An Old Idea for the New App-Based Economy

Date: 3 Dec 2015 | posted in: Media Coverage, Retail | 0 Facebooktwitterredditmail

Governing Magazine, December 2015

With Uber and Airbnb, money flows out of a community. Co-ops could counter that.  Propelled by the idea of “the Uber of everything,” many people are predicting that ever-proliferating “network companies” will radically change the older ways of doing business in all sorts of new fields.

Something like that certainly seems to be happening. Just as Uber and Lyft are taking on traditional taxi companies, Airbnb, TaskRabbit and dozens of other app-centered companies are taking on local companies in their industries. “When you can connect and share assets, people and ideas, everything changes, not just how you rent a car,” writes Robin Chase, co-founder of Zipcar, in her new book Peers Inc. This new world, she adds, “redefines our understanding of assets — proprietary versus in-common, private versus public, commercial use versus personal use — and requires a rethinking of regulations, insurance and governance.”


Clearly, someone is getting very rich on this new model. Uber, which takes a 20 to 30 percent commission on ride-sharing fares all over the world, is valued at $50 billion. That’s a torrent of money for a company that doesn’t have to supply cars, radio dispatchers or mechanics. “What’s remarkable about this new generation of platform-based companies is that beyond the initial creation of software, what are they really providing?” asks Stacy Mitchell, author of Big Box Swindle and co-director of the Institute for Local Self-Reliance in Minneapolis. “Yet they take an enormous cut of the revenue stream.”

Is there a way for local communities to take advantage of these new technologies while keeping control of them? Is there a way for workers to produce new jobs and new income while also retaining control over their working lives and, not incidentally, keeping a greater share of the revenue for themselves?

There is. It’s a very old way, begun in the mid-19th century by weavers in England’s mills, an industry then on the cutting edge of technology and social disruption. Now this way includes both small businesses such as grocery stores and huge companies like Land O’Lakes. It’s called the co-op.


Does anything like this exist now? Union Cab in Madison, Wis., is a worker-owned co-op that has been in operation for decades, and there are many other co-op businesses around the country. I couldn’t find any that have an Uber-like app, but co-ops in fact have long been a vehicle to take control of new technologies. In the 1930s, under Franklin D. Roosevelt’s New Deal policies, rural power cooperatives were created to bring electricity to underserved areas. Now some of those same co-ops are providing broadband to their citizens at reasonable rates.

Not to be melodramatic here, but we really are at a crossroads. Unless current trends are countered, as the Institute for Local Self-Reliance’s Mitchell points out, this new economy has the potential to return us to a very old economy, a pre-Industrial Revolution one in which merchants put out work at meager piece rates to families and individuals. “It’s couched in this language of providing flexibility and putting people who do these jobs in a position of power,” says Mitchell, “but clearly they are not.” Co-ops are flexible because at their core is not technology but a set of legally defined relationships. The owners, or “members,” have control, not outside investors. People vote, not money.


Read the full story here.