Will the Sharing Economy End Capitalism as We Know It?
WHY YOU SHOULD CARE
Because “crowd-based capitalism” could be the new normal.
By Kevin O'Dowd and James Watkins
In this original week-long series, The Evolution of the Side Hustle: How Gigs Are Killing the 9-to-5, OZY charts the past, present and future of the side hustle. Do you have a unique side hustle that OZY should know about? Let us know at email@example.com and we might feature your gig.
We’re selling out.
Uber and Lyft let us sell our rides and our tolerance for traffic. We can sell the spare bedroom on Airbnb. On TaskRabbit we can sell our ability to assemble Ikea furniture; on Etsy our knitting skills; on Lugg our brawn. The list goes on and on — and it will continue to lengthen.
These small transactions will have a giant cumulative effect, argues Arun Sundararajan, a leading expert on the sharing economy and a professor at NYU’s Stern School of Business. He predicts no less than a transformation of capitalism as we know it, and the end of employment, too. “Crowd-based capitalism” will usurp the corporation now at the center of the economy.
Only recently have people been able to earn money by sharing with strangers. YouTube was perhaps the first example of crowd-based industry (in this case, in the creation of videos) replacing big corporations at the heart of video media, says Sundararajan. Since then, eBay facilitated the peer-to-peer exchange of secondhand goods, but it took some time before the sharing economy got a lot more … personal. “It’s one thing to trust someone enough for them to ship you a package, but it’s a completely different thing to have a stranger sleep in your spare bedroom,” says Sundararajan. The establishment of “more robust digital trust networks” — automatic vetting of drivers, connection with hosts’ Facebook profiles, ratings and comment systems — allowed platforms like Lyft, Couchsurfing and meal-sharing app EatWith to take off.
The most high-profile sharing platforms, like Uber and Airbnb, monetize the most expensive assets that most consumers own: homes and cars. Several crowd-based platforms also exist in business lending and philanthropy, through platforms like Kickstarter, Kiva and Funding Circle. But other than money, accommodation and transportation, will people ever care to share other stuff?
Sundararajan expects the energy and health care industries to be ripe for platform-based disruption, especially in developing countries where existing infrastructures are less reliable. Distributed networks of solar-energy generation and storage allowing us to swap, trade and share electricity with each other could bring an end to “centralized power production and distribution,” he says; meanwhile, “a lot that we go to the hospital for today could very effectively be delivered through an app” that calls a nurse to your house. “That said, I don’t expect open-heart surgery is going to be crowd-based anytime soon.”
With even nursing at risk of becoming an on-call gig-working Uber-like profession, the model could bring about the end of employment and become the main way of organizing labor in the new economy, thinks Sundararajan. But problems arise when casual side hustles turn into full-time gigs. We have “painstakingly” built a system of worker protections, minimum wages, regulations and pension schemes that “transformed full-time employment from something that was pretty reprehensible 100 years ago to something that looks pretty good in many countries today,” says Sundararajan. How will a crowd-based economy look after its workers?
Sundararajan is pretty optimistic about the potential for sharing to be a force for good in the economy: It could make it easier for independent workers to operate as small-scale entrepreneurs and so democratize economic opportunity, he says. In addition, it could bring about a revolution in the efficiency of the economy, as resources that usually lie unused, like spare rooms and idle cars, can become much more productive. But how will crowd-based capitalism affect the inequality and inclusivity of economic growth, and how do we ensure that the new economy works for everybody?