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Defining the Sharing Economy, Dissecting its Merits

BY Sam Roudman | Thursday, June 5 2014

What is the sharing economy? Today's PDF panel "Defining and Debating the Sharing Economy" yielded a broad spectrum of responses from its panelists. Very broad. Author Adam Greenfield said it didn't exist because true sharing has nothing to do with the commodification. James Slezak, co-founder of sharing economy user organization Peers (which is funded in part by executives and investors from for-profit sharing companies), suggested it was related to making better use of underutilized assets, but that his organization is geared towards people getting involved with the sharing economy, however they define it. Writer and developer Tom Slee described it (in part) as a tool of venture capital that manipulates communitarian ideals and language to help companies extend unregulated markets. And Denise Cheng, who studied the sharing economy for her master's thesis at MIT, suggested that it was about peer to peer marketplaces with reputation systems, but that the sharing economy is too broad a term, and we should consider using peer economy instead.

Each definition was the product of a different perspective, none of which were completely wrong.

Slezak painted the sharing economy as part of a somewhat anti-consumerist ideology. "Fundamentally we believe our economy today is failing us," he said. Although per capita income is high, people aren't happy. "Why aren't we working two days a week," he asked, "because we’re spending all that money on apartments we don’t use, [and] cars we don't drive." Making use of what people already own in the economy helps people provide for themselves, and tip the balance of power from corporations like Hilton to individuals. (That Airbnb is valued at $10 billion, $1.6 billion more than Hyatt, was not discussed)

Greenfield rooted his distaste for the sharing economy in his own personal experience and relationships. He was put off by going to a party to find the host had employed a domestic worker through Taskrabbit. "the host referred to this person as the Taskrabbit," he said. Which indeed does sound weird. Greenfield took this as evidence of the way the sharing economy instrumentalizes and monetizes relationships between people. He mentioned a gripe against Uber for working its way into the taxi system in New York, even though historically the taxi fleet has been well managed. But his central problem seemed to be a sense that the networks typified by the peer economy in the form of monetized peer to peer networks like Airbnb, Uber, and Taskrabbit tend to erode human interaction.

Cheng focussed, in part on the conditions that have helped the peer economy to thrive. "That idea of full-time employment, benefits, [is] fading quite quickly." She described the peer economy as an obvious place for some of these workers to turn, and made sure to delineate between the "upward bound" of what each peer to peer network might offer a worker. For instance, while an Uber driver could never hope to make enough money to get another driver working under him, a seller on the crafts marketplace Etsy has the potential to earn enough to hire employees. She also focussed on the importance of reputation systems to peer to peer networks, which help them solve the information asymmetry of knowing who you're doing business with (as opposed to networks like Craigslist, which are more readily scammable).

Tom Slee discussed how peer to peer networks might start informally, but suggested that they'll formalize as they grow, due to the demands of investors. As an example he pointed to Lyft which began with a donation based payment system, and then moved to a fare based one, with surge pricing to boot. He made the further point, that in some respects, the supposedly casual sharing economy is more stringent than the normal one. "If you want to take part as rider and driver, all of the sudden you require a digital ID card," he said. Transactions in cash don't require so much personal information.

This post has been updated to reflect that Peers has not received any direct corporate funding from Airbnb.