‘I just got out of prison and asked my sister how much it would cost to start a business. She said $500. I got a grand from my husband, I bought two ounces of cooked up crack. Opened this place at one of my sister’s friend’s house … I had a little crew. About eight of us: seven women.’ Denise, in Sommers, Baskin and Fagan, 2000.
We often focus on big old scams like Bernie Madoff ‘s ponzi scheme and Enron which are clearly fraudulent, big bucks ripoffs. However it is less common to encounter major league criminality of this kind in everyday life. Normal scams are more likely to form part of the social fabric. These might be the near-pyramid scheme structures of multi level marketing businesses which promise the opportunity to integrate entrepreneurship and wealth generation into people’s day to day lives. MLMs are based on a seductive proposition: use your spare time to sell a product that virtually sells itself. Nutrition supplements, leggings, whatever they may be. MLMs target people who might be not doing too well financially but have some free time and a reasonably good family and friendship network they can sell to. As part of the sales pitch they present people who have made enormous amounts from selling the product. The MLM requires the would be agent to pay a chunk of money to buy product, which they are then required to sell. In addition – the vital ‘multi-level’ bit – they recruit people under them to also sell. They receive a cut of the sales of these ‘downline’ distributors. MLMs pre-date the gig economy by a long time though they have some elements in common in terms of the promise and the hidden costs. Their economics depend on their agents providing time and infrastructure that is costed at zero – storage and sales space, or in the case of ride hailing companies, the cost of the car.
In Sommers, Baskin and Fagan’s ethnography, Denise describes some of the elements of her business. It starts with investment capital borrowed from elsewhere, and success requires recruiting a sales team to provide a downline. Like an MLM drug dealing has some elements of the same normal scam. The myth of affluence keeps people in – the bling, the cars, the easily obtained riches. An attraction of gang membership is sometimes that gang leaders are the only people who are publicly affluent. These riches are out of reach, but tangible to foot soldiers. Even the wealthier members find that once they deduct outgoings profits are smaller than expected. For the vast majority profits are only workable by costing critical inputs at zero, such as their own time, and also discounting risk. At least selling leggings will not usually end up putting you in jail.
We live in a society which places self-reliance and self-creation at the heart of its conception of the self. The economy is meant to be defined by agility and flexibility. However these economic outcomes can only be achieved at significant hidden cost. Degradation of fixed capital, costing critical inputs at zero, and creating a radically pyramidal financial structure are deeply pathological and burn through vast resources. The normal scam is a normalised part of the structure of economic life and is at the heart of platform capitalism. It almost passes without comment that business risks are socialised or pushed onto the bottom of the pyramid, and that the labour and resources of the majority are expected to be valued at zero.