Marx, Capitalism, and the Sharing Economy

Are AirBnB and Zipcar leading us into communism?

Or, less sensationalistically: Does the rise of the Sharing Economy represent the beginning of late capitalism’s final evolution into communism, as predicted and advocated by Karl Marx over a century ago?

To explore this issue, I had a great conversation with Mark S. Byrnes, Associate Professor of History at Wofford College; and William Carleton, startup lawyer, columnist, and blogger at Counselor @ Law, America’s #1 most popular Securities Law blog.

Our conversation also ranged over public utilities and monopolies, the rise of the railroads, The Circle and 1984, Theodore Roosevelt and the Progressive Era, 3-D printing, the Federal Reserve, the NSA, the Affordable Care Act, and the Surveillance-Social Network Complex. It was a lot of fun, I learned a lot, and the conversation changed my mind– which is always the best recommendation.

Evgeny Morozov recently wrote a critique in The New Yorker that compares today’s Maker movement to the Arts and Crafts movement of the early 20th century, and argues that it is likewise doomed if it continues ignoring the fight for justice, and fails to discuss institutional and political change. As an activist and former MAKE editor, I agree. Morozov’s essay reminds me of this conversation with Byrnes and Carleton, which focuses on different aspects of the same historical era, and comes to similar conclusions.


Paul: I have been wondering, what would Karl Marx think of what we now call the Sharing Economy and collaborative consumption? I participate more and more in the sharing economy, which I think it is a genuine revolution, and it reminds me of what I vaguely remember learning about Marx back in college, and his vision of community ownership and sharing. I know he is more concerned with the means of industrial production rather than products and services on the consumer side, but I’m wondering if, in our advanced state of capitalism and information technology, we aren’t backing into something that’s at least similar to what Marx envisioned: collective ownership and sharing.

And if so, what are the differences? Take Zipcar or City CarShare– if they were owned collectively and run as co-ops, would that be Marxist? Or, there are now crowdfunding platforms for craft brewing, like CrowdBrewed and CraftFund. If they let people become part owners in craft breweries, would that be Marxist? A few years ago there was an online prank where people pledged money for a crowd buyout of Pabst Blue Ribbon; SEC shut the prank down, but it also became a main inspiration behind the new crowdfunding laws. If that crowd buyout of PBR actually happened, would that be an example of the proletariat taking ownership of the means of production, in Marx’s terms?

I know all of this stuff isn’t inclusive– people still have to pay, and it’s not like ownership in a brewery or access to a car sharing service is a right of citizenship. And I also think that participants in the Sharing Economy are currently self-selected as a pretty trusting and privileged group– which might help it work for the time being, but could decline later.

Marx said that socialism and communism can only take root where capitalism has already created a sufficient level of wealth and productive capacity. Some Marxists say this is why it hasn’t worked yet, but here in the US, we have greater wealth and productive capacity, and recent polls show that Millennials are less interested in personal ownership of things, or at least in owning a car. So are we starting to fulfill Marx’s prediction?

Mark: My first instinct about that is, nothing has fundamentally changed. With car sharing, for example, as long as someone can say “this is mine” and deny use to others use, then it’s still property with exclusive claims. Even if the owners are a large group.

Paul: Yeah, that’s a really good point.

Bill: Maybe this is a tangential thought, but I’m really taken with my car-to-go service. I’m using it a lot, and part of what’s so thrilling about is you don’t have the burden of ownership. You don’t have to buy fuel or insurance for it, you don’t have to maintain it, you don’t have to deal with the city for parking.

Mark: But what you’re describing is a convenience as a consumer. Instead of purchasing a concrete product you’re purchasing a service, the ability to use a product at your convenience. You’re effectively renting very short term, but ultimately you have no claim to the product. It doesn’t belong to you; it belongs to someone else.

Bill: Who is exploiting the asset to make money, yes.

Mark: So you still have people controlling and extracting value from things that others want.

Bill: So, based on what you’re saying, the car-to-go model is more like the railroads in the 19th century, where a few robber-barons owned the track and trains, and anyone else who wanted to use them had to pay them for it. And it might be very convenient for you, but it’s not a right. It’s still a commercial transaction.

Mark: Yes, so I think that Marx might see car-sharing as an inventive and innovative way of leveraging property for profit, but I don’t think he would see it as changing the essential dynamic of property.

Private Property Sharing and Public Utilities

Paul: But what if enough people said that some minimum ability to drive should be considered a basic right, or that it should be subsidized the way Universal Lifeline Telephone Service is. We already use drivers’ licenses as a sort of national identification card, tying driving to citizenship in a weird way. And new regulations are conceivable that would require the car sharing companies to offer some minimum access to every citizen.

Mark: That would basically turn car-sharing into a utility, which represents a kind of half-way point between free-market private ownership and public responsibility and ownership. Utilities are basically monopolies that we allow to form and effectively force to provide a basic service that we’ve decided ought to be universally available. For example, I have to buy my power from Duke Power, and their monopoly over providing electricity here comes in exchange for being regulated, like they have to apply for rate increases. So a utility is kind of a hybrid, but it does not ultimately represent a disappearance of property.

The question for the scenario of a public car-sharing utility is, would requiring universal coverage take all the profit out of it? In which case, the company wouldn’t do it. They would say, “No, that’s a fail. It wouldn’t be worth it if we had to let anyone use our cars, regardless of their ability to pay.”

And as far as I understand Marxism, what it all comes down to is, does someone have an exclusive title to something, whether it’s an individual or group. In Marx’s mind, if it’s exclusive in any way then you have property, and complete economic justice is not possible. So on that level, I think what you probably could argue is that we’re evolving past the categories he used, in interesting ways.

There are some aspects of the way the economy has developed over the last 10 or 20 years that would be mind-boggling to Marx, and with others, he would say, “Well, of course.”

The “Well, of course” part includes the incredible internationalization of the economy, the extent to which corporations operate extra-nationally. That type of thing would have made perfect sense to him, because capitalism knows no country. But things that technology has made possible would probably bend his mind in the same way that our minds would be bent if we were catapulted 150 years into the future.

I think the real question you’re getting at is, are things evolving today in ways that fundamentally challenge older notions of property? There are categories of property that Marx simply could not have conceived of. For example, data that’s mined and clearly has property value to companies.

Paul: Yes, and the vocabulary is changing. With utilities, we generally think of them in terms of big infrastructure, but maybe a shared car or bike or tool can be considered a utility.

The Triumph of the Market

Paul: Mark, I remember you talking earlier about how capitalism has been developing differently since around 1989, when the specter of Marx, in a sense, went away. I thought that was really interesting.

Mark: Yes– and I wonder about how that’s intersecting with the way technology is changing; I haven’t yet had time to really think that through. But going back to the idea of utilities and basic public services, I do think our ideas there have drastically changed. For example, the Post Office was one of the first things that the newly-formed U.S. government established here. It was taken for granted that delivering mail was something that only the government could do.

But now we have UPS an FedEx and others that are basically impinging on what used to be considered an exclusive government domain. This makes it harder for the USPS to sustain itself, because it has the obligation to serve everyone everywhere at the same rate, whereas FedEx and UPS can charge different rates, make their own rules to follow market forces, and cream-skim the most profitable parts.

But that actually undermines the public role of the post office, but we don’t question it anymore. So on some level, in that specific instance, we’ve gone to an even more extreme idea of market than even existed at the founding of the Republic. We’ve said no, we’re not going to grant monopoly status to the USPS to deliver everything– the private sector can do a lot of that.

In many ways we’ve become more laissez faire than they were in the 1780s. Another one is how we’ve moved toward privatization of national defense, especially in the last 20 years. That’s was always seen as a government function, and now we delegate it to government contractors of various kinds. For example, using private security firms for embassy security, I think would have been unthinkable 200 years ago. We’ve had this erosion of what basic services are considered legitimate areas of government monopoly. It’s a strange and interesting shift seems to have accelerated, I would argue, in the last 20 years or so.

Paul: It makes me think of schools as well– charter schools and things like that, and how public schools teach the kids who are left behind when the more profitable ones are taken out.

Mark: Yes, and again, certainly in the 19th Century, the idea of a public education developed as a civic responsibility that the government had to take on. It was considered a right of citizenship that the government had to provide on as equal a basis as practically possible to every citizen. The privatization mindset that has been growing over the last 20-25 years is undermining that, and is creeping into higher education in a similar way.

So I think that these developments over the past 20-25 years are clearly related to this sense of the triumph of the market, and the way that the end of the Cold War was interpreted as a triumph of the market. Our system, which was based on market forces, was proven to be the better one. I think it’s a gross oversimplification of what happened during the Cold War, but that’s how it’s been interpreted, certainly in this country.

The Progressive Era

Mark: And going back to the influence of Marx, if you go back 110-115 years ago to the Progressive movement, that’s the first political response to the problem of industrial development in this country. The motivating factor for people like Theodore Roosevelt was their belief that Marx was actually onto something. If things like the railroads could not be shown to serve the public good, if they could not be regulated into public resources that would help people in general, there would be a revolution. Theodore Roosevelt was really explicit about that: if you allow untrammeled capitalism to develop, you risk a revolution. And he saw New York as police commissioner in the 1890s, he saw the poverty, he saw the exploitation.

Bill: Mark is the historian and I’m the amateur, but I just love Theodore Roosevelt. I recently read the Edmund Morris biography, and I just picked up the new Doris Kearns Goodwin book about Roosevelt yesterday and I’m looking forward to diving into that. She gets into that a bit, I think– about just how transformative the Progressive era was. The way Roosevelt handled things initiated a huge shift in the direction of the country, even in the absence of a war, a civil war, a revolution, a depression, or another big event like that.

Paul: Wow– so, when was this? When was the start of the Progressive era?

Mark: Early 20th century, basically. It depends on how you want to look at it. If you’re a historian, you always want to see the antecedents, and you can go back to the populists of the 1880s and the 1890s and see the first rumblings coming out of the changes in industrial development. But most people would say that when Theodore Roosevelt became president in 1901, with the assassination of McKinley, he brought a new mindset to the White House in a way that perhaps never could have happened without an accidental presidency.

I don’t think there’s any historian of modern America who would disagree that the Progressive era is an incredibly important turning point. The debate that historians have is whether it was radical or conservative. I tend to side with the idea that Theodore Roosevelt represents enlightened conservatism. He wants to preserve a free market economy, and he understands that the only way to preserve a free market economy is through regulation.

Roosevelt is dealing with a lot of people who see regulation as the end of free market, but he sees regulation as the perpetuation of the free market, and that’s what he’s grappling with. He’s trying to convince the businessmen on Wall Street that submitting to regulation is the only way to preserve the market. He was afraid of revolution, and worried that the abject poverty that resulted from an unregulated, completely laissez-faire economy might push the United States towards the kind of radical revolutionary movements that were bubbling up in Europe.

And I would argue that Franklin Roosevelt is the exactly the same way in the 1930s, with the New Deal. With the Great Depression, we’ve seen how bad the free market can treat us, and if we don’t find a way to convince the average person that the system is not going to lead to widespread abject poverty, it’s going to fall. That’s what the New Deal and modern liberalism have been about since the 1930s.

But what emerged after 1989 was the sense that there’s no real choice. The free market is the only game in town, because we saw that totalitarianism doesn’t work.

National Health Care

Paul: Right– the interrelationships and nuances were lost. This also makes me wonder whether people view health care as a utility, and to what extent should it be regulated. There’s definitely debate on that now. It’s not by any means a laissez faire field. It’s more of a complex, like the military industrial complex, in which a few large players compete over a firehose of guaranteed income deducted from people’s paychecks, and effectively lock out any newcomers.

Mark: Absolutely. And looking at the debate we had over health care a few years ago, the idea that basic health care is a public good that should be provided as a last resort if necessary by the government– that didn’t get anywhere in Congress. The possibility of a “public option” was completely out; it wasn’t even considered viable by what passes for the Left. And under this supposedly socialist president– it just shows how much the goal lines have shifted.

Instead, the new health care system is entirely driven through private companies. That’s now considered “socialism.” Making people purchase from private companies is called socialism. I don’t think you could have made that charge stick 40 years ago. Medicare and Medicaid started up in the mid-1960s, and they’re government programs; the government acts as the insurer. That was accepted at the time; that got through.

But with the Affordable Care Act, the one part that the Supreme Court shut down was requiring the states to expand their Medicaid programs. That was the only potentially socialistic aspect, and it was made optional, under the argument that you can’t force states to expand government control. Meanwhile, the idea that you can force people to buy insurance privately, the part that’s going to help businesses, was upheld. It certainly shows how that ground has shifted since the 1960s, when Medicare and Medicaid got through Congress without any involvement by private companies.

Monetizing Social Life

Bill: Maybe this is a wrong turn in your thesis, but it also seems to me that, as progressive-sounding as a lot of these new social media and sharing systems are, they are actually a regressive force. I’ve been reflecting on this, and also reading books by Jaron Lanier, Evgeny Morozov, and most recently Dave Eggers’ novel The Circle— which is a very simple story but also very compelling. And I’ve come to see an underlying techno-utopianism that has an attractive libertarian veneer but is ultimately not humanistic. It’s like a wolf in sheep’s clothing, because it uses the idea of sharing, but it’s really about monetization happening at some central place, that the participants are not allowed to share in.

Facebook, for example, uses your sharing activity to help promote products, but it’s not playing fair because it doesn’t share its advertising revenue with you or pay you any kind of royalty for using your likeness. It’s regressive– and this is right out of Lanier– in the sense that the only one extracting economic value is the is the party that owns the server, but any non-fraudulent accounting would show that the only real, irreplaceable value in the system comes from the user contributions. We’re like serfs, or unpaid interns.

Mark: And the server then becomes the sort of social means to production, right? It is the thing that extracts value from us in the same way, in Marxist terms, that the factory would extract value from the worker. Except, instead of not just getting paid poorly, we’re not getting paid anything at all– although we’re also not suffering.

Paul: I like this, because it’s coming around to the exact opposite conclusion from what I started with. It is a wolf in sheep’s clothing. You can look at social media and sharing platform idealistically, but so long as the means of production, the servers, are privately owned, then we’re just being exploited.

Mark: And to the extent that the social networks increasingly define being socially active, if you choose to disconnect from them, it’s as if you’re not even alive socially. The company owners want to make you feel that if you are not active on their server, you do not exist socially, you have no presence as a person.

I just finished the Eggers book the other night, and I liked the way it captured that sense of obligation. The way the main character May is shamed by whatever tendency she has left toward privacy. If you keep things private, then you’re not involved, you’re not sharing, you’re not part of the group– it’s seen as selfish and dishonest. I see this defensiveness on Facebook when people announce things like, “Okay, I’m going to take a Facebook break. It’s not personal. Don’t be mad at me.” You can’t just go away. You need to tell people. It’s an interesting development.

There’s that scene where May is called in for interrogation because a surveillance video that shows her doing things that she shouldn’t do. When I was reading that, the image that came into my mind was of Winston Smith being called in at the end of 1984. That’s how it felt. And of course, at the end of the book, May loves the Circle just the way Winston comes around to loving Big Brother– not through torture, but voluntarily. But there’s a similar sense of this entity just taking you over, which I thought was effective and interesting.

But once you have that dynamic, then you’ve found a way not just to monetize economic life the way industrial capitalism did, but to monetize social life — which I don’t think Marx could ever have imagined.

Bill: That’s a creepy phrase, Mark: “monetize social life.”

Mark: It’s is creepy. But that’s how it felt reading The Circle— I involuntary got the image of 1984. The way it presented social sharing as a moral obligation. Of course, it’s an exaggerated caricature of what the author sees us possibly heading toward, but I see the same dynamic it in small ways even in my little Liberal Arts college. Are you visible? Are you seen? Are you part of the community? Are you Facebook friends with those people? I don’t think, for example, that I can turn down friend requests from people at work– although I don’t necessarily invite all of them to parties. There is something insidious about that, not being able to turn down a friend request.

Paul: It is insidious, and it makes me wonder what would happen if things really went south. I remember reading about how the Third Reich identified the people that they wanted to arrest or send to the camps using index cards in shoeboxes. It must have taken a long time for them to go through these and mine all the networks and associations that they were looking for, but today you could do it almost instantly. And I know it takes enormous pressures for a society to turn ugly like that, but if there’s ever a need for some collective social scapegoats, then they’re all there, it would be so easy.

Concentrations of Power

Mark: There is something in the concentration of power and the incessant growth of Google, Facebook, and potentially Twitter that very much echoes the way 19th century industries moved toward massive consolidation. In the 1860s and ‘70s you had all sorts of small railroad lines being created and competing with each other, with lots of money being invested and government support in forms of land grants. But by the 1890s, that competition was gone. The industry was consolidated by big finance, by J.P. Morgan buying up the companies to create regional monopolies.

There’s no question that the railroads in 1860s and ‘70s were incredibly useful and efficient, helpful to economic development, and (to use an overused word) disruptive of the status quo in an assortment of positive ways. But they were ultimately consolidated in the name of efficiency because that’s the nature of this kind of capitalist growth. And it is more efficient to have standards so that train tracks can connect one to one another, and schedules that facilitate easy connections. There are all sorts of logical reasons for consolidation, but it also leads to monopoly control– and monopoly control lends itself to abuse.

Today, Google has a similarly egalitarian veneer, but it’s buying and taking over companies all over, just like the consolidation of the railroads. So you have that same sense of, “this industry is positive, it’s doing good things, it’s making us more productive.” But it also means that, at the end of the day, the ones behind the consolidation have tremendous power.

That’s what the Progressive movement was reacting against, this unchecked privately-held power. Nobody elects these people, and they control everything. They can save the economy, or they can crash the economy– whatever works for them is in their power to do.

Conspiracy nuts are often upset about the federal reserve system, but the Federal Reserve was put in place as an alternative to the banks having to go to J.P. Morgan to bail them out. In 1907, J.P. Morgan decided that it was in his interest to intervene and save the markets, but that was the choice of one individual rather than an institution responsible to the people. At the time, the federal government didn’t have the instruments to do this, which is why we now have a Federal Reserve.

I think there are potential parallels developing as the information industry becomes the equivalent of the railroad industry or the finance industry.

Paul: Given these parallels, do you see any information age analog to the Progressivist movement? I’m thinking of the Electronic Frontier Foundation, which does a lot of good stuff in that area.

Mark: Maybe, but right now I don’t really sense it. Maybe we will look back on the Snowden leaks as alerting us to the ways in which the government is abusing its power of surveillance and information collection. And perhaps someday people will look back at The Circle as being similar to Upton Sinclair’s The Jungle. But right now I don’t think there’s that much concern about it.

The Surveillance Social Network Complex

Bill: I’m way out on the fringe on this one, but I think that what corporate interests are doing with people’s data and privacy is far more insidious than what the government is doing. I know that there are covert government operations that could disappear any one of us tomorrow, if some government agency thought that it needed to happen, and no one would be the wiser. But that’s not every street corner in America, and ultimately the NSA is accountable to the elected Congress and President.

What scares me about the Snowden debate is how the techno-utopians and libertarians show absolutely no irony in their critique of the NSA operations. To make a joke about it, the only problem I have with the NSA is that they should be monetizing their data better!

Paul: A friend of mine’s father is a longtime FBI agent, and I’m told that he now spends a lot of his time reading Facebook.

Mark: It’s the surveillance social network complex.

Paul: Yeah, the surveillance social network complex. And one thing that hasn’t come up in the news yet, but that I believe, is that backup services like Mozy make the contents of our computers’ hard drives available to whatever intelligence agencies assert a “need to know.”

Mark: It probably best to assume so, yeah.

Bill: I don’t want to say that I’m not concerned about government surveillance and data collection, though– especially if it starts to enter into routine law enforcement, and the NSA treasure-trove becomes a database for other federal agencies or even local police departments, to convict people of crimes or impose fines. I don’t know– maybe those revelations are coming next week (laughs).

Paul: I’d be surprised if that line was crossed. I think the federal intelligence community is very protective of their power to have this information, and won’t share it with some local authority unless there’s a clear need that’s probably very difficult to demonstrate. But who knows– maybe these days they would be happy to share!
Well, on that note maybe it’s time…

Bill: Thanks for your thoughts and questions Paul, and Mark, I always like hearing you expound on how there’s nothing new under the sun, and that all these issues and comments we have are merely reflections of ongoing debates from…

Mark: Not “merely.” They’re new manifestations of old debates, which circles us back to the beginning. I would say that if Marx’s insight about industrial capitalism of the 19th century tells us something today, it’s that the pressure to grow and to always be more is built into the nature of our economic system. That compulsion is inherent in a profit-driven system, it is always insatiably hungry, and the only thing that has ever interrupted or controlled that is effective good government, diligently applied.

We have an aversion of doing that anything that regulates the internet for all sorts of good reasons, but regulation is ultimately the only thing that has ever checked that private concentration of power. How do you do that with internet companies? I can’t even pretend to know. And maybe you can’t, and maybe you don’t want to. But it’s certainly worth thinking about.

Paul: That’s a good question, and I appreciate your changing my mind, which I always enjoy. I came into this conversation looking at the sharing economy as possibly beginning to fulfill what Marx envisioned. But now I see the wolf in the sheep’s clothing, and how it’s actually just the opposite– it’s a new manifestation of the same kinds of centralizations, ownerships, and exploitations that he was complaining about.

Mark: My current crazy pet theory is that 3D printers will allow for the individualized ownership of the means of production.

Bill: Let’s hope so, unless the state starts knocking down doors saying, “You just printed out a bootleg replacement part for your vacuum cleaner– you need to pay a license fee.”

Paul: Maybe there will be a mandated chip inside of each 3D printer that detects if you are attempting to print Mickey Mouse, and stops and reports you if you are.

Mark: We can be pretty certain that once the information and benefits starts flowing back in the other direction, they’ll find a way to keep control of that.

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