Private actors take over state functions: The role of the digital economy in the provision of public goods

Abstract: This article studies the sources and dynamics of an increasingly pervasive trend: platform companies taking over traditionally core public functions. Classic accounts of marketisation of the provision of public goods and services have explained processes of privatisation, as well as more subtle manners in which the private sector participates in the functioning of the state. These literatures have taught us a great deal about the role of the private sector in the delivery of public responsibilities. However, existing scholarship has not yet explored the distinct features of this novel phenomenon. First, platform firms occupy an infrastructural position in the economy and, as such, collect and process an enormous amount of data that allow them not only to carry on a series of functions that have traditionally been associated to nation-states, but to do it arguably better. Second, as opposed to traditional privatisation processes where a contract is signed among the government and private companies, platform firms are appropriating these functions without explicit permissions or agreements. In this paper, I explore three tasks performed by these firms: the collection of information about the people that inhabit the nation, the creation of connections among residents and the provision of security.

Jimena Valdez is Fellow in Comparative Political Economy at the LSE’s European Institute. Her research centers on how states are challenged by and respond to domestic and international capital, and how business’ power, strategies and preferences are shaped by economic and technological change. Jimena received her PhD in Government from Cornell University in 2020. Previously she earned a MA in Government from Cornell University, a MA in Political Science from Torcuato Di Tella University and a BA in Economics from the University of Buenos Aires.