How the sharing economy could develop

The sharing economy could bring about the end of capitalism: that’s the provocative claim made by economic journalist Paul Mason, among others. But my ongoing research indicates that there are many possible futures for the sharing economy: it could transform the world of work as we know it – or it could gradually fade from the public eye.

The exact nature and impacts of the sharing economy are still disputed. The organisers of social movements, entrepreneurs, established businesses and politicians all have very different ideas of what the sharing economy is, and what it should become. For example, Share the World’s Resource (a not-for-profit civil organisation) talks about building a sharing economy based on “shared” public services, which are funded by taxation.

Meanwhile, the UK government speaks of building a sharing economy based on online peer-to-peer platforms, which enable citizens to become micro-entrepreneurs by renting out assets such as homes, driveways and pets. So it seems that a diverse range of actors can see their own hopes, fears and values reflected in the sharing economy. But one thing is for sure: online platforms such as Airbnb and Uber have grown from Silicon Valley startups to global corporations, and this trend will probably continue.

Research on the economic, environmental and social impacts of these enterprises is scarce. As a result, there is very little evidence to help us understand how the sharing economy will develop. So I analysed approximately 250 sharing-economy-related articles and reports, which contained contrasting views from advocates and critics. Based on this evidence, I mapped out four possible paths for the sharing economy: and only one of them predicts that the sharing economy will bring capitalism to its knees, as Mason holds.

Consumption 2.0

Some have argued that online sharing platforms can enable a new form of collaborative consumption, where citizen access rather than own products. For example, peer-to-peer car sharing platforms, such as Easycar Club, enable individuals to rent out their car to others when they are not using it.

The idea is that these new forms of consumption have major environmental benefits. As these practices reduce consumer demand for products, this in turn reduces the number of products manufactured and ultimately decreases carbon emissions. If this form of innovation grows significantly, the sharing economy may enable a new form of consumption.

But this path seems unlikely to be transformative: simply using products more efficiently will not, on its own, lead to a sustainable economy. By engaging in more efficient forms of consumption within the sharing economy, people save money, which they then spend on other carbon intensive other products and services. For example, someone using a car sharing platform could spend the money they save on holiday flights, thereby increasing their overall carbon emissions.

New ways of working

Much of the interest in the sharing economy – particularly in the United States – focuses on online platforms which enable citizens to engage in new forms of work. For example, Uber enables car-owners with “spare” time to work as taxi-drivers. Airbnb enables property owners with “spare” space to work as hoteliers or landlords. Taskrabbit enables anyone with “spare” time to perform tasks including cleaning, shopping and other domestic errands. These platforms enable consumers (for instance, a tourist) and service providers (an Airbnb host) to form short-term relationships.

But sharing economy workers do not automatically have access to the rights and benefits of contracted employees, such as sick pay and annual leave. And as the recent swathe of cases brought against Uber and its contemporaries has shown, there is strong opposition to these conditions on behalf of the workers themselves, and those they compete with.

If this form of innovation grows significantly, the sharing economy may come to transform the world of work. But whether you view this a path to creating new opportunities for entrepreneurship, or promoting the exploitation of low-skilled or low-income workers, rather depends on your political beliefs and values.

A fair and sustainable future

Paul Mason is not alone in predicting that the sharing economy will bring an end to capitalism. Radical grassroots actors such as Ouishare and Shareable, who are critical of the capitalist economic system, are creating a sharing economy built upon the principles of collaboration, sustainability and equality.

They talk about a sharing economy of grassroots activities, ranging from cooperatives, to open source software and hardware, to crowdfunding, to the maker movement – a social movement which enables individuals to create products, challenging the dominant systems of large-scale industrial manufacturing.

This vision includes grassroots innovations as diverse as bread co-ops, open-source communities developing tools for reducing energy demand, Kickstarter and Fab Labs, which provide people with access to the tools needed to manufacture products.

These activities share a focus on empowering communities and creating a decentralised, sustainable economic system. If these diverse forms of innovation grow significantly then the sharing economy may, indeed, bring about the end of capitalism.

Fading away

Given the diverse visions of the sharing economy, it’s questionable whether the idea will stand the test of time. It’s possible that the sharing economy will lose meaning as a concept and gradually disappear from public, media and policy discussions.

Perhaps it will be replaced by concepts such as the gig economy – referring to platforms enabling new forms of work – or the collaborative economy – referring to grassroots action to create a more sustainable economy.

It’s hard to tell which path we’re currently on. I for one hope Mason is right, and that the sharing economy will bring an end to an unsustainable system. But I fear that it’s more likely to transform the world of work in a negative way, reducing quality of life for many within society. The people championing this path are those with great power within the capitalist economy.

Meanwhile, those advocating for a path towards a more equal economy – such as grassroots organisations – are currently marginalised and disempowered. It’s clear who the odds will favour.

This article is published in collaboration with The Conversation. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with the Agenda subscribe to our weekly newsletter.

Author: Chris Martin is a Research Fellow at The Open University.

Image: An attendee is interviewed by a company representative during the JOBarcelona’14 at the Palau de Congressos de Catalunya in Barcelona, February 18, 2014. REUTERS/Gustau Nacarino.