There were taxis before there was Uber, just as there were bookshops before Amazon and friends before Facebook. A large part of innovation is new ways to deliver old ideas. Technology gives the innovator an edge by lowering costs, enabling nimbler delivery and outcompeting established traders who are stuck with obsolescent methods.
That is the foundational myth of Silicon Valley folklore. It was the story that Uber propagated about itself in the years of its most explosive growth from a service for hailing rides around San Francisco to a global tech powerhouse. Here was the archetypal digital disruption – an app to match demand to supply with a slickness that blew competition off the road.
When those competitors (licensed taxi drivers) complained, their objections were dismissed by the newcomer as the death rattle of monopolists and luddites who were getting in the way of progress.
There was then, and still is, an argument to be had about regulation that inhibits innovation, and when it needs to change in step with changing times. That debate looks somewhat different in the light of leaked communications, dating from between 2014 and 2017 and published yesterday by the Guardian, showing the ruthless, aggressive methods that Uber used to force entry into various markets around the world.
The company’s mercenary ethos is encapsulated in an exchange between senior executives discussing the threat to Uber drivers from attack in Paris, when the city’s established taxi operators went on strike. Travis Kalanick, Uber’s co-founder and former chief executive, wanted his drivers to defy the strike with mass civil disobedience. When warned that this might provoke violent retaliation, Kalanick responded: “I think it’s worth it. Violence guarantee[s] success.”
The implication, which Uber denies, is that the company saw the threat to its drivers as part of a suite of public relations tools, alongside its many levers of private influence, to press for regulatory change. The scale of that operation, recruiting top politicians and power brokers around the globe to agitate for the company’s interests, is breathtaking. (Also expensive. In 2016 alone, the company spent $90m on lobbying.) Uber now says it is under different management with a different modus operandi. Kalanick left the company in 2017.
It’s not unusual for an ambitious young company to pursue commercial interests with abrasive force. Ruthlessness is a historic driver of economic evolution. Some innovators have a philanthropic streak, others are rapacious. The pattern across history is that technology smashes its way into an economy and only later, once the wider implications are visible, does society organise a political response to mitigate the downsides. The Industrial Revolution generated phenomenal wealth for industrialists before there were laws against child labour. It took workers organising themselves into trade unions to bring a counterweight to forces that tended naturally towards mass exploitation and poverty pay. (Only last year, the UK supreme court upheld an employment tribunal ruling against Uber, which had claimed that it didn’t need to provide its drivers with the minimum wage, paid leave or pensions because they were not technically categorised as workers.)
The success of liberal democracy – the best model yet devised for organising people into prosperous and free societies – depends on a balance between the wealth-generating impetus of the market and the obligations politics must impose on business for the greater good. Today, the difference between mainstream left and right in economic policy has come down to the question of where to adjust the levels between those competing demands; where the emphasis falls between the individual freedom to get rich and the collective duty to share.
Periodically that distinction is declared irrelevant by the forward march of history. But it keeps bouncing back. The Marxist project to eliminate capitalism entirely degenerated into tyranny and bankruptcy wherever it was tried in the 20th century. That failure was then seized as moral vindication by free-market fundamentalists who saw any state regulation of the economy as an assault on liberty.
The post-cold war triumphalist moment for the west coincided with the digital revolution, producing a culture of arrogance and political complacency around the new-tech economy. The Silicon Valley ethos combined California’s gold-rush model of lawless capitalism with traces of utopian evangelism that the hippies had brought to San Francisco. The result was a cultish veneration of the internet startup as a new kind of business to which old rules did not apply, and whose purpose was improving humanity as well as making money.
The Uber files are a snapshot of a particular moment – the peak of political credulity and negligence around the growing power of tech companies. But the basic rules of the new digital economy turned out to be not so different from the old analogue ones. The type of regulation that might be needed to restrain corporate excess will be different in sectors that didn’t exist a generation ago. The pattern of politics getting captured by corporate lobbyists is dismally familiar.
The revelation of Uber’s sharp practices tells a simple truth about the tech revolution. It is the same one that is told by the arduous working conditions in an Amazon warehouse and the poisoned reservoirs of public debate where Facebook discharges hatred and misinformation. The cost of innovation might be invisible to the consumer, but that doesn’t mean it isn’t there. And the job of democratic politicians is to be guardians of public interest, not the lubricants to private gain.
Rafael Behr is a Guardian columnist
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