The world’s attention is zeroing in on the future of work, and the sharing economy is a very important element of that future. Specifically, the Sustainable Development Goals contain various targets pertaining to the future of work, and the International Labor Organization established a High Level Global Commission on the Future of Work in 2017. However, the sharing economy has faced various backlashes over the years as its capitalist enterprises prioritize profit-maximizing motives over its own workers, thus neglecting the well-being of workers to the detriment of economic and social equality.

In that context, the platform cooperative movement was born with a strong conviction to advocate for the common economic and social concerns of workers through “jointly-owned and democratically-controlled enterprises” (International Cooperative Alliance n.d.). Platform cooperatives offer the same services on technologically equivalent platforms compared to their capitalist counterparts, but the engagement of workers in these two business models are vastly different, due to their distinct goals and missions.

Cooperatives have a significant presence in the world’s economy today. According to the ILO, cooperatives provide 100 million jobs and ensure the livelihoods of half of the world’s population. Beyond bringing employment, cooperatives provide decent work as they, by definition, value the principles of employee protection, fair profit-sharing, and community building. They play a major role in developing areas where private investors do not because, instead of relocating to areas with cheap labour, cooperatives are established by the community where it is located and grow to serve that community.

An innovative offshoot from the cooperative model is “platform cooperative,” a term coined by scholar-activist Trebor Scholz referring to the cooperative model applied in the digital economy. Scholz claims that it follows the same principles as a traditional cooperative but there are two major differences. First, business transaction is conducted on digital platforms such as websites or mobile apps.  Second, due to the interconnected nature of the digital economy, platform cooperatives are more efficient in fostering collaboration among their own members and between different cooperatives.

Platform capitalism exacerbates social and economic inequality because such enterprises enhance access to jobs that are traditionally taken by low-income, low-skill workers and causes a displacement of labor. Furthermore, workers are signed on as independent contractors instead of employees, depriving them of the ability to unionize and bargain for their rights, including minimum wage or unemployment benefits. As a result, platform capitalism has come under fire for distorting the local economy and neglecting workers’ rights. Take Airbnb for example. The hotel industries in Spain and France have protested against unfair competition created by Airbnb. Local residents of cities with travel destinations have voiced their concern about the prohibitive rise in house prices and overcrowding by tourists brought about by the increasing popularity of Airbnb. Similarly, Uber was involved in various scandals due to its low wages and lack of monitoring to ensure safety for drivers and customers. In Germany, Japan, and Spain, the government has forbidden Uber from operating due to its perpetuation of unfair competition.

In contrast to platform capitalism in the sharing economy, platform cooperatives offer a different way of organizing internet enterprises, one that is under democratic ownership and in line with Social and Solidarity Economy (SSE) principles. It can unite producers and consumers by committing to serve the well-being of all and striving for equitable distribution of benefits.

How do the differences between the engagement of workers in platform cooperatives and in platform capitalist enterprises impact workers’ satisfaction? 

To answer the research question, we conducted qualitative case studies of two different businesses: TaskRabbit, a platform in the capitalist sharing economy, and Loconomics, a platform cooperative (Loconomics Cooperative Bylaws 2016), seeking to identify the ways TaskRabbit and Loconomics engage workers in four different domains: ownership, decision-making, distribution of profits and benefits, and interpersonal relationships.

All in all, we find that platform capitalist enterprises and platform cooperatives differ significantly in their mechanisms of worker engagement, both in theory and in practice, as exemplified by the case of TaskRabbit and Loconomics. While these two enterprises belong to the same industry and offer the similar services, they embody the spirit and the philosophy of different business models, which translates into their impact on workers’ satisfaction. Platform cooperatives put heavy emphasis on the social wellbeing of workers through implementing a joint-ownership model, an inclusive decision-making process, fair distribution of gains, and strong support for interpersonal relationship development. Thus, they are better geared toward maintaining and enhancing workers’ satisfaction.

However, a major concern for platform cooperatives is whether the enterprise can remain profitable enough to survive and provide the best benefits to its workers. The scalability and replicability of this model need to be tested in the long run. Many questions remain to be answered: How well will worker-engagement methods of platform cooperatives work when these enterprises get bigger? How can they ensure enterprise growth without compromising active participation of all workers and the quality of their interpersonal relationships?  How can the platform cooperatives’ approach be replicated to worker engagement in different industries? Addressing these questions will require consistent and interdisciplinary research, drawing from various fields such as political economy, psychology, and management.

Having said that, with all the potential benefits that platform cooperatives can offer to the community of workers, this business model could be an up-and-coming component of the SSE. Further technological advances will continue to support the growth of platform cooperatives and the transformative role they could one day play in the future of work. Even outside of the SSE movement, other business models could find certain elements of platform cooperatives applicable to their own situations. Learning from the approach of platform cooperatives can help us convert existing capitalist enterprises into more human-centered organizations. As a result, studying platform cooperatives and the dynamics they create among workers is important for scholars, policymakers, entrepreneurs, workers, and consumers alike. We need to ensure that technological advances and progress in labor protection are moving in synchrony, so that the human element is not left behind in the age of machines.

Raymond Saner is Professor Titular at the University of Basel and Director of Diplomacy Dialogue CSEND.

Lichia Yiu, E.D., is President of CSEND, an ECOSOC accredited NGO and Director of its Research Department

Melanie Nguyen is Research Assistant, CSEND.

This article has been written for the Albert Hirschman Centre on Democracy’s series of commentaries on the need to redesign the platform economy on a more democratic and sustainable basis.

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