Why It Will Take a Lot More Than a Smartphone to Get the Sharing Economy Started

Yves here . It’s telling that someone has to debunk long form that sharing economy does not equal “sharing”.

By Steven Gorelick, managing programs director at Local Futures (International Society for Ecology and Culture). He is the author of Small Is Beautiful, Big Is Subsidized (pdf), co-author of Bringing the Food Economy Home, and co-director of the Economics of Happiness. His writings have been published in The Ecologist and Resurgence magazines.Originally published at the Economics of Happiness Blog

I ran into my friend Rick the other day in a small town near our homes in northern Vermont. He was just coming out of the bookstore, holding a pink plastic bag containing a dozen eggs from his flock of free-range hens. Rick asked, “You don’t by any chance have a pair of jumper cables in your car?” I did. “Would you be willing to drive over to the post office and jump my pickup truck?”

After we got his truck started, Rick held out his bag and asked, “Could you use some eggs?” As a matter of fact, I could: our elderly hens don’t produce enough for a family of four anymore; Rick’s flock, on the other hand, was producing far more than a live-alone bachelor needs. I thanked him for the eggs, and we said our goodbyes.

This exchange—a battery jump for a dozen eggs—wasn’t a formal transaction of any kind; it didn’t add to GDP, and won’t be reported to the IRS. It wasn’t even barter, since I would have offered the help without the eggs, and Rick had only brought them to town so he could give them away. But it was an economic exchange nonetheless, one that’s so common around here it hardly rates notice. Childcare, garden help, tools, construction labor, and especially food are routinely exchanged, loaned or given away without money changing hands. (This past summer someone posted this bulletin board notice: “Free: Take as much as you want. We have two 5-gallon pails of large cukes, half a pail of beans and that much broccoli. I will leave some paper sacks on the porch.”) Although this may sound like something that only happens in rural areas, similar exchanges occur in big cities, too, in neighborhoods where people know one another well enough to value their mutual interdependence.

Transactions like these make up what’s been called a gift economy, a concept introduced almost 100 years ago by anthropologist Bronislaw Malinowski. An equally apt term might be sharing economy, but that name has already been applied to something that, to my mind at least, is very different.

The sharing economy concept first appeared around 2010, launched on a sea of optimism about technology’s ability to transform the world for the better. In her TEDx talk describing it, Rachel Botsman, author of The Rise of Collaborative Consumption, made liberal use of terms like “revolution” and “seismic shift” to underscore the positive transformations the sharing economy would bring. Exchanges like mine with Rick are okay, she implied, but technology can greatly improve them: “We now live in a global village where we can mimic the ties that used to happen face to face, but on a scale and in a way that has never been possible before.” That scaling up, of course, is thanks to the internet, where most collaborative consumption (soon rechristened the sharing economy) still makes its home.

Botsman’s description of how the sharing economy works is fairly straightforward: through online platforms, people who need a product or service can quickly hook up with someone able to provide it. Need to drill a hole? Don’t go out and buy an electric drill that “will only be used around 12 to 15 minutes in its entire lifetime,” instead borrow or rent it from someone who already has one. Apply that principle to hundreds of other shareable items and multiply it by millions of sharing events, and we’re not only taking steps to eliminate hyperconsumption and its environmental impacts, we’re creating community as well.

Part of Botsman’s thesis makes sense: most modern households contain plenty of infrequently used tools, gadgets and implements that could easily be shared among many families. This is one of the benefits of co-housing arrangements and ecovillages, where washing machines, lawnmowers and even fully equipped kitchens are shared among all the resident households.

But the fact that there are more power drills per capita than necessary is hardly the essence of the hyperconsumption we need to minimize. Thanks to sophisticated marketing campaigns and cradle-to-grave advertising, the consumer culture constantly manufactures new needs; it molds personal identities around brand names, and makes convenience an obsession. Shoppers today can buy robotic vacuum cleaners, forks that monitor their eating habits and two-story inflatable cats; they can choose from 504 brands of designer jeans and 2 million smartphone apps. These are symptoms of a consumer culture gone mad, and sharing this empty bounty isn’t much of a cure.

Perhaps the most profound benefit Botsman claimed for internet-based sharing is that it will enable us “to engage in humanness” again. The sharing economy, she argued, will make us better people, whose “rediscovery of collective good [will] create an economy of ‘what’s mine is yours.'”

The sharing economy has grown rapidly, but the utopian, egalitarian effects Botsman predicted have failed to materialize: today, in fact, much of the sharing economy looks like big-business-as-usual. Although sometimes defined so broadly it can include everything from recycling to cooperatives, the sharing economy’s standard-bearers are multi-billion-dollar corporations: Uber currently has a self-reported value of $62.5 billion, more than the market capitalization of General Motors; Airbnb is said to be worth $24 billion, making it more valuable than the Hyatt Hotel chain; and Zipcar is now owned by conventional car-rental company Avis, which paid $500 million for it in 2013.

These sharing economy companies have more in common with big business than just their market valuations. Uber is notorious for its ill-treatment of drivers, uses opportunistic “surge-pricing” to inflate fares when demand is high, and is reported to be a “workplace where sexual harassment takes place with impunity.” Like other big corporations, these companies use lobbying, PR and campaign contributions to tilt the democratic process in their favor. Uber succeeded in quashing New York City’s plan to cap the number of cars on the city’s streets, while Airbnb was able to scuttle a San Franscisco proposition to limit short-term housing rentals, spending 100 times more than its opponents.

Maybe the profit-oriented businesses at the top aren’t saying, what’s mine is yours, but what about all those trusting strangers: aren’t they rediscovering the collective good? Not so much. A recent survey of sharing economy consumers revealed that “saving money was actually the number one reason for people to participate in the Sharing Economy, with 82% of respondents telling us this was very or somewhat important to them.” The least important reason? “New relationships/friends or being part of a community.”

To be fair, not all sharing economy enterprises are cut from the same cloth as Uber and Airbnb. Tool-lending libraries are a non-profit means of addressing the electric drill quandary Botsman described. But by their nature, these are local, place-based initiatives: there’s a physical space where patrons come to find what they need, and where they’ll interact face-to-face with the staff and their own neighbors. Nor are tool-lending libraries an artifact of the internet: the first, in Columbus, Ohio, was founded in 1976, and many others were established in the late 1970s and ’80s.

But the sad fact is, digital technologies continue to erode the face-to-face interactions that underpin local economies and communities. It has become a cliché to point out how genuine friendships are being eclipsed by the shallow “friending” that takes place on Facebook, or how people sitting together in a café will stare at their phones rather than engage with each other. If my friend Rick ever decides to carry a smartphone, he might find himself hiring a stranger from Taskrabbit to jump his truck, rather than seeking out a neighbor. With Amazon and other online booksellers dominating the market, the local bookstore where Rick and I met may not be around much longer. These are real-world losses, as more of our social and economic life—including reciprocal exchange—is monetized and absorbed by the internet.

To give the sharing economy its due, I admit that there can be environmental benefits to sharing goods like cars, rather than each of us owning one. But profit-making online platforms like Uber and Lyft aren’t the only—or the best—sharing models out there. Many years ago I moved from New York City to a remote valley in the mountains of Colorado. Of all the differences from big-city life, none fascinated me more than the fact that everyone in this valley left their vehicles unlocked, with their keys in the ignition. I remarked to one of my new acquaintances how wonderful it was that people were so trusting, so confident that no one would just drive off with their car. He looked puzzled a moment, then smiled and said, “That’s not why we leave our keys in the ignition: it’s to make sure that if someone needs a car, they’ll be able to take it.”

Now that’s a sharing economy.

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  1. Disturbed Voter

    Using a smart phone does make you part of the sharing economy, since you are now sharing with the CIA. This is why I keep my electronics, one generation back. Too bad my rotary phone doesn’t work anymore ;-)

    The US is like Germany … we are complicit like they were, because we don’t resist. We have a crematoria right next door, but can’t smell it.

    And I do share already, at work, and with one of my neighbors. What the authorities want is efficiency, brutal efficiency, like Stalinism 5 year plans.

    1. jrs

      Equating CIA spying to the holocaust really doesn’t do your argument any favors. I could deal with equating something that actually equals mass death like say the Iraqi war (or even Hiroshima, climate change if it leads to mass death) with the holocaust but spying = holocaust is completely hyperbolic.

      1. Atalanta69

        Dear JRS, I rather think the crematorium comment was meant to be metaphorical, referring to the general phenomenon of turning a blind eye to what is clearly evident…and in that respect is perfectly valid. It is quite clear that no literal comparison was meant.

  2. Moneta

    We’ll know neoliberalism has peaked when married couple have to declare their marital duties and put a dollar value on these. Plus having to wear a different helmet for every activity.

  3. John

    I think there was an earlier version of the sharing economy in the US South. It was called sharecropping….not too far off from the medieval sharing economy of lord and serf. As in most things economic, the crucial thing is how the pie is divided and who gets what size piece.

  4. a different chris

    Crap I’ve worn out more than one quality electric drill over my lifetime and my day job is as a software engineer. Ah well, I work with plenty of other engineers that can’t even conceive of changing the oil in their car, so I guess I started a bit different from average and that average has then really, really moved over to individual incompetence in my lifetime.

    The interesting thing is all the working with your hands – it suddenly means you don’t have to “have the best” anymore, you get your satisfaction from the fact that you are the one that makes it work. You have a Mercedes, I could afford it (barely admittedly) but instead I have an old piece of crap that I got and keep running myself. When I take my vehicles for state inspection and if they find something they always call and ask if I want them to do whatever or if I want to do it myself. They don’t even bother roughing up a quote first.

    But, uh, can I find out more about this 2-story inflatable cat? I *could* find room for that….

  5. Charles Myers

    If everyone shared via smart phone would your original trade had ever happened? Wallstreet will never replace good neighbors.


    Just call the “sharing” economy what it really is: rent-a-serf. These scumbags market their services with an imagery of collaboration, but in reality it’s all set up and used for selling people short-term servants. Uber is a chauffeur when you need one, Taskrabbit is a maid/errand-runner when you need one. It’s exploitation with a shiny, appeal-to-novelty face (no no no, you don’t understand, Uber isn’t a car service company because it has an app). Even Airbnb at this point is nothing more than a Silk Road for illegal hotels, which drives up rent prices.

    1. jrs

      Americans have only occasionally been attracted to utopian communities. They’ve always complained about the lack of good help though. So maybe those who can afford it (even just a task rabbit) really want the latter over the former. Sad but maybe true.

  7. c1ue

    Ecological savings from a car sharing enterprise is mythical because the amount of travel per trip increases 50% to 100% – thus entirely negating the portion of resource utilization and pollution from the manufacture of the car.
    Normal usage of a car results in an ecological footprint that is roughly 50/50 between car manufacturing and ongoing operation, but driving a car 2x or 3x as many miles per year – which is what full time “ride share” drivers do – means the manufacturing portion of resource utilization/pollution drops to 1/3 to 1/4 – which the increased travel per trip offsets.
    I also note that the “surge” pricing also does have some utility: traffic and other notable features of “peak” times mean trips per hour numbers drop. It doesn’t really mean that much more for the drivers in many cases (not all).

    1. oho

      >>Ecological savings from a car sharing enterprise is mythical because the amount of travel per trip increases 50% to 100% –

      During the final weeks when I was an Uber driver, a ***good*** day was getting one revenue-generating mile for every two miles added to the odometer.

      And of course if it’s winter or July, that engine doesn’t turn off even if you find a legal parking spot. (uncomfortable car climate = 1 star; too many 1 stars = deactivation)

      End result, 15 MPG in a car that should get 20+MPG—all that idling. (Throw in waiting the 3-5 minutes it takes for 99% of passengers to get to the car, when they could’ve timed it to exactly meet their car is it pulls up.)

      Uber/Lyft generates a lot of wasted CO2. …but, but, but something something something GREEN-washing! say the uncritical pundits :)

      1. jrs

        “And of course if it’s winter or July, that engine doesn’t turn off even if you find a legal parking spot. (uncomfortable car climate = 1 star; too many 1 stars = deactivation)”

        what a bunch of whiny babies :). In some climates A/C in the car is absolutely a necessity but doesn’t one kind of expect the car to be somewhat hot when first stepping into it before the A/C gets going. Yea it’s wasteful.

    2. HotFlash

      Uber and Lyft aren’t car-sharing, they are ride-sharing, ie, include a driver. Car-sharing is a vehicle that you drive yourself Car2Go or Zip car or Enterprise Car Share, which does not increase car miles traveled in most cases. I have been a member of a car-share for nearly 10 years and I love it. The first year my costs for car use through them was about half what my insurance company wanted for a year, and that’s just for insurance with a deductible and no accidents, ever. Never mind capital cost, gas, maintenance, and parking. I love having whatever size car or truck when I need it, for as long as I need it, and especially *not* having it the rest of the time.

      Back when I owned a truck (we’re have a business, so had to have a vehicle that would handle our largest need), I would take it everywhere, even if only one person and a bag of tools was required on the job. Now we rent the size vehicle we need, when we need one, and often we just bike, take public transit or very occasionally a taxi.

      As to footprint, I have read an estimate that a shared car eliminates as many as 13 conventionally-owned automobiles, so large reduction in mfg and disposal footprints. And because I can’t resist, YMMV,

  8. pebird

    If you had Uber over to your house to share a meal, once they left, the sink would be full of dishes, the toilet would be overflowing, your wallet would be missing, and you would have a one-star rating on their app.

  9. akaPaul LaFargue

    The sharing economy concept first appeared around 2010, launched on a sea of optimism about technology’s ability to transform the world for the better. In her TEDx talk describing it, Rachel Botsman, author of The Rise of Collaborative Consumption….


    Janelle is co-author of The Sharing Solution: How to Save Money, Simplify Your Life & Build Community (Nolo 2009), a legal and practical guide to shared ownership and cooperative activity. Janelle earned her J.D. from the University of California, Berkeley School of Law.

    From http://www.theselc.org/book/

    And way before that there were (and continue to be) truly sharing “platforms” like international couch surfing. And today some believe that Platform Cooperativism is a viable alternative. I think it is ironic that cooperative values are promoted via a “platform” created to respond to profit-making dependent upon an atomized society. Maybe a better term would be Rentier Cooperativism?

    On the other hand, if ( to take but two examples) taxi co-ops in Denver and Madison adopt an app for their use do we have “platform cooperativism” or simply “modernized” traditional cab co-ops?

  10. Libre

    I have to say it has been a few years since I read “What’s Mine is Yours” where Botsman and Rogers refined their collaborative consumption theme. It is unfortunate that large corporations have bastardized this concept into more rent seeking and less about sharing resources. Of course technology enabled disintermediation is the underlying theme with both good and bad outcomes. I wish the author focused on the more important themes of cooperation, sharing, building community. I suspect that would be too lame of a subject. Maybe the author should have been reviewing “Amusing Ourselves to Death” by Neil Postman, when referencing how social media trivializes human relationships in their refuting the intended theme of people working together. I give this article a C- and suggest that you read both books. Rent seeking and profiting off others is not the point, but Mr Gorelick begs to differ.

  11. oho

    House “sharing” == full-time flaunting of local hotel/zoning regulations by the vast majority of property owners (odds are it ain’t Aunt Mabel letting out her house while she’s in Florida).

    Car “sharing” == a market where drivers are in effect getting a ‘pay day’ loan—depleting the positive equity of their car to get cash today. Uber/Lyft even offer “get paid today” features—-presumably cuz many drivers couldn’t wait for the weekly disbursement—Uber-Lyft HQ use their drivers (and drivers allow themselves to be used—likely cuz many drivers have no other choice).

  12. Jeotsu

    I’m lucky enough to live in a rural valley which does have a somewhat similar sharing economy. Best version of that was coming up the valley one day only to pass a friend driving out in my ute (pickup truck). She needed it, I wasn’t using it. And she had attached a note to the door so I’d know who’d taken it.

    An underlying social connection, face-to-face, which is regularly reinforced does seem to be vital to this network of trust and cooperation. Over the last 3 years we built a barn on our place which involved a half dozen “barn raising days” to do all the work to massive for me to accomplish alone. In these cases the work itself became a tool for reinforcing those social connections with friends and neighbors.

    These sorts of networks don’t arise from smart-phones and “social media”. Or as the old joke goes ‘friends help you move, real friends help you move a body.’ When you raise livestock, you occasionally get into binds which help identify who the ‘true’ friends are!

  13. susan the other

    Back before India crashed the “black” economy they were talking about how they could include this resource in the real economy – the answer evolved into digital money. But it’s not working because it will just create more barter at some level. A ‘sharing economy’ has the same feel, something controlled digitally that manages to include what was an underground economy – not illegal, just cooperative – into the main economy. I don’t believe taxation is so necessary that every iota of human exchange must be accounted for… but it looks like that is the direction. Or corporations like Uber will move in to control it. I think I’ll stick with garage sales, farmers co-ops, and lending libraries for now.

  14. Oguk

    I work for a “sharing economy” corporation, and yes, it surely is big business, with a fully staffed marketing department, lots of $ going into branding, etc. and precious little going into “community building” and actual real sustainable living, and honestly, not ever enough toward transparency with respect to the user/member. The “member” is really a “customer”.
    A real sharing economy business to me would look like a coop. First of all be non-profit, or not for profit, with a compensation structure like a cooperative; run itself like a utility, making a public good widely and affordably available; allow for funding from the community (like $27 shares??) as well as from public funds; allowing members of the community to contribute goods/resources/time/materials/services (e.g. parking or other land resources, resources of all kinds); all with a clear, transparent governance structure that involves being accountable to the community. We can tweak that.

    1. Dan

      Yeah, I tried something like this, actually is still live. But the local Chamber of Commerce is saying it is against the law since people will do jobs for other people without paying tax, and the local start-up venture fund is saying that the website will promote black (or grey) market, and some business angels are afraid the taxman will question the business model on the same grounds as above. So, I decided to froze it, put it on stand-by and even looking to offer it for free to someone with enough balls (and some money) to make it work.

  15. RMO

    I’ve seen genuine “sharing economies” and people in my suburban neighborhood participate in one with things like garden produce, tools and I belong to a non-profit glider flying club where we all get together so we can have club aircraft, a hangar, volunteer instructors and tow pilots. I notice that none of these involve a bunch of parasites sucking money out of the system with digital technology. Interesting isn’t it?

    Are we going to have to add “sharing” to the list of terrifying words along with “smart” “innovative” “disruptive” etc.?

    1. Lambert Strether

      > Are we going to have to add “sharing” to the list of terrifying words

      Yes (depending on who’s saying it).

      Digital = rent-seeking (at least when there’s rent to be sought, i.e. not with open-source (?)). Digital is, I think, a phishing equilibrium.

    2. jrs

      no sharing itself is not a dirty word, it’s just being used where it has no meaning, it’s pretty much the equivalent of if everyone started calling Paul Ryan a social-democrat. Because the sharing economy has about as much to do with sharing as Paul Ryan is a social-democrat.

      The thing with real sharing economies is they are usually very well intention-ed but in the real world they are a struggle because everyone has very little time to devote to them as they are too busy surviving in the monetized capitalist system, now that really is a swear word.

  16. Wade Riddick

    Isn’t “sharing” just another way of downgrading a lifestyle we can no longer afford because of downward pressure on wages and upward pressure on intellectual property prices? Isn’t “sharing” just another word for the new tenant/sharecropper economy? Just another way to insert internet connections into our lives to permit Big Data trespassing on what used to be our private property?

    We used to own a car. Now we “share” one – and corporations just coincidentally pick up valuable data about our movements to help “monetize” us. Maybe they even turn us into a captive audience for ads.

    We used to own a house. Now we “share” the neighborhood with AirBnB renters. We used to take stakes in mortgage companies. Now we share “tranches” of CDO risk with thousands of other investors. We stick our data in other people’s clouds instead of our own hard drives. We rent instead of owning music.

    We solved the teenage wasteland of “broadcasting” by narrowcasting each individual life on Facebook. Instead of faking reality for millions of prime time TV viewers so we can sell ads, we convinced those millions of viewers to turn their own lives into fake TV shows for corporate America to monetize (call it the oversharing economy). We used actors and scripts and lighting to convince TV audiences their lives weren’t as good as the fake ones we showed them – not unless they bought the right products. In the downsized new oversharing economy, every viewer is also the actor and producer, faking his own life to convince others they aren’t good enough unless they buy the right products. In all the streaming and trolling and snapchatting, review and reflection seem to be the only taboos in the new oral culture of social media. Everything’s becoming a one-time live performance. We’re getting canceled in the reruns of our lives.

    How do you ponder what you can’t record and keep because reality rests in the hands of someone else and all you’re left with is the Facebook fiction you so artfully constructed?

    It’s not freedom for corporations to share our stuff with them whether we want them to or not. It’s not some inevitable march of technooogy. It’s part of the financializing of life. Fragmenting responsibility of ownership makes it easier for a kleptocratic elite to subvert private property rights. They can’t slip in those fees into all the dark crevices of our lives if they can’t trespass in there in the first place. If knowledge is power, why would we want to hand them all this?

    The leftists dream that once respect for property and borders erode, it won’t be a long slide from the corporate sharing economy to the communist sharing economy. Soviets über alles (with app)? I wouldn’t gamble on it.

    1. Kevin

      Isn’t “sharing” just another way of downgrading a lifestyle we can no longer afford …

      Exactly. As described in the article, are we really so poor now that we can’t even afford our own drills? Let alone a vehicle.
      For many the answer today is yes.

  17. oaf

    *share* time and energy with the Overlords; in exchange; they *share an opportunity to find purpose in existence! By seving the Elite!

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