The Gig Economy, Millennials and Capitalism

created by Nathaniel Thoreson |

Since the Industrial Revolution catalyzed the Labor Movement, workers have been tied to the 8 hour work day, expected to work diligently from “9 to 5.” However, recent trends suggest this structure may be shifting. The innovation of the ‘Gig Economy’ and its quick adoption by young professionals could be ushering in a new era.

The gig economy is characterized by freelance labor and short-term contracts. If you have used Uber, Lyft, Instacart or Airbnb, you’ve tapped into the gig economy. These businesses are driven by both a demanding workforce and demanding consumers. They secure contracts between private parties, such as an Uber driver and rider, to ensure trust and provide value. So why, if so many young people are embracing the gig economy – an embodiment of free markets, are they turning against capitalism and toward socialism?

What is socialism?

Labor unions in the 1830s and 40s pushed for increased workforce regulations. These new policies restricted the freedom of employers and employees, and this regulatory environment slowly evolved to become the modern 9-to-5 grind.

The personal choice and flexibility of the gig economy stands in contrast to our current regulation-induced environment, and that may be what millennials are embracing.  So why do so many polls and surveys show millennials desire for socialism? One common explanation for this conundrum is that many young people do not understand the fundamental nature of socialism vs. capitalism. Socialism is an economic and political system in which the government maintains ownership of the means of production (i.e., businesses are owned by the government); capitalism is an economic and political system in which the means of production are privately owned and operated (i.e., citizens can create and own businesses.)

The underlying philosophical basis for socialism is equity and egalitarianism. The government controls the market and (in principle) seeks to distribute the same level of economic power to all citizens. Socialists desire uniformity at the expense of individual freedom. Therefore, it’s surprising to see many millennials embrace socialism while simultaneously pursuing careers that offer the most flexibility and personal choice.

A Millennial Branding report found that 45 percent of millennials would choose “workplace flexibility over pay” – the opposite of what socialism promises. The young and upcoming workforce seem willing to sacrifice pay for a job that makes them fulfilled and happy as an individual. This may be what attracts them to the gig economy, a place where free-willed and enterprising people face fewer constraints. Gig work allows laborers to work when they want to best serve their needs.

The gig economy is capitalism

The gig economy is a product of the innovation encouraged and allowed by private entrepreneurship. Uber, for example, was started in 2009 by experienced entrepreneurs, working closely with private investors, to launch a ride-sharing platform in San Francisco. They replicated the model in cities around the world, growing to a value of $120 billion. Of course, this growth didn’t come without pushback from regulators and existing industries.

Additionally, these systems are based on individual choice and insured by peer-to-peer contractual agreements (hallmarks of capitalism). In a free market, individuals voluntarily choose to exchange services through a mutually beneficial contract. These types of agreements, businesses, and flexible work opportunities would not exist under socialism.

Other companies are starting to catch on to Uber and related firms’ success. A recent study found 85 percent of Canadian companies plan to move to an “agile workforce” – meaning more contractors and fewer full-time employees.

As employers and employees increasingly shift toward a contract-based market, it’s time to acknowledge the role of capitalism as the most effective market system. Capitalism desires economic prosperity and individual freedom for all its participants. The gig economy helps deliver those freedoms to the market. 


Meet the Author

Nathaniel Thoreson is an intern with the NDSU Center for the Study of Public Choice and Private Enterprise and the director of communications and co-founder of Webblen. He is studying marketing, political science and a certificate in sales at NDSU. The views expressed in this article belong to the author. 

nathaniel.thoreson@ndsu.edu 


Tags

Innovation   Employment/Jobs  Regulation   Technology   Freedom   History and Philosophy

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