8   luglio

The Origins of the Amazon Economy – Kathleen Thelen’s Ciampi Lecture

Ciampi Visiting Scholars

In her Ciampi Lecture, Professor Kathleen Thelen, presented the results of her research on what she calls the “origins of the Amazon economy”, pointing out the continuity and differences between the platform and app economy monopolized by Big Tech and the history of mail-order retail in the early decades of the 20th century and large chain stores such as Wal-Mart.

In a country of enormous size in which most people relied on the local commissary for their purchases, Sears’ idea is that of the nearly infinite catalog – from safety pins to the prefabricated house -, low prices and the ability to get everywhere through the use of public infrastructure (the postal service), used both as a delivery system and as a financial intermediary. The low prices due to scale and low production costs and the ability to get everywhere ensured that the first companies to develop this system were widely accepted by consumers who saw the cost of their purchases fall and had access to a wider range of goods.

According to Thelen, the relationship with consumers is a key that these companies used, by mobilizing them, to prevent the imposition of regulations governing their development and business strategies. A similar strategy is that of large chain stores such as Wal-Mart, which grew by ensuring a widespread physical presence and longer and weekend opening hours.

In this sense, the history of large-scale retail in the United States is one that does not diverge too much from that of platforms. These are often quasi-monopolies that are not attacked because of an interpretation of antitrust given by the Supreme Court since the 1970s that has made large retail chains immune because the only thing that is considered problematic is what compromises consumer welfare, i.e., retail price – an interpretation comes from the influence of the Chicago school of economics. Large chains, whether physical like Wal-Mart or online like Amazon, have a business model built around reducing the cost of goods.

There are, of course, important differences between large chain stores and platforms. Like railroads, companies such as Google and Amazon are not just service providers but are an infrastructure on which an entire economic ecosystem depends. Sellers on platforms depend almost entirely on Amazon (or Google Shopping) to reach consumers; content creators need YouTube or Instagram or Tik Tok to monetize their videos –  the protests against the potential shutdown of the Chinese video app in the United States are a good an example of the platform-consumer alliance. In this sense, traditional measures of a company’s “size” often underestimate the platform’s dominance. Amazon, for example, has a large share of the online retail market, but more importantly it occupies a structural position that allows it to control market flows in both directions. The ubiquitous presence in various market segments and the accumulation of data on consumption and consumers is also an added advantage–the chains also have a great deal of data, but the platforms have a presence and pervasiveness that is not comparable–there is also video consumption, music tastes, entertainment, etc.

Finally, there is the labor issue. Data and algorithms control and organize that as well. Speaking of labor, Thelen names the paradox that poor labor (nearly 10 million in the U.S.) or on the verge of poverty, who often work precisely for large chains or platforms are both victims and beneficiaries of the Amazon economy: they are paid little to compress the cost of goods, they need goods cheaply in order to survive.

Kathleen Thelen is Ford Professor of Political Science at MIT.

Her work focuses on the origins and evolution of political-economic institutions in the rich democracies. She is the author, among others, of Attention Shoppers! American Retail Capitalism and the Origins of the Amazon Economy (forthcoming 2024), Varieties of Liberalization and the New Politics of Social Solidarity (2014) and How Institutions Evolve (2004),

She was elected to the American Academy of Arts and Sciences in 2015 and to the Berlin-Brandenburg Academy of Sciences in 2009. She was awarded honorary degrees at the Free University of Amsterdam (2013), the London School of Economics (2017), the European University Institute in Florence (2018), and the University of Copenhagen (2018).

Thelen has served as President of the American Political Science Association (APSA), Chair of the Council for European Studies, and as President of the Society for the Advancement of Socio-Economics. Thelen is General Editor of the Cambridge University Press Series in Comparative Politics, and a permanent external member of the Max Planck Institut für Gesellschaftsforschung in Cologne, Germany.