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The Politics of the Sharing Economy by Trebor Scholz

photo of Kevin Flanagan

Kevin Flanagan
26th May 2014


 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, stuff, skills, or services. (Botsman and Rogers)

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[1], 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.

Right, but then he claims that such emerging marketplaces can perfectly self-regulate and should be left to their own devices (Sundararajan). Sharon Ciarella, Vice President of Amazon Mechanical Turk made a similar argument (Pratt); 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 crowdbilking 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 pointd out that the so-called “sharing economy” is nothing but the logical continuation of crowdsourcing. And Uber is not free from those dynamics. There is a reason that taxi fares are regulated; it prevents abuse.[2] 

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, 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 hosted 8,5 million guests without ever turning a brick (Yeung). All they got is an app; it’s a logistics company.

Are we looking at a secret plot, a sureptitious p2p takeover? Companies in the “sharing ecomomy” can only function because they are using your “assets,” YOUR resources: your car (Bla Bla Car, Getaride), your apartment (Airbnb), and your computing power (e.g., Skype).

Surving 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 of people. “Why don’t you just lend your car, drill, parking lot, blender, and house once your unemployment benefits run out?” And the sharing ecomoy can even feed you. A new app let’s share your leftovers with strangers.

And once the Airbnb hosts who are rent-subsidized are exposed, they will might get evicted because obviously they did not need all that extra space anyway. In the UK, for example, the so-called bedroom tax that was introduced in 2012, punishes tenants for having a spare bedroom, while no tax deductions are administered if people have, let’s say, spare houses.[3]     

Rachel Botsman’s book What’s Mine is Yours, published by Harper Business, is a frequent reference in the sharing movement, which, contrary to the title of the book 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,” “Sharing is Mainstream”(Owyang) and vocabulary like

 

  • love (!);
  • open innovation;
  • trust;
  • co-creation;
  • co-design;
  • and mass customization.

 

I mean, may people have a soft spot for Etsy. 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, for responsible consumption, and completely new marketplaces.

Now, I want to keep having the feeling that I want to sign up for commons-based peer production but 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. 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. To summate, 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.

All practices end up in the same celebratory sauce of the Californian Ideology, complete with mandatory meditation, cheers, and group hugs followed by business pitches. Close your eyes and wake up in San Francisco– 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 like crowdsourcing or massively commercial online learning platforms that can be linked to the closure of Community Colleges.[4] 

Let me be a bit more concrete. Like I mentioned many times before, economists now project a division of society, where a superclass of 10 to 15 percent make over one million dollars a year and the rest makes between 5,000 and 10,000 dollars annually. The numbers and percentages may differ but there is a pretty coherent vision of the overdeveloped world being transformed in a way that cuts out the middle class. Jaron Lanier seconds and thirds that, too. 

How would a society be able to move in that direction? It would require 1) an extreme deskilling of large parts of the population, 2) one would have to make sure that prospective workers have no credentials or deep skills that could serve as bargaining instruments [5], and 3) one would have to be able to reorganize work in a way that makes extremely low paid work available for the vast majority of the population. The rhetoric of austerity also helps 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. The rethoric of austerity can do wonders.

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 of platforms in the app economy. Seti@home would not hit the like button on AMT, usertesting.com, mob4hire, or 99tests.

And, do we really want to waive our lighters through the dark evening skies for the newly gained ability to not buy a table anymore but just get the parts and assemble it ourselves?

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 (following 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 that 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 nature of employment and making 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.

Rachel Botsman ends the introduction to her book with a quote. She writes: “The status quo is being replaced by a movement. Peer-to-peer is going to become the default way people exchange things, whether to space, staff, skills, or services.” Statements like that could come straight out of the Occupy Wall Street handbook. But this activist rhetoric is in fact spoken into the context of an industry takeover by incumbents in several areas of the economy. 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 (Wensink). 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 produsers. And I wil not even start to address the harsh mistreatment of workers in Amazon warehouses all over the world.

One thing is clear, there is something irresistable and important about commons-based peer production. But what is compelling is not that the millions in revenue shift from the owners of the Intercontinental hotel chain to the youthful owners of Airbnb.

It is not a completely new breed of businesses that is so compelling but 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 place 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 Besoz.

Community-based tool lending libraries (1), 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 financialize our labor. 

Value creation is no longer bound to corporate waged 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. 

And yes, free labor is not the problem but at the same time, I don’t want to be turned into a wheel on the bandwagon of a soon-to-be billionaire incumbent.

 

References

Andrew Leonard. “‘Sharing Economy’ Shams: Deception at the Core of the Internet’s Hottest Businesses.” N. p., n.d. Web. 9 May 2014.

Botsman, Rachel, and Roo Rogers. What’s Mine Is Yours: The Rise of Collaborative Consumption. HarperBusiness, 2010. Print.

Owyang, Jeremiah. “Sharing Is the New Buying: How to Win in the Collaborative Economy.” N. p., n.d. Web. 9 May 2014.

Pratt, Mark. “Amazon Mechanical Turk – The Cloud Show (CS&A Series – Episode 4).” cloudshow.tv. N. p., n.d. Web. 14 Mar. 2014.

Sundararajan, Arun. “Trusting the ‘Sharing Economy’ to Regulate Itself.” Economix Blog. N. p., n.d. Web. 9 May 2014.

Wensink, Patrick. “My Amazon Bestseller Made Me Nothing – Salon.com.” N. p., n.d. Web. 9 May 2014.

Yeung, Ken. “Airbnb Reveals Hospitality Lab To Help Better Train Property Hosts.” N. p., n.d. Web. 9 May 2014.

This article is reproduced here with the permission of Trebor Scholz and was originally posted on http://collectivate.net/journalisms/2014/5/19/the-politics-of-the-sharing-economy.html

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