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Capitalism’s Brave New World

We have seen the future, and it microtasks

Jul 16, 2012, Vol. 17, No. 41 • By JONATHAN V. LAST
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The other development is the rise of multinational corporations following World War II. As communication, shipping, and jet travel improved, it became practical for large corporations to do business abroad. They built factories in other countries, hired foreign workers, and eventually learned to pit countries against one another in order to get the best deal they could with their taxes and regulations. From there it was just a short step to transnational corporations—business concerns which operate without any true home country. This metamorphosis completed the corporation’s evolution to something like a semi-autonomous sovereign: The corporation pursues its own interests, as it understands them, from whatever geographic position (and under whatever legal regime) it finds most accommodating at the moment. It becomes a city-state without land.

None of this is sinister. There is probably no better way to organize large industrial concerns and make them as efficient as possible. Under the traditional arrangements Americans have had with business for the last 200 years, our relationship with corporations has been mutually beneficial. America provides a hospitable environment in which businesses can prosper. As they prosper, businesses create wealth for workers and investors. And the arrangement creates a loop of prosperity as consumption, education, and innovation combine to elevate the lives of all concerned.

At the heart of this loop is a social compact. America provides business with an enormous basket of essential goods. There’s the physical capital—roads and sewers. Then there’s the human capital—a literate, educated workforce with a reasonably benign cultural disposition. All of which, you could argue, businesses pay for with their taxes. But infinitely more valuable is America’s social capital. If you run a business in America you usually don’t have to bribe every government official who comes by to inspect your workplace. When you interact with the police, they are likely to help you rather than ask for protection money. If a competitor damages you, there is a legal regime that can be engaged with some modicum of impartiality. Property rights are generally secure and respected. The criminal code is explicit and routinely enforced. Corruption—a deadly poison for economic life—is rare and the political order is stable enough to be disregarded as a cause for concern.

These benefits aren’t really paid for by anyone’s taxes. They are the legacy of 250 years of American labors, on the battlefields, in the courts, and at the ballot box. They are intangible yet irreplaceable and, literally, priceless.

Americans have loved commerce since the Founding and they give these wondrous gifts to business freely. In return, they have traditionally asked only one thing: that business owners participate in the life of their communities.

A company that builds a factory in San Antonio should employ Americans to staff it and not have Mexican laborers commuting back and forth over the border. This may not always make good business sense—after all, if Mexican labor is cheaper, using it is more efficient. But America’s historical compact with business is about bigger things than efficiency, and if a company wants to employ Mexicans it’s free to build its factory in Mexico.

Yet it’s this geographic link that the remote freelancing revolution threatens to sever. The problem it poses isn’t just that American companies will offload low-skill, microwage jobs to Mexico (or India or Vietnam or Cambodia). The rise of remote, freelance microtasking means that the relationship between business and America becomes a one-way street: Americans provide a welcoming social order for business, and business is still welcome to fish in the global labor pool for the cheapest workers.

When you combine these two transformations—business’s evolution from the individual to the corporation and its newfound ability to exist in, but not of, the place it physically inhabits—you create an environment where a business is less like a citizen and more like a virtual state. A semi-sovereign. A parasite, the hippies might say.

That's an exaggeration, of course. Commerce is the indispensable engine of American life, and has been since the country’s earliest days. (Before the revolution, George Washington created and ran the Patowmack Company, a private venture dedicated to turning the Potomac river into a toll waterway via a series of locks and canals.) And in any case, the liberal critique of microtasking is usually that it somehow isn’t “fair” for the Mechanical Turk to pay someone 16 cents to do a job that takes 90 seconds.

But the real concern isn’t wages, per se. (There are some services, like Odesk.com, where highly specialized freelancers command as much as $25, $45, even $80 an hour.) It’s what happens when labor is, for the first time in human history, uncoupled from geography.

Perhaps the free market true-believers will be right. Maybe the increased efficiencies will trickle down through the economy and the rising tide will lift all boats. Maybe the tech company in San Francisco that hires microtasking Pakistani temps, instead of local workers, will be able to use the money it saves to create even more value and wealth, which will eventually find its way into the San Franciscan, or at least the American, economy. Maybe, too, the ability to switch employers on an hourly or daily basis will be a type of liberation for workers. Instead of chafing for years under a petty tyrant of a boss, you can quit your job at noon after a thankless morning and start a new job with a different employer after lunch. 

Or perhaps it will turn out that the ability for any business to outsource any task, no matter how small, will not just deprive local workers of work, but will drive down local wages even for other forms of work. Maybe the bulk of the economic benefits will be realized abroad and businesses will become ever more mercenary “citizens of the world,” which is to say, not citizens at all by any traditional understanding of the concept.

Whether the end result is good or ill, this will not be business as usual—it represents a sea change in the relationship between business and the citizenry, and it is something wholly new to the American experience. And despite the foolish protestations of some on the left, conservatives should greet it with, at most, two cheers.

Conservatives, in America anyway, have long had a natural sympathy for business. But they have also cultivated an appreciation for the unintended consequences of systemic disruptions. This is why conservatives have been wary of epochal social changes, especially those flying the flag of liberation, such as the advent of the birth control pill, the rise of no-fault divorce, and gay marriage. If the geographic linkage between American businesses and the American people is dissolved, it is impossible to predict what will happen next.

The websites for microtaskers Mechanical Turk, Odesk, and Elance note that they serve employers as big as AOL, Google, Citigroup, and Microsoft and as small as the Mom and Pop business next door. Yet when you click through the lists of available workers waiting to serve these businesses, more often than not—far more often, actually—they’re from Pakistan or Turkey or India or Serbia, rather than the United States.

Where, coincidentally, the unemployment rate is 8.2 percent, and the real jobless rate is closer to 15 percent.

Jonathan V. Last is a senior writer at The Weekly Standard.

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