Saturday, July 18, 2015

Does The Internet Spawn Global 'Capitalistic Socialism?'

Enter Zipcar, Uber, Lyft and AirBnB
Lest I lose this audience from the start, let me attempt to first outline certain terms that we may know, but as I realize, 99% of us do not understand. To this end I recommend a really great radio episode by an economist who really discusses these business ideas in great detail.  

The show is called 'Economic Update' hosted by Professor Richard D Wolff, from 9am to 10am, on WBAI radio and the episode was broadcasted on July 17th 2015. It is quite educational and one would be well advised to listen at the above radio links,  it will take you to the archive page of WBAI. At the page, just locate the program 'Economic Update' and click it.

Capitalist Enterprise ; traditional business model which focuses on a top down control and decision making structure with little concern paid to the workers' social well-being, or their ability to work safely and more productively on the job. The focus is mainly on profit without strong concern for social or environmental issues related to the result of doing business.

Capitalism is about 300 yrs old, starting in England in the 17th century and expanding outwards from there to Europe and the Americas... and globally. Called an individualistic system it is not well favored in most countries as the result is always a widening of the economic gap between workers and management while having some unsociable or damaging affects on society and the communities where they operate.

Socialism; Emerged in the 19th century and is more geared toward workers getting a better and/or more humane deal, and better social rewards as a direct result of employment. Geared to also socially serve the communities with greater affect in and around where they exist. Cooperating collectively to conduct profitable business while enhancing the society they exist in as a whole. 

In its largest form, Socialism is thought to mean using the government to have and maintain large economies that were socialistic in focus... this is a misunderstanding, as that is really State Capitalism; it is directly run and regulated by the State. 

Socialism has never been achieved anywhere in the world by major countries like China, Russia, Cuba or France, as they were still run and regulated by States, not private community sources.

State Capitalism is just a means to arrive at Socialism but it is not in itself Socialism... it is just a means to get there. Many people misunderstand this... including Stalin; and think State or Private Capitalism is actually Socialism, but it is not, if you have not transformed the production process into a community social structure or affair. 

A good example of a long existing social success in the form of a Cooperative is the Mondragon Corporation in Spain.

Workers' Self Directed Enterprise;  is an alternative to traditional Capitalist enterprise. This seems to now be the preferred mode of reducing company expenditure and realizing more profits for the company as a result of the reduction. There may be different ownership arrangements but the workers get a better socio economic result than being employed at  the traditional hotel or rental car company. Worker cooperatives are the oldest form of this business model, one example is religious organizations, where the workers are sociably interactive with the community/society they function within, with positive results for everyone involved.

The new trend for some business models has been greately re-done by the use of the internet and using new platforms that helps companies to grow much faster, spread the cost to a wider framework by letting owner/operators share in the operations and the profits, while not burdening the company with owning the hardware or product. 

This is a link to a WNYC Bryan Lehrer episode where the co-founder of Zipcar Robin Chase is interviewed and offers some wonderful ideas about how and why this business platform is successful. In Zipcar's case, the customers have a much better experience fulfilling the needs to get a vehicle when needed, while not having to deal with the rules and practices of a regular car rental company, or owning a vehicle that you only use on weekends.

With new business platforms using the internet, the actual owners of the products being used are in fact the actual workers as well, for instance Air BnB, where the home owners that facilitate the business also maintain their homes and are thereby the owner/operator of that empty room and property used.

In the case of Uber and Lyft, owner/operators are used by these companies via their exclusive app platforms, to connect riders to a privately owned car operated by its owner who is courteous and keeps within the high standards required by the company. The car owner is paid a premium price for their work and is able to fashion their work hours and work zones, around their personal lives, thereby beneftting from having enough time to have other activities including having a family. 

These new businesses are the epitome of having as close to a successful Socialistic business model in the 21st century as is feasible and it is only growing. It is far more cost effective for the companies, as they do not own a car but just an app and a payment system...and makes millions of dollars with it. Welcome to the 21st century!! Open your wings/minds and fly people!

This is the best example of what I call 'Capitalistic Socialism' in the 21st century. 
Could these business models be a boon to self described Socialist Bernie Sanders in the 2016 election, as opposed to the traditional approach of Hillary Clinton? Well, it is Socialism... kinda

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  1. Thanks, T.

    Wolff devotees unite!

  2. LOL! The honor is mine Cirze :)
    Yes Prof. Wolff is a master of his craft !!