Who really benefits from the gig economy?

Gig economy, sharing economy, passion economy, or, as some prefer to call it, the hustle economy. All the latest technology-powered “disruptions” of 21st-century capitalism share a principle that, ironically enough, was first espoused by Karl Marx, the arch-enemy of everything capitalist.

As Marx put it, “Only liberated workers with control of production can soak up the full spiritual and financial benefits of their labour.”

This idea underpins a host of new-age businesses such as Uber, Patreon, Airbnb, and local delivery apps, too numerous to name. Their grand promise was seductive and straightforward: you could control who you wanted to be, what you wanted to produce and deliver, how much you wanted to work, and even who you wanted to sell to.

Turn two spare rooms into a guest house and become a hotelier. Teach cooking via Patreon or Etsy. Put a car lying idle to work through Uber. Ride a motorbike and deliver pizzas. These are undeniably clever ideas, capable of creating work for someone who does not know what else to do. But can they replace old-fashioned employment or entrepreneurship, and I use that much-maligned word in its older sense, meaning self-employment, even something as basic as running a paan-beedi shop as a way of earning a stable and reasonably predictable income on which a family can be supported through its life?

A decade or more after the euphoria created by Uber and Airbnb, it remains unclear whether this “new” economy represents a triumph of technology and human creativity or a failure of society to produce enough conventional employment.

What is clear is that it has dismantled many traditional businesses that once provided regular employment, such as taxi companies and neighbourhood shops, for instance, often by offering mouth-watering prices to consumers. The more complex question is what this has done to those who produce or deliver what is being consumed.

Is the platform a tool that allows the worker to liberate herself, or is the worker the tool used by the tech executives who built these platforms? Has the rise of gig and contract work been driven by worker preference or by venture capital chasing returns in a world awash with cheap money? In other words, is Uber a symptom of a deeper malaise or the beginning of a new dawn?

The question becomes sharper during crises, such as the recent global shutdown. During such times, the gig economy has undeniably provided a means of basic survival for many. But when the economy reopens, will it offer a decent living to those dispossessed of traditional employment, and to how many?

We now live in what is often called the gig economy, where people stitch together livelihoods from multiple part-time jobs. Sometimes this is by choice; usually it is not. The labour market increasingly favours short-term contracts and freelance work over permanent employment.

Crucially, the gig economy is designed to shift risk from the enterprise to the service provider. By doing so, it reduces business costs and increases profitability. Labour costs, such as healthcare, retirement benefits, and statutory contributions, quietly disappear. Wealth is syphoned upwards.

The most unsettling aspect of this model is how successfully companies have recast themselves as heroes. Uber, in particular, cloaks itself in the language of “consumer choice” and “flexibility” while developing autonomous vehicles that will one day make its own drivers redundant. Those same “independent contractors” will then discover the second shock of gig life, the absence of any real safety net.

The gig economy does not create economic security; it erodes it. It is not designed to expand choice but to minimise costs. It does not grant workers autonomy; it transfers uncertainty to them. Over time, its net effect will be a drain on economic activity, a reality that will become apparent soon enough.

Workers in the gig economy are not soaking up the benefits. Contrarily, they have lost all the benefits of a stable job (people see in the bastion of capitalism, the US). They don’t have a high income, vacation, sick leave, or any retirement benefits. Moreover, not everyone can manage their retirement accounts and will thus be at the mercy of their brokers or financial advisers.

(The author writes about politics, material culture, and economic history)