Capitalism and Socialism: Case Study: Uber-1

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“Capitalism maintains that personal self-interest, not community interest, motivates business activity, the major sources of society’s economic production should be privately owned, not governmentally owned, and economic planning should be decentralized through the market, not centralized through government policy.” (Fieser, 2015). The ultimate purpose of any business is to earn profits through capitalism. In life and the business world, we as people use self-interest to drive our energy and creativity. In capitalism one of the main ingredients is the free market that it creates. The free market economic model states that businesses should be governed by the laws of supply and demand, not restrained by government interference. Almost the opposite theory is displayed in socialism, the government controls everything. “Socialists attempt to impose a prehistoric model of communal society on modern economy.” (Fieser, 2015). It is this mindset that was the back drop for the Soviet Union’s implementation of the extreme socialist view of communism that was ultimately responsible for its dissolution. They regulated everything from toilet paper usage to daily bread allowances. The U.S. obviously does not work this way, but has socialist attributes such as government to balance out the economy. Certain aspects of socialism are evident in our economic structure such as government health insurance programs created recently. Uber would be considered part of the capitalism structure of the economy. Its performance as a company (or technical application), has been rewarded by large profits due to their innovative idea and the excellent performance of their independent contractors. Since capitalism is designed to promote excellence in the behavior of a company to succeed in our economy. Imposing laws on Uber could be considered a socialist move on the company’s operations since the government of the state of California has gotten involved.

It is not illegal what Uber is doing with their applications in most areas of the world. Independent contractors agree to Uber’s terms and thus become independent contractors under the stipulations of the agreement. Uber states that they are merely a technical application that provides a service much like Expedia, and others that help us find the best rates for travel. In California however, a driver filed a lawsuit claiming that Uber should be liable for her personal expenses while giving rides to the consumers. If other drivers come forward with similar claims there could be a possibility of Uber having to change its business structure. The ruling in California could cause a ripple effect in other states that would make Uber compensate its contractors as employees for their personal expenses. As of now Uber is not even responsible for carrying unemployment insurance since it is considered to be a mobile application, and not a company per say. California is the first to classify them as a transportation company. Which will make the company cover expenses that go with falling in this category.

  If similar cases arise in other states, following suit with California. Then the company will incur more expenses that were previously not warranted in its operations. This will cause the company’s profit margin to be affected, and probably make the company be more involved with its employees (contractors). As of now that are not even required to carry auto insurance on the contractor’s car, much less offer health insurance. Basically the company has just been receiving profit from this technical applications venture. This could change in the future, and could have implications on other Uber like companies. Some of the readings highlighted the fact that this may be the way our economy may be headed, so it will be interesting to see how much the government will have to do with restrictions and laws applying to such businesses.

  My moral belief is that Uber should be responsible for compensating its employees, and that it should be considered a company in the eyes of the government. I think that their behavior is unethical, and that they should share some of the benefits of its profits by providing certain incentives for its employees. There is no reason why they can’t afford to provide for the people that provide them with profit in the first place. In my opinion they should follow the utilitarianism theory in order to place the company in better social standings. “The utilitarianism theory states that an action is morally right if the consequences of that action are more favorable than unfavorable to everyone.” (Fieser, 2015). By compensating its employees it will not only benefit the employees and the company, it will allow them to make sure that the company is still being operated at a high standard. I do not believe that taxi drivers have a right to be upset. Times are changing, and in theory they could choose to leave their company (if possible due to current investment), and decide to offer their services to Uber at a higher rate of pay. This I do not see to be unethical behavior on the part of Uber. They have created a new type of business that helps even people in rural areas get from point A to point B. By Uber applying the utilitarianism theory, I believe they could adapt their business model that would could cause more pleasure to its consumers and employees, thus creating the greatest good for the greatest number of people.

References:

Fieser,J. (2015). Introduction to business ethics [Electronic version]. https://content.ashford.edu/

IJ Sales. (2014, February 4). What is Uber? [Video file]. https://youtu.be/pzBMo59iwPo

Mashable. (2014, October 9). What is Uber?| Mashable explains [Video file].

  https://youtu.be/tQlgavP5cmo

Smith, J. W. (2015). The Uber-all economy. Market News, 49(6), 26.

Steinmetz, K. (2015, June 17). Wht the California ruling on Uber should frighten the sharing

  Economy. Time. http://time.com/3924941/uber-california-labor-commission-ruling/

TechCrunch. (2015, June 17). Uber driver ruled employee, not contractor, in CA| Crunch report

  [Video file]. https://youtu.be/n3QJWPg5TLA

Zuniga y Postigo, Gloria, (2015), Knowledge-Sharing Archives, Ashford University.

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