On the Sharing Economy

Sharing comes easily to us. We share particulars like names and lineages, ideas and experiences, kisses and embraces, as well as vital generalities like air and water, land and space. Sharing is a kindly and generous impulse and a critical aspect of what Marx would call our “species-being,” our basic nature. Indigenous people even made sharing the basis of economic exchange through great gift-giving feasts called potlatches. Too little of this spirit stunts social relations, and we might wonder if culture could exist without it. But what happens when sharing is put to profit? Can it be the pivot on which economic activity turns?

Advocates of the “sharing economy” say yes. By privileging “access over ownership” and renting out underutilized assets—your apartment, your couch, your car, your appliances, your spare time—this new sector promises to deliver us of our possessiveness. The clearinghouse Shareable, for instance, claims “disownership” is “the new normal.” Online profiles and accumulated user ratings mean that actual strangers become virtual friends you can eventually trust with your real stuff. All for a price, of course. The sharing economy is sharing made mercantile. It is goodwill with an instrumental purpose, occupying the rarest of places: where self-interest and public good happily coincide.

Or so we are led to believe. The truth of the matter is that the sharing economy is a floating signifier for a diverse range of activities. Some are genuinely collaborative and communal, while others are hotly competitive and profit-driven. A good many others are suspended somewhere in between. As such, studying the “industry” tells us much about a culture dominated by economic imperatives but yearning for more cooperative ways of doing things. The following essays help separate rhetoric from reality in an emerging economic sector.

Juliet Schor provides a neat précis of the industry as it stands, disaggregating the vague notion of the sharing economy into discrete components. She points to the growing power of industry giants crowding out the sector’s more egalitarian and democratic experiments. Edward Walker looks beyond the sharing economy’s progressive and participatory posturing, drawing attention to labor practices that have more in common with temporary and precarious work than with anything empowering. Caroline Lee considers the paradox of an industry that sees itself as a social movement, but has generated as much goodwill as resentment and created a risky business model by presuming trust. Finally, Paolo Parigi and Karen Cook look closely at the building of such trust. They argue that the “strangeness” of strangers is stamped out by technology—namely online profiles and ratings—that makes sharing less threatening, but also less surprising. Relationships multiply in such social networks, but they lack depth (consider, for instance, how many of your Facebook friends you could actually call on the phone).

Taken together, these four pieces describe a novel, evolving economic sector that makes use of what is best and worst in our social natures.

  1. Getting Sharing Right, by Juliet B. Schor
  2. Beyond the Rhetoric of the “Sharing Economy”, by Edward T. Walker
  3. The Sharers’ Gently-Used Clothes, by Caroline W. Lee
  4. Trust and Relationships in the Sharing Economy, by Paolo Parigi and Karen Cook

Getting Sharing Right

by Juliet B. Schor

The meteoric rise of the sharing economy has raised a compelling set of questions. Is it really about sharing? Is there anything new here? Does it represent a better model for organizing work and consumption? After more than three years of studying these initiatives, I can definitively say that the answers to these questions are: maybe, maybe, and maybe.

I define the new sharing economy as economic activity that is Peer-to-Peer, or person-to-person, facilitated by digital platforms. “P2P” is distinguished from models such as Zipcar, which is Business-to-Peer, in that the company owns the assets (cars) and rents them to consumers. The digital dimension is important for initiatives that aim for size, partly because it reduces transaction costs (the time involved in arranging exchanges), but also because it allows crowdsourcing of reputational information and ratings that mitigate the risks of intimate exchanges among people who don’t know each other. While sharing has been around forever, this type of “stranger sharing” is new.

But is it really sharing? There’s a class of platforms, typically non-profits, where the answer is yes. Couchsurfers stay at each others’ homes without payment. Gifting sites such as Freecycle and Yerdle enable people to offer free stuff to each other. Other true sharing sites include time banks, landsharing (which pairs would-be gardeners with people who have land), seed and tool libraries, and locally based, emerging forms of production and consumption like food swaps and pop-up repair collectives. Innovative practices of this type, based on social solidarity, ecological consciousness, and open access, are proliferating. Their Achilles Heel is that most haven’t taken full advantage of the digital technologies or figured out the economic models that will yield robust and growing volumes of trades and reciprocal relations. In research with the MacArthur Foundation Connected Learning Research Network, my colleagues and I find that the time banks and food swaps generate only small numbers of exchanges.

The platforms that are growing are those where providers earn cash and consumers get a good deal. These are the large, well-funded, for-profits getting most of the attention—Uber, Lyft, and Airbnb. But none is in the sharing business. (An exception is the small slice of the market devoted to true ride sharing—strangers in a car together.) The ride service companies are taking advantage of regulated barriers to entry and the resulting rents in the taxi industry in order to “disrupt” it. Uber has become notorious for predatory pricing and anti-competitive practices against other ridesharing companies, bait-and-switch policies toward its drivers, invasion of privacy and sexism. Airbnb is a rental site that allows people to monetize the housing assets they control or lease. These platforms are innovative, serve consumers well, and can be lucrative for certain providers. But increasingly, they’re more about earning money (for providers) and managing labor and other costs cheaply (for the platforms) than the feel-good values of sociability, carbon footprint reduction, and efficiency many platforms emphasized when they started out.

Sharing is least evident in the labor platforms, particularly those that specialize in skills that are in ample supply: driving, running errands, housecleaning, or putting Ikea furniture together (a common ask on Task Rabbit, a low-end concierge site). Providers have no protections—not even minimum wage guarantees—when payment is by the job, rather than by time. The platforms are adamant that “gig” laborers are not employees, but “micro-entrepreneurs.” We have found that people with specialized skills or high education can earn attractive sums of money, especially because they typically have other employment. It’s much harder for those with run of the mill competencies, because providers seem to be outstripping demand. Even if the economics were more favorable to providers, these sites are mainly taking advantage of collapsing labor markets rather than creating shared risk and reward.

Could it be different? Consumption sharing was originally conceived as the next stage in the peer production revolution. Peer production yields products that are not created for money and are freely available. Examples include open source software (Linux, Firefox), citizen science, shared cultural content, and crowdsourced knowledge (Wikipedia). Peer production has emerged because information, ecological assets, and social relations are at the core of 21st century economies. These resources are not well organized via private property and profit-maximization, as a considerable body of economic theory shows. They are common resources, or “commons,” better managed via fair allocations, collaboration, and democratic governance. Shared lodging, land, goods, and services could be the next steps in a new model that emphasizes cooperation and widely-diffused value, rather than competition and concentration of wealth. Digital technology has made this path efficient. But to take advantage of these efficiencies at large scale, we’re going to need platforms owned and controlled by their users (providers and consumers). That’s technically feasible and democratic governance will mitigate against race to the bottom dynamics and preserve value for consumers.

Whether we can get there before Uber, Airbnb and other for-profits have achieved durable domination is now the question. If we do, we’ll have a shot at a true sharing economy.

Beyond the Rhetoric of the “Sharing Economy”

by Edward T. Walker

AirBnb, the website through which users can rent out their home to overnight guests, is valued at $10b and has an estimated 800,000 rentals listed in 34,000 international cities. Uber, the ride-sharing service, also dominates its sector and has a valuation of no less than $40b.

Although these are the most successful, a variety of smaller start-up firms are revolutionizing industries: they are providing alternative, crowdsourced services in areas ranging from meals (SupperShare), package shipment (PiggyBee), car or boat rental (respectively, RelayRides and Boatbound), home delivery of goods (Instacart), and even contracting with short-term laborers (TaskRabbit, AirTasker, Proprly). Their services build upon the well-established repertoires and rhetorics of local exchanges such as community-supported agriculture (CSA) programs, neighborhood tool-sharing, time banks, and the like, but are now using mobile technologies to facilitate their expansion.

These companies frame themselves as part of a broader “sharing economy,” with the argument that these start-ups augur the onset of a more friendly, empowered, collaborative, and locally oriented capitalism. In some respects, this is accurate. Certainly, practitioners and advocates view these arrangements as a more progressive and participatory alternative to the power of multinational corporations and the entrenched problems of large bureaucracies.

But the reality isn’t so simple. In terms of labels, labor, and lobbying, “sharing” doesn’t quite capture what’s taking place.

First, can each of these projects be accurately understood as part of the same “sharing economy?” Highly profitable, major companies like AirBnb and Uber are grouped alongside voluntary gift-giving exchanges like Freecycle or Couchsurfing. Calling them all part of the same “sharing economy” ignores vast differences.

While, of course, it’s true that a strength of all of these operations is their reliance upon decentralized networks of “producers” for their services, dominant firms extract substantial rents from the transactions on their sites, and the extent of these fees is not always clear: Uber, for instance, has been opaque about whether its drivers receive tips for their work.

The “sharing economy” label also misrepresents the labor issues involved, eliding the distinction between paid work and uncompensated volunteering. TaskRabbit, the odd-job household labor and cleaning service, goes so far as to suggest that they are little more than “an old school concept—neighbors helping neighbors—reimagined for today.”

In many respects, though, such crowdsourced labor fits very well with the turn toward precarious employment and the privatization of risk documented by many sociologists. In fact, some have argued that the industry is more accurately understood as the “1099 economy,” since their workers are not employees receiving IRS W-2 forms, but 1099-MISC forms. That is, they are temporary contractors. Some authors see this in an empowering, “be your own boss” light, but it’s worth noting that contractors aren’t offered the health and social safety-net benefits of conventional workers. Neither firms like TaskRabbit nor those who use their services pay benefits to workers.

Third, the “sharing economy” frame might also mislead one into thinking that such start-ups don’t engage in lobbying, instead favoring softer, more collaborative political approaches.

There is some evidence from the transportation sector that incumbent taxi companies are outspending firms like Uber in campaign contributions. But it’s also becoming clear that firms in the broader crowdsourcing sector are learning to flex their political muscles. This has recently been underscored by the scandal surrounding an Uber executive’s comments that the company intends to “dig up dirt” through opposition research about the journalists writing negative stories about them.

Even more striking are the industry’s “grassroots” efforts, both through Peers.org and Fair to Share and in other attempts to use grassroots lobbying strategies, which mobilize the public as pro-business citizen lobbyists. In these cases, the firms’ workers, users, and supportive third parties are organized as front-line defenders of the industry.

In fact, these campaigns bear a notable resemblance to other industry-backed grassroots campaigns such as those I describe in my recent book. They trade on the power of everyday citizens to create an authentic voice for industry, they are often less than fully transparent about the role of the corporate funder, and they seek out individuals seen as local opinion leaders to most effectively make their case. Like other companies, they face the charge of “astroturfing,” or simulating the appearance of independent, grassroots advocacy.

Peers.org, for instance, has leaders who have denied that it’s a lobbying organization and claimed that it’s a free-standing, independent, nonprofit organization. Nonetheless, Peers has been heavily funded and staffed by crowdsourcing firms and has served as a major political force for the industry. That isn’t, of course, to deny that Peers helps bring together a variety of interests looking to improve crowd-sourcing and provide social benefits, nor is it to suggest that self-styled sharing firms don’t have a right to lobby. But greater transparency might help to alleviate the image that services like Peers are engaged in political ventriloquism on behalf of leading firms like AirBnb. And there’s now evidence that this message might be getting through: Peers is currently rebranding itself as an association focused on problems facing vulnerable peer economy workers.

What we learn, then, is that the “sharing economy” would be much more accurately understood as the “crowdsourcing economy.” The change in terms recognizes the sector’s technology and approach without misleading by moralization.

So it’s time to stop assuming that this sector plays by an entirely different set of rules. The technologies may be new and there are certain noteworthy social benefits, but let’s not go so far as to mistake Silicon Valley’s idealized self-image for reality.

The Sharers’ Gently-Used Clothes

by Caroline W. Lee

The sharing economy busts a lot of the assumptions of our finance-obsessed, over-leveraged culture. It seems the perfect locally rooted, small-is-beautiful antidote to an economic crisis precipitated by reckless financial giants too big to fail. But it’s not just tangible things like beds, bikes, and breastmilk that are being shared. Equally important is the community ethos of sharing. The message of collective empowerment through human contact is its own viral product, touted by Harvard Business School professors and time-banking activists alike. Is the industry’s egalitarian impulse real or a kind of window dressing? As I’ll explain, it’s a little of both.

For sociologists of democratic culture, the sharing economy is just the latest example of insurgent sentiment being used to sell the bona fides of profit-making corporations. Advertising agencies of the 1950s and ’60s, for example, were quick to sell their products as countercultural and revolutionary. The same held for the “liberation marketing” of the ’90s, which promised self-realization through consumption. By the turn of the century, large corporations were claiming to be regulation-oppressed little guys whose only interest was empowering stakeholders. In today’s post-crash reality, sharing economy giants like Uber and Airbnb compete to be seen as leading the charge against “Big Taxi” and “Big Hotel.”

On the surface, the idea that consumption can be collaborative seems radical indeed. Greed and growth are no longer the greatest goods. Shareable, an online news site, sees the “sharing transformation” as a “movement of movements” challenging “outmoded beliefs about how the world works—that ordinary people can’t govern themselves directly; that nonstop economic growth leads to widespread prosperity; and that more stuff leads to more happiness.” With its calls to fight old economy industries, the sharing economy seems to borrow from the “fuck the man” ethos of earlier generations of sharers, from hippies and activists sharing their lives in communes to punk rock kids distributing free ’zines at benefit shows to techies sharing music files on Napster.

The anti-establishment ideology sold by sharing economy companies is hazier and cuddlier by comparison, and that’s no mistake. Social change may be on offer, but it’s more about self-realization through cooperation than it is about redistribution or mobilization. The companies seem to say, “A better world is within reach, once we tap into our own need for self-fulfillment and authentic connection, once we learn to trust our emotions and intuition.” Testimonials from hosts on their website say that Airbnb sparked career-changing conversations about “life purpose and finding what is meaningful.” Quotes like these let us believe hosts and guests don’t just share herbal tea and towels, but “meaningful exchanges that further build community, foster cultural exchange, and strengthen understanding.” Social change begins at home, over a bottle of wine with like-minded strangers.

This rhetoric of peace, love, and understanding is more than clever marketing. There really is a new business model here, and it depends on sharers believing the hype. The new sharing economy leverages value from strangers’ tenuous social connections online—and for that to work, people need to have a significant amount of trust in their online communities, drivers, and new housemates. It’s no wonder that companies like Lyft outfit drivers’ cars with friendly pink mustaches and Airbnb takes a hard line on “bad actors” making big bucks off gullible tourists.

In the absence of regulation and clear guidelines, the industry relies, to a degree, on the moral policing of crowdsourced reputation scores and social network identity verification. Counting on the goodwill of others in an ongoing economic crisis is a risky gambit, however: assaults, thefts, prostitution rings, squatters, and other horror stories show the dark side of putting too much stock in strangers’ online profiles. When an unhinged driver attacks a passenger with a hammer or an apartment is rented for what turns out to be a “XXX FREAK FEST,” tamperproof surveillance cameras in licensed cabs and hotel lobbies start to seem sensible. As New York Magazine puts it, “The Dumbest Person in Your Building Is Passing Out Keys to Your Front Door!” Despite promises of million-dollar insurance guarantees, sharing economy terms and conditions reveal that liability and risk are unclear and often unequally shared.

Global sharing hub OuiShare argues that “an economy based on community principles such as sharing, collaboration and openness can solve many of the complex challenges the world faces,” from climate change to poverty. Far from warning sharers against opening their hearts and homes, I would caution them against investing too much faith in the idea that global problems can be solved by “peer-to-peer” conversations and self-governing communities of strangers.

As sociologists like Sandra Levitsky, who studies failures to mobilize among caregivers, show, the private politics of fellowship and mutual support don’t easily translate into impact on the larger polity, despite back-breaking shared grievances. In fact, grander ambitions for challenging the status quo mean rude questions about ownership and rights and uncivil protests that don’t look cooperative. Sharing may be caring, but so long as it builds upon existing inequalities in power and wealth, it may not add up to much.

Trust and Relationships in the Sharing Economy

by Paolo Parigi and Karen Cook

The Internet has evolved rapidly as a new medium for human interaction, particularly as people generate online communities. While these communities typically have unifying objectives, they often attract individuals from different backgrounds. Facilitating contact and eventually the emergence of trust among strangers is an integral part of how the sites function. Such is the case, for example, with the community-based organizations springing up in the “sharing economy”. These organizations ask members to share a good or service with strangers. Members of Lyft, for instance, trust car-owners to drive them to their destinations, while members of AirBnB stay in strangers’ houses while traveling. Remarkably, what appears to be a very difficult act in the offline world—creating interpersonal trust—is a routine activity for organizations operating within this segment of the economy.

We have studied an extreme case of interpersonal trust in depth: CouchSurfing. A website created in 2003 to support international travel and cultural exchange, CouchSurfing built a community of members who both “host” others and “surf” to find a “couch” to sleep on as they travel the world, all without the exchange of funds. From its unassuming beginning, CouchSurfing has grown into a worldwide phenomenon with a distinctive culture. Members post detailed personal pages, recounting their experiences visiting other members or hosting them. Similar to Facebook pages, CouchSurfing pages list “friends,” though the depth of information provided by CouchSurfers about their social lives greatly exceeds what most other social networking websites supply.

By studying this community, we discovered an interesting mechanism at the root of interpersonal trust, a mechanism that highlights the importance of technology. The accumulation of ratings about users (whether guests or hosts) had a double-edged effect on the emergence of trust and relationships: it made relationships easier to establish initially but it also weakened them after a certain threshold. That is, technology facilitated the emergence of interpersonal trust among CouchSurfers, but it also made establishing strong ties harder as users acquired more and more reviews.

For example, early on, social ties originated through a process of mutual discovery. As one CouchSurfer told researcher Paula Biasky: “He [the guest] would speak, and I would often listen. It was the first time I ever invited a stranger into my home, and the first time I ended up speaking to a stranger until the late hours of the night.” Despite the perils of uncertainty, the psychological and emotional rewards of a successful interaction produced strong bonds and interpersonal trust. These interactions occurred in the context of an early rating system which provided little accumulated information about users. In contrast to early CouchSurfers’ openness, the people we interviewed in 2010 were more calculating about the types of strangers they hoped to meet. Their experiences with other CouchSurfers were mediated by the organization’s reputation system. While they welcomed the rating system, in part because it allayed some safety concerns, it also made relationships more predictable.

Technology thus operates as an assurance structure: it reduces overall uncertainty and promotes trust between strangers. At the same time, it strips away some of the serendipity involved in meeting new people. Interactions are more normalized, less open to chance. This is because trustworthiness is promoted not by interpersonal ties, but by the monitoring of one another in a network in which reputations are posted.

Does technology operate in the same way for other communities in the sharing economy? It is hard to know, as there is very little research so far on the mechanisms for building trust where it might not otherwise emerge. What our research suggests is that Internet-mediated interactions tend to become less open-ended and unexpected the more information the community accumulates about its members.