The coronavirus crisis

This blog has been sadly neglected in recent years, as all my blogging time and energy have been taken up with my Brexit Blog. But the current coronavirus crisis prompts me to return to it, because so much of what is happening in this crisis has an organizational dimension, and some of it relates directly to the themes of the book which this blog accompanies. In this post, I’ll discuss some of them, with the focus on what is happening in the UK but no doubt at least some of it has a wider relevance.

Overall, it’s possible to see many of the chickens of contemporary organization coming home to roost. This is most obvious in the National Health Service where spending as a percentage of GDP effectively flatlined between 2011 and 2019, and per capita is well below that of most other highly developed countries (e.g. France, Germany, Japan, Australia). Crucially, this is against the background of a rapidly ageing population and – as has also been laid bare by the coronavirus pandemic – a social care system that was already in crisis and has been for at least half a decade (as discussed on this blog in May 2016).

The issues here go well beyond those of funding, though. They also relate to managerial apprehensions of the ‘efficient’ use of that funding. In the book (p. 142) I use the specific example of the NHS to discuss this, writing that “one way this has been done is to reduce spare capacity in the system. This in turn has the effect that unusual peaks in demand, such as a major incident or a flu epidemic, swamp the system … the question still remains: efficient for whom? Is spare capacity inefficient from the point of a view of a patient caught up in a demand peak?”

This seems almost prophetic now, as the NHS faces a desperate struggle to obtain the machinery and protective equipment needed to deal with coronavirus, whilst old people dying in care homes are not even included in the official coronavirus mortality statistics. Of course, it would be absurd to argue that any health system could permanently maintain all of the spare capacity needed to deal with so unprecedented crisis. But running a system for years without any spare capacity at all was always bound to lead to disaster.

Similarly, we are now seeing the consequences of the endless restructurings and in particular the dynamic of centralization-localization as the supposedly inefficient bureaucracy of the NHS is subjected to almost yearly reforms. It was such an analysis which led to the fragmentation of the NHS into Clinical Commissioning Groups (CCGs), to break down the ‘monolith’ of the NHS. This was happening even as it was being reported that the problem with NHS procurement was lack of centralization, but under the dogma of ‘post-bureaucracy’ this was ignored (discussed on p. 87 of the book). Fast-forward to the coronavirus crisis and what do we fine? That very quietly the government has taken back central control of procurement from the CCGs to deal with it.

Nor is it only in health care that we see the consequences of the ill-judged managerial reforms and budget cuts of the last decade or more. I wrote on this blog in October 2016 about the crisis that was already underway in prisons. No surprise, then, that coronavirus is sweeping through them now, and there are calls for the early release of at least low-risk offenders and prisoners on remand.

Beyond public service issues, the coronavirus crisis has laid bare the inequalities and insecurities associated with the new capitalism and its associated ‘precariat’ (discussed on p. 118-120 of my book). The supposedly self-employed ‘entrepreneurs’ and zero hours workers of Uberfied business models are by the far the most economically vulnerable to the lockdown of the economy. The gap between this precariat and the salariat (like me) who have continued security as they work from home is more obvious than ever. It falls to government, at least partially, to bear the costs of this – in effect bailing out the employers who have for years benefitted from this ‘flexible’ workforce. As with the financial crisis, what we see is a privatization of profits and a socialization of costs and risks.

Meanwhile, hundreds of thousands who had never expected to now turn to the welfare system and find that it is very far from the generous safety net they had imagined, let alone the scroungers’ paradise that the tabloid press had led them to believe (see also p.120 of book). This is not just a matter of a one-off crisis. Rather, it comes against the background of the middle-calls insecurity which has been underway for some time, and is intimately linked to the demise of middle management and the white-collar underclass that has characterized the new capitalist model (p.123 of book; see also this blog post from February 2015).

Intimately linked to precarious employment is the use of foodbanks (blog post from September 2016) and here, too, coronavirus has had an impact. On the one hand, they face mounting demand as people’s incomes dry up. On the other, staffing and donations are both impacted by the illness, and some foodbanks are having to close down just as they are most needed.

No doubt there are many more examples of how coronavirus is exposing underlying issues within the organization of public services, of work, and of society more generally. The key words are ‘exposing’ and ‘underlying’. In this post I have made frequent reference to what I wrote in my book or on this, accompanying, blog. The message is not meant to be a self-congratulatory ‘I told you so’. Rather, it is intended to show how so much of what is happening grows directly out of things we already knew, or which were already happening.

This is absolutely crucial for otherwise they would just be regarded as ‘crisis’ events and, as such, unusual or short-lived. This in turn would support the idea that once the crisis is over we can and should return to ‘business as usual’. To an extent, this is what happened after the financial crisis. Although many expected that it would lead to a wholesale re-evaluation of how – at the most generic level – we organize, that didn’t really happen. Instead, we saw what Colin Crouch aptly dubbed the strange non-death of neo-liberalism.

Perhaps this time things will be different. The neo-liberal or new capitalist model has been much more challenged by the coronavirus in that it has led to the mobilization of state resources in a way not seen since the Second World War. That ought, at least for a while, to put paid to the innumerable paeans to the superiority of the market for any and every political and economic question. It feels, at least at the moment, as if something quite fundamental has ruptured – although one should be wary in assuming that any such rupture will have predictable, let alone positive, effects. And even should they be positive, it is a tragedy that it will have taken the deaths of so many to demonstrate what was, in so many ways, already obvious.

Uber good news

After my last rather gloomy post, today there is some good news. I’ve posted elsewhere about the rise of uberfication and the gig economy, and also about how this links to supposed ‘self-employment’, which is really employment shorn of any protections. (I do not write about this in the current edition of the book, but it will be covered in the fourth edition, which comes out next month).

Today, the company after which the phenomenon was named, taxi app firm Uber, was subject to a significant ruling by a UK employment tribunal. Specifically, Uber was told that it cannot treat its drivers as self-employed, and must pay them the national living wage and holiday pay, and possibly even pensions. The ruling (which is likely to be appealed against by Uber) will, if it stands, have significant implications for other companies operating the same or similar business models. As the lawyer representing the drivers who brought the case (with the support of the GMB union) said:

“This is a ground-breaking decision. It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled.”

This ruling comes at a significant time, politically. In both the EU Referendum (and for those interested in Brexit, do take a look at my Brexit blog tracing developments) and, even more, the US presidential race, the issue of how changing work practices erode security has been an issue. More widely, this connects with the political consequences of globalization and the hollowing out of middle class employment.

Of course, even on minimum wage and protection terms, employment remains a far cry from the post-war social democratic model of secure employment with a social welfare net. Even so, the ruling suggests that the direction of travel need not inevitably be downwards, and that globalization and technology are not forces of nature but may be corralled by politics and legislation. As I argue throughout my book, what happens in organizations is not pre-ordained but is an outcome of the choices we, collectively, make about how to live.

Uberfication: an idea from the past

I learned a new and rather ugly word this week: uberfication. It came up in a discussion of new patterns of work and employment and checking on the internet I find that it is a term which has been in use for a year or so now. It derives from the taxi firm Uber which has developed a model for taxi hire in which customers use a mobile phone app to match their journey requirements to the availability of an Uber driver. This has caused protests from taxi drivers all over the world, most recently in Rio de Janeiro just yesterday, because Uber drivers are exempt from the licensing and many of the regulations of established taxi firms and drivers who are thus having their livelihoods threatened.

Uberfication refers to the application of the same, or similar, business model to a range of businesses and activities with many websites referring to the uberfication of everything, examples ranging from dog walking to doctors. Other terms for the same phenomenon are the ‘gig economy’, the ‘on-demand economy’ or the ‘platform economy’ (the point being that a platform such as Uber does not provide services but connects customer demand to a supplier, who provides a service as if engaged to play a gig) or the more cosy-sounding ‘micro-entrepreneurship’.

This business model has three defining features. The most obvious is a technological one, the mobile phone app that enables the connection between demand and supply to be made, including differential pricing according to levels of demand and supply at the moment that the transaction is agreed. The second is that it enables the avoidance of most or all of the regulations that apply to conventional providers of the service. The third is that those providing the service are not employees of any company but are independent contractors or self-employed agents (or, if you prefer, ‘micro-entrepreneurs’).

Although the word is a new to me, the underlying idea is one discussed at several places in my book and on this blog. The ‘flexibilization’ of work has been underway for some time now, leading increasingly to a ‘precariat’ (p.117 of book) whose work is insecure, often characterized by zero-hours contracts and without much or anything in the way of fringe benefits such as pensions, sick pay or maternity/paternity pay. Uberfication is an intensified form of this, since the independent contractors have no employment rights at all: they are not employed, so such rights are irrelevant.

Unsurprisingly uberfication is beginning to find its way onto the political agenda, at least in the United States. For the free market right it is a splendid development, bypassing state regulation and ‘vested interests’ and promoting an Ayn Rand type vision of autonomous self-determining individuals, freely contracting with each other in a pure(ish) market (only pure-ish because there is some evidence that prices are manipulated by controlling supply at times of peak demand). For the left, the concern is that employment rights are eroded, insecurity increased and, for that matter, buying power diminished (in other words, this isn’t an anti-capitalist point, it’s a Keynesian point: if workers don’t have strong and secure earnings then where does demand come from?).

One way of looking at this in organization theory terms is a shift from ‘hierarchy’ to ‘market’. In brief, the idea here (associated with the economist Oliver Williamson but also, in a different way, the business historian Alfred Chandler) is that there are different ways of co-ordinating human activity, which come into play according to specific cost conditions, allied to particular technological conditions. One way is via a market of individual contractors (the invisible hand, as Adam Smith called it), the other is through internal hierarchies within firms (the visible hand, as Chandler dubbed it in his book of that name). Following that account, uberfication substitutes market for hierarchy. However, it should not be forgotten that the way that co-ordination occurs does not just arise ‘naturally’ from cost and technology but depends on the political decisions we make and the legal systems through which we enact those decisions (hence the many legal challenges to Uber, most recently in Canada).

We can see this as a new technologically-mediated moment in the long-term hollowing-out of the social contract that sustained at least Western economies and societies in the post-1945 era which, along with erosions of the welfare state, makes for an increasingly insecure existence as I have written about several times on this blog. But although the technology may be new, the idea, and its consequences, are not: in very many ways it is reminiscent of the ‘putting-out system’ of the early industrial period (and still to be found in many parts of the world today). In this system subcontracting to individuals and families working within their homes was a way of bypassing the restrictions of the medieval guild system.

Of course the idealised image of uberfication is one in which people have complete flexibility of work and complete control of their destinies with no manager telling them what to do. And that may fine for some people, especially when they are young and healthy. But as a general model of employment it means low wages, no security and no protections. Stripped of its technological glitz it means a life rather like that depicted in the long poem written by Thomas Hood in 1843, The Song of the Shirt, which is about the putting-out system in the garment trade. The link to the full text is here, but just to quote the closing stanza:

Stitch! stitch! stitch!
In poverty, hunger, and dirt,
And still with a voice of dolorous pitch,--
Would that its tone could reach the Rich!--
She sang this "Song of the Shirt!

I began my last post with a reference to the saying that history always repeats itself but never in the same way. Here, I will finish with another aphorism, usually attributed (in a number of variants) to the Spanish-American philosopher George Santayana: those who don’t learn from history are doomed to repeat it.