Role of Capital and Labor in the Digital Economy

Taking the example of cab-hailing app Uber, the Director of IT for Change says that we will need to go to the heart of what a digital economy is and the role of capital and workers in it if we are to really protect and promote workers’ rights as a digital society and economy take over.

September 26, 2019 Produced by Lynn Fries / GPEnewsdocs


PARMINDER JEET SINGH: New platform companies based on continuously collected granular data developed such end-to-end digital intelligence about every aspect of any sectors economic activity that they virtually become the brain of that sector. And everything else, activities and actors, are then like the physical body which completely gets controlled by the brain. Now if this looks very scary it indeed is so let us try to find an escape from it.

LYNN FRIES: It’s Global Political Economy newsdocs. I’m Lynn Fries. And that was a clip of the Executive Director of IT for Change, Parminder Jeet Singh, as guest speaker in a forum at the International Labor Organization 2019 International Labor Conference. The forum looked at how to shape technological change to promote decent work. Taking the example of Uber, Singh commented that in order to protect and promote workers’ rights, we need to go to the heart of what a digital economy is and the role of capital and workers in it. This show features those comments but we go first to a related clip for some context.

At the time of Walmart’s $16 billion acquisition of India’s E-Commerce company, Flipkart, Parminder Singh when interviewed by Newsclick explained that “A Duopoly Over the E-Commerce Sector Implies a Duopoly Over the Whole Economy”.

PARMINDER JEET SINGH: Platform is a new kind of animal which controls everything from production to logistics to even primary activity like agriculture and farming. Data gives power to platforms to predict what  needs to be manufactured, in what quantities. The manufacturer would soon get a design and that person has simply to do the 3D printing and produce exactly the number of goods which has already been predicted and the logistics would move as per the platform’s directions. Everybody is moving as per the directions of the platform because the platform is digitally intelligent from the data it has gathered. It acts like the brain of the whole system. The farmer is already told- how production is expected, how much rain is expected, how is your soil quality, what kind of inputs you should make, what kind of things you can produce, when I will pick it up. So it becomes an animal which controls the whole economy through the digital intelligence which acts like a brain as I said. And every player becomes like a worker, you know. You lose your economic independence. Like a worker who is told in the morning you have to do these things and at five o’clock you can go off. Everybody – a trader, a manufacturer, a primary producer – becomes like a worker. Who is exactly told what has to be done and what produce has to be produced and how it will be collected. And therefore when you lose your economic independence you are given subsistence amount of returns. And of course there are no worker benefits in the traditional sense. And therefore a platform is neither a marketplace nor a firm. It’s a completely new kind of an institution. And since it’s a new institution, it requires new kinds of regulation which the government of India has not even started thinking about. But at least, as long as the companies are Indian, we can when the time comes regulate them. But if when get dependent as we are say on Facebook & Google, on global E-Commerce companies who are very strong and I keep on saying add artificial intelligence angle into it which will become very forceful in the next decade or so, you are not able to regulate them. And therefore you lose all your economic independence right through to primary producers and also political independence because you don’t have policy independence. And outsiders control your economy and with it also your politics and culture.

LYNN FRIES: We go now to our featured clips of Parminder Singh’s comments at the ILO.

PARMINDER JEET SINGH: As a digital society and economy takes over, two themes get most discussed regarding its impact on workers. These are automation that is destroying jobs and the ever greater informalization of workforce through what has been called as the ‘Uberization’ of the economy. These very important themes are expected to get much airtime here and I would therefore not discuss them. But even more importantly, I would like to go beyond them. Because these themes largely address post facto impacts of the digital economy and not its basic structural nature which is what this short presentation would focus on. My main submission here is that if we are to really protect and promote workers’ rights we need to go to the heart of what a digital economy is and the role of capital and workers in it. Let’s take Uber’s example. The deteriorating incomes and work conditions of Uber drivers are sought to be addressed by declaring them as drivers and not independent contractors as courts in many countries have done. I understand the reasoning and even more the model concern behind it and have great sympathy for it. But really are Uber drivers who own their own capital goods workers? If so, then soon small manufacturers will also be like workers as E-Commerce companies thoroughly and minutely dictate what they produce, how and when, almost entirely supplanting the manufacturers own agency. And this is already happening. 

New platform companies based on continuously collected granular data develop such end-to-end digital intelligence about every aspect of any sectors economic activity that they virtually become the brain of that sector. And everything else, activities and actors, are then like the physical body which completely gets controlled by the brain. Now if this looks very scary, it indeed is so let us try to find an escape from it. Staying with the Uber example, let’s provisionally accept Uber drivers as independent contractors. They’re go into a contract with Uber that provides them commuters and for this service charges about one-fourth of the fare. Which is well fair enough. But Uber’s real asset is not connection forming and the brokerage which comes from it. It is the detailed intelligence that it builds about a town, its drivers and people which is systematically and continually accumulated. Much of it is collected through the drivers and their cars. And this is an important point to note. One might ask who legitimately owns the cumulative economic value of such data and the digital intelligence that it provides. Contributing to this main and ever-growing intelligence asset of Uber was never a part of the deal between Uber and its drivers. Some EU policy documents have raised questions about who should own Internet of Things data. Whether the application provider or the owners of the points of generation of such data. Data coming from cabs is not much different. The case may be made out that cab drivers as the main data contributors have a stake in the key asset of Uber which is data and the intelligence which comes from the data. This could justify cab drivers co-owning the Uber platform. The extended means of which would need to be determined and defined. But by that right they should be able to participate in its management. Drivers might prefer this route to rightful inclusion in the digital economy rather than just being declared as workers of Uber.

If Industrial Revolution was about mass production, digital revolution is about intelligent production. It is marked by intelligent work processes and intelligent products and services. A book delivered to your house at just the most convenient time is as much a service as a product. And embedded in it is considerable data based intelligence. That is what situates this activity in the digital economy. So is an Uber ride an intelligent service? It is cheaper, in many ways more convenient, because of considerable data based intelligence embedded in it. Ownership of such sectoral intelligence which can be described as digital capital increasingly occupies the top of value chains in every area. We may again ask, do platform companies really and fully own all such digital intelligence which the capital market values at trillions of dollars? Or do the points and actors that contribute the all-important data behind such intelligence have an ownership stake in it? That to me is a central political economy of the emerging digital economy.

Coming to workers proper, say in a factory it may be claimed that since the employer owns the workplace – unlike it is with Uber – all the data coming from the workplace is legitimately its. That means the employers. There are many problems with this argument if data contribution is a part of the work contract or just the physical and or intellectual labor, that’s a question. And even if it is, how is it to be remunerated? Data contribution to digital intelligence is quite unlike that of physical labor to physical production. The marginal value of contributed data to which could normally be a basis of remuneration is relatively quite low. However data’s cumulative value is very high. Neither can the worker appropriately price her data contribution as she does not feel the immediate cost. This fact is well known in privacy debates. The only way to price and remunerate data contribution therefore is through collective ownership over the cumulative value of data and digital intelligence. Making co-decisions about it and benefitting proportionately from profits made out of it. Even more importantly data contributed by workers gets used to build the automation that replaces them. And it is used to develop the digital intelligence to closely control and manage those who survive automation even as they might be more distributed and informalized than ever.

Data contributing workers therefore have a right to know how such data and the digital intelligence arising from it are employed. And they should be able to, at least partly, own and control such uses. Now if all this sounds very complex, as I’m sure it does, remember that political economy around the assets of land, industrial capital and intellectual property when they respectively came to be at the center of production, was not simple either. Whether and when we begin to develop legal frameworks around data and do the required value accounting considerably depends on who benefits the most from such an exercise. India has come up with a draft policy that declares collective ownership over data by a community that contributes it.

Data’s collective ownership is also inherent in many policy frameworks that propose or suggest requiring some kind of data sharing across the economy and society for everyone’s benefit. One of these is the Data for All initiative of Social Democratic Party of Germany. 

Platforms are where [inaud] data is mined and converted into digital intelligence which is then employed to orchestrate all activities and actors in any sector. It has been argued that platforms should be public utilities in order to actively promote the considerable public interest inherent in their working. Similarly but separately a stake of the workers and other distributed data contributing actors – like cab drivers, small traders and SMEs – can be built into how a platform is run and managed and how its efficiency gains are distributed. As workers get digitally separated from each other and simultaneously closely controlled – more than a foreman could ever on a factory floor – the pushback has to be through data collectivization. With a view to take back at least a part of the digital control, workers need to collectivize their data to break their digital chains. This will require appropriate legal forms of collective ownership of data that is key to intelligent production. Workers economic rights over data produced by them and thus their stake in the ensuing digital intelligence that drives the digital economy, can be reconciled with profit oriented entrepreneurship and progressive capitalism. Data collectors too will have appropriate rights over data’s value as would data contributors. Such rights will be differentiated as per the kind of data, different uses of the same data, time limited exclusive rights versus sharing obligations co-decision making and so on.But today it is undeniable that the pendulum has swung too far in favor of owners of digital capital. It requires to be pulled back towards the rights of workers and other marginalized actors of a digital economy.  To end, appropriately understanding the economic relationships around data and digital intelligence is necessary for shaping a new social contract that many have called for in a digital society.  It can provide workers there due share of the digital economy pie. Thank you very much.

I would try to address some questions which were raised, all very excellent ones. The Malaysian Workers group representative talked about increase in informality and how things are getting into our personal life. And I like the point that – look at the human behind it. We get into a machine versus man contest. The problem is not the machine versus man but man in front of machine and the man behind the machine because the machine is being used as an amplifier of power. And that’s important. Now talking about what to do about informality, I think we need to go to the structural causes and not just see the symptoms. And I’m sorry to say that a lot of treatment here of the subject is of symptoms – loss of jobs, informality, etc. But these are very deep structural changes. And we need to see what is happening at the heart of it. And as I was discussing, it’s data and digital intelligence which also increases informality because for the first time you can control a very distributed and informalized workforce by use of digital intelligence almost as you could do it in the same office. And therefore, who owns that control mechanism, who own owns what contributes to that control mechanism, which I was talking about is data. Unless you go to data and keep on talking about the symptoms, you are not going to make it. And that’s where I will come to the Saudi employers group which talk directly but what is community data. And I should make it clear, that it is a corrective concept not an all encompassing concept. We are trying to see how to get and use it about striking the balance.  How to strike the balance right.

In the physical economy and the physical society there are our public sector owned infrastructures and resources. There are Commons. And some are owned by private. There is a balance between the three. But if you look at the digital, even infrastructures are owned by the private sector. There’s nothing public or common. Whoever collects data completely appropriates it. And we are trying to get the balance right. And at least some areas of data are supposed to be community generated and therefore community has some rights over that data.  How would that happen? We are at very early times but unless you start making those concepts then you wouldn’t it go and do the tracking the balance which was being talked about. And I gave an example that when land became the center of production, or later when industrial capital became the center, or intellectual property became the center, we had to start figuring out who owns what rights, when – whether they are time bound, whether they are permanent, which kind of data, what uses of data. That start will be made at least by first marking out that there are some data which are commonly owned. Some data which could be public sector owned. And then we go ahead with it.

So my issue is that you don’t have simple answers here and cutting the debate into optimists and pessimists is not the right way to go because businesses are supposed to be optimists because they look at opportunity. But policymakers are supposed to look at what could go wrong. And policymakers cannot be too much like a businessman, as the businessman should not be like a policymaker. So the issue of optimism and pessimism does not come here. My organization’s name is IT for Change. We have been around for 20 years looking at all the positive sides of IT. But regulation has a different responsibility. And I think, we don’t have simple options. If businesses are looking at data, all boardrooms are discussing data as the lever on which change is happening. On the other side, workers and the marginalized groups cannot be talking about symptoms. Unless you go deep and directly address the complex issues, you don’t have simple answers. You would need to build the capacity because it’s very normal among human groups when wealth is out there to be captured that people kept trying to capture more for yourself.  And therefore capacity building – your workers, governments – will have to build capacity around data and digital intelligence. And we are at a start. We are happy that these kinds of discussions are taking place.

LYNN FRIES: We have to leave it there. Thank you for joining us.


Parminder Jeet Singh is the executive director of IT for Change. His areas of work are ICTs for development, Internet governance, e-governance, and digital economy. He has been a special advisor to the UN’s Internet Governance Forum (IGF) and UN Global Alliance for ICTD. He was a part of UN working groups on IGF improvements and on enhanced cooperation on International Internet policy issues. He was the first elected co-coordinator of the premier global Internet governance civil society group Internet Governance Caucus. He is a founding member of Just Net Coalition and Internet Rights and Principles Coalition. He was associated with the group that helped develop India’s draft e-commerce policy.

Originally published at NewsClick

Original content in this work by Lynn Fries/GPEnewsdocs is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. Some of the other public domain work(s) that this program incorporates may be licensed separately.

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