Big Tech and the Cooperative Economy

Platform ecosystems, e.g. those of Amazon and Apple, play a central role in our economic system. However, recent research alludes to the challenges that these Big Tech firms impose on stakeholders and on society. My recent book – The Cooperative Economy (Routledge, 2023) explains why remedies such as antitrust regulation, legislation, and corporate policies that seek to infuse corporate social responsibility fall short. It uncovers the underlying deficiencies and advocates an alternative economic system.
Wealth concentration and economic inequality, the grip of platform owners, loss of privacy and free choice, overconsumption of natural resources, and some drawbacks of globalization, have taken a toll on society. These problems have one root cause – our economic system prioritizes profit and utility maximization and rewards opportunistic behavior. All efforts to fix our economy treat the symptoms, not this root cause. Because we cannot change the system's DNA, I call for designing a new economic system that is free from these faults.

The mirror image of opportunistic behavior is prosocial behavior, whereby individuals seek to enhance the utility of others at a personal cost. Experiments suggest that about half of humanity is conditionally prosocial- people will be kind to others if others are kind to them. By rewarding those who exploit others, our economic system breaks the natural cycle of positive reciprocity and drives out prosocial behavior. However, new design principles can reinforce prosocial behavior. The cooperative economy is a prosocial platform for exchange, barter and donation that serves societal values under resource constraints. It limits consumption and profit making while facilitating economic equality. It serves the interests of consumers, vendors, and employees while restricting the power of the platform owner. The cooperative economy scrutinizes greedy individuals and penalizes opportunistic behavior while motivating and rewarding prosocial behavior. This leads to a just distribution of value in the system.

The main novelty of the system is price discrimination whereby high-income consumers subsidize low-income consumers. Unlike progressive taxation in which the state steps in as a political intermediary that imposes a burden, price subsidization creates a perception of unmediated donation to community members, and thus carries the benefits of prosocial behavior. By increasing the purchasing power of low-income consumers, the cooperative economy provides employees with the freedom to pursue a profession of choice or start a business with less financial distress, thus encouraging entrepreneurship. By shifting from a global to a multi-local structure, it restores a sense of community that facilitates interaction and mutual support, while reducing value chain vulnerabilities and enhancing sustainability. Another design principle is consumption per need rather than per desire. This entails imposing consumption limits which are upward adjusted for high-income earners to support subsidization. In turn, reasonable profit caps redirect vendors' excess profit back to consumers. The platform operator accepts not to enter its vendors' businesses and avoid influencing consumer behavior, which are common practices in the current system. These principles represent an extension of the notion of corporate social responsibility to various stakeholders. The cooperative economy can leverage sophisticated algorithms, machine learning, and artificial intelligence, not to inflate consumption and abuse consumers, but to protect users from opportunistic behavior.
The cooperative economy ensures fair competition by guaranteeing market access. In turn, stricter controls for quality and sustainability ensure consumers' welfare. It also promotes respectful employment while reducing salary differences, which further enhance economic equality. To prevent concentration of wealth and power, the system excludes financial shareholders, whereas consumers, vendors, and employees receive equal voice in promoting their interests. A new standard for inspecting and certifying algorithms can further serve that purpose. Accordingly, the proposed system offers a revolution that replaces the greed-driven logic of our economic system with a counter logic of prosocial behavior.