The Politics of the Sharing Economy

“As best we can tell, the politics of the venture capital elite boils down to fending off higher taxes, keeping labor costs low and reducing the ‘burden’ of government regulation. … Silicon Valley could start by putting a stop to pretending that the sharing economy is about anything other than making a killing.” – Andrew Leonard

If you’ve heard about companies like Airbnb, Zipcar, Skype, Uber, Getaround, and Lyft, and you know a bit about crypto-currencies, you get the picture. The “sharing economy” is just as exhilarating and vexing as the Web 2.0 meme was nine years ago.

I am all there with Arun Sundararajan, professor at Stern School of Business at NYU, who describes walking down the street in New York City, musing on all the parked cars that remain unused ninety-two percent of the time. He gets it right; it seems awfully inefficient, even wasteful. Why couldn’t he just pick up one of those vehicles, run an errand, return the car to that same spot thirty minutes later, clip a twenty dollar bill under the sunshade, and be done?

But then he claims that such emerging marketplaces can perfectly self-regulate and should be left to their own devices. Sharon Ciarella, Vice President of Amazon Mechanical Turk, made a similar argument: Mechanical Turk workers would just vote with their feet — they could not be tricked into performing exploitative work. All good here; no intervention needed.

Not so fast. It is surprising that crowdmilking practices on Amazon’s Mechanical Turk still have not raised red flags in the offices of regulators. Based on these examples, it should be clear how sorely regulation is needed. I agree with Evgeny Morozov who pointed out that the so-called “sharing economy” is nothing but the logical continuation of crowdsourcing. A company like Uber is not free from those dynamics. There is a reason that taxi fares are regulated; it prevents abuse. I rode in a town car recently and was quoted $16 for my trip. Through Uber, the same trip would have cost between $21 and $27.

But it is also all so electrifying. Uber is valued at 10 billion dollars and Airbnb, a company founded in 2008, is valued higher than the Hyatt hotel chain. Airbnb offers as many rooms as Intercontinental, which has 4600 hotels with 120,000 employees in over 100 countries. It took Intercontinental sixty years to build this business empire. Hyatt and Intercontinental had to hire architects and build up an enormous infrastructure. And then here comes Airbnb, which offers an impressive 500,000 listings in 33,000 cities in more than 192 countries. So far, Airbnb has hosted 8.5 million guests without ever turning a brick. All they got is an app; it’s a logistics company. Are we looking at a secret plot, a covert p2p takeover? Companies in the “sharing economy” can only function because they are using your “assets,” your resources: your car (Bla Bla Car, Getaround), your apartment (Airbnb), and your computing power (Skype).

But the exploitative basis of such business ventures is overshadowed by their obvious appeal to consumers. In the sharing economy, surviving without a job suddenly seems to be in reach; people can now rent out all of their “assets.” The rush to wield unused capacity (“Buy a bigger car because now you’ll be able to rent it out!”) can quickly move from a bit of welcome extra cash to being a requirement. “Why don’t you just lend your car, drill, parking lot, blender, and house once your unemployment benefits run out?” And the sharing economy can even feed you. A new app lets you share your leftovers with strangers.

The appeal of the sharing economy to the consuming public is solidified through its rhetoric. Rachel Botsman and Roo Rogers’s book What’s Mine is Yours, published by Harper Business, is a frequent reference in the sharing movement, which, unlike its title suggests, has nothing to do with infrastructure socialism or Richard Barbrook’s “cybernetic communism.” The “sharing economy” comes with slogans like “Sharing is the New Buying,” “Sharing is Growing,” and “Sharing is Mainstream,” and vocabulary like love (!), open innovation, trust, co-creation, co-design, and mass customization. This sentimentality is easy to understand. Take the example of Etsy. Many people have a soft spot for this site and community. Who wouldn’t immediately line up when they hear about a culture that is community-centric, based on trust, sustainability, a novel type of horizontality, “a new social operating system based on unused value,” generosity, and a culture that is against wastefulness and for responsible consumption and completely new marketplaces?

Now, though I want to give the impression that I want to sign up for commons-based peer production, I also want to be crystal clear about which part of this conversation I don’t want to have any part of. There is a difference between non-market practices and greed-free business like Craigslist and Fairnopoly on the one hand and corporations like Airbnb or Uber that profit from peer-to-peer interactions on the other. Again, I support peer production and sharing practices but I am vexed by attempts to subsume them into the new corporate hype of “the sharing revolution” that comes with calls to make the world a better place and comparisons to the Arab Spring and Occupy Wall Street. What seems to be completely missing from the discussion about the “sharing economy” is a distinction between the shifts of markets (and labor practices) to the Internet and the surprising victories of market incumbents like Airbnb, Lyft, and Uber on the one hand, and commons-oriented peer production and greed-free companies on the other.

The market-oriented companies of the former group have given rise to a culture in which all “sharing”-oriented practices end up characterized by the celebratory Californian Ideology, complete with mandatory meditation, cheers, and group hugs followed by business pitches. Close your eyes and wake up in San Francisco circa 1995, then turn on an episode of HBO’s Silicon Valley (spiritual advisor to business tycoon: “You clearly have a great understanding of humanity”).

I am not sympathetic when practices and projects like Shareable and Wikipedia or — more generally — collaborative lifestyles with people exchanging resources such as food, skills, or time, are mixed up with often exploitative practices such as crowdsourcing or massively commercial online learning platforms that can be linked to the closure of Community Colleges. What Yochai Benkler defines as commons-based peer production shouldn’t be thrown into one pot with mass customization sites like MyTwinn, Gemvara, or Zyrra and co-design a la 99Designs. It is not to be mixed up with developers designing unique features for platforms in the app economy. SETI@home would not hit the “like” button on AMT, usertesting.com, mob4hire, or 99tests. The high-minded values of genuine commons-based production should not be confused with the user exploitation inherent in the practices of a company like Airbnb, which is not concerned with the fact that hosts who are rent-subsidized can be evicted on the grounds that they obviously did not need all that extra space. And do we really want to wave our lighters through the dark evening skies for the newly gained ability not to buy a table anymore but just get the parts and assemble it ourselves?

Let me be a bit more concrete. Economists now project a division of society, where a superclass of ten to fifteen percent of the population makes over one million dollars a year and the rest makes between $5,000 and $10,000 annually. The numbers and percentages may differ but there is a pretty coherent vision here of the overdeveloped world being transformed in a way that cuts out the middle class. Computer scientist Jaron Lanier has argued that the Internet is directly complicit in this transformation.

How would a society be able to move in such a direction? It would require an extreme de-skilling of large parts of the population and the reorganization of labor in a way that makes extremely low-paid work available for the vast majority of the population. The rhetoric of austerity can do wonders in this regard. As long as everybody understands that they have to tighten their belts, the ruling class can cut wages and transform the nature of work for the rest of us. This reorientation of labor and society also entails a prejudice against prospective workers who possess credentials or deep skills that could serve as bargaining instruments. If the goal is to undermine the educational system and replace it with a system of learning that does not allow for credentials and actual deep learning, then distributed learning (i.e. education not dependent upon a physical location) would be a highly efficient instrument on the way to a society without a middle class. To be clear, I’m not against massively open online courses in general, but I’m deeply skeptical about the commercialization of connected learning.

There is really a tricky undercurrent that sometimes gets forgotten. It is absolutely true that it’s phenomenal that Airbnb and Skype could “disrupt” entire industries (to use business lingo for a moment) without having to build infrastructure but instead using existing “wasted resources.” And it is true that consumers seem to benefit from the services. But let’s also acknowledge that this means that people have to open their homes, that the nature of the private has completely changed, and that life itself changes when your apartment turns into a B&B and you become an innkeeper.

If the goal is to undermine the traditional nature of employment and make the gig economy go viral, then businesses like TaskRabbit, Uber, or Lyft should be celebrated. If one thinks that the model of micro-entrepreneurship is something to aspire to, then all of that makes perfect sense.

At the end of their book, Rachel Botsman and Roo Rogers write: “The status quo is being replaced by a movement. Peer-to-peer is going to become the default way people exchange things, whether it is space, staff, skills, or services.” Statements like that could come straight out of the Occupy Wall Street handbook. But incumbents in several areas of the economy in fact iterate this activist rhetoric in the context of an industry takeover. It is fantastic that co-creation is possible on Amazon.com where authors can self-publish with the help of platforms like Blurb. At the same time, self-published authors who make it onto on Amazon’s best-seller list also make only a fraction of what they would have made in the context of traditional publishing. Therefore, I would not hold up companies like Lulu, Blurb, Moo, Threadless, or Amazon’s book reviews as shining examples of co-creation, powered by the living labor of intrinsically motivated producers. And I cannot even start to address here the harsh mistreatment of workers in Amazon warehouses all over the world.

One thing is clear: there is something irresistible and important about commons-based peer production. But what is compelling is not that millions in revenue have shifted from the owners of the Intercontinental hotel chain to the youthful owners of Airbnb or that a completely new breed of business has taken hold. What matters are collectives and greed-free economic practices that are infused with values relating to ecological concerns.

In “When Push Comes to Pull,” David Bollier defines the pull economy as being based on demand rather than supply, an economy that is built by like-minded individuals who “pull” the goods and services that they want on their own terms. Nobody needs to create the demand for me to want a place to stay in when I’m in another city. That need already exists and services like home sharing and boat sharing meet that need. Yes, there are new marketplaces for labor, things, ideas, and money, but we should look closely and see whether they are addressing issues of income inequality or if they are just about delivering the next Jeff Bezos.

Community-based tool lending libraries, bike and car sharing initiatives, meal exchanges (e.g., to feed the Walmart employees who can’t afford a Thanksgiving dinner) or potlucks, peer-to-peer land initiatives, personal fabrication with 3D printers, open hardware, the free exchange app Yerdle, and even team-buying services like the Chinese Twangou set the needle of our moral compass in a much better direction than platforms that expropriate and capitalize on our labor.

Value creation is no longer bound to corporate wage-labor. The value that is created through the collaborative economy is based on social connectedness, it is based on communities, it is based on connectivity; it is grounded in the ubiquitous use of mobile phones, collaboration, and economies of scale.

Free labor may not be the problem itself but at the same time, I am not interested in being a wheel on the bandwagon of any soon-to-be billionaire incumbent.