The sharing economy: hypercapitalism or sustainable alternative?

The sharing economy: exaggerated optimism?

In June Juliet Schor, American professor of sociology at the University of Boston, was a guest at the University of Antwerp in Belgium. She presented her results on a study about the sharing economy. Schor specialised throughout her career in trends in worktime, balance work-family, economical inequalities, gender and consumerism. She is currently researching “connected consumption”, a phrase launched by Rachel Botsman (What’s Mine is yours: The Rise of Collaborative Consumption) and one that largely co-exists with our subject, the sharing economy.

Over the last few years, an optimistic view has taken hold in studies about the sharing economy or peer production networks. Despite its rapid growth and enormous popularity with consumers, there is no universally accepted definition of the “sharing economy,” which is also known as the “collaborative economy,” the “peer-production economy,” or the “peer-to-peer economy.”

So what is the sharing economy? A host of new internet companies claim to be expanding the possibilities of sharing and collaboration, and are clashing with established players in their respective industries such as hospitality and transit. These companies make up what is being called the “sharing economy”: they provide a technological platform such as a website or an application through which individuals can offer to “share” their apartment or car with a guest, for a price. While a large number of sites and companies that consider themselves part of this sharing economy have been founded over the last decade, three industries lead the way: living space (AirBnB), transport (taxi alternatives Uber, Lyft and, Blablacar), and casual work (TaskRabbit, Homejoy).

The sharing economy invokes values familiar to many on the Left: decentralization, sustainability, community-level connectedness, and opposition to hierarchical and rigid regulatory regimes, seen mostly clearly in the movement’s bible “What’s Mine is yours: The Rise of Collaborative Consumption” by Rachel Botsman and Roo Rogers. It’s the language of co-operatives and of civic groups.

There’s a definite ecological side to the movement too: ideas of “sharing rather than owning” make appeals to sustainability, and the language of sharing also appeals to anti-consumerist sentiments popular on the Left: property and consumption do not make us happy, and we should put aside the pursuit of possessions in favour of connections and experiences. All of which leads us to ideas of community: the sharing economy invokes images of neighbourhoods, villages, and “human-scale” interactions. Instead of buying from a mega-store, we get to share with neighbours.

These ideals have been around for centuries, but the rise of the Internet has given them a new momentum. In the share economy literature authors like Jeremy Rifkin and Paul Mason emphasize that the web is lowering transaction costs of group formation and collaboration to a level at which they can form a threat and an alternative to capitalism.

Both authors argue that capitalism will be replaced by a “post capitalism” (and, tellingly, not socialism). Mason writes about post capitalism and Rifkin about the collaborative commons, both of which will be achieved after a hybrid phase when capitalism will be increasingly undermined by this new type of economy. They note three major reasons for this: first of all an information revolution is happening, creating a society with an abundance of information and because of that a virtually costless and labour saving economy. Secondly the capitalistic market and big monopolies are unable to integrate this information revolution. Finally, the seed of this “post capitalistic” economy is already present in the current capitalism we know, just as capitalism once sprouted inside the feudal system.

Paul Mason writes in The Guardian article announcing his new book Postcapitalism:

An economy based on the full utilisation of information cannot tolerate the free market or absolute intellectual property rights. The business models of all our modern digital giants are designed to prevent the abundance of information.Yet information is abundant. Information goods are freely replicable. Once a thing is made, it can be copied/pasted infinitely. A music track or the giant database you use to build an airliner has a production cost; but its cost of reproduction falls towards zero. Therefore, if the normal price mechanism of capitalism prevails over time, its price will fall towards zero, too […] Once you understand that information is physical, and that software is a machine, and that storage, bandwidth and processing power are collapsing in price at exponential rates […] We are surrounded by machines that cost nothing and could, if we wanted them to, last forever. [1]

Jeremy Rifkin in the Zero Marginal Cost Society takes it a step further:

The distributed, collaborative nature of the Internet allowed millions of people to find the right match-ups to share whatever they could spare with what others could use. The sharing economy was born. This is a different kind of economy—one far more dependent on social capital than market capital. And it’s an economy that lives more on social trust rather than on anonymous market forces […]while the Communications Internet is an enabler, as it merges with the Energy Internet and the Logistics Internet in the years ahead, establishing an integrated and sharable communication, energy, and logistics infrastructure—an Internet of Things—that can operate at near zero marginal cost, it dramatically boosts the potential of the other sharable sectors, including rentals, redistribution networks, cultural exchanges, and exchanges of professional and technical skills. When that happens, collaborative production and exchange will scale up from a niche sector to the dominant paradigm and capitalism will be reactive to the Commons, not the other way around. [2]

However, the remarkable achievements by web-based peer production do not automatically mean that digital networks level the social playing field despite claims of these authors. On the contrary, such optimistic claims rest on a set of inaccurate assumptions that have begun to obscure the ways in which technologically enabled peer production may be changing our lives for the worse. Many analysts proceed as if peer production networks are by their very nature nonmarket, nonproprietary, and fundamentally opposed to large-scale corporations. While peer production may at times have or have had these characteristics, this description only works if analysts abstract it from the socio-economic relations in which it exists. Yet Harry Braverman clearly cautions us against this: “examine the “machine on the one side and social relations on the other, and the manner in which these two come together in society.”[3] There is simply nothing to suggest that peer production networks must be nonmarket and nonproprietary and that other economic forces cannot leverage what they produce. When we look into the platforms themselves we have reasons to be critical, and here Juliet Schor’s lecture and research proved to be quite interesting.

The sharing economy: typology

Examples of the sharing economy are names like Yerdle, Freecycle, Airbnb, Couchsurfing, HubCulture, Citizen Space, co-housing, Toolshare, Time banking, the maker movement, P2PU, and Skillshare. During the presentation of her research Schor focused on seven case studies: Time banking, open learning (P2PU, peer to peer university), foodswap, Makerspace, Airbnb, RelayRides and Taskrabbit. Her method of research were interviews mainly taken in the US.

Schor presented her casestudies in a typology, and all casestudies were divided according to profit motive on one hand, and wether the relationship was between people directly (P2P) or between people and business (business to peer). This resulted in the following table:

 

Profit motive

Non profit

P2P

AirBnB, RelayRides, Taskrabbit

Time bank, Food swap

Business to peer

Zipcar

Makerspace

 

In the case of AirBnB 43 people who are active on the platform were interviewed. The first thing that sprung to attention was that all these people were very focused on making a profit: money was an important drive. Often rather large sums were involved that were a serious addition to the monthly income: because of this a dynamic was created where people talked about loss of income when the rooms were being used by family members or friends. Half of the interviewees forged some bonds with their guests, guiding them around their city, the other half indicated to be only interested in the money. On AirBnB’s website it became clear that renting out an extra room no longer was the main activity: many companies now use the platform to rent out rooms, and in some cities there is already a process going on where real estate is being bought with the intent to rent it out through AirBnB. This commercialisation is to the detriment of the local neighborhood and leads to inflating prices of family homes, putting these houses and apartments outside what regular families can pay. In short, AirBnB is moving away from the casual “air bed” mentality that gave it its name.

Next up was TaskRabbit. This company is often used among opponents to show that the sharing economy is in fact a hyper capitalistic race to the bottom: people put a task up on the online platform, and several “rabbits” can respond to this task with a price offer. A price is worked out between both parties, and the “rabbit” sets of to complete the “task”. Interview data shows that the people active on the platform are often in their twenties, unemployed or underemployed because of the crisis, and looking out for something extra to earn. The interviewees were initially happy about the money they could earn, an amount above minimum wage, but also indicated that as the number of “rabbits” increased the competition became fiercer. All kinds of services against a minimal fee, and exploitation became the norm on the platform. They also indicated it was hard to subsist solely on TaskRabbit jobs, but appreciated the freedom of choice.

At this point in the lecture only for profit parts of the sharing economy had been talked about, but Schor also talked about the nonprofit segments. Just like the rest of the sharing economy, this segment is using the language of sustainable local production, solidarity, innovation, equality and inclusivity. Contrary to the commercial segment of the sharing economy they have also succeeded to remain closer to their original values because there is no profit motive. Yet this segment is not without problems, as Schor’s research shows.

The first example was the Timebank: the principle is that people are being paid in time. If you perform x number of hours on certain tasks, somebody else from the community owed you the same x number of hours to do something for you. Schor had to admit that this idea for an alternative economic model had failed: there were few candidates for the different tasks. Everybody’s hours were valued equally, indifferent if the work consisted of coding, doing research or dogsitting. The people on the site didn’t accept this or had real trouble accepting this. Often people didn’t offer their main expertise because they wanted to do something else than their main job, but in reverse those same people expected others to commit their best skills. There was also a lot of making excuses in order not having to do a certain job: the other person’s education wasn’t good enough, the other person’s grammar and use of language were not good enough. In short, there was an air of snobbery around the site.

At Foodswap Schor discerned the same pattern, not surprisingly because food is eminently a domain of distinction and snobbery. At Makerspace she found that everything that was created had to be as obscure and unpractical as possible: one example was an (according to the Makers’ norms) important project on which they had been working for a long time, a 2 meter high robot with 6 legs to be able to walk over cars. When interviewing people at Makerspace she noticed an atmosphere of elitist group forming, clearly white, male, highly educated and socially privileged people.

In the nonprofit segment of the sharing economy we can observe that despite the outer anti capitalistic appearance, they still have issues about inclusivity and accountability and tend to reproduce societal inequalities both online and offline. The commercial segment rests on all kinds of labour now being sucked into the market through the use of all kinds of online platforms. This labour doesn’t enter the market under the form of employment with a contract and a wage, but more as a form of commercialising social interactions and acts. It is not surprising then that market based thinking invades and changes private life in all its aspects through these online platforms. It also remains unclear if and how one can make a living through the sharing economy, and if not, if one actually has any time for it after working their main job. The question that needs to be asked is whether the sharing economy is undermining capitalism, or, on the contrary, is reinforcing it by replacing and modernising some sectors of the economy? How does the sharing economy relate to the permanent struggle for more social equality, better work and living conditions with social security, and wages with which people can lead good lives? This struggle is being waged by trade unions and is still relevant today as shown by the success of the 15$/hour movement in the US, a demand launched by Ksama Sawant in Seattle and now being carried to a higher level by Bernie Sanders, Democratic presidential candidate.

Conclusion

Many of those who study the sharing economy still proceed too often from the assumptions that peer production is radically participatory, egalitarian, efficient, and psychologically fulfilling. As a result, all too easily the line that peer production is revolutionizing the way that we produce and consume information, democratizing culture, and fostering a robust public domain is being echoed. In that way, a long line of engineers and marketers of new technologies is joined. The personal computer, the early Internet, and of course, the airplane, the railroad, and the telegraph before them, were all hailed as having much the same egalitarian potential.

The first flaw to be found in the writings of sharing economy advocates is the tendency to technological determinism, ranging from mild to severe. The suggestion that we just have to sit back, relax, and watch how digital revolution will eat away capitalism’s profit margins and ultimately capitalism itself gives people the false idea that technology on its own will guide society to a better future without need for social, political or economic emancipation. The key issues for working people are still those that have always been with us: improving wages, hours, working conditions, job security, and social benefits. Workers protect themselves in these matters through trade union and political struggle. Technological determinism trivialize the social struggles present in society that also determine if we make progress at all, and if we do, what kind of progress it will be. In this worldview, problems are solved technologically, but social-political struggles are never fought.

The second flaw – also a common one – is a reluctance to follow the money. The Internet is not a single model of sharing/collaboration/collective action; it’s many models. There is a need to distinguish between these models, to study which ones have legitimacy and longevity and which ones do not. Perhaps it is no longer no longer necessary to tell that the Internet is a big thing. It is time to treat that fact as the starting point for a discussion rather than the conclusion. The question then becomes what kind of structures will form and persist in the online world, their economics and what impact they will have on people’s lives.

According to Crunchbase, Uber has raised over 5 billion Euros in investments since its founding in 2009, and both AirBnB and Lyft over 700 million Euros since their founding in respectively 2008 and 2012.[4][5][6] All the big players are technology companies based in the venture capital-rich San Francisco Bay area. The sector is growing quickly with regular new investments, including such seemingly odd choices such as Google Ventures investing in taxi services (Uber) and housecleaning services (Homejoy).

When we look at the website of Peers (peers.org), “a grassroots organization that supports the sharing economy movement”, we find an interface that distinguishes between “find work” and “manage work”, and which in essence functions as a portal site to the websites of the different members of Peers. It turns out Peers is a “grassroots organization” without local chapters but with many corporate “partners”, some of which as we have seen above attracted significant venture capital funding. Peers itself is also funded by the companies listed on its site, according to director Natalie Foster.[7]

The total funding for all companies listed on peers.org is well over 8 billion euros according to Crunchbase, and the money comes from investors such as Goldman Sachs, Google Ventures, or multi-billionaire Jeff Bezos, founder and CEO of Amazon.com. These are hardly the people to stand up against entrenched interests. Venture Capital funds are not interested in people power, they are interested in an investment with a good return.

The companies that are part of the sharing economy will lobby to be freed from all constraints on their ability to generate profit: health and safety regulations, work conditions, license regulations, … in this regard they will not be different from other private companies. In order to be successful the venture capital funded sharing economy will be forced to build down all informal aspects of the social practice of sharing. Meanwhile labour rights and minimum standards will be further undermined. If the sharing economy succeeds to do this then it will have used the progressive language of cooperatives and sharing to bring about an unregulated ultraliberal for profit economy.

The questions then becomes what kind of structures will form and persist in the online world, what kind of economy will develop online, and what impact this has on the daily lives of people, both in their working lives and their private lives. It seems clear to me that the sharing economy is not a nascent post capitalism, but a reconfiguration of the current capitalism. It is essential not to mix those two up.

The commercial section of the sharing economy leads to a growth of precarious jobs on a global scale under the control of big multinationals, and blurs the line between work and private lives through a technological platform that allows us to be constantly available to the employer. Workers are not employees, they are micro-entrepreneurs, and as such these kind of jobs tend to strengthen labour market competition. Investors invest because individual sharing economy companies have the potential for a global reach in space and a constant reach in time, collecting a little from each of millions of transactions around the world. It is clear the business wing of the sharing economy is appropriating the language of collective and progressive politics for financial gain.

The sharing economy companies have all started to turn their backs on their peer to peer roots despite still using the language of sharing and empowerment, while those non-commercial segments remaining are increasingly coopted by commercial interests. Even if some digitally enabled peer platforms succeeded in resisting commercial pressures and remain nonproprietary, they still have issues about inclusivity and accountability and tend to reproduce societal inequalities online. While the nonmarket, nonproprietary parts of the sharing economy certainly have their merit, on their own they are hardly the motors of revolution sharing economy authors make them out to be.

However, if sharing economy proponents are telling us that we have become so productive that we have created the conditions for a society based on abundance and an end to the exploitation of the 99% by the 1%, they are right. This is of course nothing new: Marx already wrote this down 160 years ago, and all social progress we have made since then is the result of social struggle, not technology.

 

 

 



[1] Mason P., http://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun

[2] Rifkin, J., The Zero Marginal Cost Society, 2014, p.187

[3] Braverman, H., Labor and Monopoly capital, 1974, p.12.

[4] https://www.crunchbase.com/organization/uber

[5] https://www.crunchbase.com/organization/airbnb

[6] https://www.crunchbase.com/organization/lyft

[7] Andrew Leonard, the sharing economy gets greedy: http://www.salon.com/2013/07/31/the_sharing_economy_gets_greedy/

Actions: Comments (1)

Comments

# n.sahraoui@londonmet.ac.uk
14 September 2015 16:19
Thank you Laurens for this article, it's a really good read, I found it illuminating! Would you see any ways forward to regulate labour online (thinking of TaskRabbit) or to avoid the negative consequences of Aribnb for housing prices? do you know of any attempts?

Post Comment

Only registered users may post comments.

If you would like to stay up to date with our news, events and blog posts, you can subscribe to our RSS feed  (not sure what this is? Find out here)

Subscribe to our RSS feed  for:

Share ⁄ Bookmark: