,” says Scholz. Cooperative platforms, he believes, can be the fair trade alternative to the existing, low wage, exploitative corporate platforms.

Challenges and opportunities

It is one thing for a cooperative bakery to compete with a chain bakery in a neighbourhood. But cooperative platforms are up against some of the biggest corporate giants in the world. Uber, for example, has an estimated valuation of US$68 billion, while Amazon is the world’s seventh largest company by market capitalisation.

Another major barrier facing cooperative platforms is money. There is no answer to the millions in venture capital funds that flow into on-demand platforms, thus allowing companies like Uber to severally undercut taxi fares in order to gain market share.

For Danielson, this can be a positive. Instead of having to worry about paying back venture capital investors, who often demand fast growth on their investments, he can focus on increasing Loconomics worker-owners at a slower, more organic pace, keeping their needs as the top priority.

“We don’t have the pressure of paying back 10-times on investment,” said Danielson. “Our profits are controlled by the owners and [staff] will make market salaries, not executive salaries.”

One already successful example is Stocksy, a stock photography platform which is self-described as an “artist-owned digital-licensing co-op,” and currently gives users a far bigger share of royalties than corporate platforms such as Getty Images.

And in Austin, Texas, where Uber and Lyft recently choose to leave the market due to new, voter-approved regulations, a non-profit start-up, RideAustin, has launched in less than a month, creating a cooperative alternative to the investor-backed ride-hailing companies.

“All of a sudden, Austin is the epicentre of ridesharing innovation and entrepreneurship... in the absence of the two giants, we’re seeing real experimentation and innovation," says Andy Tryba, one of the founders of RideAustin, in a press release.

RideAustin, Loconomics, and Stocksy are all strong starts. But in the end, for cooperative platforms to succeed, they’ll need more than just the best technology; a societal shift towards worker empowerment and equitable labour is also required.

“This is not, of course, about some sort of technology. What it’s really about is a change of mindset, towards mutualism, cooperativsim,” says Scholz. And an economy in which workers, not venture capitalists, are in control.