What do platforms really do?
In 1986, David S. Landes wrote the essay, ‘What Do Bosses Really Do?’. He argues that the historical role of the ‘boss’ was an essential function for organizing production and connecting producers to markets. Digital platforms have become the new bosses. Platforms have the same functions of market creation, labor specialization, and management, but they have replaced the physical factory floor with algorithmic management. While their methods are novel, platforms are the direct descendants of the merchant-entrepreneurs and factory owners Landes described, solving the same historical problems of production in remarkably similar ways.
Design for a Teacup (1880-1910) painting in high resolution by Noritake Factory. Original from The Smithsonian Institution. Digitally enhanced by rawpixel.
So, why am I posting this on my own blog and not on a “platform”? I don’t view writing as a financial transaction. It is a hobby. By putting the financialization lens front and center, platforms are killing the mental space for hobbies. When you monetize tweets, you create incentive to craft tweets that create engagement in particular ways. Usually not healthy ways.
If we think of old media or traditional manufacturing, we can compare them to guilds. Guilds kept up prices and controlled production. With the simplification of tasks factories could hire workers who weren’t as highly skilled but didn’t need to be. Nowadays, why should any newspaper or TV channel’s output be limited by the amount of airtime or page space they have?
Platforms take unskilled and train them. We are in the age of specialization of ideas. Akin to the “the advantage of disaggregating a productive process” Platforms leverage this by having many producers explore the same space through millions of different angles. This allows the platform to “purchase exactly that precise quantity of [skill] which is necessary for each process” —paying a viral star a lot and a niche creator a little, perfectly matching reward to market impact. Which is to say platforms make money through whatever sticks.
In Landes’s essay, Management became specialized, today management will become algorithmized. Platforms abstract away the issues that factory owners had such as embezzlement of resources, slacking off etc. Platforms don’t care how much or how little you produce, or even if you produce. If you do, the cash is yours (after a cut of course).
This may lead to a visceral reaction against platforms. This week when Substack raised a substantial amount they called the writers “the heroes of culture”. This should ring at least a tiny alarm in your head. The platform’s rhetoric of the creator-as-hero is a shrewd economic arrangement. In the putting-out system, the merchant-manufacturer “was able to shift capital expenditures (plant and equipment) to the worker”. Platforms do the same with creative risk. The writer, artist, or creator invests all the time and labor—the “capital” of creation—upfront. If they fail, they bear the entire loss. The platform, like the putter-outer, only participates in the upside, taking its cut from the successful ‘heroes’ while remaining insulated from the failures of the many.
So what do platforms really do? They have resurrected the essential role of the boss for the digital age. They are the merchant-manufacturers who build the roads to market, and they are the factory owners who discipline production—not with overseers, but with incentive algorithms. By casting the creator as the hero, they obscure their own power and shift the immense risks of creative work onto the individual. While appearing to be mere background IT admins, they are, in fact, the central organizers of production, demonstrating that even in the 21st century, the fundamental challenges of coordinating labor and capital persist, and solving them remains, as it was in the 18th century, a very lucrative role.
What Do Bosses Really Do?, David S. Landes, The Journal of Economic History, Vol. 46, No. 3 (Sep., 1986), pp. 585-623 (39 pages). https://www.jstor.org/stable/2121476
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