Profiting from sharing (Part 2)

August 6, 2013 by
Filed under: Enterprise, Social Economy 

As the sharing economy is booming (Part 1 – Sharing our way to prosperity), its millions of participants now face a choice. There are ways of swapping and collaborating for free, and there are also ways of commercialising idling capacity.

In reality, many of the most successful sharing economy platforms are simply commercial platforms with a personal touch. eBay works because buyers and sellers leave feedback for one another; enough to grease the wheels on $175bn of transactions in 2012. In an era of self-checkout supermarkets, it’s ironic that it is through internet applications we’ve reawakened to the fact that business can be personable and customised. Airbnb now call themselves a “community marketplace”. Etsy is an online shop for $1bn of products sold direct by artists and craft-workers who make them. Every sharing platform seems to have spawned a commercial sharing platform: eatwithalocal might be devoured by eatwith and Google Hangouts (video chats) looks set to expand to Google Helpouts where people buy and sell services via video link.

Should we commercialise sharing? In working with Benoit Passot investigating the logic of impact investments, I became convinced that we all place values on achieving financial returns and social outcomes, but those values vary. What we need are opportunities to discover what our values are. Technology makes it easier for us to join timebanks, and easier for us to make a living selling our skills. When money is involved, obviously, these values are made explicit. There are platforms which will enshrine free sharing as principle and policy, and there will, simultaneously, be ever more sophisticated commercial platforms – with a social dimension – making up an ever greater proportion of economic activity. In other words there is sharing, and there is the economy. We will vote with our feet and vote with our money.

Commercial sharing platforms can’t be fully inclusive if some potential participants are excluded by a lack of money, but commercialising traditionally non-monetary assets such as spare bedrooms could support someone to pursue other socially productive activities in a volunteering or caring capacity. We know sharing gives us a feeling of solidarity and identification, more than selling and buying, and can (re)build social capital in a way that traditional market transactions can’t.

Does this mean money contaminates exchange relationships? Not always. People form meaningful relationships with their bosses, and the people they manage. Shopkeepers befriend their customers, consultants get chummy with clients. In each case, physical interaction and proximity usually matter. Money-free sharing platforms are probably best realised at the local scale. There is stronger potential for ongoing reciprocity in dense urban areas. Money, as it has always has been, becomes a unit of trust which can reduce the friction of distance. Whether free or commercial, the promise of the sharing economy is about the alignment of self-interest and common good; at distance, the ability we have for realising common good together diminishes, and money is more helpful as a proxy for trust.

However, there is a fundamental challenge to achieving collective and inclusive “common good” if the sharing economy continues to grow: non-monetary activity doesn’t register as GDP.

The more we try to gain economic and environmental efficiency through generating activity outside of – or reclaiming activity from – the market, the more we stifle the monetary economy. While we already know GDP is an insufficient measure of progress – as Rachel Botsman says we need to measure the number of holes drilled not the number of drills sold – our primary system for realising life opportunities is built on it. One of the buzzwords of tech recently has been disruption. In this regard, the sharing economy is highly disruptive.

Drilling holes in the sharing economy, Source

As a society, we tax consumption, employment, income and profit. More money on the books and circulating in the economy – i.e. rising GDP – generates more tax revenue. Tax then gets spent on government services, further contributing to GDP. Government, therefore, has an implicit incentive to both formalise the informal economy, support recorded and taxable economic activity, and bring online commercial platforms, and their users, into the tax regime. Government in fact represents the ultimate level of sharing: we are practicing collaborative consumption through societal organisation of public services.

As Caron Suchecki says, “paying tax is participating in a sharing economy, dodging it is not.”

Public services in 2020 need to look a lot different – in their structure, relationships, delivery and funding – and they have a long way to go. There is a lot to learn from the sharing economy in unleashing idling capacity. But collaborative consumption doesn’t work in every context: a recent report found that it is difficult to reconcile the need for personalised care and support packages with the economic advantages of collective purchasing power: “service providers and commissioners can’t impose collective approaches or assign people to groups that don’t matter to them”.

We therefore face competing quandaries. On the one hand, the more we rely on each other in non-monetary ways through systems of mutual aid and support, turbo-charged by new innovations, the more we withdraw from the circulating flow of money which ultimately funds public services: our democratically-controlled, societal support network. (The prevalence of the informal and undeclared peer-to-peer economy may already be undermining public institution-building in the developing world.)

On the other hand our GDP treadmill is increasingly frustrating: its failing to improve well-being in rich countries. The cost of our basic requirements – for example housing, food and childcare – are increasing faster than wages for most people. Many work all day to make enough money to pay someone else to work all day looking after children, elderly parents, or others needing care, and the primary destination for our tax money is to subsidise low wages and provide health, education and social care.

In conclusion, the expansion of economic activity in its current form is eroding our time, quality of life and environment. The sharing economy has some promise to challenge this by making better use of existing assets – through monetary and non-monetary sharing. But unless GDP is uncoupled from the funding and delivery of the public services, and environmental resrouces are valued properly, simultaneous efforts to personalise public services, stimulate economic growth and expand the non-monetary sharing economy risk undermining one another and stifling the realisation of our collective aspirations.

Jonathan Schifferes (@jschifferes) is a Senior Researcher and leads on the 2020 Retail project for the RSA.

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