Network
July 29th 2013
Bring on the ‘real’ sharing economy
This month New Start has published a number of articles about the sharing economy and asks whether it can regenerate local areas. Wherever you read the words ‘sharing economy’ you can guarantee they’ll be soon followed by the words Airbnb, TaskRabbit, Sorted, taskPandas, Lyft and a whole host of ever-increasing copycats.
All of these organisations use technology to connect those who have assets to those who want to use them. But it’s not only new technology that links them: they all promote themselves as embracing a set of values that favours access over ownership, anti-consumerism in the post-financial-crash world of austerity and rising poverty, and as vanguards of an economic revolution.
What I don’t understand is how any of these companies can be described as ‘sharing’: they all exchange services for money. Airbnb enables people to rent out rooms in their homes. TaskRabbit (USA), taskPandas (UK) and Sorted (UK) connect people who want odd jobs or errands done to people who will do them for a fee. Uber and Lyft work like a local taxi service but with community drivers.
These companies use smartphone apps to connect buyers and sellers of services. The only services the company provide is an online venue to bring both parties together and a fee transaction service on the PayPal model. All of the companies take a commission; Airbnb is savvy enough to take a fee from both guest and host. I don’t understand how this is sharing; it’s renting and cash for labour. Just old fashioned capitalism run by tech savvy entrepreneurs.
Aside from these companies being high tech and dressed up in ethical language, the other common denominator is that they provide ways to cheat the system. With TaskRabbit/Panda and Sorted you sign up to receive notifications of tasks on your smartphone and then bid in the hope you’ll get picked for the job. Obviously the cheaper you rent yourself out the more likely you’ll be to get picked. Very tempting in these cash-strapped times, but I have to wonder who in reality would go to the trouble of paying income tax on work like this. The same has to be asked of Airbnb hosts.
All of the sites make it clear that tax reporting is the responsibility of the service provider and all state they will release your personal information if legally required. With transactions being digitally recorded the taxman and the DWP might find them a very useful source of information.
What’s so sharing about this? Paying tax is participating in a sharing economy, dodging it is not.
Massive unemployment is fuelling a market whereby people are encouraged to undermine each other with cheaper bids for one-off jobs. In harsh times people are prepared to work without protection and for less than the minimum wage. The companies absolve themselves of all legal responsibility towards those providing and receiving the services, including health and safety and workers’ rights. The New Start April 2009 special on unemployment predicted an increase of illegal workers as unemployment rises. Is the ‘sharing economy’ nothing more than the high tech organisation of the black market to enable the wealthy to exploit the poor?
Forbes magazine calls the sharing economy a disruptive economic force in the USA and estimates the value flowing through it will reach $5bn this year. It’s not saying it’s a bad thing, just that it is disrupting major markets who cannot afford to ignore the phenomenon. One thing for certain is that these companies are making money. Airbnb was valued at $2.5bn earlier this year and the partners are likely to become the sharing economy’s first billionaires. Pretty serious stuff underneath that fluffy community marketplace mask it wears.
Any ‘sharing economy’ model where money changes hands can’t really contribute to regeneration: someone is always getting rich at the expense of the poor; employment rights are being dispensed with; local taxation is losing out; the health and safety of consumers is ignored. There are concerns that the massive success of Airbnb is contributing to gentrification and evidence that some hosts are avoiding tax and violating tenant laws in rent controlled homes.
There is a real sharing economy out there: Time banks are the most obvious way to share skills. Freecycle has been connecting those with goods to spare to those with no money for years; it’s low tech, but simple and effective. Couchsurfing has been doing what Airbnb does for nearly a decade and it’s always been free. For everything else there’s Craigslist, so low tech it’s positively ugly but also a repository of everything for which the human heart might yearn (no matter how disturbing).
Another great example of the real sharing economy is Peerby – it’s all about connecting people within their neighbourhoods. If you want to borrow something Peerby will ask the 100 closest lenders to you. If the item can’t be found they’ll extend the search, but keep it within cycling distance. No money changes hands (though they don’t object to muffins); it’s all built on trust. You’re unlikely to rip off someone if you might bump into them down the pub – conversely you’re quite likely to chat to someone you borrowed something from if you bump into them down the pub. Peerby is a strong advocate of community cohesion and environmental sustainability and the forward-thinking Dutch are happy to grant-fund it.
Resilient neighbourhoods are built on community cohesion, so only the real sharing economy can contribute to regeneration.
Good article, thanks. “Any ‘sharing economy’ model where money changes hands can’t really contribute to regeneration”. See your point, but depends how you define ‘sharing economy’. For people to trade (with money) directly with each other rather than through a profit-making intermediary, can be redistributive. Decentralised ownership and earning, and co-operatives, are both ways of doing this redistributively.
“Paying tax is participating in a sharing economy…”
Pull the other one. Tax is an impost, something forced upon us. We get no choice and little say in how it’s spent.
And on the point of exchange – it is simple really (and no different whether we call it ‘sharing’ or ‘business’) there is mutual gain. If there were no mutual benefit there would be no exchange. So to say that money changing hands is somehow a bad thing that doesn’t contribute to regeneration is arrant nonsense.
Finally the point about sharing is that it is philanthropic – my gain isn’t tangible whereas yours is tangible.
And the irony is that sharing systems – whether LETS, freecycle,or timebanks – all require administrative resources. I guess you’ll be advocating taking these forcibly from people – including those grumpy folk who don’t want to share.
This could turn into a rehash of the old discussions on social enterprise – what’s the ideal balance between the social and the enterprising? Or, to use Keren and Simon’s terms, what’s the ideal balance between sharing and monetary exchange?
It all depends a bit on what you’re trying to achieve. If you’re just looking for smarter ways for people to consume, services like AirBnB fit the bill. If you’re trying to provide affordable housing for people who need it, AirBnB is no use at all.
So if the objective is regeneration (rather than individual wellbeing) there needs to be a recognition both of the reasons why places are in the state they’re in, and the means available to improve them. Those means are generally not so much sharing – which in Keren’s terms is a voluntary activity – as redistributive. Simon would regard that as an impost, whether it’s in tax or in kind, but that doesn’t mean it’s not needed.
The sharing economy is interesting in all its forms, and exciting in some. But is it regenerative? On its own, probably not.
I think financial person-to-person transactions can be redistributive, but still carry a danger of expanding the black market and that can leave individuals open to serious risks, although co-operatives can help overcome that. My criticism was mainly about those parts of the ‘sharing economy’ that work on a massive scale with a middle-man profit-making company.
Janelle Orsi, who works to change US legislation that’s burdensome for small-scale sharing organisations, says: “Anytime a sharing activity scales up, it’s going to run into the realm of a commercial activity. It’s going to start looking like a commercial enterprise of the sort that is subject to regulation.” There’s an interesting article about her work at the Shareable website. I think the sort of organisations she’s working to support, the less flashy local stuff, have much potential for benefit in deprived communities, both economic and in terms of cohesion.
And taxes may not be popular, but I for one don’t want to live in a country where only the wealthy can afford health care and education.
Yes – it’s called the “Anarchy Economy”. Agreed that Sharing is Sharing, not exchanging money. http://www.shareable.net/blog/differentiating-the-sharing-economy-from-the-anarchy-economy
A sharing economy only works if the social and community structures support it. Poor land use planning, the end of mass experience (the workplace, local shops, the internet) have all contributed to the isolation of the individual and the family. You cannot blame someone who looks for income potential because claiming benefits is not ‘easy’ or pleasant.
The solution may well be in terms of social enterprise zoning and real powers given to LEPs. Tax hypothecation is also important: people need a much greater understanding of where their taxes are going and why, and to be able to focus them on what they want.
By pointing up how much more available (and high profile) some examples of the #sharingeconomy are, I think Keren is also highlighting the lack of critical policy engagement with the topic. There’s a strong case to be made for models like AirBnB: they lead to the same utility for less resource use, so are a good thing, but don’t seem to lead to much identifiable social good beyond enabling some already relatively well-resourced people to monetise their assets. So, wouldn’t it make sense to recognise that there are different models, and prime them accordingly? I’d favour policy-makers – those with an interest in local economies – identifying the type of sharing models that would be most useful in their area, but which are currently lacking, and taking measures in incentivise them. A year ago, when it first struck me, I suggested developing a taxonomy of the sharing economy, here: http://wp.me/p2jpRC-2z. Has policy interest progressed enough in the past year that this might now be timely?