Rationalization is defined as the increase of: efficiency, predictability, calculability and control. In his book, The McDonaldization of Society, Ritzer explains how this process of rationalization, popularized by the large restaurant corporation McDonalds, relates well to consumers and even gives them a sense of comfort. An aspect of rationalization that is one of the most important within the scope of Silicon Valley is efficiency, which Ritzer describes in the following way, “One important element in the success of McDonaldized systems is their efficiency, or finding and using the optimum method for getting from one point to another.” (Ritzer, 2021)
Rationalization has deeply impacted the industries founded and run in Silicon Valley. This web page examines how each aspect of rationalization (efficiency, calculability, predictability and control) affects the tech industry and the legal environment of Silicon Valley. This page will move between all four of these aspects and describe how each relates to big tech companies in Silicon Valley and Silicon Valley's law firms.
Contextualizing
Early Silicon Valley
Silicon Valley came to prominence in the 1940’s and 1950’s with Stanford University’s culture of entrepreneurship and starting companies. This culture of entrepreneurship is responsible for the start of many of the current prominent companies in Silicon Valley, including Hewlett Packard (HP). In addition, Silicon Valley is responsible for the invention of, “The transistor,” which was “manufactured in Silicon Valley, which gave the area a leg up in the radio and telegraph industries” (Batsell, 2017). Silicon Valley differentiated itself from other growing American industrial centers by being the only place in the country with the capabilities to produce, “either components like Silicon chips (from which the Valley got its name) or the hardware into which the chips were placed” (Batsell, 2017).
Moving into the 1970's and 1980's
Much of the prosperous Silicon Valley experience was due to the invention of the personal computer by companies such as IBM and Apple. As PC’s, “were becoming more useful,” software companies came to prominence as software was becoming more useful and profitable than hardware in the ecosystem of Silicon Valley. By the early 1980’s, “An impressive number of software companies were started in 1982 in Silicon Valley” (Scaruffi, 2010).
Silicon Valley in the 1990's to today
Moving into the 1990’s and the 21st century, is arguably the most prosperous era for Silicon Valley and the reason why Silicon Valley has been able to rationalize to the extent it has in the current day. The dot com bubble of 1995-2000 was the first indication that Silicon Valley and the technology it produces was coming to prominence, even though that particular bubble burst, it showed what was possible coming out of Silicon Valley. Society and Silicon Valley were moving more towards the internet and all that came with it in that, “the period marked the emergence of the widespread use and adoption of the internet from shopping online, communication, and source of news” (Corporate Finance Institute).
Efficiency
Efficiency in the gig economy
There is almost no delay between a ride being called by someone who wishes to ride in an Uber and the driver receiving that request. This takes the responsibility out of the companies’ hands in that they do not have to connect riders with drivers directly. This makes the process of the getting a ride much more effcient.
Efficiency in Silicon Valley Law Firms
Law firms’ roles as dealmakers and counselors increases not just their own efficiency but the efficiency of the gig economy as a whole. A lot of startups in Silicon Valley do not have the resources to access real consultants when starting their companies and often turn to their lawyers for additional service besides legal advice. In practice, “Silicon Valley law firms often mediate both resources and information at once, in single sets of behaviors” (Suchman, 2000). Much like the companies around them, law firms are using similar strategies to become more efficient. The law is a non-human means of control that aids in Silicon Valley’s law firms’ ability to rationalize.
Calculability
Calculability in the gig economy
In a McDonalized system, or one that is highly rationalized, quantity is emphasized over quality. As Ritzer says himself, “Workers in McDonaldized systems also emphasize the quantitative rather than the qualitative aspects of their work” (Ritzer, 2021). In terms of the gig economy or in terms of Uber, this is defined as: how quickly can one get a ride or other service from these companies? Uber has worked exceptionally hard to ensure that time is as low as possible. Quantity of rides supplied by Uber is emphasized over the quality of rides. In rationalizing towards calculability, companies like Uber try to decrease the amount of time it takes to get service. For example, in New York City, “the median wait time for an Uber vehicle is even shorter than five minutes: exactly 3 minutes, 8 seconds in outer boroughs. In Manhattan, it's just 2 minutes, 25 seconds” (Mosendz, 2016).
Calculability in Silicon Valley Law firms
Through the lens of calculability, law firms are able to produce more tech companies through their role as dealmaker and counselor. In the calculability sense, quantity of companies produced is emphasized over the quality of companies. As stated before, startup companies in Silicon Valley often cannot afford the work of expensive consulting firms, which leads to them using the help of their lawyers in a consultant’s place (Suchman, 2000). Through calculability, companies are able to use their lawyers to calculate how long it will take to get their company started and off the ground.
Predictability
Predictability in the context of Uber
Uber and large tech companies design their systems so that consumers receive a similar, though not identical, service every time a consumer uses their service. While the exact cars that Uber drivers use differ in each case, they tend to be similar kinds of cars that provide the same service all other cars do. Uber is also effective at predicting the costs that they have. Almost every ride you have with Uber will be in a similar kind of car. Almost all cars used on Uber will be some sort of four door sedan that looks almost identical to the last car you rode in. In addition, the use of an app to call a ride from Uber and take you to a certain location heightens predictability. Riders can see the exact route a driver will take, from their phone. This keeps a lot of the guesswork of how a driver will drive to your location out as it is instantly calculated.
Predicability in the context of SV Law Firms
Law firms are able to see what a company will need to get off the ground by the careful prediction of a trained professional. Lawyers are trained on the law and how they can help companies use the law to their benefit. In their role as counselor, lawyers and law firms are incentivized to carefully predict the correct number of resources a company needs to be up and active (Suchman, 2000). In their role as dealmaker, law firms predict the correct deals for companies to make to maximize their resources. This helps the company predict their outcomes effectively without the use of consulting firms, like many of the other aspects of rationalization help smaller companies especially do. In closure, predictability allows Uber to run more smoothly and maximize the amount of services they provide. For law firms, predictability allows law firms to more effectively collaborate with companies to determine the resources and time these companies need to function.
Control
Control in the context of Uber
More than law firms, the workers of rationalized systems like Uber are controlled to a high degree, much like McDonald’s workers. McDonalds’ workers, “are trained to do a limited number of tasks in precisely the way they are told to do them” (Ritzer, 2021). McDonalds’ workers are trained to do one specific task within the greater chain of the operation of the restaurant. There’s a division of labor that Max Weber would have loved. Uber drivers are similarly hired to complete one job. Their job is to simply drive from one place to another, picking up and dropping off the consumer. There are less things to do within the job for Uber drivers and other workers in the gig economy, but the idea of control remains the same. Uber has a tight control over their workers and what tasks they complete exactly, this follows the McDonalds archetype very closely. There are very few skills needed for people to work for Uber, much like McDonalds. Really the only barrier there is to become an Uber driver is having a car and having a driver’s license. There are few other requirements needed to become a driver for Uber and the process takes minutes to complete, with an approved application coming back in a matter of days (Uber, 2021).
Control in Silicon Valley Law Firms
Through calculability, we saw that law firms are able to admit as many companies as they wish into the Silicon Valley ecosystem. With that being said, law firms exert a great deal of control over the tech companies that seek their advice. In this sense, law firms are the agents and the big tech companies are the consumers. Silicon Valley’s law firms’ role as dealmakers and counselors gives them a large say in how these corporations operate. This allows the scope of the companies that are essentially allowed to operate in Silicon Valley to be determined by these law firms.
Conclusion
From all that has been described here, the gig economy and the law firms that support it find themselves running a highly rationalized system that relies on rationalization to function. Rationalization has deeply affected the gig economy and Silicon Valley law firms to the benefit of the consumer and the company itself and somewhat of a detriment to those who work for these companies like Uber. Silicon Valley law firms and Uber have in and of itself created an ecosystem that allows companies and law firms to function in a way similar to McDonalds.
Refrences
Suchman, Mark C. (2000), “Dealmakers and Counselors: Law Firms as Intermediaries in the Development of Silicon Valley,” pp. 71-97 in M. Kenney (ed.), Understanding SIlicon Valley: The Anatomy of an Entrepreneurial Region. Palo Alto, CA: Stanford University Press.
Ritzer, George. The McDonaldization of Society: into the Digital Age. SAGE, 2021.
Mosendz, P., & Sender, H. (2016, March 8). EXCLUSIVE: Here's How Long It Takes to Get an Uber in U.S. Cities. Newsweek.
Batsell, J., Cornell, C. J., Graybeal, G., Green, M., Poepsel, M., Pucci, J., … Cuillier, C. (2017, August 23). From the Field: A Short History of Silicon Valley. Media Innovation and Entrepreneurship. https://press.rebus.community/media-innovation-and-entrepreneurship/chapter/from-the-field-a-short-history-of-silicon-valley/.
Scaruffi, P. (2010). A History of Silicon Valley. https://www.scaruffi.com/svhistory/sil9.html.
Dotcom Bubble - Overview, Characteristics, Causes. Corporate Finance Institute. (n.d.). https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/dotcom-bubble/.
Dotcom Bubble - Overview, Characteristics, Causes. Corporate Finance Institute. (n.d.). https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/dotcom-bubble/.
Credits:
Created with images by StartupStockPhotos - "programming developing startup" • t_watanabe - "stanford university campus" • andreas160578 - "computer retro old" • Firmbee - "office freelancer computer" • Inactive_account_ID_249 - "dsgvo privacy policy europe" • Bru-nO - "euro seem money" • robert - "Black and white rideshare pick up zone sign" • DariuszSankowski - "navigation car drive"