It’s time to speak the truth about the sharing economy – and the truth is that mankind has never been particularly amenable to “sharing”. After all, when the Americas were discovered nearly 500 years ago, the British, French, Dutch, Spanish and Ottoman empires weren’t exactly clambering over themselves to “share” the new colonial territories. And in the late 1920s, when capitalists in the car-manufacturing industry suggested making “breakable” goods in order to increase sales numbers, it certainly wasn’t the idea of “sharing” that drive their new business models.
The U.S. Department of Commerce issued a report in June 2016 about “digital matching firms”. They use this cute little phrase, of course, not to be painfully politically correct, (contrary to popular opinion, they are trying to do something worthwhile in between covering their own asses) but to narrow their coverage to the likes of Uber and AirBnB. Otherwise, phrases like “the sharing economy” and “collaborative consumption” are simply far too ambiguous, so instead the Department of Commerce chooses only to discuss “digital matching firms” that fulfill the following four criteria:
- They (the firms reported) use information technology (IT systems), typically available via web-based platforms, such as mobile “apps” on Internet- enabled devices, to facilitate peer-to-peer transactions.
- They rely on user-based rating systems for quality control, ensuring a level of trust between consumers and service providers who have not previously met.
- They offer the workers who provide services via digital matching platforms flexibility in deciding their typical working hours.
- To the extent that tools and assets are necessary to provide a service, digital matching firms rely on the workers using their own.
So for the sake of argument, I will use the above characteristics as well, to further my coverage of the newest, and perhaps most popular, niche of the “sharing economy” – the digital matching firms.
The essence of the sharing economy
The anti-consumerism discussion is not new, but its popularity is. Nearly a century after the call to hyper-consumerism (think white picket fence, white-collar jobs, white no-crust sandwiches), it seems that we’re finally sick of that frenetic consumption. Indeed, now that we have too much food and too many celebrities earning millions by virtue of being celebrities, we are now a generation afflicted with “lifestyle diseases” the likes of Type 2 diabetes, chronic obstructive pulmonary disease, certain types of cancer, and renal failure. Yes, you read that right – our kidneys are failing because we’ve got it too damn good.
In all seriousness, though, the shift towards anti-consumerism is much more than a passing trend. This is reflected in the shocking sales numbers for Marie Kondo’s The Life-Changing Magic of Tidying (an instructive book, by the way, for those who desire the 20-inch TV sans the clutter), which bagged top spot in the New York Times for 27 weeks. This isn’t just an American quirk either, because over 2.1 million copies were sold in Japan (where Kondo first published), and over 1 million copies are now sitting on well-worn shelves of many a reader scattered across the world.
The people have spoken. They want to tidy the (consumerist) hell out of their lives.
Here is another example, in case you’re still not convinced: in 2010, two corporate rats, Joshua Fields Millburn and Ryan Nicodemus (both of whom had oversized cars and houses and TVs) decided to get rid of “all that stuff”. They experimented with minimalism, and – would you believe it – ended up as poster boys for the movement. To date, they’ve held seminars at the Harvard Business School, Apple, SXSW, TEDx, and the World Domination Summit. In May 2016, their documentary, Minimalism, hit over 400 theatres in the North Americas, opening as the #1 indie documentary of the year.
Their message – of de-cluttering, simplifying, cutting back and cutting down – drives, and is enabled by, the advent of digital matching firms like Uber, which has grown exponentially in population-dense cities like L.A., Moscow and Doha,
Let it be noted, in no uncertain terms, that it is also these metropolitan cities that birthed the likes of Kondo and Millburn-Nicodemus, who continue to host their own conferences, write their own books, and inspire indie documentaries about ways of living that resolutely turn away from that unfortunate, inherited philosophy of “newer/bigger/more is better”.
Mere coincidence? Unlikely.
Companies like AirBnB and Uber maximize what’s called “reputation capital”. Reputation, my friend, is the currency you’ll need if you want to become an accommodation host on AirBnB or a vehicle driver on Uber. This means that your clients get to review your services and collectively determine your overall reputation score. The better your reputation the more likely it is that you’ll receive repeat business and/or new customers
This concept of “trust”, though isn’t new, surely? Think of Nathaniel Hawthorne’s The Scarlet Letter, published in 1850, which chronicles the collective shaming of young Hester Prynne by making her wear a scarlet “A” on her dress. Think of business partnerships, and verbal contracts made on little more than reputations. Think of Althusser’s ideological state apparatuses. Each of these encounters between man and man is possible only because there is a transaction of “trust” within the relationship.
The difference in today’s “trust economy”, as compared to that of 10, 50, 200 years ago, is that your reputation – now manifest online for all to see – brings about very real, very immediate effects to your business. In fact, having a poor review (or, worse, a negative one) is not much better than having no reviews, and there are Uber drivers who would rather you not review them at all.
The same business model is utilized across a myriad of older e-commerce platforms as well, such as Amazon, Ebay, and Asos, but what’s different about the digital matching firms that have risen in popularity in the last 2-3 years is that their economic “trust” model is based on more than just reviews. AirBnB, for example, allows users to link their social media profiles (LinkedIn, Facebook, etc.), and Uber drivers are required to provide proofs of identity (car license, driving license, etc.). This lowers the risk of prior performance for the consumer, and puts the consumer in a position of control. Compared to older P2P, B2C and B2B e-platforms, which usually require the customer to pay before the goods/services have been provided, the customer now has a hand on the steering wheel too, and is no longer blind nor dumb.
Rachel Botsman, pioneer and advocate of the collaborative consumption era, author of What’s Mine Is Yours, recently publicly opined that the collaborative economy is driven by Generation Y, who are largely habituated to sharing. She says:
[…] things are changing, and one of the reasons why is the digital natives, or Gen-Y. They’re growing up sharing — files, video games, knowledge. It’s second nature to them. So we, the millennials — I am just a millennial — are like foot soldiers, moving us from a culture of “me” to a culture of “we.”
Based on the demographic findings by researchers Juho Hamari, Mimmi Sjöklint and Antti Ukkonen, it certainly appears that Rachel Botsman’s observation can be substantiated. Hamari and his team collected demographic information from 168 registered users on Sharetribe, and found that 68% of users were between the ages of 20 and 35 (those born between 1981 and 1996). In fact, the 20-25 age group took home the biggest share of the pie, coming in at nearly 40% of total users on Sharetribe.
And so it seems that after the disaffection and aimlessness of Generation X, it is Gen-Y that has saved us from the 2008 economic crash – by embracing the “collaborative” paradigm.
The Shift to Green
Given that Generation Y is the primary demographic group propelling the collaborative economy forwards, it should be noted that they are also the very ones who grew up watching Al Gore’s An Inconvenient Truth and Robert Kenner’s Food, Inc. The media emphasizes climate change and the need to cause lower environmental impact have become significant intrinsic motivators for millennials who engage in collaborative consumption.
Collaborative consumption and sustainability go hand-in-hand. Based on their research, Hamari et. Al. concluded that collaborative consumption typically engages consumers who are conscious of their own environmental and ecological impact. In other words, the perceived sustainability of the collaborative economy is precisely what sustains it.
Thanks to mainstream media coverage on diminishing natural resources and the debilitating effects of pollution (air, water, sound, etc.), the perceived sustainability of the collaborative economy offers great incentive for attitude and behavioral change. Participation in the collaborative economy, in this instance, offers not only communal and social connection, but also – and perhaps more importantly – a shared ideological cause.
In other words, by participating in the collaborative economy, you’re doing good. As such, you get psychological license to feel like you’re contributing to the overall wellbeing of the world, and people generally like feeling this way.
Ten years ago, the most exciting thing about the Internet was that Internet Explorer could run multiple tabs on a single browser. Sure, things had moved on from the dial-up modems of the late 1990s and clunky CPUs now looked like storage boxes rather than a small house, but in the mid-2000s it was still about Yahoo and AOL
Today, only your grandfather owns a “dumb” phone; everyone else’s is smart. In 2017, it’s about Google and Amazon, Facebook and Twitter, Instagram and Tumblr. It’s about embedding gifs, memes and Youtube clips into your blog post. It’s about UX and UI. It’s about convenience, speed, and apps.
Make no mistake about it – it’s the leaps and bounds that we’ve made with technology in the last ten years that has made this possible.
There’s one another factor behind today’s collaborative economy that nobody seems to talk about, and that factor is globalization. It’s worth considering how the seemingly unanimous, worldwide acceptance of neoliberal capitalism has contributed to the momentum of collaborative economy today.
Take, for instance, the linguistic imperialism that enables AirBnB strangers to communicate more than “hello” and “goodbye” to one another. In The Linguistic Imperialism of Neoliberal Empire, Robert Phillipson dubs English as the current global lingua franca.
Now that English has been adopted as the communicative meeting point between otherwise distinct cultures, people from opposite corners of the world are equipped with cultural and institutional links with which to perform economic and social transactions.
Academics tend to be critical of neo-imperialism be it linguistic or otherwise. Nevertheless, whatever the moral judgement may be, it is true that linguistic imperialism has powered the engines of global digital matching firms. After all, the ability to “collaborate” and “share” implies a certain degree of trust and shared values between two parties, as well as the ability to accurately communicate said values. “Global” English fulfills that purpose.
There are, as with any other trend that sweeps the masses, fears about the collaborative economy. There are people who oppose, resist and restrict its influence, but they will probably not get very far. There are shifts – psychological, emotional, technological – happening, and these work primarily in the service of a collaborative economy.
It seems to make sense, at least to the majority of urban netizens, to participate in the new “trust economy” that encourages the maximization of “idle” goods. Thanks to technology, anti-consumerism, Generation Y, environmental awareness, and globalization/neo-imperialism, your car isn’t just an ornament in the porch – or even, more damningly, a status symbol. In the climate of collaborative consumption, your car could serve a greater purpose too.