Thoughts on Peer Economy Platforms : A New Iron Cage?

A draft of this essay appeared in :

McKinley_ProsperityMicrosoft FUSE lab’s recent call for project proposals on the “peer/ sharing economy” emerging online prompted me to dig a little deeper into both the available literature on the peer economy and the online platforms that populate it. I found some parallels between platforms that organize peer exchange and the platforms that I have recently studied in more detail which organize microvolunteering and -lending (Postigo and Ilten, work in progress). Sure, the obvious similarity between Uber, TaskRabbit, and Kiva and Sparked is that they coordinate participation of growing numbers of users. But who are they – peers? Not so much. The most interesting parallel to me is that these platforms are similar organizations. Here is an attempt to articulate those thoughts more clearly – and maybe end up with a research question and theoretical agenda.

While there is a good amount of research on contributors and labor in peer production (Benkler and Nissenbaum 2006; Dijck 2009), as well as a literature on trust and reputation systems (see also the Journal of Peer Production), we are still lacking an understanding of managed peer economy platforms as new forms of socio-technical organizations. This perspective becomes crucial as newer peer economy platforms move further into the service sphere, where online coordination and offline services are mediated by platforms as brokers. Much of the discourse about peer-to-peer platforms still focuses on platforms that seem to meet the ideal of cyber-communism and practical anarchism – a perceived absence of management (Benkler 2013; Vadén and Suoranta 2009), and ignores the organized actors which increasingly provide the architectures for mass peer-to-peer systems. These brokers, often companies, govern inclusion and exclusion of participants to the platforms, for example through more and more elaborated identity provision systems. Airbnb, Uber, and TaskRabbit do not meet utopian visions of communal sharing; rather, CEOs and designers deliver a matching service to entrepreneurial individuals and derive a profit through monetizing those peer-to-peer services. A hybrid market niche for mediated – or rather: managed – peer-to-peer services seems to have emerged – a phenomenon that calls for an organizational analysis.

A few authors have mobilized social theory and organizational theory to make sense of the governing processes that occur in all structures of coordination. For communities of hackers, O’Neil uses Weber’s theories of authority to explain the hybrid forms of hierarchical organization that emerge therein (O’Neil 2014). He posits that index-charismatic authority is a new, reputation-based system that institutes authority in the context of networked architectures. Rather than “hacking Weber”, Kreiss et al. (2011) bring organizational theory of bureaucracy (the ideal type of rational, formal organization ) back into peer-to-peer platform analysis. Criticizing the “utopian orthodoxy” (the consensus in new media studies that views peer production as inevitably non-proprietary and socially leveling) Kreiss et al. suggests that “the rationalist spirit and bureaucratic power may yet infuse peer production” – in both welcome and alarming ways (2011:243). While bureaucratic structures can be highly constraining, they have also introduced mechanisms of accountability and explicit rule-making into peer economy systems, structures that may be desirable but whose fate is uncertain in peer economy systems. Kreiss et al. ask whether “peer networks serve less as alternatives to Weber’s iron cage of rationalization, than as implements of its diffusion.” (Kreiss et al. 2011:256)

450px-Spisska_Hrad_047How can we begin to answer that question? We need to untangle (but possibly re-tangle) the two concepts that make up the iron cage: 1) bureaucracies and their organizational structures (i.e. the iron of the “iron cages” and 2) the rationale and logics of organizational structure (i.e. the social construction of theiron cage”). With this distinction, we can start asking about the location of power in these structures. So if peer economy platforms and micro-action platforms fail to meet ideal type criteria for formal bureaucracy in terms of accountability and impersonality, then why should we think about them as bureaucratic structures?

We may need to turn to the other most widely used metaphor for bureaucracy: that of a rational machine, an architecture that is designed to coordinate large amounts of processes smoothly. This technical dimension of bureaucracies goes to the heart of what a peer-to-peer economy does: divide up labor. At the same time, fuzzier mechanisms of sharing are at work (John 2013). For example, in order to participate, peers must provide identifying information (thus sharing themselves). The design mechanisms (or affordances) for identity production are elements of a socio-technical architecture not developed by users, but delivered by entrepreneurs, programmers, and designers. Counter-intuitive to the standard start up narrative, we are seeing a sharp organizational pyramid: A very small power center manages all communication by providing the interface (typically an app) as well as financial brokerage in the way of processing payments. Companies do not, however, own the real, material means of production that “peers” employ in the delivery of their services, such as Uber drivers’ cars. The brokers’ profit is based entirely on taking fees for connecting peers. This constitutes a management service: “Most of what managers do is arrange social relations among those who make and distribute products in order to maximize the ratio of output to input.” (Roy 1997:264) By retreating from production, online peer economy platform brokers focus on this core task of management: arranging social relations among those who exchange services – all the while steering clear from the vagaries of operations on the ground. This, of course, maximizes the input to output ratio dramatically – especially Karl_Marxwhere responsibility for services is fully waived in the terms and conditions, and the brokerage fee amounts to as much as 20% of prices. The aesthetic of the interface can easily veil these relations – there is no need to invoke Marx to see that the terms of the contract are beyond most users’ grasp. Organization theory can help us map out the (not so) new hierarchical relations that managed architectures consist of.

Science and technology studies have a long history of showing how technological infrastructures are not neutral, but unfold social and material power – artifacts have politics (Winner 1995), and this is particularly critical for digital platforms, where materiality can evade our view (Gillespie 2010). While most research on the peer economy either ignores the material basis to peer exchange systems, or heralds web structures as inherently “peer” (decentralized), organizational theory on bureaucracy can help us critically engage the “plumbing” (Musiani 2012) that structures peer economies. Again, we must focus on individual platforms (organizations, architectures), and look out for the broader rationality that is embodied in these cases. They certainly have a new look and feel that is quite different from Weber’s state bureaucracies. But the structures governing participation and exchange, cast in algorithms, are no less rule-based and hierarchical on the technical dimension of the architectures. Importantly, the newer architectures of participation that I have called managed or mediated above come with some fairly centralized design/power structures. This is a departure from what we could almost call “traditional” (or, to stick with Weber: value-rational) online peer production in for example Free Software projects. This bazaar is brought to you by Peer Economy Design, Inc., the banner could read.

So what kinds of cages are these new architectures? Weber’s original term stahlhartes Gehäuse translates not so much into cage as into casing, or housing. Or, in the era of online structures, into platform. We are not so much stuck in that iron casing as we are voluntarily stepping onto new iron platforms that efficiently and appealingly organize processes we feel compelled to participate in. The rationalist spirit has a new vehicle, it seems – a great opportunity to bring organization theory, social theory and STS together (once more) to see the bigger picture that connects rationalities and social structures.



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