Introduction
Carlota Perez in her 2002 book; Technological revolutions and financial capital: The dynamics of bubbles and golden ages contended that we have always had a technology revolution every 40-60 years, starting with the 18 th century industrial revolution and which was typified by the emergence of canals, factories, and machines. She added that each era of technology revolution has had varying extents of influences on human populations. The present age of information and communication technologies (ICT) is the fifth major revolution since the 1771 industrial revolution (Wladawsky-Beger, 2017).With minimal doubt; the internet has had a weighty influence on the world today. Similarly, as with most technologies, there have been debates contending the nature of the outcomes of the proliferation of the internet. One such outcome of the internet that has been subject of differing public opinion in the recent past is the rapid rise in bartering, sharing, renting, lending, trading, and swapping (sharing economy). Thanks to the development of digital technologies and the growth of web 2.0, online platforms that foster sharing, collaboration as well as promoting user-generated content have become apparent. Sharing economy allows people to market and also share the consumption of goods and services via online platforms. Platforms such as Lyft and Airbnb are today experiencing rapid growth, thanks to digital economy and this has in turn led to political and regulatory battles. Idolizers assert that the new technology will most definitely generate utopian outcomes-enfranchisement of ordinary citizens, efficiency, and also lower carbon footprints. However, critics accuse sharing economy for being about economic self-interest rather than sharing, and also for being both exploitative and predatory (Schor, 2014). The reality of the impacts of the sharing economy have therefore become complex to establish. The discussion will first focus on sharing economy. Additionally, the essay will explore the ‘gift economy facilitating reciprocity’ as well as its implications on capitalism; thereby serving to reveal that irrespective of what critics hold about sharing economy, these contemporary technologies of peer-to-peer economic activities are potent tools for building a social movement focused on genuine practices of sharing and cooperation in the production and consumption of goods and services.
What is Sharing Economy?
Sharing economy, also peer-to-peer-based sharing, or collaborative consumption is an emerging concept that underscores the preference and ability of individuals to borrow and rent goods as opposed to buying and owning them (Hamari, Sjöklint & Ukkonen, 2015). Juliet Schor also talked about sharing economy, describing it as a fast rising economic-technological model that exemplifies a major shift in organizational structures facilitated by progressions in digital technology. Schor added that sharing economy activities can be classified into four categories: recirculation of goods, exchange of services, sharing of productive assets, and increased utilization (Schor, 2014).
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Regarding recirculation of goods, this is what Schor (2014) had to say. That eBay and Craiglist are two examples of marketplaces for recirculation of goods and that have been operational for over 20 years and have consequently become key players of the mainstream consumer influence. The second type of sharing economy platform (increased utilization of durable assets) facilitates use of durable goods and assets more intensely. Car rental sites (Relay Rides, ride sharing (Zimride), ride services (Uber and UberX), bicycle sharing (Chicago’s Divvy Bikes, Boston’s Hubway), and marketplaces offering lodging and accommodation facilities (Couchsurfing, Airbnb) are some of the most important online goods and service providers as far as facilitation of use of durable goods and assets is concerned. As mentioned before, one of the practices of sharing economy is service exchange. Schor narrated that the origins of this practice lie in time banking, tailored to provide opportunities for the unemployed. Time-banks according to Schor (2014) are community-based non-profit multilateral barter sites where services are traded on the basis of time spent. The main principle in barter sites is that every member’s time is valued equally. Compared to other platforms, it is fair to say that time banks have not had the same measure of growth. The last category of sharing economy concerns itself with efforts aimed at sharing assets and space so as to enable production, rather than production. Cooperatives are examples of participants in asset sharing section of sharing economy.
Additionally, it is also important to explain the meanings of some of the key terms commonly used in sharing economy, and also why people share. The first term is consumers. This term is often used to refer to those who are buying services. Meanwhile, providers, or sometimes referred to as suppliers, are those who offer services. Participants on the other hand, can be from either sides of the transaction. The term users on its side, is used variedly across different platforms. Airbnb for example, refers to its guests and hosts as users. Other platforms however, for example Uber and Lyf, the term users is used to refer to riders rather than drivers. On the topic of why people share, this is what Hamari, Sjöklint, and Ukkonen (2015) had to say. That some choose to share because they are attracted by the novelty and trendiness of the platforms, some are motivated by environmental, economic, and social factors (sharing economy sites are cheaper compared to other market alternatives), other consumers are motivated by the desire to expand their social connections, commitment to social transformation is also a factor, and finally, the fact that many sharing economy sites advertise themselves as green, and also present sharing as a way of reducing carbon footprints also appeals to most consumers.
Implications of Sharing Economy on Capitalism
Arun Sundararajan articulated that crowd-based capitalism (sharing economy being an example), will stand alongside the 20thh century corporate model as one of the mainstream models in which the world’s economic activity is organized. He also said that in many industries, the largest company in the sector is likely to be a crowd-based platform. Finally, he affirmed that value creation will shift away from companies that are in the business of selling physical products and toward companies that are in the business of offering services and experiences (Jaye, 2018). Jaye cited the existence of a platform responsible for amassing demand, that provides consumers with search and discovery capacities, and also that provides risk-palliation services to both providers and consumers as one of the sparks to the rapid expansion of crowd-based capitalism. To help reveal the extent to which sharing economy has impacted capitalism as we are accustomed to, Jaye went a step further to give examples such as Airbnb, currently the world’s largest provider of short-term accommodation, and that involves renting out extra space within an individual’s house. It is the complete opposite of accommodation services as we know it (building accommodation facilities which are then rented out). China’s Didi Chuxing is also currently the largest private transportation provider. Jaye also explained that crowd-based platforms are rapidly evolving and chances are it will dominate and outpace 20 th century (Jaye, 2018).
One writer who buys the sentiments of Arun Sundararajan is Russell Belk (2014). He narrates that industrial capitalism is slowly fading thanks to encroachment by crowd-based capitalism. Talking about the former, Russell says that 20 th century industries are the epitome of industrial capitalism and involve full-time employment and payment of wages to workers as a mean of rewarding their talent and labor. He also says that these industries often provide goods and services to consumers. He however reveals that crowd-based capitalism has become the more attractive version of capitalism, thanks to model change. Apart from providing goods and services, crowd-based capitalism and specifically in this case, sharing economy, also offers trust, search and discovery. Airbnb (a sharing economy platform) today accommodates more people per night than Starwood, Hilton, and Marriot combined (Belk, 2014). Crowd-based capitalism is rapidly emerging form the fringes and also rapidly changing the manner in which we go about our economic activities.
Advancing the discussion above, technological advances are also restructuring jobs and also remodeling the nature of work. Arun Sundararajan, author of The Sharing Economy and Professor of Information, Operations and Management Sciences at NYU Stern School of Business, noticed in 2011 “a particular kind of change that technology was engendering, that unlike the 19 th and 29 th century evolutions, modern day technological shifts are gradually steering humans away from managerial capitalism and towards what many see as a more crowd-based iteration.” He even said that he envisions crowd-based capitalism replacing managerial capitalism in the next two decades (“Will crowd-based capitalism replace managerial capitalism?” 2016). In his book; The sharing economy, Sundararajan supports his thoughts on this interesting subject. He began by narrating that traditional hierarchical organization and even large and well-staffed companies that create goods and offer various services are on the decline. In their place, an alternative model is rapidly ascending. In this model, products are not distributed by a firm, but by a crowd. The economic structure of the new model obscures the lines that traditionally existed between professional and personal, and between full-time and casual labor roles. This new model is crowd-based economy (Sundararajan, 2016). Freecycle is an example of a crowd-based, and to be specific, a form of sharing economy. This online platform blurs three significant binaries as far as analysis of consumption is concerned. These include consumption/production, digital/material, and mainstream/alternative (Eden, 2015). Other areas of the economy that may undergo complete transformations in the near future are accommodation, thanks to Airbnb, and the energy sector, thanks to Crowdsourcing, a platform that will soon allow individuals to buy and then sell locally produced solar energy (Sundararajan, 2016).
Moreover, sharing economy as an example crowd-based capitalism is also likely to interfere with capitalism by increasing consumerism. Bill Su (2018) publicized that sharing economy has presented humans with an unmatched form of economic and social exchange. Thanks to sharing economy, there is not a clear cutline distinguishing consumers from suppliers. It enables everybody i the society to act as both a supplier and a consumer. In fact, according to firms such as Uber, both the driver and the passenger are considered as consumers since the institution cannot coexist without the contribution of both parties. In addition to obscuring the definition of key actors in an economy, sharing economy also disrupts the relationship between the four actors of production. Factors of production such as a capital, land, and labor are therefore no longer in the hands of the privileged few in the society, but rather property-owning masses who enjoy the freedom to deploy the properties to any means they wish to (Su, 2018). Sharing economy is therefore a symbol of the shift from the traditional capitalism to present day consumerism, best described as a new era of social structure whereby consumers, rather than corporations, form the center stage of the social order (Godelnik, 2017).
Finally, Paul Mason on his publication on Guardian newspaper revealed that sharing economy will make it possible to realize postcapitalism due to three main drivers. These changes include reduction in the need for work as a result of growing automation, impulsive rise in collaborative production, and abundance of free information. He cites the changes evidenced in the rental, transportation, and accommodation sectors as proof that capitalism is in its death throes. Peer-to-peer finance, video and music sharing, and even online staffing have also been in the rise, causing extant corporate giants, for example, Apple to restructure their business models (Thorpe, 2019).
Conclusion
There is little doubt that sharing economy idolizers are not telling all the information that people need to know about these innovations. However, it is also apparent that sharing economy critics are a little bit too skeptical. There exists great potential in this sector to create new firms that would apportion value more equitably, establish businesses that are more democratically organized, and that can bring people together. This explains why there has been a lot of excitement regarding sharing economy. Sharing practices are also evidently capable of instigating and catalyzing a social transition. Regarding how sharing economy as a form of crowd-based economy impacts 20 th century capitalism, it is aforementioned that crowd-based economy promotes collaborative production, promotes automation, fosters consumerism, and threatens the longevity of industrial and managerial capitalism.
References
Arun, S. (2016). The sharing economy: The end of employment and the rise of crowd-based capitalism. Cambridge, MA: The MIT Press.
Belk, R. (2013). You are what you can access: Sharing and collaborative consumption online. Journal of Business Research, 67 (8), 1595-1600. doi: https://doi.org/10.1016/j.jbusres.2013.10.001
Eden, S. (2015). Blurring the boundaries: Prosumption, circularity and online sustainable consumption through Freecycle. Journal of Consumer Culture, 17 (2), 265-285. doi: https://doi.org/10.1177/1469540515586871
Godelnik, R. (2017). Millennials and the sharing economy: Lessons from a ‘buy nothing new, share everything month’ project. Environmental Innovation and Societal Transitions, 23 , 40-52. doi: https://doi.org/10.1016/j.eist.2017.02.002
Hamari, J., Sjöklint, M., & Ukkonen, A. (2015). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67 (9), 2047-2059. doi: https://doi.org/10.1002/asi.23552
Jaye, N. (2018). How the rise of crowd-based capitalism will change economic activity. CFA Institute. Retrieved February 15, 2019 from https://www.cfainstitute.org/en/research/cfa-magazine/2018/how-the-rise-of-crowd-based-capitalism-will-change-economic-activity
Schor, J. (2014). Debating the sharing economy. Great Transition Initiative. Retrieved February 15, 2019 from https://www.greattransition.org/publication/debating-the-sharing-economy
Su, B. (2018). Sharing economy- a symbol of the rise of consumerism. Medium. Retrieved February 15, 2019 from https://medium.com/analytics-for-humans/sharing-economy-a-symbol-of-the-rise-of-consumerism-238617bb2830
Thorpe, D. (2019). Will the sharing economy replace capitalism? SMARTCITIESDIVE. Retrieved February 15, 2019 from https://www.smartcitiesdive.com/ex/sustainablecitiescollective/will-sharing-economy-replace-capitalism/1089788/
Wladawsky-Berger, I. (2017). Technology, capitalism, and ‘the American way of life.’ Brink News. Retrieved February 14, 2019 from https://www.brinknews.com/technology-capitalism-and-the-american-way-of-life/
Will crowd-based capitalism replace managerial capitalism? (2016). Medium. Retrieved February 15, 2019 from https://medium.com/@Reinvent/will-crowd-based-capitalism-replace-managerial-capitalism-27a3b16394c7
