Nice Jig If You Can Get It

China now has an estimated 320 million people in »flexible employment«, according to the Financial Times. The category includes part-time workers and the self-employed as well as gig workers. Which makes me wonder what happens to an economy when the transaction becomes the basic unit of work.¹

»The basic unit of the economy would no longer be the job, or even the company. It would be the deal«

A job is a peculiar economic invention. It bundles together work, income, risk, training, reputation, social security, and continuity. You sell some portion of your time to a company, and in return the company assumes some of the uncertainty around your future. A gig strips much of this away. You are paid for a transaction: one journey, one meal, one delivery, one piece of code. The relationship becomes a deal.

This changes where the risks sit. The worker absorbs idle time, sickness, retirement, training, and equipment. The customer absorbs more uncertainty about quality and recourse. The platform puts its brand between two parties it does not necessarily employ or control. And society inherits whatever is left over: people who have spent decades working without accumulating the protections that employment was designed to provide.^2,3

The strange thing is that the formal machinery around work has barely changed. We still have companies, employment contracts, job titles, pensions, tax systems, CVs. But underneath them, another economic geometry is emerging.

In 1937, economist Ronald Coase asked a pointed question: if markets are so good at coordinating transactions, why do firms exist at all? His answer was that markets have costs. Finding someone, negotiating a price, monitoring performance and resolving disputes takes time and money. Sometimes it’s cheaper to bring the activity inside a firm.⁴

The gig platform is an odd creature in this framework. It looks like a market but performs some of the functions of a firm: finding workers and customers, setting prices, processing payments, and managing reputation. It’s an intermediary whose existence depends on the transaction being difficult enough to require an intermediary. But what happens when the cost of coordinating a transaction approaches zero? Perhaps the platform is only an intermediate technology.

The obvious future – the one China hints at – is dystopian. The job disappears, but without setting the worker free. Instead, the person becomes the gig: a bundle of capabilities summoned whenever demand appears. Every skill becomes a product. Every hour becomes inventory. The transaction has atomised the worker.

But there is another possibility. The work becomes the gig. A substantial problem becomes a temporary project; people assemble around it. A brief becomes a team. The team does the work, gets paid, learns from it, then dissolves.

Perhaps this is the difference between a gig economy and a jig economy. A gig is a small piece of work; a jig is an arrangement for making something. In the gig economy, people are broken down into things that can be bought. In the jig economy, work is broken down into problems and people assemble around them.

The company has historically solved a similar problem. The best companies are platforms for talent: places where people with different abilities can work together long enough for their knowledge to compound. Bell Labs was extraordinary partly because it created conditions in which people could collide. So do good research departments, advertising agencies, and architecture studios. The question is whether we can reproduce that function without reproducing the company.

AI makes this much more plausible. When someone expresses a need, machines could turn it into a brief, find people with the appropriate capabilities, assemble a team, negotiate the transactions, and dissolve the arrangement once the problem is solved. Reputation could follow the individual rather than the employer. A CV could become less important than a record of things actually made.

China may simply be showing us an early version of this transition. The gig worker is not necessarily the future worker. The gig may be the first economic unit small enough to be reorganised.

This is where Coase becomes interesting again. Firms exist partly because transactions are expensive. If machines make finding, evaluating, contracting, and coordinating people almost free, the economic reason for the firm begins to weaken.

We have spent the industrial era organising people into companies so that their work could be organised efficiently. Perhaps the next era will organise work so efficiently that we no longer need to organise people into companies.

That would not necessarily produce a world in which everyone is a gig worker. It might produce something stranger: the jig economy. The job disappears, but the worker doesn't. The work becomes a collection of problems, and people assemble around them. The basic unit of the economy would no longer be the job, or even the company. It would be the deal.

And if the cost of making a deal approaches zero, we may discover that the company was never the fundamental unit of capitalism after all. It was just a workaround.

References