Taxis Versus Uber: Politics and Morality in Competing Market Forms
This paper is part of a broader research project that combines conceptual tools and analytic frameworks from political economy, economic sociology and science and technology studies (STS) to address crucial questions generated by the emergence of the so-called ‘sharing economy’. While the ‘sharing economy’ phenomenon provides many compelling arenas for analysis, such as the battle between Airbnb and the large and highly organized incumbent hotel industry in short-term housing markets, this research focuses specifically on ‘ridesharing’ in urban transportation markets, which by contrast are small, fragmented and decentralized.
Ridesharing provides a particularly rich empirical case through which to understand the political, economic, and moral dimensions of processes of technological change and market transformation. For economists of industrial organization, ridesharing firms are simply ‘two-sided platforms’ that serve as ‘market makers’ allowing buyers and sellers to meet. Their commercial success is due to the algorithmic technologies upon which they are based, which are simply more efficient than previous market technologies such as taxi dispatchers in the case of urban transportation. However, work in political economy, economic sociology and STS would suggest that this conception obscures as much as it reveals by masking highly contested political decisions at the organizational and regulatory levels in the arcane realm of a complex technical infrastructure.
This research seeks to highlight the moral embeddedness of these political economic debates. It does so through comparative analysis of competing market structures and organizational forms in these urban transportation markets.
The stakes of these debates are extremely high, as the ambitions of large ridesharing firms and their powerful financial backers extend well beyond the provision of urban transportation services to include radical new conceptions of mobility and automation, such as driverless cars. Crucially, the bulk of economic rents from a mobility industry of the future are no longer expected to accrue from the end production of automobiles, as in the contemporary auto industry that is dominated by lead manufacturers and assemblers that have enjoyed a century of incumbency. Instead, complex algorithms that promise to predict human behavior and rationalize transportation patterns are expected to rule. This places firms like Uber and Lyft (in which traditional auto firm GM has recently made a large strategic investment), as well as Google and other ‘Silicon Valley’ technology firms, in potentially powerful market positions.
The role of ‘disruptive’ technological innovation in economic perspectives of these market transformations raises crucial questions about performativity and governance that will be addressed using new insights from science and technology studies. However, the competitive battle thus far suggests that winners will not be decided by technological innovation alone. This is ultimately a regulatory game, and a painstaking and complex one as these markets are governed at local rather than national levels. As such, this analysis of the ‘taxis versus Uber’ debates of moves well beyond the technical elements of each competing market form to rest on questions of fair competition and the threat of monopoly, and the implications for consumer welfare as well as the future of work. The case thus exemplifies a view of markets not only as political spaces but also as explicitly normative and moral projects.
Finally, by adopting a perspective that is attuned to the implications for labor, this research on the ‘taxis versus Uber’ debate provides an alternative analytic lens on the transformation of industrial structures as well as a valuable window into broader questions about the future of work. The case of urban transportation markets highlights an important distinction in strategies of corporate restructuring, where manufacturing sector firms restructured hierarchical modes of production by shifting cost reduction burdens arising from a withering welfare state to intermediaries governed through global value chains thus allowing them to escape the pressures on profit margins. By contrast, others like the taxi industry were similarly forced to restructure but did so internally beginning in the same period of the 1970s. This variation in industry-level strategies was facilitated by post-New Deal legislative changes in employment regulation and had mahor implications for industry and market structure. However, despite this difference there are also important similarities, not least the ways in which these structural shifts were facilitated by structural patterns of labor market inequality: between developing and industrialized countries in global value chains (GVCs), and along lines of race, class, ethnicity and immigration status in urban transportation markets. Ironically, the latter is evident in both traditional taxis and modern ridesharing firms like Uber. Further, while the politics of manufacturing in GVCs remains structured by conflicts between large firms and wage employees that can attempt to collectively bargain through unions, the taxis versus Uber debate is organized around a different type of worker identity, that of the independent contractor or ‘working class entrepreneur’. This cultural representation helps to legitimize a structural shift that largely precludes traditional modes of industrial relations, once again highlighting the normative and moralized dimensions of the debate.
The analysis thus proceeds along lines charted by exemplary comparative studies of morals and markets by conceptualizing taxis and ridesharing firms as constituting competing market structures that operate in the same economic space, albeit with different governing logics and firm strategies; different technological infrastructures; different organizational structures and corporate cultures; and different moral underpinnings that shape their engagement with external regulatory structures and political actors. Methodologically, it does so through a combination of participant observation of ridesharing practices of Uber and Lyft in the Boston metropolitan area and interviews with policymakers and representatives of ridesharing firms, particularly those with responsibility for regulatory engagement. It contextualizes this contemporary market conflicts through a historical analysis of the emergence of the taxi industry that pays particular attention to the evolution of the relationship between taxi operators and local government that allowed concentration of medallions in a few hands. It thus facilitates a historical comparison of how the relationships with government actors facilitated the creation of two highly oligopolistic industry structures, first taxis and now Uber.