A Two-Stage Social Contract as an Extended Model of Governance for Socially Responsible Digital Platforms

Pietro Ghirlanda (University of Milan)

Abstract

The purpose of this paper is to apply a game-theoretical approach to analyse the governance model of those particular institutions that are labour-based ‘lean’ platforms and study their Law and Economics. Accordingly, they are interpreted as the concretisation and accelerator of the global neoliberal trend that is making work always more insecure and precarious. Nevertheless, the exogenous shock of the Covid-19 pandemic appears to offer the opportunity of creatively destructing mainstream platforms and substituting them with a truly democratic alternative consistent with the cyber-utopian dream of the beginnings of the digital revolution of work. Indeed, what is now known as the ‘gig economy’ emerged in the U.S. in 2008, born out of technological possibility and economic necessity. Originally named ‘collaborative consumption,’ it was characterised by digital companies whose primary mission was to enable the sharing of idle assets on a peer-to-peer scale, eliminating at the same time the traditional economy’s transactional costs and hierarchies. However, this dream was soon betrayed, and economies of scale reaffirmed their power. Thus, a transition to a task-based and piece-rated old-fashioned business model took place, and collaborative consumption became the gig economy. Consequently, both platform owners and consumers started to instrumentalise gig workers’ condition of vulnerability to extract a net benefit from the insecure tasks they are coerced to do to escape poverty. All the more so, the pandemic has only worsened this situation, adding the health-related risk. Indeed, even if many governments considered gig workers between the only essential ones who could work ‘in presence’ during the lockdown period, neither the platform shareholders nor the consumers have agreed to share part of the business responsibility and internalise some of their social cost.
Following the model proposed by Giacomo Degli Antoni and Lorenzo Sacconi (2013), the paper formalises the strategic game governing the gig economy as a repeated exclusion game in which two strong players, i.e., the platform and the customer, decide alone how to divide the surplus without including a third dummy player, i.e., the gig worker. Accordingly, it is proposed a two-stage social contract informed by the normative framework of the capability approach as an alternative organisational model based on the extension of fiduciary duties towards all the firm stakeholders. However, the precondition of the viability of this proposal is that at the post-constitutional stage the hypothetical contractors comply with what they have agreed upon during the constitutional one even in the presence of unforeseeable external contingencies. Thus, the hypothetical social contract poses mainly a motivational problem. Consequently, the most original contribution of this paper is reading the pandemic as an external trigger that unlocks an innovative way to reframe the strategic game governing digital firms. Namely, a psychological evolution capable of bolstering cooperation and the collective sharing of responsibilities between all the stakeholders.
More specifically, if correctly informed that they are unconsciously but unfairly profiting from the exceptional exogenous situation and that redressing the abuse of power would be a little cost for themselves, I foresee that customers would accept to punish unfair firms without boycotting the entire business. In this way, they would not cause the collapse of cooperation and allow fairer platforms to scale and compete with mainstream ones. That is possible because, given the essentiality of the specific investments made by those weak stakeholders during the lockdown period, the consumers can understand themselves as fundamental members of a joint social commitment for the digital workers’ protection. Surely, the movement of ‘platform cooperativism’ is the most consistent real-life experience with my theoretical proposal. Indeed, the organisational model of a co-op, based on stakeholders’ direct participation in the firms’ governance, appears able to articulate prosocial aims with monetary and non-monetary individual motives. Finally, the paper also presents an experimental design aimed to test if this extension of the model of Degli Antoni and Sacconi could work in the real world of the gig economy. Namely, the purpose of the experiment is to build a hypothetical market with a reputation system capable of putting consumers in the position of punishing digital companies that externalise their entrepreneurial costs on workers pre and post an exogenous shock treatment and an information treatment.

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