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Platform Economy As A New Form of Capitalism: A Régulationist Research Programme

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Cambridge Journal of Economics 2019, 43, 805–824

doi:10.1093/cje/bez017
Advance Access publication 14 May 2019

Platform economy as a new form of


capitalism: a Régulationist research

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programme
Matthieu Montalban, Vincent Frigant and Bernard Jullien 

The terms ‘platform economy’ or ‘sharing economy’ have become widespread with
the development of digital platforms like Uber. This economy is transforming capit-
alism and raising important questions about its nature. Is it a new process of embed-
dedness or is it the next step for deregulation following the crisis of the financialised
regime of accumulation (RA)? Is it a possible new Growth Regime? Using the
approach of the French Régulation school of thought, we describe the nature and
transformations of the form of competition inherent in platforms. Although this
may favour some forms of re-embeddedness, we show that it will accelerate some of
the trends and characteristics of the institutional forms of the financialised RA and
that it is an endogenous product of its crisis. This raises further questions and un-
certainties related to the ability of platforms to generate stable long run growth due
to the dysfunctionality of the mode of régulation and the conflicts it could generate.

Key words:  Platform economy, Financialisation, Mode of régulation, Dis-embeddedness,


Regime of accumulation
JEL classifications:  B52, O33, P10

1. Introduction
The terms ‘sharing economy’, ‘collaborative economy’ or ‘platform economy’ have
spread quickly since the creation of several well-known digital platforms such as
Airbnb, Uber, TaskRabbit etc. that contest and ‘disrupt’ the incumbent firms of regu-
lated sectors. The digitalisation of data and the diffusion of smartphones are factors
which have contributed to creating the conditions for developing new services through
applications that match users or professionals and consumers, and allow them to
‘share’ (freely or not) the use of assets. The aim of this paper was to study the im-
pact on the current capitalist system of the platform economy and, more specifically,
the ‘platformisation’ of the economy, defined as the process of resource exchange via
the use of centralised digital tools. Most of the proponents of this platform economy
evoke a technological and social revolution that unreservedly promotes a radically new

Manuscript received 30 September 2017; final version received 18 July 2018.


Address for correspondance: GREThA UMR 5113, University of Bordeaux, Bordeaux, France; email:
matthieu.montalban@u-bordeaux.fr
GREThA UMR 5113, University of Bordeaux.
© The Author(s) 2019. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.
All rights reserved.
806   M. Montalban et al.
society. This was already the case at the end of the 1990s when, just before the bursting
of the dot-com bubble, it was thought that the Internet’s ‘new economy’ model would
reduce inventories, increase flexibility and transactions and subsequently accelerate
growth and reduce economic fluctuations. This, however, turned out to be a myth
(Gadrey, 2000).
Nonetheless, we consider it necessary to take into account the ‘revolution hypoth-
esis’ and its performative implications. A lesson from history is that industrial revolu-
tion is related to dis-embeddedness or re-embeddedness processes (Polanyi, 1944).

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In the polanyian sense, the economy is always embedded in social and institutional
structures. Capitalism and economic theory, however, are producing a process of
dis-embeddedness. It is the performative myth of a pure, self-regulating and autono-
mous market free from any form of other social relations. As a myth, it cannot become
reality because markets need institutions and it also generates political counter-
reactions (re-embeddedness). But it is a myth that is gaining significant traction. Dis-
embeddedness can thus be more clearly understood as the hegemony and hierarchical
dominance of market institutions such as private property, competition and the law
of supply and demand over the other social relations which are subsequently subor-
dinated, leading to a growing commodification of activities (Le Velly, 2008). In this
research, we study a form of dis-embeddedness that is occurring through the rise of
digital market platforms and the myth surrounding the platform economy.
As the discourse of free market studied by Polanyi, the ‘platform economy’ has also
apologetic discourses around it. On the one hand, it is sometimes presented in the
popular press as a new ‘non-capitalist’ or even ‘communist’ mode of production be-
cause it allows for the development of common-pool resources, sharing, collaboration
and the ‘green’ economy (Mason, 2015). On the other hand, it is understood to repre-
sent a new form of capitalism, called ‘uberisation’ (Morozov, 2013). Interestingly, these
two discourses mirror each other. One is about a positive new ‘great transformation’ in
which the re-embeddedness process facilitates non-market transactions and social links.
The other discourse, however, describes an enthusiastic dis-embeddedness through
the development of market transactions, commodification and private self-regulation
(Polanyi, 1944). In other words, we have one discourse in which capitalism is bypassed
and another that describes the platform economy as a new form or stage of neoliberal
capitalism with significant development of markets and competition.
French Régulation Theory (Boyer, 2015) is particularly relevant to question the
novelty and functionality of platform economy as a new phase of capitalism and as
a process of re- or dis-embeddedness. It involves studying the historical stages/trans-
formations and mechanisms of the endometabolic/endogenous structural crisis of
capitalism through the concepts of the regime of accumulation (RA) and mode of
régulation1 (MR) and by analysing the institutional complementarity and hierarchy
of the five main institutional forms2 (IF) and the role of political conflicts and com-
promises between social classes, Using this well-known theoretical framework, this
paper shows that while the ‘platform economy’ may allow potentially interesting forms
of re-embeddedness to emerge, it is in fact predominantly a large but dysfunctional

1
  Régulation is understood as all forms of rules, norms or mechanisms insuring the coordination of agents
and the reproduction of prevailing capitalist social relations. It must be distinguished from regulation, which
is only one form of régulation.
2
  Monetary and financial regime, wage–labour nexus, form of competition, form of the State and inter-
national regime.
Platform economy as a new form of capitalism   807
endogenous dis-embeddedness transformation linked to the crisis of the financialised
RA. The platform economy is growing particularly quickly in the service sector and
is not yet present throughout the economy. Nonetheless, the diffusion of platforms
may impact the MR by extending commodification, thus justifying the use of the
régulationist framework to interpret this systemic transformation.
The remainder of this paper is organised as follows. In Section 2, we analyse the
main impact of the platform economy on forms of competition by focusing on how it
transforms markets. In Section 3, we explore how it is related to the financialisation

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process and monetary regime. In Section 4, we show how the platform economy ac-
celerates the changes in the wage–labour nexus. In Section 5, we study how States and
policies are complementary to this process. Finally, we conclude by showing the on-
going contradictions of this accumulation regime and MR.

2.  How the platform economy disrupts competition


The platform economy is a booming with new apps created every day to offer services
as diverse as delivering food, offering or selling personal services (teaching, dog walking
etc.), renting, giving or selling idle assets (boat, car etc.) or funding projects.
To embrace this diversity, we define the platform economy as economic activities
where tangible or intangible resources are exchanged between providers and users by
the way of centralised electronic platforms. Whatever the types of assets exchanged or
the way in which they are exchanged, this broad definition underlines two key points:
a platform is a tool to match users and providers and it is also a set of rules defining
the creation, the exchange and the closure of the dyadic relationship. These two di-
mensions are embedded in two instrumental tools. The first dimension is related to the
software and hardware infrastructure that make up the digital infrastructure, including
computers, data centres, smartphones, GPS and software packages and, in particular,
predictive analytics tools (Siegel, 2016). Each platform is an algorithm-enabled
cyberplace (Zysman and Kenney, 2016) and the exchange is organised by an algo-
rithm which collects and analyses data about supply and demand and, first and fore-
most, about users and providers. The second dimension is a governance issue. Each
platform constitutes a private governance structure (Boudreau and Haghiu, 2009).
It sets out and enforces its own rules regarding the membership of the platform, the
monitoring process and the system of reward. In this respect, the platform economy is
a form of régulation.
Three interconnected dynamic processes related to platform economy need to
be underlined. The first process relates to the logic of extension of the market area.
Platforms commodify relationships which were previously outside the economic space
(Dobusch, 2017; Schor, 2017). The strength of digital infrastructure is to make it so
convenient to find a car for a hitchhiker or a pet-sitter for family holidays that people
substitute their traditional solutions (friends, community, family etc.) with apps. While
some of these exchanges made use of the ‘market’ in the past, the platform economy
scales-up the commodification of these relationships. On the other hand, it is clear
that platforms can be used to build non-market exchanges. This point needs to be
connected with the second dynamic which appears inside the platform economy itself. Apart
from rivalry between profit-seeking platforms, pure sharing (non-pecuniary) platforms
(Bostman, 2013) are in competition with pecuniary platforms which try to capture a
808   M. Montalban et al.
growing part of the platform exchanges using the siren-like appeal of earning money.
Why give away the armchair inherited from your great-uncle, when it is possible to
sell it on eBay? This competition process incentivises the commodification of relation-
ships. While some scholars stress that the growth of sharing platforms is based on the
diffusion of ideology and the appeal of the social and solidarity economy (TRANSIT,
2015), no concrete evidence exists to clarify which type of platform is growing the
fastest. The net effect between substitution and creation thus needs to be studied, but
incentives are strong for a dis-embeddedness process. The third dynamic is between in-

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cumbent firms and newcomers. The platforms shape competition and challenge incum-
bent firms through ‘disruption’. Every type of good and asset may be involved (labour,
finance, capital goods) for different purposes. In addition, incumbent firms do not
only face competition from start-ups but also from the gift-economy offering services
for free that were previously provided by markets. While the cases of Uber or AirBnB
are probably the most commonly mentioned in the media, a lot of other industries
are facing the entry of platforms firms seeking to disrupt incumbents. The platform
economy thus poses a genuine threat to the ‘old’ economy.
This disruptive ambition of platform firms is directly linked to their digital na-
ture (Zysman and Kenney, 2016). Owning the residual right to exclude unreliable
members, platforms reduce both adverse selection and moral hazard issues. At the
same time, the collapse of IT operating costs and the design of new interfaces afford
a technological advantage to the new generation of platforms by reducing the need for
tacit coordination and technological interdependency which are two classical limits
of outsourcing (Benkler, 2004). Along with this, platforms are network technologies
generating network economies and increasing returns to adoption (Arthur, 1989).
More precisely, platforms are two-sided networks: each side of the platform represents
a different type of user, and a platform firm incurs costs in serving each user but can
also, depending on its business model, earn revenues from each group (Eisemmann,
2005). The aim of a platform is to generate a catalytic reaction based on rapid and
massive adoption of its services from users on both sides (Evans, 2003). The challenge
is to attract a large number of providers and users contributing to the platform ex-
changes and, since the seminal book of Shapiro and Varian (1998), network literature,
has proposed specific strategies such as pricing and subsidies (Hagiu, 2006), and the
interconnection of complementary services (Suarez and Cusumano, 2003). Platforms
also adopt more classical solutions, however, such as employing a workforce located
in low cost countries. Platforms can also mobilise the ‘crowd’, either on both sides
as it is often the case for a C2C platform (location of idle-assets, services exchanges
etc.) or only on one side as it is the case for B2C or C2B platforms (like jobbing plat-
forms, De Groen and Maselli, 2016). For these reasons, platform firms have a com-
petitive advantage over classical firms operating in similar activities which produce
their services or goods using their own resources. Among the different types of plat-
forms, those which propose services using idle resources belonging to the crowd are
the most disrupting. They activate resources which are indeed quasi-infinite, with very
little investment and without needing to finance capital goods. Because their owners
consider renting as complementary revenue, they can offer resources at very competi-
tive prices. In addition, the reverse auction principle at the core of their activity con-
tributes to a deflationist configuration in the rivalry between platforms themselves and
between providers belonging to the same platform on a global scale. For other types of
Platform economy as a new form of capitalism   809
platforms, however, the key to their competitive advantage lies with their ability to en-
large the crowd, to mobilise digital infrastructure and to inter-connect complementary
services. The disruptive power of Amazon, for example, is based on its huge diversity of
items, its individualised recommendations based on its algorithm and its high perform-
ance delivery system. Traditional book or music shops thus struggle to survive even in
countries like France where the price of books is State-regulated.
Another source of growth for platforms that is further developed in Section 5 is their
ability to exploit gaps in the regulation framework due to the novelty of offered services

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and this can generate unfair competition. Platforms that rent assets are good examples.
Whereas professional hotels must comply with security norms or professional stand-
ards, a household renting its apartment via a platform does not incur such compliance
costs. The supposed higher ‘efficiency’ of such platform firms is thus a consequence of
their ability to avoid regulations and they win market share from ‘conservative over-
protected firms’ as a result of their imagination and their ability to design digital infra-
structure. Clearly, the platform economy is growing in particular in the service sector
and it has not disrupted mainstream economic activities. However, as it expands com-
modification and promotes specific competitive processes, it is influencing the form of
competition in addition to other IF.

3.  A monetary and financial regime: start-ups, VC and NASDAQ as


pre-conditions for the fund raising strategy of platforms
Although the platform economy ‘disrupts’ most of the IFs and previous MR of finan-
cial capitalism, we argue that, rather than representing a new RA, this transformation
is endogenous to the financialised-neoliberal RA. It is based on a very similar institu-
tional hierarchy, it is functional to the monetary and financial regime and it accelerates
previous trends. The transformation process from a financialised RA to a platform
economy will be described (Figure A1), and we argue that the platform economy
favours significant dis-embeddedness and the commodification process.

3.1  Financialisation as an enabling condition for the development of a platform economy


Financial liberalisation and monetary policy focused on price stability and the stability
of the banking system have generated bubbles fuelled by credit and savings from pen-
sion systems managed by institutional investors (Auvray et al., 2016). This pro-bubble
regime has been a condition for the development of start-ups.
Most digital platform companies are focused on the network economy and increasing
returns to adoption (Arthur, 1989). Typically, they are in ‘first mover takes all’ activ-
ities. As firms with a ‘new economy business model’ (Lazonick, 2009), they burn cash
quickly at the start when they are developing their innovations and apps with no or
little sales and their activities are funded by business angels or venture capitalists (VC).
Their growth expectations are based on the assumption of attracting a sufficient mass
of users to occupy a monopoly position and then monetise their business. VC funds
are looking for ‘unicorn’ companies, which will become the new GAFAs whose very
high capital gains will compensate for all the other risky investments most of which are
not profitable.
This corresponds to the emergence of a new financial convention. The global growth
of inequalities (Piketty, 2013) creates surplus savings on a global scale and a significant
810   M. Montalban et al.
part of these are attracted to Silicon Valley’s eco-system based on the proximity of ven-
ture capital and the new economy (Lazonick, 2009). The few success stories of win-
ning start-ups that become unicorns are used to boost the system while the numerous
failures are not mentioned. Wealthy individuals, in particular, including celebrities,
also tend to believe that they are part of a movement to change the world. The per-
sonalisation of enterprise—and its media coverage—by a small number of charismatic
bosses such as Elon Musk and Mark Zuckerberg reinforces the seductive power of
their own firms and, indirectly, of all digital companies. The potentially high returns

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on investments are also attractive because mature industries cannot offer such prom-
ising returns.
As a consequence of the dominant business model, the platform economy is there-
fore largely functional to the financialised RA. VC development is largely the result of
development of financialisation through a combination of the pension fund system,
the stronger legal protection afforded to investors and ‘new’ lightly regulated stock
markets such as NASDAQ or AIM offering a source of funding and an exit possibility
for young innovative enterprises (Cumming, 2008; Bédu and Montalban, 2014). It
has been shown that there are institutional complementarities between the post-1970
intellectual property rights regime and the growing financial markets in software and
biotech industries (Coriat and Orsi, 2003; Useche, 2014), as patents and intangible
assets are used as a signal for investors to fund new ventures. While patents are not
the core of the platform economy, its business model is clearly based on intangible
assets such as highly qualified human capital, knowledge, control of data and digital
networks. Although these firms accumulate losses in the short term, the existence of
such assets creates an expectation of future monopoly rents for the winner or for the
first mover as a result of network economies. However, the aim of the founders of those
platforms is not necessary to create value and profits, but to increase their market cap-
italisation to sell their shares to larger companies who will exploit the data and their
network to create value.
Platforms thus contribute to help other firms, particularly large established firms,
to increase their flexibility and to lower their sourcing and production costs. B2B plat-
forms offer access to resources such as labour and finance which can be useful for large
firms wanting to focus on their core competences (Prahalad and Hamel, 1990), and to
promote open innovation (Chesbrough, 2003) in order to be lean, focused and agile.
The heterodox economics literature has explained that this new tryptic is partly due
to financialisation and shareholder value management, which reduce the productive
investment of listed companies. ‘Old economy’ and mature companies are obliged to
adopt practices of ‘downsize and distribute’ due to shareholder value management
(Lazonick and O’Sullivan, 2000; Auvray et al., 2016), by increasing share repurchases,
dividends and reducing investments. Firms may also choose to crowdsource but
they often underestimate the organisational difficulties involved (Ford et  al., 2015).
Crowdsourcing generally implies low qualified tasks while collaborative platforms are
more likely to develop activities involving engineering jobs and supports activities such
as marketing and design (Schmidt and Jettinghoff, 2016). It is worth point out ex-
plicitly that such start-ups and innovative businesses find it relatively easy to raise
funds and burn cash without suffering from too much short-term pressures to extract
profits by paying dividends and engaging in buybacks. As their governance is entrepre-
neurial and VCs play an important role as both advisors and long-term investor, these
Platform economy as a new form of capitalism   811
start-ups can control their business model and raise money from the stock market to
sustain their rapid growth strategy. To a certain extent, the platform economy com-
plements the old economy by taking risks, innovating and accessing capital to develop
activities that will prove useful to mature industries. In other words, platforms allow
established firms who are operating under the pressure of finance, to achieve their ob-
jectives. From a financial perspective, the platform economy increases the liquidity of
markets to the extent that it contributes to a marketisation of the production process
of large companies who can outsource with arm’s length relationships and focus on

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core competencies.
Outsourcing to start-ups is not an entirely new process, however, and it is already a
characteristic of the financialised RA in some industries. Big Pharma companies, for
example, have outsourced a large part of preclinical research to biotech companies,
and some have created VC funds to fund biotech start-ups (Montalban and Sakinç,
2013). This form of ‘start-up complex’ for large firms is favoured by financialisation.
Large firms focus on their core business in order to maximise shareholder value and
biotech or ICT start-ups are able to raise funds on stock markets even if they do not
make any profit.

3.2  Platformisation of the monetary and financial regime: still uncertain


Because of the feedback effect, innovations from digital platforms and start-ups may
transform monetary and financial regimes. Cryptocurrencies such as Bitcoin or Ether
that are based on blockchain technology compete with official currencies such as US
dollars or euros for transactions. Blockchain technology is a decentralised, transparent
and immutable ledger where all the computers in the network automatically check
and secure all of the transactions (Wright and De Filippi, 2015). It has been invented
to disrupt ‘trusted third parties’ such as banks, central banks or notary publics. Some
start-ups have begun to raise money via Initial Coin Offerings (ICO)3 (Conley, 2017).
These currencies are created by start-ups without regulation and without the need for
a banking license. They are connected the blockchain and exchanged on trading plat-
forms. Central banks are not lenders of last resort for these platforms which alters the
traditional legal monetary circuit. Similarly Paypal, the digital platform of online and
mobile payment system, is now widely used for online transactions and it is thus com-
peting with traditional banks as a leading ‘Fintech’ company. Crowdfunding platforms
such as Kickstarter and KissKissBankBank raise money to fund the projects of artists,
creators, inventors, scientists in return for gifts that are given as rewards to the backers.
This mode of financing is different from a VC project, as it is not only committed to
funding capitalist ventures, but addresses ‘social’ projects also. A large number of pro-
jects funded by crowdfunding in the seed stage, however, are subsequently financed by
VC. Crowdfunding is thus not likely to represent the end of the quest of shareholder
value and it thus appears more as a complementary mode of financing, alongside the
traditional modes of financing capital which include VC, credit, bonds or stock mar-
kets. In addition, while cryptocurrencies have grown significantly in terms of number
of existing cryptocurrencies and number of transactions using these as unit of account,
reserve money and/or speculative asset, they are not used in current daily transactions.

3
  ICOs are a form of fund raising: start-ups issue cryptocurrency tokens instead of stocks in exchange for
‘real’ fiat money. The token gives the owner the right to buy future products or services of the company or it
can be used as a speculative asset such as a stock.
812   M. Montalban et al.
They can thus be considered as an alternative financial asset to money. It is, nonethe-
less, possible that the transformations brought on by these innovations will go further,
but this will depend on the reaction of Central Banks, the extent to which non-geek
and non-speculating households overcome worries about legal uncertainties (Enyi and
Le, 2017), and the reactions of private banks. States and Central Banks have sover-
eign and fiscal interests to maintain state money and one easy way for government to
ensure that its money is used is to oblige individuals and firms to pay their taxes with
it. Private banks are seeking ways to seize the opportunities offered by the blockchain

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and thus avoid the disruption of their oligopoly positions. They also hope to secure
part of the blockchain transactions and reduce certain administrative problems (Le
Monde, 15 November 2016; Les Echos 7 February 2017). Blockchain technology can
reduce transaction costs in settlements and digital platforms of cryptocurrencies can
disrupt the functioning of centralised financial markets that are traditionally closed.
Blockchain technology could also be used to secure transactions of assets through the
use of a decentralised record of all the previous transactions. Finally, digital platforms
of cryptocurrencies may create some decentralised common global markets place for
trading by enlarging the globalisation of finance (Financial Review, 17 June 2017).
The platform economy has thus potentially deep connections with financialisation.
It also accelerates previous neoliberal trends towards the flexibilisation on the wage–la-
bour nexus and outsourcing.

4.  Continuous flexibilisation and individualisation of the


wage–labour nexus
The ‘new’ wage–labour nexus institutionalised by platform capitalism and, in par-
ticular, the ‘uberisation of labour’, is not as recent as it would appear. It is a more rad-
ical version of certain existing processes. After World War II, Fordism was characterised
by an MR in which the wage–labour nexus was the dominant IF. This favoured inte-
grated firm and the growth of wages sustained the growth of mass consumption. This
mode of development was underpinned by both the rise of productivity and wage-led
demand, and an international regime that was only moderately opened. The crisis of
Fordism occurred as a result of a combination of factors. An inflationary-monopolist
MR emerged as productivity was slowing (Bergeaud et  al., 2016), due to growing
conflicts against Taylorism. There were significant changes in demand with greater ex-
pectation of variety as the population became increasingly equipped with cars and as
trade became increasingly liberalised (Boyer, 2015). To address this crisis, the Fordist
compromise was broken and capital imposed neoliberal policies to reduce inflation
through monetarism, financialisation and globalisation. The end of the Fordist com-
promise was facilitated by the rise of unemployment and de-industrialisation (Streeck,
2011), but it has exacerbated the slowdown of productivity growth. In parallel, glo-
balisation and financialisation facilitated flexibilisation and individualisation of the
wage–labour nexus.
At the same time, the growing importance of large institutional investors trans-
formed the dominant form of management by imposing ‘shareholder value manage-
ment’ on large listed companies (Lazonick and O’Sullivan, 2000). To increase their
return on equity, financialised companies outsourced a growing share of their produc-
tion to suppliers and distributed stock options and very high pay to CEOs to ensure
Platform economy as a new form of capitalism   813
their subordination to the dominant objective of increasing the company share price.
These new practices accelerated the end of the historical compromise between top
management and unions and replaced it with a compromise between shareholders and
managers pitted against unions and low-skilled employees. As a result, from the mid-
1980s to the 2007 crisis, the adjusted share of wages declined in most OECD countries
although profit rates and the share of dividends in profits increased (Husson, 2010).
In addition, reinvestment of profits declined, thus fuelling the growth of the finance
sector and bubbles. Other consequences include the spectacular growth of inequalities

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(Piketty, 2013), a dual labour market and higher poverty rates in the neoliberal MR.

4.1  Digitalisation of labour, uberisation and platform economy as the next stage of an
on-going process of individualisation and flexibilisation of the labour force
The development of the platform economy is transforming the wage–labour nexus,
capital/labour relationships and the business models of firms. It involves the develop-
ment of self-employment and freelancers in place of regular wage-earners/employees.
This may involve highly skilled freelancers for platforms such as Upwork or low-skilled
entrepreneurs for platforms such as Uber or Deliveroo. There is no clear distinction
between professional labour such as full-time Uber drivers or delivery men and ‘oc-
casional’ labour such as drivers who work from time to time for platforms such as
Uberpop, Amazon Mechanical Turk, or TaskRabbit at the same time as they have an-
other job. Depending on the level of qualification of the labour force, ‘uberisation’ has
different effects and we can expect that the process of individualisation, flexibilisation
and dualisation of capital/labour relationship already in place in financialised RA will
increase.
The emergence of the platform economy has clearly favoured the development
of freelancers. The Silicon Valley model is partly based on freelancers and their mo-
bility and professionals such as coders, engineers, accountants, advertisers, and de-
signers develop their own activity with short-term contracts and moving from one
firm to another. By extending the model of freelancers to low skilled workers, however,
platformisation replaces labour contracts with commercial contracts, and outsources
the risks and costs previously borne by capital to labour. The platform economy is thus
a new form of ‘dis-empowerment’ of the labour force and a new stage of neoliberal
capitalism. Uberisation, in the form of crowd working, is another stage of outsourcing
of workers and reducing their ability to engage in collective organisation. As such,
uberisation is not a new system of labour organisation as it is not very different to the
putting-out system that prevailed during the early years of proto-industrialisation. In
the putting-out system, workers were self-employed and worked at home with their
own means of production and the capitalist who provided the raw materials was simply
an intermediary between workers and consumers. This system was replaced initially
by the factory and subsequently by manufacturing systems. The manufacturing system
and Taylorism were invented to increase the control over the labour force and reduce
the risks of opportunism (Marglin, 1974; Tinel, 2004).
Platformisation is re-organising a putting-out system 2.0. Capitalists organise the
matching and selling process and the control of labour is easier due to digital applica-
tions. In addition, most of the services involved do not involve indivisibility in produc-
tion and this limits problems related to team work (Baudry and Chassagnon, 2016).
By replacing employment contracts with commercial contracts, by controlling access
814   M. Montalban et al.
to the platform to match supply and demand and by removing the distinction between
professional and non-professional labour, firms such Uber have created competition
between low-skilled workers. Without the status of wage-earner, incomes are more
volatile and previous forms of remunerations such piece-rate payment are reappearing.
This competition between low-skilled workers decreases their incomes and deterior-
ates their working conditions.
The main concern in relation to this new form of putting-out is that workers who
are not wage earners are not protected by labour laws and have no social protection. If

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such ‘uberisation’ becomes widespread, it would represent the deinstitutionalisation of
the wage–labour nexus, which would be transformed into a commercial relationship.
However, the vast majority of workers are still wage earners, and the generalisation
of the model is far from certain. As there is a significant level of control imposed on
low-skilled workers by these platforms, a number of these workers could actually be
requalified as employees. Delivery personnel, for example, are obliged to wear branded
uniforms and can be disconnected from the platform if they do not accept enough
orders. In California, the UK and France, delivery personnel and drivers of some
platforms are seeking to have their contracts requalified as an employment contract.
To date, legal decisions have been handed down in favour of workers. If this trend is
confirmed in future legal fulingss, the business model of such platforms would be in
danger and the diffusion of this ‘new’ form of the capital/labour relation would be sig-
nificantly limited.

4.2  Crisis, poverty and inequalities as a source of development of the platform economy
and free lancing
There is a self-reinforcing relationship between inequalities and the development of
the platform economy. Poverty and inequalities encourage the development of plat-
forms and platforms, in turn, may increase poverty by the dis-empowerment of low-
skilled labour and the rise of very high-paid ‘stars’.
During the Great Recession, unemployment and poverty increased in most OECD
countries, weakening the balance of power for employees and unions, although in-
siders still have strong social benefits and strong employment protection. It was when
unemployment grew and median income stagnated or decreased at the beginning of
the 2010s that Airbnb or Uber rose to prominence (Rippe-Lascout and Ternisien,
2016). In a very competitive international context with high unemployment and stag-
nating wages, the only option to increase purchasing power is to decrease prices or
to supplement primary income with new activities. This is typical of a deflationist re-
gime. Schor (2017) highlights how the platform economy increases inequalities among
the poorest 80% of the population. For high-skilled workers with rare qualifications,
digitalisation and jobbing platforms can increase their incomes if they choose to be-
come freelancers. This is also the case for high skilled workers who use some jobbing
platforms to supplement their incomes by practicing low-skilled work as a secondary
activity. Workers who are not dependent on the platforms can thus use it to increase
their income. However, for low-skilled workers dependent on platforms and struggling
to survive, the relationship is reversed and the inherent competition generated by the
platform decreases their incomes.
The rationale that is often given for why people are using the platform economy
tends to be positive and suggest that it is because it is ‘more fun’, ‘more green’, ‘more
Platform economy as a new form of capitalism   815
collaborative’ or ‘more inclusive’. However, a recent French study has shown that the
dominant reason for using such platforms is financial. Their attraction lies primarily
in the fact that their services are less costly or that people can earn additional income
by renting their home or by working as driver. This is clear from the fact that 80% of
users in the study reported that they use platforms to save money, while only 24% re-
ported that it was to ‘consume differently or in non-traditional channel’. Only, 15%
reported that platforms were used in order ‘to protect the environment’ and 7% re-
ported that it was for the human contact. On the other side of the platform for people

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selling or renting, 57% of respondents to the study are doing so to earn more money
(Rippe-Lascout and Ternisien, 2016). Schor (2017) has shown that different social
motivations may motivate users to participate in platforms and that these may be altru-
istic but that the poorest and the more dependent workers are using platforms simply
because they need money to live.
The development of the platform economy has, therefore, been encouraged by the
growing levels of inequality and unemployment that emerged as a result of the crisis
of the financialised RA. Its emergence, in turn, reinforces inequalities between skilled
and unskilled workers.

5.  The ‘silicolonisation’ of public policies: the final pillar in the edifice of
the Schumpeterian Workfare State
The state is defined as ‘a set of institutionalized compromises that ensures the me-
diation of violence and conflicts to produce public policies’ (Delorme and André,
1983). Its role has been significantly transformed by changes that have taken place
in the other IFs that have been adapted to facilitate the development of the platform
economy. The dominant stakeholders express two political demands. One is that gov-
ernments deregulate industries and the other is to reduce spending and both these
recommendations are complementary to efforts for financial liberalisation and the
associated transformations of monetary regimes. ‘Platformisation’ thus reinforces
dis-embeddedness by giving it a new form and by proposing new restrictions on the
domain of States. Morozov (2013) explains how financialisation and platformisation
occupy roles as ‘bad cop’ and ‘good cop’, respectively, at both a political level and as
drivers of the transformations of the form of the State. The trajectory underway com-
bines a simple reduction of the public domain with public policies organised by states
that ensure the hegemony of worldwide digital giants such as the GAFAs and Uber.
To interpret these changes in theoretical terms, it is important to bear in mind the
large diversity of ‘institutionalised compromises’ that generates the forms that states
may take and that explains their imperfect coherence (Théret, 2006). The ‘Fordian
State’, for example, cannot be reduced simply to the ‘welfare state’ as it also had an
ability to distribute productivity gains along with Keynesian policies. Divergent forms
of ‘Fordian States’ emerged in different national capitalisms as a result of bundles
of regulations and public policies that were both central and local. These sectorised
public policies are not simply local versions of economic policies, but they are de-
veloped to stabilise more subtle compromises in multiple sectorised policies such as
transport, education, health or housing. In each domain, the State has to produce rules
and forms of taxation and subsidisation not only to solve market failures but also to
organise compromises between social and territorial groups with conflicting interests.
816   M. Montalban et al.
The activities concerned are largely ‘mixed’ because private initiatives and compe-
tition are embedded in rules to stabilise local political compromises. Fligstein (2001)
underlines the necessity of such embeddedness for firms to limit competition and price
wars, and he introduces the concept of ‘conception of control’. This is a shared repre-
sentation of how to control/adapt to competition and organise firms. The concept of
‘conceptions of control’ is also relevant to our understanding of the form of the state
and its key role in stabilising the relations among stakeholders. This could involve, for
example, mediating between patient needs and those of the pharmaceutical industry

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in the provision of healthcare or catering for households in relation to the supply of
transport. Through mediating these relations between firms and stakeholders in order
to stabilise the conceptions of control for firms, the state apparatus accumulates com-
petences in its various local and central components and structures them in corpus
and doctrines.
From this perspective, certain forms of these sectoral compromises were largely
preserved and defended by an alliance between civil servants, political staff and local
political demands during the period of transformation of monetary and economic pol-
icies, of forms of competition and of wage the labour nexus. During the 1980s and
1990s, therefore, the advance of deregulation move and the growing pauperisation
of states at different level was facilitated by these compromises as they mitigated the
damaging effects of globalisation on households and territories. In France, in par-
ticular, the pauperisation of the central state was accompanied by a significant transfer
of competences and resources to local authorities, including regions and cities. These
actors thus developed proactive policies and their competent civil servants worked to
maintain public services and local policies for transport, housing or education.
Platformisation, however, is proving to be a more explicit challenge to these series of
compromises as it suggests that civil servants and political staff adopt tools and doc-
trines that are more ‘efficient’ for transforming and/or ‘modernising’ their domains.
Both the general doctrine developed by ‘siliconians’ and its variations in different
areas have been studied through the framework of the GAFA’s cultural archaeology by
Turner (2006). He describes how Californian entrepreneurs associated with the plat-
form economy are linked to the counter-culture that opposed the conservatism of US
society in the 1970s. Over time, a large part of this generation transformed its quest
for societal change to a search for alternatives in business opportunities through the
‘digital revolution’. Sadin (2016) defines ‘silicolonisation’ as the invasion and diffu-
sion of Silicon Valley’s culture and ideology across an increasing number of domains,
including politics. The discourse of these Silicon Valley entrepreneurs has become
increasing explicit in promoting practices that they claim can solve problems usually
considered to be public ones. At the same time as they maintain their fundamental
libertarian ways of thinking, they have allied themselves with neo-liberal demands and
these ‘digital gurus’ have become severe critics of bureaucracy, conservatism and cor-
poratism as explanatory factors for the inefficiency of public policies.
This ‘silicolonisation’ appears to provide the finishing touch to the structural trans-
formations analysed 25  years ago by Jessop (1993) who analysed the advent of a
Schumpeterian Workfare State. The key economic and social objectives he identified
have become the promotion of innovation, the enhancement of the structural competi-
tiveness of open economies and the subordination of social policy to the demands of
Platform economy as a new form of capitalism   817
work flexibility and competitiveness. The underlying clarion call of this phase of the
transformation is that of modernism.
Digitalisation and the ‘platform economy’ are thus promoted as a more ‘modern’,
cheaper and democratic way to solve problems usually analysed as ‘market failures’
that require public regulation or the provision of public goods by the State. For policy
makers, this argument is very attractive as decades of neo-liberalism have already sig-
nificantly reduced both their legitimacy and their financial resources. As a consequence
of these financial constraints and because they have been led to believe in the superior

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efficiency of private operators, they are paradoxically free to abandon the traditional
scope of their expertise to Uber, Google or other start-ups who claim to be in a pos-
ition to solve the problems they face in a more effective way.
By developing their ‘digital solution’ and by participating very actively in public
debates about public policies in different circles, the GAFAs have gradually trans-
formed the status quo in their specific area and have mobilised the support of civil
servants. As a result, there is no ‘concerted attack’ against public services but multiple
local alliances between this entrepreneurial world, civil servants and public experts.
Typically, before explicitly selling their digital solutions, digital entrepreneurs appear
in specialised colloquia to share their expertise and convince public actors and ex-
perts of the strength of their analysis. They generally explain why it is so important
to ‘change the paradigm’ with the help of cliché that explain that this is way ‘to do
more with less’, ‘to put users, patients or students at the heart of the system through
digital solutions’. They oppose the ‘old world’ where top-heavy bureaucracy, dubious
expertise and intolerable monopolies impose top-down solutions with the digital tools
and big data solutions that propose the real-time, efficient solutions that are need to
address the challenges of the complex world of today. Initially, elected representatives
and civil servants may be reluctant but over time they are gradually convinced by such
argument and can often become pro-active in support of the proposed changes. At this
point, they genuinely believe that they will be able to do a better job by using these
new tools and generating the promised savings and they are motivated by the new chal-
lenges emerging in this new world.
By influencing areas such as public transport, healthcare systems, training or
housing, platforms can influence the norms and legislation that define the rules of the
game to which firms must comply. As a private governance structure, platforms de-
fine their own rules, and most of them operate at the fringe of the law. If they are able
to convince policy makers that they will operate more efficiently in these areas than
would be possible under existing rules and policies, they legitimate their practices and
their political demands. More fundamentally such ‘political work’ is an effective means
to counter resistance against ‘platformisation’. Market-place platforms, for example,
use the stateless nature of the Internet to sell goods, such as medicines, which are not
allowed in certain countries and/or can only be sold in accordance with specific rules.
Jobbing platforms for virtual work (in the sense of De Groen and Maselli, 2016) can
bypass national laws in relation to outsourced work. Unfair competition also relates to
the tax situation, both VAT and tax on corporate profits. By showing they can do the
jobs previously done by public services, GAFAs and start-ups legitimise their efforts
to avoid taxation, to get public subsidies and to sell their services to states and local
authorities. There is still a debate and both the OECD and the European Commission
are redesigning fiscal rules to clamp down on tax avoidance strategies. In September
818   M. Montalban et al.
2017, however, the French government decided to stop investing in costly heavy in-
frastructure projects such as intercity railways and motorways for public transport and
to allow car sharing platforms optimise the use of existing resources such as roads and
cars.

6. Conclusion: the contingent and uncertain MR and political compromise


of an unstable predatory, competitive and dysfunctional regime

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The main transformations of IFs are summarised in Table 1 and Figure A1. The plat-
form economy appears as an endogenous transformation of financialised capitalism
and pre-existing relations rather than a radically new RA.
In a platform economy, as in the financialised RA, the dominant hierarchical IF remain
the monetary/financial regime, the forms of competition and the international regime.
The State and wage–labour nexus remain the dominated forms (Figure 1 and Appendix).
Finally, the platform economy appears as a more intense version of the financialised
RA and dis-embeddedness. As a consequence the major well-described consequences
of this RA are not likely to be altered. Debt and bubble-fuelled growth, instability and
low wage growth are thus likely to continue along with a ‘debt-deflationist’ mode of
regulation and low growth of productivity linked to the growth of the service economy
(Boyer, 2000; Stockhammer, 2004).
Paradoxically, while the current period of expansion of the platform economy is gen-
erally described as very innovative, labour productivity has not yet increased. Much
research on the question centres on ‘Solow’s paradox’ and the secular slowdown of
total factor productivity (Gordon, 2012). There is, therefore, still no concrete proof
that the platform economy will prove sufficient to generate a high growth regime. In
addition, economic theory has highlighted advantages of vertical integration and team
work to enhance the development of new capabilities (Baudry and Chassagnon, 2016).
Interestingly, one difficulty with the start-up model of the platform economy is the fact
that many SMEs, having disrupted one market, rarely invest in the accumulation of
competences in relation to the industry when the cost or complexity of the activities
proves too challenging.
In addition, a lot of platforms do not make profit or do not create value added. Uber
has accumulated large losses in 2016 and Airbnb became profitable only in the second
half of 2016 and these are the largest companies in the sector. The smallest ones often
generate negative ‘value added’ and, therefore, destroy value. Of course, the net contri-
bution of the platform economy is higher than the measure of value added because it
generates new services and experiential values for consumers and users. It has been ar-
gued by some authors (Aghion et al., 2018) that growth linked to innovation, especially
destructive creation, is understated. It is also pointed out that platforms can reduce the
prices of some services through increased competition among services providers and
companies. These arguments forget, however, that the aim of any form of capital is to
produce (exchange) value for profit, not to provide use value, which is just a means for
capital. Platforms are capturing part of the rent from their position as intermediary or
‘market organiser’. Very few create actually value for capital, so their activity resem-
bles a redistribution of surplus value rather than value creation. The net effect on the
average rate of profit is not yet very clear, but considering the fact that a growth in la-
bour productivity is still highly uncertain and the combination of inequalities, austerity
Table 1.  The comparison of the IF of financialised RA and platform capitalism

Institutional forms Financialised RA Platform economy

Monetary and Pure credit money, central banks as lender of last resort Financialised monetary regime plus:
financial regime and guaranty against financial crises; dominance competition of private cryptocurrencies (?); small
of private banks and institutional investors; high disruption of private banks and asset management
development of financial markets; money managed industry by blockchain &fintech (??) and
capitalism; dominance of shareholder value crowdfunding to complement VC
management; VC and PE
Form of competition Outsourcing; financialised and globalised competition Financialised form of competition plus:
(take-overs; M&A; role of stock prices etc.); focusing extension of competition and commodification
on intangibles; dominance of MNCs; growing due to platforms; outsourcing as crowdsourcing;
commodification and financialisation of activities; tax dominance of MNCs and GAFA/large platforms;
and regulation avoidance as competitive strategy first mover/winner takes all and disrupting
competition
Wage–labour nexus Individualisation, flexibilisation, de-unionisation; Financialised form of wage–labour nexus plus:
financialisation of rewards; (stock options); pension pay to piecework, new form of putting-out system
funds; erosion of social and employment protection; with ‘independent workers dependents’
slow growth of wages compared with productivity
Form of the State Neoliberal State; Austeritarian-neoliberal and silicolonised-
Erosion of Welfare State; schumpeterian State; organised impoverishment
Competitiveness, credibility and attractiveness as mantra of indebted State by outsourcing to platforms;
of public policies; silicolonisation and technicisation of public
Technicisation and depoliticisation of public policies policies; digitalisation and platforms as technical
solutions to political problems
International regime Free trade and free movement of capital; dominance of MNCs and institutional investors; competition between States;
declining hegemony of USA and growth of emergent countries
Platform economy as a new form of capitalism   819

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820   M. Montalban et al.

Form of Internaonal Monetary and


compeon regime financial

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Form of the State

Wage-labour
nexus

Fig. 1.  The institutional hierarchy in financialised regime and platform economy

policies, financialisation and stagnant wages from the demand side, it is hard to im-
agine that this new context could generate a new stable and high growth RA.
It would appear that the likelihood of a real surge of productivity will depend the
progress made in artificial intelligence and robotics by Google, Facebook or Uber.
The development of these technologies has been made possible by access to big data
and their widespread application would increase the substitution between capital and
labour. It is often claimed that this is what will lead to a significant increase in labour
productivity (Brynjolfsson and MacAfee, 2011; Frey and Osborne, 2013). However,
this will further exacerbate the inequalities between low- and high-skilled workers—
depressing the growth of wages and demand—and will increase the conflict between
capital and labour. If no regulations are invented to address such conflicts, there will be
potential for the emergence of neo-luddite forms of struggle. The net effect of robotics
on labour productivity and employment (Arntz et al., 2016), however, has generated
much debate involving some more alarmists commentators and others who are more
optimistic from a productivity point of view (Brynjolfsson and MacAfee, 2011); Frey
and Osborne, 2013).
The emergence of a new platform-led RA is, therefore, highly dependent on the
contingent transformations of the MR and the associated socio-political compromises.
This ‘new’ MR and the silicolonisation process are an attempt to depoliticise the
economy and to make the state obsolete, by substituting digitally organised markets,
‘pragmatism’, ‘technical adaptation’, ‘innovation’ and ‘problem solving’ to policy
making and politics. Morozov (2013) calls this ‘technical solutionism’. Rather than
organising deliberation about collective ends, it predominantly promotes adaptive
and competitive behaviour along with technical solutions. This is the essence of dis-
embeddedness. By trying to invalidate the role of politics, this approach is, in fact,
imposing a form of libertarianism policy and the domination of capital. It particu-
larly works in favour of highly skilled workers such as the geeks, coders, freelancers,
managers and the capitalist class and against the interest of low-skilled and low-paid
workers from services and industry.
Platform economy as a new form of capitalism   821
As a result, the story has not yet been played out, and uncertainty about the future
development of this process of platformisation remains high. As the dis-embeddedness
deepens, the tensions are growing along with the threat of political reactions. Platform
capitalism thus generates conflicts by disrupting sectors where we are witnessing the
re-emergence of politics and re-embeddedness. This is the case, for example, with
taxi drivers opposing Uber or Airbnb in conflict with city administrations. In the
French presidential debate in 2016, some candidates such as socialist B. Hamon, far-
left J-L. Mélenchon and even far right M.  Le Pen spoke out against ‘uberisation’,

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whereas E. Macron who won the election, proposed measures in favour of the plat-
form economy. But political support for ‘silicolonian’ modernisation is not significant
and most developed countries are on the verge of deep political crises (Amable and
Palombarini, 2017), which could lead to critical junctures and unpredictable trans-
formations. Subsequently, more detailed case studies to study this political instability
and the associated conflicts, lobbying of different groups and possible political com-
promises should be the core of a régulationist research programme on the platform
economy.

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Appendix

De-
unionizaon
Unemployment Growing
internaonal
compeon

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Slow wage growth, Financializaon
Flexibilizaon;
Stock market,
individualizaon;
shareholder value
financializaon of
& VC
incomes

VC fund raising Outsourcing&


and IPO for start-
investment
Inequalies; poverty ups
raoning

Plaƒorm economy

De-
industrializaon
Slow and unstable
growth

Debt and austeritarian State;


erosion of Welfare State and
impoverishment of State

Fig. A1.  From financialised regime of accumulation to the platform economy

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