Russia may have finally caught up with the rest of the world’s governments in cracking down on ridesharing services like Uber. Russia’s Federation of Car Owners (FAR), like any good oligarchy, has complained to Russian state authorities that “rogue” elements such as Uber, Gett, and Yandex represent a “threat to society.” Exactly what kind of threat do the web-based taxi services represent? FAR claims they don’t have “real world” taxicab expenses. Code for: They threaten our profits by avoiding artificial entry barriers we’ve secured.
This desperate play at stifling competition by FAR is not unique. By petitioning the Russian state to put an end to the threat these companies pose, Russia may soon join the growing list of countries in which established taxi services have used lawsuits and state regulation to rein in competitors who operate outside of the standard business model.
On his Café Hayek blog, Donald Boudreaux discusses the attacks governments around the world are waging against new “sharing economy” services such as Uber and Airbnb. Though it’s naïve to call Uber a part of the sharing economy, Boudreaux rightfully denounces the assaults, pointing out that these businesses offer a way for everyday people to turn their consumer goods into capital goods. Boudreaux recognizes that their business models shift ownership of the means of production away from “older” capital and into the hands of those formerly on the “periphery of those ranks.” He goes on to condemn government intervention which would smother the sharing economy, calling out the hypocrisy of those who in one breath decry the existing wealth gap, and in the next, attempt to suppress market forces that would achieve a more equitable distribution.
What’s missing from Boudreaux’s critique, among other things, is the role played by “private” enterprise in this global anti-competitive phenomenon. Government intervention suffocating innovative new enterprise doesn’t originate from within the state. Sure, the “reforms” which would quash the sharing economy are couched in government do-gooder phraseology like “consumer protection” and “safety standards,” but that language is only a diversion. As evidenced in the Russian FAR saga, the primary motivation behind the scheme is to protect existing capitalists from encroachment by dormant competitors. It is through the state that entrenched owners of capital seek to restrict others from also becoming owners of capital. In other words, today’s capitalists seek to maintain their profitable status quo through the strong-arm of the state using tactics such as regulatory schemes and intellectual “property.”
FAR’s efforts, like those being carried out by taxicab oligopolies in Germany, Australia, France, the US and elsewhere, show us how quickly so-called private enterprise jumps on any deviation from the current capitalist structure. That’s the name of their game: try to transcend the set boundaries of capitalism and you’ll be lassoed back in so as not to upset the apple cart. It’s all the more shameful that such parasitism is sold to the public by outfits who claim to be looking out for the good of the consumer.
Uber itself appears to have now become one of “today’s capitalists,” if it wasn’t one already. It has succumbed to the urge to strangle its other web-based competitors through political brinksmanship. It now works directly with local governments to craft ridesharing regulations. This serves not only to ingratiate it with bureaucrats, but also to hamstring genuine peer-to-peer ridesharing services that seek to route around Uber’s siphoning of funds from the driver-passenger transaction (as well as Uber’s well-documented mistreatment of its drivers). As it continues to grow, Uber seems destined to become more and more like FAR and the other capitalist creatures who will stop at nothing to snuff out any attempt to render them irrelevant.
