Commerce | E-commerce » Aurelien Acquier - Uberization Meets Organizational Theory, Platform Capitalism and the Rebirth of the Putting-out System

Uberization meets Organizational Theory: Platform capitalism and the rebirth of the putting-out system Aurélien Acquier Professor, ESCP Europe, 79. av de la République, 75011 Paris FRANCE aacquier@escpeurope.eu A.Acquier (2018) Uberization meets organizational theory: Platform capitalism and the return of the putting-out system, in Cambridge Handbook on Law and Regulation of the Sharing Economy (eds N.Davison, DFinck & JInfranca), Cambridge University Press 1 Uberization meets Organizational Theory: Platform capitalism and the rebirth of the putting-out system Summary: During the 20th century, the large managerial corporation became the dominant economic institution of capitalism. However, the current emergence of peer to peer online platforms entails major economic, organizational and social transformations. While these platforms are often depicted as radically new organizational innovations born of the digital world, this essay develops an alternative analysis rooted in

the history and theory of organizations. The central argument is that the emergence of platform capitalism should be understood as a digital reincarnation of the putting-out system, a pre-industrial organizational form that preceded the emergence of manufacturing and the managerial corporation. After drawing the analogies between the old putting out system and platform capitalism, we discuss the implications of such a return. While the digital putting-out system stands in stark opposition to the managerial view of the corporation, it appears to be fully coherent with financial capitalism, as it fits in perfectly with the financial theories of the firm. This process of financialization not only affects organizations but also profoundly reshapes individual identities by transferring processes of strategization and financialization to the individual level. Implications are discussed in terms of individual transformations and social and legal responsibilities of platforms. Keywords:

Platform capitalism, organization theory, domestic system, Taylorism, financialization, platform governance 2 Uberization meets Organizational Theory: Platform capitalism and the rebirth of the putting-out system Introduction At first sight, peer-to-peer digital platforms undoubtedly appear as a radically new phenomenon. Most of them were created less than a decade ago: Airbnb was founded in 2008, Uber in 2009, Lyft in 2012. While these corporations are still in their infancy when compared to most large-scale capitalist enterprises that have dominated capitalism since the second industrial revolution, they have, in a surprisingly short period of time, brought about major economic and social transformations. Much has been written about the competitive transformations and disruptive pressures created by platforms like Airbnb or Uber on centuryold companies and professions (Christensen et al., 2015; Sundarararajan, 2016); about the ongoing rise of self-employed vs. salaried work and

the emergence of a “gig economy” (Friedman, 2014) and its associated regulatory challenges (Redfearn, 2016), new forms of collaborative consumption and exchange based on “stranger sharing” (Benkler, 2004), or the dynamics of peer and open-source production (Bauwens, 2015). There is little doubt that platforms largely depart from the traditional bureaucratic and hierarchically integrated firm that has long dominated capitalism and organizational theory (Scott and Davis, 2014). As digital organizations, platforms convey the countercultural and libertarian values that marked the origins of the internet (Turner, 2008), and tend to promote decentralization and horizontal forms of peer-to-peer collaboration. Internet and digital organizations are often analyzed as a field of alternative, collaborative and democratic forms of organization (Laloux, 2015), de-hierarchized systems based on “Holacracy”1 (Robertson, 2015), open-source production (Raymond, 1999) or spaces for

non-commercial collaboration allowing the emergence of shared goods (Benkler, 2006; Jemielniak, 2014). In general, peerto-peer platforms are imbued with a strong post-bureaucratic flavor (Acquier et al, 2017) 1 Holacracy is one of many concepts that promote a new approach to management and leadership in opposition to the traditional hierarchical bureaucracy. According to its founder, Brian J Robertson, Holacracy is a management model based on self-engagement, individual initiative and distributed leadership. 3 For academics trained in organization theory, these new organizational forms pose a challenge. Are organization theories still relevant to make sense of this new breed? In the end, why wouldn’t digital platforms disrupt organization theory itself, just like Uber and Airbnb disrupted the taxi and hotel sectors? In this chapter I use organizational theory and business history to question the newness of peer-to-peer platforms and develop an organizational analysis of

digital platforms such as Uber, Airbnb and more generally of platform capitalism (Evans and Gawer, 2016; Srnicek and De Sutter, 2017; Sundarararajan, 2016). By “platform capitalism”, I refer to a set of organizations carrying out productive and for-profit activities through digital platforms that arrange transactions between providers and customers. Two definitional remarks: as defined in this chapter, “platform capitalism” only constitutes one part (arguably the most visible and controversial) of what is commonly referred to as the sharing economy. Therefore, this chapter does not cover the entire and broader field of the sharing economy, which also builds on logics derived from access-based economy and community-based economy (Acquier et al., 2017), and involves a variety of value-creation models (Acquier and Carbone, this volume). Second, this chapter does not look at platforms for sharing information between peers (social networks like Facebook, Twitter, etc.); instead, I

will focus on peer-to-peer transactional platforms (Evans and Gawer, 2016) whose primary function is to intermediate between peerbased supply and demand for commercial transactions. My central argument in this chapter is that the emergence of platform capitalism should be understood as a digital reincarnation of the ‘putting-out system’ (Hounshell, 1984), a preindustrial organizational form that preceded the emergence of manufacturing and the managerial corporation. In this system, merchants outsourced work to individuals who produced goods at home and owned their own means of production. The current return of this mode of production creates major challenges, both for organizational theory, the governance of platforms, and individuals. This chapter is structured in three parts. First I discuss how platform capitalism is challenging some fundamental tenets of organizational theory. In the second section, I explore platform capitalism from a historical perspective. I first examineand

then challengethe idea that algorithmic management marks a rebirth of Taylorism.2 Moving beyond this perspective, I 2 The term Taylorism is used in reference to the managerial doctrine founded by Frederik Winslow Taylor, also known as “scientific management”. Taylorism emerged as one of the first systematic managerial doctrines of work design, at the end of the 19th and beginning of the 20th century (Taylor, 1903; 1911). Taylor developed a 4 develop two propositions that I believe are central to conceptualizing the organizational models of peer-to-peer platforms. First, I argue that the emergence of transactional platforms can be viewed as the organizational outcome of the ongoing financialization of firms and individuals, which began in the 1970s and 80s. Second, I argue that this logic replaces the managerial organization by pre-capitalist forms of labor organization, in a type of putting-out system powered by digital technologies. In the third section, I explore the

challenges of this analysis in terms of the governance of platforms. 1. Welcome to the newand strangeworld of Platform Capitalism Peer-to-peer platforms challenge fundamental tenets of both the economic and sociological view of the firm, arguably the two major traditions of organizational theory. For organizational analysis rooted in the economic tradition, platforms erode the boundaries between markets and firms. Since Ronald Coase’s foundational article on “the nature of the firm” (Coase, 1937) and Oliver Williamson’s subsequent Transaction Cost Theory (Williamson, 1985), it has generally been acknowledged that firm and market are two fundamentally different mechanisms for coordinating transactions. In this perspective, business coordination is based on a centralized hierarchy, standardization and planning, which reduces uncertainty. It constitutes an alternative to market coordination, which by nature is more heterogeneous, uncertain, free, and regulated by price. This

fundamental distinctionoften used in organization theory textbook introductionsobviously does not apply to platforms like Uber, Airbnb, Taskrabbit and others, which organize transactions between providers and customers who are independent of the platform. Neither full markets, nor full hierarchies, they constitute hybrid governance structures (Makadok and Coff, 2009) that are best described as “market organizations”. Such hybrids render obsolete the idea of a fundamental difference between organizational and market functioning. Platforms are also shaking up some fundamental tenets of the sociological tradition of organizational analysis, as relations of social and economic domination are no longer based on the cleavage between capital and labor. Since Marx (Marx, 2010/1865) theorized relations of systematic method for re-engineering work using scientific principles, relying on the use of science and rationality (instead of empiricism and workers’ autonomy) and on a stark

differentiation between work engineers (in charge of designing and controlling work) and workers (in charge of execution). Taylorism has been associated with mechanization, mass production, standardization of processes, automation, extreme specialization of work, and negative consequences for workers such as alienation and de-skilling of the workforce (Friedmann, 1961). 5 domination in the capitalist regime, it has been accepted that conflicts concerning value production and value capture revolve around the distinction between capital holders on one side and labor providers (who exchange work for a salary) on the other. This fundamental distinction between capital and labor, which has infused a long tradition of research in the sociology of labor, is also being shaken by the emergence of platforms. Indeed, platform workers, whether Uber drivers or Airbnb hosts, possess (or at least provide) the capital needed to perform their activity. In the strange world of platform capitalism,

workers are capitalists without power, exploited by the virtual managers (algorithms) of companies without employees! 2. From firms to platforms: financialization and the rebirth of the putting-out system History is an indispensable tool for contextualizing and analyzing how these organizational innovations function and understanding their implications. In this section, I discuss the emergence of platforms in light of business history and the transformation of the firm. A) A reincarnation of Taylorism ? Sociologists of work have recently taken an interest in the impact of algorithms on work. Rather than study the work of programmers who design algorithms (digital white collars), they explore the hidden and dark side of “digital labor”, the emergence of a new type of work that is often low-skilled and globalized (Fuchs, 2014; Scholz, 2013). This research explores how a new class of specialized workers, often referred to as “digital pieceworkers” (Cardon and Casilli, 2015),

sells its labor on micro-task platforms similar to Amazon’s Mechanical Turk platform.3 Through such platforms, companies offer micro-tasks to individuals dotted around the world who perform them in exchange for micro-wages. Earning anywhere from a few cents to a few dollars per task, individuals assist the algorithms by completing or configuring them: they input data for a few seconds, verify files, transcribe, translate, correct, code, take photos, put items in order, click on a page, etc. 3 Beyond its mode of operating, the reference to the “Mechanical Turk” is particularly revealing of the platform’s underlying vision: to make work literally “invisible” (Gomez, 2013). The original Mechanical Turk was an elaborate fake automaton, designed at the end of the 18th century to trick people into believing that it was an automaton equipped with artificial intelligence that could play chess against humans. Outwardly, the Mechanical Turk looked like a machine, but in reality it

was controlled by a human chess player hidden inside. Amazon’s Mechanical Turk metaphor reveals the concept behind the platform: using invisible human labor to create the illusion of an automaton and assist the algorithms. 6 Echoing academic work on algorithmic management (Lee et al., 2015), a recent Financial Times article (8 September 2016) entitled “When your boss is an algorithm” (O’Connor, 2016) invokes this historical perspective. Detailing the working conditions of delivery drivers and couriers for UberEats and Deliveroo in London (in the food delivery sector), the article draws an analogy between these new forms of labor organization and Taylorism. It underlines how algorithms measure and monitor the activity of couriers in real time and make managerial decisions, such as automatically excluding a member from the platform for any deviation from expected standards. These tools are used for measuring productivity, timing activities, and remote monitoring, which

largely echo the scientific management of Frederick Taylor (1903, 1911). The article cites Jeremias Prassl, professor of law at Oxford University: “Algorithms are providing a degree of control and oversight that even the most hardened Taylorists could never have dreamt of.” For these new proletarians of the early 21st century, the limitations, fears and criticisms leveled at the Taylorist organization of labor one hundred years ago seem to be largely transposable to these contemporary forms of work. Digital work is characterized by a clear separation between the conception and execution of work, which ultimately places the individual in the service of the algorithmic machine, in a digital version of Modern Times. Work on such micro-task platforms is reduced to an extremely fragmented and alienating task, the individual to an operator, with the same effects in terms of deskilling, dehumanization, and loss of meaning in work as in Taylorist forms of organization (Friedmann, 1961).

The Taylorist engineering dream of a completely mechanized and rationalized organization appears to be alive and well if we consider Uber’s plans for autonomous vehicles, which reflect its desire to get rid of its drivers, in a universe where the service would be entirely robotized, mechanized and free of human work. In this corner of the digital universe, human work is seen as a necessary evil, a relic that serves to supply an algorithmic chain that appears to have replaced the physical production line of the factory. Many traces of Taylorism seem to be present in digital work: a mechanistic vision of the organization, a scientific dream of organizational control through technology, the stopwatch timing of operators and a sharp separation between design and execution where the worker is just an extension of the machine. However, the Taylorist analogy has several limitations and should be nuanced on three important points. First, the level of workers’ autonomy differs 7 vastly

from one platform to the other, resulting in varying degrees of prescription, to use Taylorist language. While the degree of prescription appears to be high on platforms like Mechanical Turk or Uberwhere the organization sets prices and operating processes that must be followed by operatorsother platforms such as Etsy, Airbnb or Upwork (a global freelancing platform) allow service suppliers significantly more autonomy and are less obtrusive in the types of interactions between transaction partners. Similarly, crowdfunding platforms claim to act as mere brokers: they impose very few conditions on their users, either on the nature of projects to be financed, their operation, or the responsibility of the project initiators. Second, while Taylorism is characterized by a transformation of work, achieved by breaking down tasks and recomposing processes, things are more complex for platforms. In the case of Uber, the activity is only reconceived marginally: the driving activity is not

radically transformed (it is still performed by a driver who has freedom of choice in terms of routes, trips/riders, driving, working hours, etc.) Rather than imposing a standardized process or redesigning the work by fragmenting it, the platform intensifies control by introducing performance evaluations by the customer, the driver and the platform. In many cases, platforms do not redesign the work; they modify it by introducing new forms of control and through contractual relationships. Finally, digital labor is quite unlike the social organization of Taylorism. As several business historians have pointed out (Hatchuel, 1997; Nelson, 1980; Savino, 2009; Wrege and Greenwood, 1991), Taylorism is closely associated with the emergence of large firms, salaried employment and labor unions. Through the systematic study and engineering of work, Taylorism radically redefined the nature of work and its processes. Such a transformation entailed the creation and recognition of hierarchical power

in the workshop, and a relationship of subordination between the worker and the organization. Along with the emergence of Taylorism, the responsibility for work was transferred from the individual to the organization, and salaried employment was generalized as a way of regulating work in the firm. Through this mechanism, the firm took on responsibility for workers’ skills, the means of production, working conditions, and established long term employment relationsquite the contrary of platform capitalism, which emphasizes the independence and autonomy of workers. In the end, while some platforms echo the technical aspects of Taylor’s dream, they seem to be completely at odds with the social organization (the managerial firm and work subordination) that underpinned Taylorism. 8 B) From the managerial firm to the financial platform The organizational logic of platform capitalism must also be understood as the product of a process of financialization that progressively replaced

the logics of managerial capitalism, a process which has been described in detail by Gerald Davis (2009). The organizational model of the traditional –and integrated- managerial firm was generalized during the second industrial revolution and the 20th century. As Alfred Chandler has shown (1977), with the emergence of large firms, the central driver of the economy and innovation shifted from the “invisible hand of the market” to the “visible hand of managers”. Through their power, the managers rationalized firms and organized their operations. The firm concentrated power and gathered together unique competences, whether in terms of product creation (unprecedented in technical complexity and scale), the organization of labor and production (as attested by Taylor’s efforts in the organization of work), marketing or market power. In the 1930s, Berle and Means (1933) underlined the issues of control and governance raised by this managerial revolution, especially in relation to

shareholders. In the managerial firm, management became more and more concentrated, while shareholding became more and more diffused. Managers took over the running of the firm Their accountability towards distant and fragmented shareholders was limited. In the 1960s and 70s, many observers worried about the considerable influence that managers exerted on society. Galbraith (1967) criticized the way firms neutralized the laws of supply and demand with their economic power, intervened in democratic choices through political influence, and shaped consumers’ intimate desires through marketing. In the era of managerial capitalism, big business, now an institution, prioritized its own development and preservation, adopting a dominant role over markets and society. However the story did not end there, and the 1970s paved the way for the market’s comeback. The transformation was both academic and ideological, occurring against a backdrop of the rise of neoliberalism and the

democratization of capital markets, boosted by academic research in finance. In 1965, Henry Manne published an article to advocate the deregulation of financial markets in order to better discipline managers (Manne, 1965). Corporate governance had to be overhauled: putting shareholders back at the center, increasing financial transparency, and discouraging any managerial underperformance with the constant threat of being taken over by a competitor or investor. In 1976, Jensen and Meckling laid the foundations of agency theory, a theory of the firm that runs counter to the notion of the firm as institution (the managerial firm) and instead depicted it as a simple “nexus for contracting relationships” whose nature is 9 not fundamentally different from the market (Jensen and Meckling, 1976). According to this theory, contractual relations are the essence of the firm. most organizations are simply legal fictions which serve as a nexus for a set of contracting relationships among

individuals. Viewed this way, it makes little or no sense to try to distinguish those things that are “inside” the firm (or any other organization) from those things that are “outside” of it. There is in a very real sense only a multitude of complex relationships (i.e, contracts) between the legal fiction (the firm) and the owners of labor, material and capital inputs and the consumers of output. We seldom fall into the trap of characterizing the wheat or stock market as an individual, but we often make this error by thinking about organizations as if they were persons with motivations and intentions. (pp 310–311) In agency theory, the firm should not be viewed as an entity with clear boundaries and responsibilities. For the proponents of agency theory, the view of the firm as a legal “person” (or a “body”, as suggested by the term in-corporation) is strongly misleading: considering the firm as an entity is a mere “legal fiction”, which simply allows the

organization to conclude contracts under the law. Consequently, firms should not be viewed as institutions or persons, but as mere platforms for contracting among parties. This financial vision of the firm as a nexus of contracts radically departs from the managerial perspective which depicted the firm as a central social entity or institution. In this new perspective, workers are no longer “inside” the firm, and they have no more rights than any other stakeholder. These new doctrines of markets and companies gave rise to a series of legal transformations in the 1980s in the USmainly urged by Ronald Reaganwhich would pave the way for financial capitalism (Davis, 2009). Following these transformations, companies brought market mechanisms into their internal functioning on a massive scale, as attested by waves of outsourcing, the dismantling of conglomerates, efforts to refocus on their core business, the hiring of temporary workers, and the emergence of global value chains, through

which a myriad of independent firms contribute to the production of a single product. In the world of financial capitalism, the firm is no longer a player on its own; it has become a tool for shareholder value maximization. The aim is no longer to grow and to protect the firm from market competition, but to maximize its flexibility and profitability. From this point of view, platform capitalism appears to be a logical outcome of financial capitalism. Drawing on the power of digital technologies, companies like Uber and Airbnb seem to be the very incarnation of the “nexus of contracts” type of firm. These marketorganizations are essentially constituted of a light, flexible central structure that takes the logic 10 of outsourcing to its extreme for all productive activities, except marketing and digital development. The role of the platform is basically to conclude contracts, implement algorithms, handle intermediation and control, and conduct massive investments in marketing

and algorithmic development. But platforms have very few assets and are not responsible for production as they claim to act as a mere intermediary. These organizations tend to shift issues of insurance, quality of service, working hours, conditions, and taxation to individuals (see Smorto, this volume). This is perfectly consistent with Jensen and Meckling’s theory of the firm: as the firm does not exist as an entity, it is misleading to think that the firm has social responsibility. The transformation is considerable: while the managerial firm used to organize and transform work, the platform concludes contracts, outsources work and controls it remotely. The locus of work is no longer inside the firm. The firm was an institution; now it is just a market C) A new form of putting-out system, powered by Silicon Valley Digital platforms do not possess any productive assets. It is up to the “workers” to obtain and provide the capital necessary to perform the work, and to bear any

associated risks. Individuals must obtain and use their own capital (a car for rideshare drivers, a property for Airbnb) before they can work. This situation is reminiscent of the putting-out system (or “domestic system”) In this mode of production, which appeared in Europe in the 16th century before the manufacture, farmers would make use of slack periods to perform domestic work (often textile) for merchants with whom they had a commercial relationship (Hounshell, 1984). The farmers worked from home, generally using their own tools. In the putting-out system, the merchant also provided the raw materials (the cloth) needed for the activity. This pre-capitalist framework is reflected in many characteristics of current work arrangements via platforms: the disappearance a workspace managed by the employer, the independence of workers whose relationship with the business intermediary is not hierarchical but commercial, the difficulty of creating a form of collective representation or

union, the difficulty of drawing a clear boundary between the domestic and professional spheres, the phenomenon of holding multiple jobs and secondary income activities (which recalls “slashers”people who combine multiple careers) rather than pursue a single full-time activity, and finally individual self-organization (individuals determine their own level of engagement with the platform). In this context, the distinction between capital and work does not constitute a criterion by which to understand relations of power and exploitation. As productive capital is outsourced and often 11 widely distributed, it is their relative market power that determines the balance of power between platforms and workers. The power of Airbnb and Uber is that of the merchant, business intermediary or broker who aggregates demand. Why are such pre-capitalist organizational arrangements making such a comeback today? From an economic point of view, information technology has considerably improved

control (using rating tools and online reputation scores) and reduced the risk of carrying out transactions between peers who did not previously know each other. Technology reduces transaction costs (Williamson, 1985), making the market more attractive than organizational integration for an entire range of activities (see Lobel, this volume for such an analysis).4 From a more ideological point of view, these forms of pre-capitalist organization are very consistent with the ideal of a financialized vision of the firm based on massive outsourcing and market coordination. Platforms thus enjoy greater legitimacy with investors who see the market as the most legitimate mechanism of coordination (as opposed to government regulation, professional autonomy or organizational integration). 3. The neo putting-out system: consequences and impacts A) Consequences at the individual level: platforms, managerialization, and self financialization For individuals, the return of the putting-out system is

bringing about major transformations. The “financialization of daily lives” (Martin, 2002) is an ongoing process that increases asset inequalities among individuals and redefines individual identities according to a financial logic (Davis and Kim, 2015). Platform organizations do not own productive assets. Instead of building a competitive advantage from complex and unique assets, platforms massively outsource them and compete with ordinary resources (Fréry et al., 2015) 4 Platform opponents argue that part of this cost advantage is artificially facilitated by the fact that a large part of the platform economy activity occurs in a non-regulated zone, belonging to the informal economy and often outside the law (accusations of undeclared or concealed work, undeclared rentals, non-payment of occupancy tax, lack of social protection for workers, etc.), which allows these activities to avoid taxation on labor and capital (see Slee, 2015). Some would also argue that such ‘cost

advantage’ is also resulting from the significant amounts of venture capital that allows these firms to cushion losses. 12 At the same time, issues related to the value and uniqueness of assets are being transferred to individuals. For platform workers, owning valuable and strategic assets is necessary to make a profit in the peer-to-peer economy. In this “Resource-Based View of the individual”,5 the ability to generate profits from platform capitalism is directly proportionate to the value of the personal assetsmaterial or immaterialthat individuals bring to the platform. Platforms therefore constitute a mechanism through which individual patrimonial inequalities may be reproduced and exacerbated. Airbnb provides a striking illustration of this mechanism: the analysis of data produced by the InsideAirbnb.com website shows that in Paris, like most other world cities that are so attractive to tourists, short-term rentals are 2 to 5 times more profitable than traditional

rentals.6 This effect is mediated by the location of the property: in Paris, profitability and occupancy rates are inversely proportional to distance from the most touristy neighborhoods.7 Potential profits to be made from platform capitalism appear to be proportional to the value and rarity of the assets individuals possess: while an individual can generate very significant profits from renting an unusual property in a sought-after tourist neighborhood in Paris, profits are much lower for ordinary properties in less touristy neighborhoods or in the nearby suburbs. The profit potential is structurally lower for individuals whose capital endowment is less specific and less valuable. This is the case for Uber drivers, whose asset is just a car In such markets, barriers to entry are much lower and the service provided is rather standard, which results in stiff competition among substitutable drivers, and in an unfavorable power relationship between drivers and the platform. And at the

base of the pyramid, bike couriers are even more substitutable, with even lower profit perspectives. Beyond the fact that these processes exacerbate inequalities among individualsthose with the most valuable assets are more likely to profit from these new modelsthey contain the seeds of a transformation of individuals, who increasingly integrate financial and managerial logics 5 I use the term in reference to the “Resource-Based View of the firm” (Wernerfelt, 1984; Barney, 1991). In this theory of corporate strategy, the sustained strategic advantage of a firm results from its ability to hold resources that are valuable, rare, non-imitable and non-substitutable. 6 See Gay Justine (2016) “A Paris, la location Airbnb rapporte 2,6 fois plus que la location classique”, JDN (Journal Du Net), 30/03.2016, (http://wwwjournaldunetcom/economie/immobilier/1175834-location-airbnbversus-location-classique/) 7 Coles et al. (this volume) study Airbnb data in New York to compare the

profitability of short vs long-term rental in various districts. Their data reveal that the profitability ratio of short vs long-term rental is higher in outlying, middle-income neighborhoods. This is in the specific context of New York, where strict city regulations were introduced in recent years to regulate Airbnb and limit the development of short-term rentals. 13 in their own way of functioning (Fleming, 2017; Martin, 2016; Murillo et al., 2017) To extract value from platform capitalism, individuals must constantly monetize and maximize the value of their own assets. This means, for example, that individuals may, when buying a new property, integrate the potential profit that could be obtained by regularly listing their property on Airbnb or another rental platform. Their capital is both tangible and intangible: individuals must preserve their online visibility and reputation, manage trust, adopt transparent behavior, integrate an ethic of evaluation by peers, and cultivate

their social and professional network to ensure future opportunities. In this perspective, any asset (tangible or intangible) may be seen as an idle resource whose value can and should be maximized. The new “homo collaborans” calculates, makes choices, and integrates a financialized ethic in which he/she constantly manages his/her own value. Recalling Foucault (Foucault, 1979), information technologies and platforms may be analyzed as technologies of self-government that redefine the way individuals perceive, define and project themselves. In this new domestic system, rather than a simple contractor, the worker is being transformed into an entrepreneur who has to cope with risks, be adaptable, and manage his/her image, reputation and networks. B) Governing the neo putting-out system: can platforms be made socially and legally responsible? By marking a rebirth of the putting-out system, peer-to-peer platforms constitute a radical organizational innovation that profoundly differs

from the managerial firm. This creates many regulatory voids, as most of the existing regulatory framework was developed in the context of the managerial corporation, with clear boundaries, salaried employment relationships and assets owned and controlled by the corporation. By contrast, platforms are set in a much blurrier landscape, where workers act as independent contractors, with unclear boundaries between market and hierarchy, between the professional and domestic spheres, where work situations vary greatly in terms of autonomy or economic dependency, and where behavior and controlled and governed by algorithms rather than formal rules, authority, or hierarchy (Lessig, 1999). In such a context, determining what/who is inside or outside the organization is difficult, as is deciding where platforms’ responsibilities start and end in relation to those of the individuals using them (Cherry and Aloisi, this volume). As Garden and Leong (this volume) argue, platforms are confronted

to an identity crisis of their own making. This identity crisis concern their ambiguous nature, standing in between positions of simple matchmakers and true service providers. 14 To add to this regulatory complexity, peer-to-peer platforms have scaled up local transactions at a tremendous pace in a surprisingly short period of time, generating massive externalities both in size and scope (see Zale, this volume). In Paris, for example, Airbnb has been accused of taking tens of thousands of apartments out of the individual rental market in just over five years. According to some press articles, in 20,000 of these cases, the owners were acting illegally in 2016 as they did not declare the associated rental income.8 These activities are criticized for contributing to the rise of real estate and rental prices, illegal rentals, and the exacerbation of inequalities in assets. In 2015, the entire neighborhood of Barceloneta (in Barcelona) rose up against the multiplication of nuisances

caused by these new practices.9 One fascinating aspect of platforms concerns the way their social and legal responsibilities are being framed in reaction to such controversies and externalities. There is no clear answer to the question of who should be held accountable for the controversies generated by platforms: the statefor failing to adequately regulate or supervise platform exchanges, the platforms themselves, or the individuals using them? Such situations echo what Rittel and Webber (1973) and Reinecke and Ansari (2016) call “wicked problems”, i.e complex issues involving multiple actors, rationalities, shared and blurred responsibilities. In such complex situations, the role and responsibility of individuals and platforms are hard to define ex-ante, and must be settled as controversies arise. A key question is to analyze how responsibilities are being attributed to actors and organizations. For researchers, one avenue of research is to study the processes by which platforms

are held accountable and responsible (or resist such efforts), calling on crossdisciplinary perspectives between sociology, law and management. Different approaches are currently being explored by regulators to govern the platform economy. One approach consists in taking action against the platforms themselves and holding them accountable for wider social and legal responsibilities. The intent is to treat these “marketorganizations” like more traditionaland easier to regulatemanagerial organizations Examples of this approach include the recent case of Uber being stripped of its London license 8 “Airbnb : 20.000 logements seraient dans lillégalité à Paris”, Les Echos, 30 May 2016 //www.lesechosfr/30/06/2016/lesechosfr/0211082718653 airbnb---20-000-logements-seraient-dans-l-illegalitea-parishtm#WdpPeXGx8iKAkHci99 9 See “Barcelona cracks down on Airbnb rentals with illegal apartment squads”, The Guardian, 2nd June 2017

https://www.theguardiancom/technology/2017/jun/02/airbnb-faces-crackdown-on-illegal-apartment-rentals-inbarcelona 15 because of a lack of social responsibility and failure to address user safety concerns.10 Other related initiatives seek to reclassify commercial relationships as salaried employment contracts. In France, Urssaf (an organization that collects social security contributions) has followed such a path, as have thousands of Uber drivers in the US, through a class action suit brought in 2014.11 In both cases, the goal is to convert the commercial contract between workers and platforms into an employment contract, provided it can be proven that there is a relationship of subordination between workers and the platform. However, such efforts have not had significant success either in France or the US so far.12 Reclassification is a potential threat for all platforms that exert a strong level of prescription and control over work processes, or use strict evaluation and

performance mechanisms. At the same time, because of their organizational novelty, digital platforms create new work situations that challenge old criteria used by regulators to establish an employment relationship. A Belgian startup called Click and Walk provides an illustration of this difficulty.13 This company, which employs about ten people, could unintentionally be transformed into a large multinational enterprise with 300,000 employees, if an overly restrictive definition of subordination were adopted. Indeed, the micro-task platform has been under investigation since June 2016 by the central office that combats illegal work in France in relation to the undeclared work of some 300,000 European “clicwalkers” (160,000 of whom are in France). These individuals carry out micro tasks (paid between 1 and 6 euros) that involve walking around in stores, taking photos of products and transmitting them to the platform to verify the availability and positioning of products on the

shelves. The grounds for investigation are that the company evaluates worker performance and bases the payment of funds on the quality of the work provided (mainly the quality of photos). This case illustrates the need to rethink the concept of subordination in the context of the neo putting-out system created by platforms that are neither pure market (which would involve an independent contractors), nor pure hierarchy (which would involve employment relationship). Efforts are currently being undertaken to better respond to this new context: some explore the possibility of creating a new employment category (see Cherry and Aloisi, this volume for a review of initiatives worldwide); others underline the need to revise 10 https://www.theguardiancom/technology/2017/sep/22/uber-licence-transport-for-london-tfl http://www.liberationfr/futurs/2017/03/17/devant-la-justice-l-urssaf-perd-face-a-uber 1556255 12 In the US, a specific difficulty is due to the massive use of class action waivers

that prevent platform workers from engaging class action suits against platforms to obtain employment reclassification (see Tipett, this volume). 13 https://www.maddynesscom/entrepreneurs/2016/07/28/travail-dissimule-clic-and-walk/ 11 16 and adapt existing proxies for employment classification to the reality of digital platforms (see Smorto, this volume; Tipett, this volume). These initiatives also recognize the need to better assess the variety of work situations that exist on peer-to-peer platforms. Emerging models suggest that two variables may be relevant to differentiate four types of work situation on platforms: the degree of economic dependency of workers vis-à-vis a given platform, i.e the existence of other economic alternatives for them to make a living, and their degree of autonomy at work, i.e their ability to set their prices and self-organize their working processes (Kuhn and Maleki, 2017). A second approach is to tackle regulatory issues by targeting individual

users of the platforms. Instead of targeting platforms, several regulatory initiatives focus on users and have come up with new forms of taxation, laws, protection and support for digital workers. (See Pantazou, this volume for an overview in the European Union). In the case of France, the parliament voted at the end of 2016 in favor of a series of measures to tax the sharing economy.14 Legislators decided to tax every activity that is not strictly speaking “sharing”, but which generates a profit for the provider. Furthermore, this taxation complies with annual thresholds for transactions, beyond which the private individual may be considered a professional. Once an individual exceeds these limits (€8000 per year for the rental of objects, €23,000 for property rentals) they must enroll in the independent workers’ social security regime (RSI). This aims to take into consideration individual roles and levels of activity that separate the domestic sphere from a professional

activity. Beyond these fiscal issues, many public or private initiatives aim to give more thought to forms of social protection and risk sharing for freelance workers. A third approach is to challenge the dominance of exploitative platforms by encouraging the emergence of competing platforms based on alternative models of governance that are more favorable to the workers and customers who use them. Numerous debates have arisen around platform cooperativism (Scholz and Schneider, 2016), promoting the idea that platforms can be made to serve the interests of digital workers through cooperative governance. Other initiatives, like La Ruche qui Dit Oui! -The Food Assembly- (see Acquier and Carbone, this volume) defend a logic of social innovation and advocate the emergence of hybrid organizations that simultaneously pursue economic and societal goals. These initiatives seek to develop platforms with a “limited profit” objective, allowing an acceptable distribution of income among 14

https://www.taxnewscom/news/French Lawmakers Approve Tax Hike On Sharing Economy 72629html 17 stakeholders and the pursuit of the initiative’s societal goal, while financing the economic development of the platform. With the recent ban of Uber from the city of London, voices have emerged to explore non-profit, cooperative or community-based ride sharing platform alternatives, following the philosophy of RideAustin, which was launched after Uber and Lyft left the city of Austin in 2016.15 Beyond these approaches, a major political and social issue concerns the production, access, and governance of digital data on platforms. This constitutes a major political issue, and initiatives like InsideAirbnb.com deserve more attention from researchers because they constitute a way of making data accessible which, in turn, makes the platforms’ externalities visible and encourages social and scientific debate on their effects. 15

https://www.theguardiancom/technology/2017/sep/23/uber-london-ban-austin 18 Conclusion As a significant organizational innovation and social phenomenon experiencing fast growth, platform capitalism is generating a large amount of debate about its social impacts and responsibilities. In this chapter, I have examined the emergence of platforms through the lens of business history and organization theory to develop the following ideas and propositions: - peer-to-peer digital platforms constitute a new organizational archetype in the landscape of organizations. For productive activities, these “market-organizations” differ radically from the managerial firm that prevailed since the second industrial revolution and which was the cornerstone of the existing regulatory framework of business. - viewing platforms as a return of the Taylorist work organization misses part of the complexity of this transformation, because Taylorism was based on hierarchical coordination, the

transformation of work and the managerial/integrated firm. Instead, I have argued that platform organizations have more to do with processes of financialization (which affect both organizations and individuals) and a theory of the firm that views the firm as a network of contracts rather than an institution. - From an organizational point of view, the rise of platforms marks the rebirth of the puttingout system, where digital tools are used as controlling devices. In this neo putting-out system, work is controlled through algorithms rather than managerial hierarchy, and power relationships are based on market power instead of hierarchical power. In this new economy, work situations are very diverse in terms of worker autonomy and economic dependence. - Given this new context, we need to rethink/update established concepts, such as the way we define subordination to determine employment relationships. As the concept of subordination was historically framed around notions of

managerial control and internalization/control of assets by the firm, it no longer fully reflects the new realities, and should thus be re-conceptualized and adapted accordingly. As a closing remark, organizational theory has traditionally approached organizations in two ways: on the one hand, “organization” can refer to an activity or a process of organizing, shaping behaviors and structure; on the other hand, “the organization” can be viewed as an object, a subject or an entity. This latter substantive view of the organization is often used when we refer to the organization as a firm, a corporation or an institution with social or legal 19 responsibilities. Platforms, and the rebirth of the putting-out system, create significant tensions between these two views of the organization. As entities, these market-organizations are small “liquid organizations” (Bauman, 2012; Kociatkiewicz and Kostera, 2014), with fluid and evanescent structures. But, at the same time, they

generate pervasive effects on society Platforms do a large amount of organizing through algorithms: prescribing work, setting up a social order, shaping relations and interactions between producers and clients, transforming individual identities, etc.16 Clearly, the scope of these organizing processes goes far beyond the current legal boundaries of platforms. This mismatch between “organizing as a process” and “organization as an entity” is probably one of the root causes of the social controversies and current regulatory conundrums surrounding platform capitalism and the sharing economy. Understanding how such liquid organizations, which produce such pervasive effects on society, may be governed and regulated constitutes an exciting and urgent field for research, that calls for interdisciplinary collaborations between history, sociology, organizational theory and law. 16 Viewed this way, platforms not only blur the distinction between organization and market, but also that

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