Guiding Investigation 24 July Jul 2017 1100 24 July 2017

The sharing economy dilemma

From Uber to Deliveroo and Foodora to BlaBlaCar: what is the real meaning of one of the last decade’s keywords?

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When we say sharing economy, we are referring to something precise and specific. For example, there is nothing shared about it at all, even though common sense could lead us to believe that Uber is part of that colossal movement, whose boundaries are however still uncertain, called the sharing economy.

The Uber issue

Californian company Uber, with its app and digital platforms for private transport, entered the social imaginary as a “winning model” of the sharing economy. It established itself with hardly any opposition, but virtually everyone can now clearly see that in practice, the company, founded in San Francisco in 2009 and present in over 69 countries, does not follow the pattern of a phenomenon, which may have many faces and even more names (even just translating it into other languages is an arduous task, with slang expressions becoming more popular, such as “the people’s economy”), but has its roots clearly and unequivocally in the social sector.

To fully understand the matter, professionals and entrepreneurs of the sharing economy in France set up an Observatory. They did this to understand the impact of that particular form of disruption – which mainly affects the labour market - that goes by the name of “uberisation” and identifies an ongoing process that goes well beyond the individual experience of the American company. It is also important for the sharing economy that we understand uberisation, its trends, the need for reforms to limit its drive or enhance innovation, as required. Understanding is also fundamental in order to establish differences which, if not understood, could ruin everything.

The newly coined word “uberisation” points to at least two general phenomena. Two phenomena that affect the very heart of the sharing economy. On the one hand, “uberisation” means converting services and regular long-term work, which are typical of the traditional economy, into activities which are instead carried out on demand only. On the other, it denotes a business model bearing the hallmark of what corporate slang calls gig economy, an economy characterised by on-demand work (usually mediated by apps, which gives us another neologism: app economy).

As Grégoire Leclercq and Denis Jacquet, researchers at the Observatoire de l’uberisation [Uberisation Observatory], explain in their book, Uberisation: un ennemi qui vous veut du bien? (Dunod, 2016), by having an impact on the fiscal, labour law, economic and social models, the process we call “uberisation” has in fact unleashed a series of questions that need answering. Most importantly: what does “sharing” mean? Are the sharing platforms really on neutral ground or are they involved in the new processes?

Sharing relations versus a monopoly on interaction

Rachel Botsman, author with Roo Rodgers of a book that is still crucial to this day for an understanding of the issue, What’s mine is yours. The rise of collaborative consumption (Harper Collins, 2010), explains that the sharing economy concerns ethically aware forms of exchange (not only consumption) relationships based on the sharing of assets that are often underused. The fact of creating value, recycling underused assets (spaces, means of production or transport, objects) is perhaps key in invalidating the issue. And this is where society can and must do its part: the sharing economy is not only a different way of matching demand and supply. Instead, it is, or should be, a practice of true social innovation.

In the sharing economy, value is created in the circulation from one subject (individual or group) to another: that is why the stress should be placed on access rather than on ownership, on trust, network-based collaboration and on horizontal citizen participation rather than on “top-down” disintermediation operated by vertical platforms such as Uber.

When we talk about the sharing economy, we are therefore referring to a collection of ecosystems, relationships and practices with a strong civic and social mission, able to share certain assets through open platforms, among private individuals or organisations, either free of charge or against consideration, which need not be in money. In this case, BlaBlacar would also fall into the category, as would, most believe, the for-profit but not only for-business company Cohealo, which shares underused equipment across hospitals and healthcare institutions.

Communities or algorithms

The Oxford Dictionary of reference for the English language added the word only in 2015. Under the entry “sharing economy”, we can read a simple but effective definition: “An economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet.”

Four essential conditions must exist for there to be a sharing economy: there must be a platform; there must be people (community); convenience; technology (algorithms). Therefore, the sharing economy model is not based on the provision of services from above, but on the possibility for the community to share assets and services horizontally, through platforms and technology.

However, the problem arises with regard to the control of the platform and technology and, therefore, to the use of data exchanged by the users. When these data are entered in sharing platforms in some countries (Finland), they are subject to a special regulation that prevents them from being “privately” processed by companies. But even this is a flawed remedy to the exploitation of the sharing economy by commercial businesses which target those data and their use, not the sharing practices.

Jean-Gabriel Ganascia, professor of computer science, artificial intelligence and cognitive sciences at the University of Paris VI, states that our systems are not currently equipped with the legislative tools to ward off this risk.

Sharing ecosystems

For this purpose, theoretical physicist Fritjof Capra, inspirer of the first pioneers of Silicon Valley, an expert in complex systems and co-author with lawyer Ugo Mattei of The Ecology of Law (McGraw-Hill Europe, 2015), explains that “the conversion of the economy into a sharing economy is one aspect of a complex ecological and social fabric in which a new overall picture is emerging, which, despite figures, ratings and budget deficits, uses qualitative growth to oppose the excessive number of figures that would like to restrict social life to mere quantity-based relations.”

By no coincidence, what influential researcher A. Annesh from the University of Wisconsin has called algocracy, i.e. the power of algorithms, is prospering on the breeding ground of this false sharing economy: a computerised governance system where the code (algorithm) and not the human factor is what determines, organises and, lastly, pulls it all together in a mortal force. Human relations are transformed into mere interactions under the goading of algocracy. The social aspect is disappearing: data is triumphing over humans, connection over relationships.

For this reason, not even the Airbnb platform should, logically, fall within the category of sharing economy. This company, which is capitalised on the stock exchange for over 1 billion dollars and also has its offices in San Francisco, is the middleman for 17% of rentals in New York and 10% of those in Paris. It is now accused of promoting tax avoidance and evasion by lessors and lessees. Similarly, not even Foodora and Deliveroo, proprietary food home delivery platforms, should fall within the category. In the hands of few and with only a few dozen actual employees, they have little to do with collaboration and sharing.

When we talk about Uber, Foodora or Deliveroo, we are referring to a specific phenomenon, which may look like something from the sharing economy, but does not have the same substance: the gig economy phenomenon. However, what is the gig economy, why is it so crucial to understand the nature and dynamics of it in order to improve comprehension of the (true) sharing economy and why is this distinction so important for the social sector? The gig economy is a model whereby stable working hours are zeroed. As a result of this, office workers and employees on permanent contracts practically do not exist anymore. The social and relational dimension is not considered, with significant repercussions in terms of social exclusion and welfare protection. The expression gig economy comes from the word “gig”, meaning a small job. In the show world, “gig” is performance money. Everything happens according to the on-demand economy model, which is entirely disintermediated thanks to apps, algorithms and proprietary digital platforms. And this is where the problem starts to get complicated – with all the apps, algorithms and digital platforms.

The platform matter

In the sharing economy, platforms are actually a different form of agent and actions are typically carried out with a high level of depersonalisation. When you choose a holiday at the travel agents, the agent is the middleman, who presents the various tours and takes the agency fee due to him or her. When you go on Airbnb or Blablacar, the site is the intermediary that offers you the various products and takes its share. The true difference lies where the intermediary works for free, as in the case of couchsurfing. The problem is not whether or not the sharing economy has disintermediated the online purchasing of products, but what form of intermediation is prevailing with the sharing economy.

Faced with this scenario, which is being sped up like never before by destructive innovation, we have another black-and-white - and no less necessary - choice to make: the sharing economy will either be social or it won't. Some reflections of Trevor Scholtz, author of the recent Uberworked and Underpaid. How Workers Are Disrupting the Digital Economy (Polity Press, 2016) follow this line of thought. Faced with growing criticism among economists and in the public opinion, which risks overturning every positive idea and all possible development in the sharing economy just to hit out at the gig economy, the challenge for everyone is not to get carried away with the distortive logic of a kind of disruption where the cost of innovation is irremediably higher than its benefits. How? By turning the so-called ethical dilemma of the social innovator around to make it positive: “How much can we destroy in order to innovate?”

Scholtz, who has written an employment manifesto on this matter, speaks of Platform Cooperativism and of a new, mediated mutual social support in the form of a cooperative, grafted onto digital platforms that are just as cooperative, which make it possible to widen the range of sharing, just as much as of an overall transformation of the system. Although cooperation is an age-old system for us, it is only just catching on in the United States. We are therefore more advanced in terms of form, but lagging behind in our ability to graft them onto the modern. Now more than ever before, the players of sharing and social change must tackle the now crucial crux of the matter: for how much longer can we survive the impact with innovation that does not produce social value but inequality?

The sharing economy intermediated by the cooperative platform may however be the keystone to “bringing the social aspect back into the social”, re-intermediating the platforms, as explained by media theorist Geert Lovink,, and halting the downward spiral of disruption, uberisation and the gig economy. The entrepreneur of sharing, “sharepreneur” Chelsea Rustrum, is of the same opinion. She believes that even a rebirth of Silicon Valley is possible, based on new models of cooperativism, some of which are now even welcomed by venture capitalists.

We have reached a turning point and we have to build the sharing economy world into our structures and economic models. Without this integration, economic inequality, as economist Joseph Stiglitz has explained on several occasions, risks reaching unprecedented levels, threatening the stability of society as a whole. In short, either the sharing economy will be an incentive to reduce those inequalities, or it will not.