Forum Final Response
May 5, 2015
With Responses From
May 5, 2015
6 Min read time
I must begin by thanking the respondents for a rich and wide-ranging discussion. They raise important questions about the usefulness of the public utility as a framework for regulation. And they recommend alternative mechanisms with which to address the challenges of private power arising in the information and sharing economy.
As we consider these questions, it is important to separate the public utility ethos from the public utility model. While the respondents are right to note the limitations of the latter, it is the former that is worth recovering, offering two important insights for us. First, the challenges raised by new technologies and their impact on new forms of economic organization are best understood not just as economic problems of prices and production, but also as moral problems of power, accountability, and access—in short, of democracy. Second, the public utility institutional structure itself emerged as part of a broader ferment and experimentation aimed at addressing turn-of-the-century private power. This spirit of experimentation and innovation could serve us well today.
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The public utility ethos doesn’t provide a blueprint for intervention. Rather, it offers a way of diagnosing the problems of private power in a changing economy—problems that make the case for regulatory intervention. As Mike Konczal notes, it is important to first separate this moral case for regulation from a separate debate over our preferred institutional or regulatory remedies.
New technologies raise moral problems related to power, accountability, and access.
Following Richard White’s comment, what is distinctive about the public utility ethos is that, like the antimonopoly position of the late nineteenth century—and unlike late twentieth-century regulatory theory, which focuses on consumer welfare and prices—it takes power and domination as central concerns. In this vision, the economy is a social construct that should serve not just the purposes of GDP growth but also social empowerment. For Progressive Era thinkers such as Louis Brandeis and Robert Hale, the public utility offered a way to counteract private domination over essential social services and goods. It ensured that they were fairly accessible to all by allowing the state—and, through it, the public—to oversee vital industries. In today’s changing economy, the platform is a new mode of private power that offers increasing access to a wide range of goods and services but also allows platform owners to exercise tremendous influence over producers and workers, buyers and sellers. If the platforms of today are to empower makers, sharers, and workers rather than exploiting them, then, like Brandeis and Progressive Era reformers, we must be mindful of the ways in which platform operators exercise power.
But the utility itself did not exhaust the Progressive imagination. While Progressivism is often understood as a precursor to the New Deal fascination with expertise, technocracy, and centralization—tendencies that Juliet Schor and others are right to criticize—it is worth recalling that the initial turn to the public utility reflected a grassroots, democratic ethos emphasizing the importance of popular sovereignty in holding private power accountable. Civic-minded reformers such as Brandeis or John Dewey saw centralized regulatory institutions as means to catalyze, channel, and focus the will of the public, empowering citizens to go toe-to-toe with the monopolists and industrialists of the Gilded Age. The public utility not only checked private power, especially in industries where a small number of firms had already consolidated a dominant position. It also offered the hope of collective democratic ownership and accountability. These goals remain worth pursuing, even if by other institutional mechanisms. The public utility is but one means to a moral end.
So even if we reject the utility model itself, we can take on board the spirit it embodies: institutional innovation and the will to counter private interests on behalf of the public good—especially by empowering the public itself. Schor, Thierer, and Baker are all correct to criticize the New Deal technocratic state for displacing democracy, for being prone to capture, and for relying too heavily on the ideal of insulated expert regulators. But this doesn’t mean we’re stuck with the market as the only source of pressure on companies. As White notes, for Progressives and democratic antimonopolists of the nineteenth century, the response to private power could take a different form—one premised on a civic, democratic ideal of accountability and voice very different from the New Deal model. In the more democratic and civic-minded tradition of the Gilded Age, the purpose of regulation is not to empower technocrats but to create institutions that empower ordinary citizens to claim voice in and control over the economy.
Realizing this specifically democratic response to private power will require the kind of institutional experimentation and innovation that turn-of-the-century reformers employed. I’ve suggested paths that a number of the respondents echo. We could facilitate entry into ride sharing and other markets, enabling rival companies to challenge existing platforms. This could be a first step to encouraging the rise of platforms that are structured more as cooperatives or worker-owned enterprises, as suggested by Schor, Konczal, and Arun Sundararajan. We might require minimum standards of consumer protection and labor standards that apply across industries from the offline to the online world, including through reforms such as the Peers Bill of Rights Robin Chase proposes. Or we could nationalize or municipalize the industries themselves. The common thread here is that regulatory institutions and interventions work to empower citizens to achieve greater control over firms providing essential goods and services.
Indeed, a number of the respondents push for decentralized, worker-owned cooperative organization. As Sofia Ranchordás and David Bollier suggest, empowering the actual workers and peers in the sharing economy—Uber drivers, for example—would allow for a more dynamic form of countervailing power to check the potential for domination and exploitation. Peer ownership is not a utopian fantasy; it is viable today.
I am drawn to this vision, but to achieve it we need a regulatory environment that can catalyze it. Regulation plays a big role in facilitating cooperative firms in the first place and can encourage decentralized forms of organization. As Konczal suggests, municipal governments can influence the development of platforms by limiting operating licenses to worker-owned or peer-organized firms. And, following Ranchordás, regulators can impose fiduciary duties on platforms to make them serve the interests of peers and sharers. Regulation would also be essential to achieving Chase’s Peer Bill of Rights. The bottom line is that regardless of what policy approach we take, we cannot expect collective organization to arise spontaneously. Regulation has a role to play in furthering commons-based empowerment as an alternative to private domination of platforms.
Just as the ferment of the Progressive Era created the conceptual, legal, and institutional groundwork for the New Deal state, we now live in a similar moment of possibility. The respondents all see a vast emancipatory potential in the sharing and information economy. I share this optimism, but in order to realize this potential, we cannot rely on self-correcting tendencies of market competition or of peer cooperative organization. What we need instead are institutional and regulatory arrangements that facilitate genuinely democratic organization: cooperatives, commons, unions for sharing-economy providers and workers, and other mechanisms geared toward public benefit.
The new information economy offers more than a threatening form of power in the platform. It also offers an opportunity to invent a regulatory state that breaks with outdated technocratic models and instead empowers democratic organization.
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May 05, 2015
6 Min read time