Profiting from Openness: A Critique of a New Business Model

This book contains the most sustained and serious attack on mainstream, neoclassical economics in more than forty years. Nelson and Winter focus their critique on the basic question of how firms and industries change overtime. They marshal significant objections to the fundamental neoclassical assumptions of profit maximization and market equilibrium, which they find ineffective in the analysis of technological innovation and the dynamics of competition among firms. To replace these assumptions, they borrow from biology the concept of natural selection to construct a precise and detailed evolutionary theory of business behavior. They grant that films are motivated by profit and engage in search for ways of improving profits, but they do not consider them to be profit maximizing. Likewise, they emphasize the tendency for the more profitable firms to drive the less profitable ones out of business, but they do not focus their analysis on hypothetical states of industry equilibrium. The results of their new paradigm and analytical framework are impressive. Not only have they been able to develop more coherent and powerful models of competitive firm dynamics under conditions of growth and technological change, but their approach is compatible with findings in psychology and other social sciences. Finally, their work has important implications for welfare economics and for government policy toward industry.

As ever more policy-makers, governments and organisations turn to the gig economy and digital labour as an economic development strategy to bring jobs to places that need them, it becomes important to understand better how this might influence the livelihoods of workers. Drawing on a multi-year study with digital workers in Sub-Saharan Africa and South-east Asia, this article highlights four key concerns for workers: bargaining power, economic inclusion, intermediated value chains, and upgrading. The article shows that although there are important and tangible benefits for a range of workers, there are also a range of risks and costs that unduly affect the livelihoods of digital workers. Building on those concerns, it then concludes with a reflection on four broad strategies – certification schemes, organising digital workers, regulatory strategies and democratic control of online labour platforms – that could be employed to improve conditions and livelihoods for digital workers.