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It can’t be ‘big business as usual’ after coronavirus If capitalism is to survive this epidemic, we cannot continue to do things the Airbnb and Amazon way

An Amazon worker at a warehouse (Photo by Sean Gallup/Getty Images)

An Amazon worker at a warehouse (Photo by Sean Gallup/Getty Images)

April 2, 2020   6 mins

Last week, a video went viral showing an angry Airbnb host ranting about the platform’s policy of allowing guests to cancel coronavirus-affected bookings penalty-free. The host seems to have believed a system of mutual obligation was in place between him and the company, and complained: “Maybe you’re good at big numbers, engineering the perfect algorithm, designing the perfect culture, building systems at gravity-defying scale. But […] you would not have an empire without us. It’s our homes on the platform, it’s our face on millions of listings. It’s our soul that brings the magic.”

But when it came to the crunch, it appeared that Airbnb did not see the company’s relationships with its hosts as requiring particularly substantial obligations. That relationship was only useful so long as it was mutually beneficial; and now that it wasn’t, the weaker party was on his own.

The question of what obligations, if any, a business should have to anyone but their shareholders is an old one, but for some decades the most popular answer has been “None save what regulations demand, and regulations should be as light as possible”. The resulting commercial environment can be characterised by the callous phrase “business is business”, a formulation that dismisses all considerations save economic competitiveness, even in the face of suffering inflicted by this approach.

At the same time, we have continued to believe (informally at least) that loyalty and mutual obligation can and should persist — at least in the service of economic competitiveness. The whole point of ‘networking’, after all, is to build the relationships that can drive further commercial activity; pursuing customer loyalty is in a company’s economic interest, and will drive a higher quality of service and hence better products.

This central privileging of commercial individualism has, over time, created an economy that resembles a pyramid. Each layer seeks to skim rents off the layer below, all the way down to a low-paid precariat whose role is to make the actual stuff — such as food, buildings or consumer products — that powers the whole ecosystem.

Few organisations better epitomise this model than Airbnb, where the platform’s owners earn rents by providing advertising exposure to Airbnb ‘hosts’, who in turn seek rents from ‘guests’ who want accommodation. This model is not even dependent on asset ownership, but has in fact prompted a further proliferation of activities in the pyramid, such as arbitrage, managing others’ portfolios or even outright scams.

Airbnb sets great stock by ‘culture’, promoting a glossy, aspirational worldview via its cutesy magazine. John Patrick Leary savaged this Airbnb ideal in Jacobin in January, as “a fantasy of production without exploitation, of an economy made of smooth glossy surfaces, benefiting all”. Now, as coronavirus rips through economic systems worldwide, we are beginning to see how little real power this model of ‘culture’ actually commands, however chummy its copywriting, within a system where loyalty is optional but competitiveness institutionalised.

The Airbnb host in the viral video, sad though his situation is, didn’t receive much sympathy from those lower down the rent-seeking food chain. But then, why should they? The Airbnb ecosystem has been accused of contributing to housing shortages in high-rent cities, as landlords eschew less lucrative longer-term rentals in favour of Airbnb, pushing up prices in the remaining rental stock. Wired estimates that one in 50 London properties is let via Airbnb, while a 2017 study by the FCA found that Londoners in their 20s were paying almost half of their income in rent.

Though rent-seeking slum landlords are not new, the widespread acceptance of a moral system that views rent-seeking as legitimate (albeit unwelcome) is out of step with post-war ethics, if not those of earlier ages.

Though they were landlords, my grandparents would have been baffled and repelled by it. As farmers in Herefordshire, from the 1950s until my step-grandfather’s death in the 1990s, they let their attached farm cottage at a peppercorn rent to Bob, who worked with them on the farm.

When I stayed with them, I remember often coming back from an outing to find muddy vegetables left on the kitchen windowsill, gifts from Bob’s garden. As my grandparents became more frail, Bob and his family did odd jobs for them, kept an eye on them and kept them in countless small ways connected to the community.

After my step-grandfather died, the farm was sold and the proceeds divided between my grandmother and my step-grandfather’s children. My step-grandfather’s son-in-law, a property developer, was keen to evict Bob and his family, and re-designate his cottage from agricultural to residential status, so as to realise its market value.

My grandmother balked at what she saw as an unacceptable betrayal of a long-standing relationship. To resolve the ensuing conflict, she gifted some tens of thousands from her share of the farm sale to Bob, so he could make a competitive offer and stay in his family home.

In my grandmother’s worldview, shaped by her experience of wartime communitarianism, land ownership and rent were elements in a broader set of mutual moral obligations. To her, asset ownership conferred a duty to ensure Bob’s welfare as far as she could. Her stepson, on the other hand, saw the situation through a post-Thatcher transactional lens, in which it was proper to disregard such considerations in favour of the asset-owner’s right to maximise economic gain.

When it works, this latter model — “the Airbnb model”, you might call it — creates a mobile, liquid and creative economy, in which growth and innovation are unleashed to drive new gains. Economic relations are freely entered into by autonomous individuals and organisations, via agreements enforced by contracts, all founded on a presumption that each entity involved is — as is proper — engaged in the pursuit of its own interest. Reciprocal social connections my grandmother saw as conferring binding obligations are here largely decorative, as Airbnb’s hosts just discovered to their distress.

As this model gained widespread adoption in the late twentieth century, it enabled the ‘release’ of considerable economic ‘value’ that had previously been constrained by social limits. Building societies demutualised, enabling these institutions to move from the less lucrative business of lending money to small regional businesses into the wildly profitable one of trading financial products — at least until the system collapsed in 2008.

Elsewhere, companies saved money by outsourcing jobs instead of incurring the obligations attendant on direct hiring. At a personal level, all prizes in this mass shedding of social obligations went to individuals with the energy, entrepreneurial vigour and determination to keep re-skilling. Today, all are told to view ourselves as individual maximisers of personal brands, and the quintessential Airbnb model worker is a freelancer, engaged in some more or less lucrative aspect of the gig economy.

Not all businesses today are selfish rent-seekers. Far from it: faced with the pandemic, some companies are demonstrating a keen awareness of their social embeddedness. Manufacturers are retooling to meet social needs such as ventilators, while the restaurant chain Leon is delivering meals to NHS critical staff. But everywhere the Airbnb model dominates, companies are still seeking to minimise obligations.

Amazon, owned by the world’s richest man, has been criticised by senators for its lack of protection for workers affected by coronavirus. Airbnb only offered cancellation compensation to hosts after an outcry. The University of Pennsylvania will pay directly employed staff this term, but lay off subcontracted dining staff at the end of the month. And freelancers are now struggling and also the most elusive demographic for government to reach with bailouts.

The usual voices are now declaring that the solution to coronavirus must, inescapably, be socialism: more nationalisation, more state support for workers. Jeremy Corbyn’s retiring salvo amounted to “coronavirus proves I was right”. But underwriting businesses’ ability to pay their workers — even if, or especially if, they are not willing to see themselves as having obligations to those workers — does nothing to address an “Airbnb model” of commerce that explicitly rejects any notion that the commercial sphere owes duties to wider society as well as to shareholders.

In 2008, government bailed out the banks at taxpayer expense, driving a decade of public service cuts. Today, faced with total economic shutdown, they are bailing out the rest of the business world as well. Others have already pointed out that the commitment of governments to underwrite economies throughout the developed world will amount, in practice, to a staggering transfer of wealth to existing asset owners from ordinary workers and taxpayers. Far beyond just the banks, this is now happening across the entire global economy, on a scale that dwarfs the 2008 bank bailout.

But the solution cannot be socialism, or indeed a massive wealth transfer to asset owners under the sign of socialism. We need to talk not about nationalising companies — which has not gone especially well whenever it has been tried — but re-mutualising or re-embedding businesses in a wider network of social duty and purpose. Companies such as Timpson are leading the way on this front. We need to talk about how about how we incentivise prosocial corporate behaviour — structurally, that is, not as greenwash or window dressing — and sanction companies that cling to the Airbnb model.

However we go about it, we must now grasp the nettle of about re-institutionalising social purpose, and social obligations, in the world of commerce. If we do not, we will end up (as in 2008) mortgaging our children to the eyeballs to shore up an economic model where, the higher up the “value chain” you go, the more returns are realised by liquidating mutual social obligations.

I am not optimistic. All the talk about worker representation on boards came to nothing after the Great Crash. Between the default Tory setting of market fundamentalism, and a Labour Party captured by the hard left, I see little hope of us taking concrete steps to re-mutualise commerce in the near future. Far more likely will be that we inch ever closer to adopting a system where an overwhelming state underwrites Airbnb capitalism. China, in other words, just without the bat soup.

Mary Harrington is a contributing editor at UnHerd.


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Paul Ridley-Smith
Paul Ridley-Smith
4 years ago

I think the AirBnB argument flawed. COVID-19 forced AirBnB to choose between the renter (make them pay for a booking they can’t use) or the property owner (receive payment for a service not used). AirBnB chose the renter and in doing so lost its commission. Mary might prefer that they chose the property owner, but either way it’s not illustrative of any flaws in the market model. Rather its illustrative that we are all losers with COVID-19. The renter lost the trip, the property owner the rent and AirBnB its commission. I don’t see how a third way approach would ameliorate that.

Dawn Osborne
Dawn Osborne
4 years ago

I would agree with your statement except that as far as I’m aware they did still take their commission.They also expected the property owners to refund the renters immediately but did not refund the property owners until the date the trip was due to commence,holding on to millions of pounds of owners income that was paid direct to them not to the property owners and presumably gaining interest on it. When you book the money is held by Airbnb until 24 hours after your trip commences and is then passed to the owner. Why did Airbnb who had the money not refund from their accounts?

Alison Houston
Alison Houston
4 years ago

The right to one’s property is guaranteed by the written part of our constitution. The Govt. does not have the right to seize private property, yet this is effectively what this state imposed lock down of the economy is. It is even more obvious when the government promises tax payers’ money and borrowed money to businesses, ostensibly to support them through this crisis of the government’s own making, but demand it back, once the business is tottering back on its feet again. Businesses are being forced to cease trading then they are being forced to borrow to try and meet their financial obligations. They will be punished for coming out at the other side of this by having to repay massive loans they would not have needed if the government had not closed them down. If they manage to keep going by burning through their savings they will be punished by being taxed at huge rates, to support all those businesses which weren’t as well prepared and the public sector.
I don’t see how mutualisation is gong to help with this. Businesses must start trading again. The governments laws are trumped by the freedoms guaranteed by our 1688 constitution and by ignoring the rule of emergency, rushed through laws drawn up on the back of cigarette packets and postage stamps, at the direction of unelected public health officials, we would not be seeking to rid ourselves of the Rule of Law, only the rule of wrongly imposed rubbish.

4 years ago

There has to be, if I dare say it, ‘a third way’. Socialism is the way to impoverish whole nations and inflict suffering on a massive scale. Unfettered capitalism allows the strong to exploit the weak. A mixed economy where the person and the family is at the centre of policy objectives, rather than the state or big business, is key. I think that we have allowed corporate capture of the State and that we have forgotten why we do business in the first place – to improve the lot of people.

Businesses should serve the nation that hosts them, just as we serve our own families. We support our weaker family members, not just replacing them with someone from another family if they can’t maximise our family’s production. Businesses need to train people locally to do the jobs that that economy needs and not just chase around the world for the workers prepared to put up with the lowest wages. No business should be so big that it cannot be allowed to fail nor so powerful that the State cannot control its excesses. No state should be so in control of people’s lives that any semblance of a free life is lost. Neither global capitalism nor international socialism is the answer.

How mixed is mixed is the problem and that will be the heart of politics forever. However, by returning agency to the nation state to follow its own course at least allows those arguments to influence the direction that nation takes at any moment, and that will inevitably mean that the mix will change from year to year. Different nations will take different paths which will create a kind of experimental laboratory where ideas are tried out and the best practise can spread to others, at least theoretically. Supranational governments and international corporations have a dampening effect on both innovation and free thinking, because a sort of group-think dominates and big solutions and centralisation are favoured.

Brain Unwashed
Brain Unwashed
4 years ago

Capitalism is not the problem here, rather it is big business corporatism with its big bucks bribery (sorry lobbying). We no long (and have not for decades) lived in a democracy rather it is a Corporate-ocracy.

cally hill
cally hill
4 years ago

The problem is over population and this is the response. The lockdown has little to do with a virus and they will extend it longer and longer to suit the purpose of social control. They are scaremongering everyone to believe that it is dangerous to go near anybody else, hence there will be no revolts, revolution. They have now brought in a law which effectively says the NHS can pick and choose who it treats according to their status in society, their job roll etc. That is effectively Nazism. The homeless, those on benefits or or the disabled or low paid workers better hope they don’t end up hospital . Those with higher status, doctors, lawyers, lords, ladies, they have nothing to worry about. There will be plenty of respirators for them. Why should any small business close down when Amazon is still operating and right now selling plenty of unessential plastic crap. Why are Amazon deemed essential? They are not a food shop, they are not supplying water, what exactly makes them more essential than all the other shops that have closed down? THe worker in their huge factories are just a much of a risk of transmitting the disease as a local small business, in fact more so. The real reason is because Amazon is run by the elites and they want to steal business from everybody else. They are generally more expensive than everywhere else now. Most things advertised on Amazon can be sourced cheaper elsewhere. Especially when you have postage on top. We are slipping into totalitarian waters. Neighbours spying and grassing on each other. Need I say more.

Martin Harries
Martin Harries
4 years ago

Thought-provoking piece, but …..

…we must now grasp the nettle of about re-institutionalising social purpose, and social obligations, in the world of commerce.

Not a peep about how that would manifest in practice.

In the West we are all free to agree to work for any company if the company makes an offer. No one is forced to work for any company. In a way, we are all self-employed, it’s just that many of us have only one customer. What your saying is that one customer owes me allegiance and all it can muster to underwrite my well-being. How Is that accomplished in the face of globalised competition?

You refer to the obligations of companies, but mention nothing about obligations of Company’s suppliers of (non-obligatory) labour services, aka employees. Slagging off one’s company – one’s sole customer, is a British tradition!

4 years ago

“Far more likely will be that we inch ever closer to adopting a system where an overwhelming state underwrites Airbnb capitalism. China, in other words, just without the bat soup.”

Far from being ‘overwhelming,’ as our media delights in depicting it, the Chinese State rules today as it has done for millennia”“with a light touch”“as anyone who has lived there can attest. (And bat soup is not a Chinese delicacy. For that you must trek to faraway Palau.)

We, like fish and water, barely notice the State we swim in. Though its pedigree is as old as China’s, ours is Roman and has always been overwhelming by design. Otherwise, how to control the far more numerous plebs and slaves?

Instead of unleashing the Praetorian Guard on the mob these days, our State practices selective terror, pour encourager les autres. Selective terror like:
“¢ warrantless surveillance of private phone and email conversations.
“¢ SWAT team raiding private homes and killing families;
“¢ thousands of shootings of unarmed citizens by police
“¢ harsh punishment of schoolchildren in the name of zero tolerance
“¢ endless unpopular wars
“¢ secret bans on 50,000 people from flying and refusing explanations
“¢ imprisoning 2,000,000 people witout trial
“¢ executing 2,000 people each year prior to charging them.
“¢ out-of-control government spending with little benefit to citizens
“¢ heavily armed, militarized police;
“¢ roadside strip searches;
“¢ roving border sweeps that imprison citizens and non-citizens alike
“¢ privatized prisons with a profit incentive for jailing citizens;
“¢ fusion centers that collect and disseminate data on citizens’ private transactions
“¢ militarized civilian agencies with huge stockpiles of ammunition

Once the war was over, the Chinese government did few of these things. Today, its police are unarmed, its legal system is highly trusted, and its government’s policies are extremely popular.

Our government does all of them, often, and overwhelms us with terror.

James Kumara-Lloyd
James Kumara-Lloyd
4 years ago

I cannot see what Airbnb did wrong. They entered into a commercial contract with their hosts and guests, then enacted force majeure due to the Coronavirus. Had the bookings been marketed and made directly between the guest and host, the situation would be exactly the same.

What I do object to is the government making it difficult entering into commercial relationships due to complicated IR35 rules. Thus forcing people into a zero hours employment contracts against their wishes. Thus adding unwanted obligations to both parties.

Also for employers (in better times), following a small downturn, making redundancies their first option. Like after your step grandfather they have reduced their obligations to their staff. But over the same time have received back increased obligations such as unpaid overtime.