Capitalism isn’t failing, it's evolving

Platforms make markets more efficient, bringing us ever closer to realising “Project Zero”.

In his article, The end of capitalism has begun, the journalist Paul Mason heralded the advent of post-capitalism: of the destruction of the prevailing economic system by an abundance of information, replacing the supply and demand of the market with something whose dynamics are “profoundly non-capitalist”.  We don’t think Paul Mason has got it quite right. He argues that capitalist forces have thrust us into a world of boom and bust, that ‘neoliberalism has become a machine to create austerity’. His prediction is that a new system, based on information and the delinking of work and wages, will emerge in the aftermath of the neoliberal dominance of the past few decades.

Much of what Paul Mason says seems sensible: the importance of information, for instance, is undeniable in the modern world. But whilst it is impossible to disagree with the righteousness and appeal of the future he imagines - of a world where work is fairer, wages are higher, and information is more ubiquitous - we think there is a better way to get there.

Tom Goodwin’s massively overused phrase (I shan’t repeat it again) about the ‘platformication’ of industries – Uber, Lyft, Hailo for Taxis, Airbnb for accommodation, Facebook & Twitter for media etc concludes with the statement “Something interesting is happening”. What, exactly, is happening? Whether you call it the sharing economy, collaborative consumption or the ‘gig’ economy, it is clear that there is a refocusing on small-scale peer to peer transactions, renting, and sharing. There is a new emphasis on the connection between supply and demand: quickly and easily matching taxis and passengers, empty houses and accommodation-seekers, car renters and car rentals, information seekers and encyclopaedia entries. Independence and flexibility are at the heart of companies like Airbnb and Uber; ‘socialised knowledge’ is at the heart of Wikipedia - we think that is why they work: they make transactions quicker and easier in a way that works for everyone. To put it slightly more technically, these companies significantly lower transaction costs, benefitting both producers and consumers.

A wave of new companies is built around improving efficiency: their products aren’t built with these ideas in mind. Their offerings are these ideas: mechanisms or ‘platforms’ to match up buyers and sellers. And they’ve been amazingly successful, with adaptive, innovative firms seeing wild success, as their products and applications become commonplace for millions of users.

I agree with Mason’s observation about the blurring of the borders between work and free time, in large part a result of information technology (see this piece on “The New World of Work”) and think that recruitment (broadly) – the market place for jobs - is deeply inefficient and is lagging behind. inploi is bringing the ‘platform’ to the jobs market, making it easier for workers to find jobs and employers to find workers. The marketplace will reduce the search costs of finding staff or a job, putting work seekers and employers in direct contact with each other via a single, centralised platform, algorithmically matching people in an instant. Mutual reviews engender transparency and allow for ‘trust’ to develop. 

Mason argues that, in the march towards Postcapitalism, “everything comes down to the struggle between the network and the hierarchy: between old forms of society moulded around capitalism and new forms of society that prefigure what comes next.” Here is where our views diverge – far from thinking this struggle will see the end of capitalism, we think that fluidity of markets, abundance of supply and freedom of information will take us closer to absolute efficiency, capitalism’s envisioned ‘end game’, making everybody better off in the process.

The bringing together of ‘buyers’ and ‘sellers’ via platforms makes markets work for us. They’re fluid. They’re transparent. Their goods and services are abundant. When we want a taxi, we press a button on our phones. When we want somewhere to stay, the market effortlessly offers us an empty flat. We have services and goods, quite literally, at our fingertips, and we’re not paying any more for the privilege. This is equally beneficial to the supply side. An Uber driver can work when he or she wants to, and an Airbnb host is able to unlock value that would otherwise be wasted, utilising idle capacity.  An inploi hirer can find staff, with the exact skills they need, near instantaneously. These companies make the basic logic of capitalism -  supply and demand – directly manifest for everyone.

Platform technologies have the potential to take us closer to Paul Mason’s ‘post-capitalist’ ‘Project Zero’: a “project, the aim of which should be to expand those technologies, business models and behaviours that dissolve market forces, socialise knowledge, eradicate the need for work and push the economy towards abundance”. Rather than dissolving market forces, we ought to develop these things in order strengthen them. Efficient, transparent markets that really work for their participants, with minimal interference, will do more to achieve ‘project zero’ than he realises.

EDIT: Having read many of your thoughtful coments I realise I ought to define what I mean by "capitalism", which is: "an economic system that is characterized by private property, freedom of economic exchange, competitive markets and limited government intervention. While the government doesn't set prices in a free market, the market does through the law of supply and demand." (Source)

Matthew de la Hey (@mattdlhey) is co-founder and CEO of  inploi, a hospitality recruitment start-up launching in London in June. He was an undergraduate at Stellenbosch University in South Africa as a Mandela Rhodes scholar and did an MSc and an MBA at Oxford University as a Weidenfeld Scholar.

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Image credit: Julia Suits, cartoonist at The New Yorker