Those cars with the pink mustaches? They may not be smiling for long, if some regulators get their way.
Last year year marked meteoric growth in the new “sharing economy” — a catch-all term for websites and apps that let people charge others for use of resources such as cars and rooms. Ride-sharing company Lyft saw a twentyfold increase in users of its signature mustachioed cars, and room-sharing platform Airbnb gained 6 million customers.
But 2013 also exposed the iffy legalities of “sharing,” as ride-sharing services tangled with city regulators and taxi unions, and Airbnb faced off against New York State Attorney General Eric Schneiderman in what Fortune magazine called the “seminal legal dispute” for the burgeoning sharing economy. In October, Schneiderman subpoenaed Airbnb for information on its hosts, alleging that some are using the platform to operate de facto hotels. The company is fighting the order in court.
Proponents of the sharing economy bill it as a way to reduce consumption and create jobs, and say that the crackdown on Airbnb would harm New Yorkers just trying to pay their bills. But critics argue that beneath their feel-good veneer, sharing businesses are little more than a new way for corporations to circumvent regulations, rob city coffers and undercut unionized labor.
In These Times convened a discussion on the sharing conundrum with David Golumbia, assistant professor of English at Virginia Commonwealth University and author of The Cultural Logic of Computation, Neal Gorenflo, co-founder and publisher of Shareable Magazine, and the SolidarityNYC collective, which supports the growth of cooperatives in New York City.
Proponents of the sharing economy tend to portray it as benefiting ordinary people by giving them a leg up over corporate actors like hotel chains. Is this accurate?
NEAL: As the cost to create, market and sell an increasingly wide variety of products and services plummets, people have a new system to go to: the sharing economy. Much of what was only possible for large corporations just a few years ago is accessible to ordinary individuals now. There’s a possibility for a power shift in favor of ordinary people, but they must wake up and take action to secure it.
DAVID: Siding with upstart venture capital is not my idea of giving ordinary people “a leg up.” The “sharing economy” doesn’t have much to do with individuals. Instead, it represents corporate capital doing what it typically does: Monetizing parts of the social world that have previously avoided it. The difference between renting one’s apartment on Craigslist and Airbnb might seem small, but it’s huge: the role of the intermediary converts the effort from an individual one to a corporate one that is all about extracting profit from resources that are not, currently, monetized enough, in the opinion of some venture capitalists.
SOLIDARITYNYC: There’s a spectrum of sharing economy groups, from cooperatives to private companies like Airbnb. Airbnb is portrayed as helping cash-strapped individuals, which may be true in some cases. But in the long-term, it will likely exacerbate New York City’s housing crisis, by allowing landlords to charge more in rent because their tenants can turn to this secondary market to make up the difference.
DAVID: Yes, and as this proceeds, “sharing” tends to become required by market prices rather than voluntary, in a dynamic I’ve been calling “crowdforcing.”
Most of the criticism of the sharing economy so far has come from conservatives. Writer Milo Yiannopoulos has called it an “ugly throwback to the dark days of socialism.” Is the sharing economy in fact socialist, or in any way anti-capitalist?
DAVID: How can a movement that has been started by corporate and venture capital be any kind of socialism? If we reframed Airbnb as “Hilton wants access to every Manhattan resident’s apartment when he or she is out of town,” we’d see more directly what is happening.
NEAL: The best parts of the sharing economy are bottom up, self-governed phenomena. It isn’t limited to tech companies, either — think about cooperatives, as well as depositor-owned credit unions. At Shareable, we use the term “sharing economy” in the broadest sense possible, as the wholesale democratization of the economy.
But we definitely need to use resources more wisely, so startups that help us better use idle assets have tremendous value. One shared car replaces up to 13 owned cars. Nothing else but sharing has the potential to radically reduce resource use, radically increase access to resources, and act as a big, local economic stimulus package.
DAVID: “Sharing” can be seen as a form of resistance to the capitalist economy. But the “sharing economy” becomes a way of capitalizing on that resistance. This strikes me as a strong instance of cyberlibertarianism, which is the yoking of far-right ideas about “freedom” and government to an apparently apolitical digital utopianism. The political mushiness of the rhetoric surrounding such projects masks what the leaders of the projects want, which is the extraction of profit from sectors so far insulated from such monetization. The only “freedom” such efforts ultimately serve is the economic freedom of concentrated capital.
SOLIDARITYNYC: “Solidarity economy” organizers define and try to frame our work through five principles: democracy, cooperation, social justice, mutualism, and ecological sustainability. Without the explicit commitment to some or all of those values, then the sharing economy — or the social economy, the new economy, or whatever other label we use — is just a new space of capitalist exchange where it didn’t previously exist or predominate. It’s the politics of the stuff that really matters here.
How should urban policy address the legal challenges presented by “sharing” businesses like Airbnb?
NEAL: The sharing economy doesn’t hinge on one ruling, or one company: There are many practical policy directions to increase the capacity citizens to co-consume, co-produce, and create their own jobs. Shareable and the Sustainable Economies Law Center recently put out the first ever sharing economy policy primer for urban leaders. In the case of housing, policies supporting housing coops, micro-units, and mother-in-law suites can increase density, make more affordable housing available, and build social capital.
DAVID: But the NYC case is emblematic because it exposes what Airbnb is really up to: getting around taxation and regulation for profit. While there may be nothing wrong with individuals offering their apartments for short-term rental themselves, coordination of these efforts together by a central corporate entity was always about getting around laws that were put in place by the democratic process and are mostly there for the protection of the public. Airbnb, like much of the “sharing economy,” is a project designed to bypass democratic governance, which is something no progressive should favor.
SOLIDARITYNYC: Yes, and the kind of profit-making that Airbnb enables can also act as backdoor gentrification that prevents communities from having a say in whether a neighborhood is mostly long-term residents or a collection of pop-up hotels and the businesses that cater to them.
It’s also worth noting that Airbnb takes business from the hotel industry, which offers many living-wage union jobs in the private sector in New York. Those jobs are backed by a complex web of regulation, collective bargaining agreements, and cultural custom that has generated economic well-being for a largely immigrant workforce. Undermining democracy and labor isn’t sharing, in our book. Democracy and social justice will need to be included and protected within sharing economy initiatives from the start if it’s going to be more than a tool for extraction and exploitation.
How about the growing numbers of people who work in the sharing economy? The car-sharing companies Uber and Lyft have both become the subject of lawsuits from drivers who say they were ripped off. But sharing economy companies tend to argue that those providing services are users of their platforms rather than employees, potentially making labor action more difficult.
DAVID: I would suggest refraining from getting involved in large-scale venture capital-backed projects to begin with. Anyone who doesn’t is making not just themselves but their peers and relations into targets for capital, and historically capital tends to get what it wants out of such relationships.
SOLIDARITYNYC: The abuse of labor can exist in any enterprise or organization, no matter how progressive. Instead of signing up as an Uber driver, these drivers could form their own company as a taxi collective — like Union Cab in Madison Wisconsin. Another way to do this that would improve upon the labor issues and the allocation and distribution of the surplus would be a consumer cooperative in which the vehicles were actually owned and shared by people who were the consumer-owners. You could even combine the two: a consumer-cooperative that had stake in the equity and governed a worker collective, which would run the service as drivers.
NEAL: The possibility to combine community financing, a cooperative business form, and an internet-based sharing platform exists. Why not a “Fairbnb?” The challenge, however, is that community financing and cooperative businesses take more time and money to set up. You typically see coops execute on well-understood business models like retail, distribution, and manufacturing. I don’t see coops tackling unusual, risky tech ideas. I think that this can change, but it’ll take a lot of time and hard work.
Given these challenges, how should progressives approach the sharing economy at this juncture?
NEAL: Progressives need a business model. Republicans and Democrats have corporate America; progressives have a collection of issues to appeal to people’s moral instincts. But that can only go so far when people can’t house, feed, or educate themselves. Progressives need to get behind the people-powered economy, all those ways ordinary people co-own what they need to thrive, as their main strategy. Until progressives play the needed role as an institution builders in the new economy, they will continue to fade in importance.
DAVID: Progressives should be very suspicious of any and all liberatory claims stemming from venture capitalists, including those being made about the potential of the “sharing economy.” The advent of cyberlibertarianism has provided capitalists with a means to attract Left activism without making clear how divergent their goals are from those of the Left. Many existing cooperative enterprises have clearly articulated their relationship to Left politics, and it is important to support them. Newer “sharing economy” initiatives should be looked at very skeptically, especially if they appear to have backing from venture capitalists, and we should think very carefully about what the ultimate picture such efforts paint appears to be. While voluntarily sharing some extra space in one’s apartment may well be appealing, the prospect of being essentially compelled to “share” one’s living space in order to afford it is much less so.
SOLIDARITYNYC: We should be organizing around economic activities that contribute to community wealth and that include all people, not just those with the ability to access capital for a start-up based on sharing technology. Progressives need to ensure that the idea of the “sharing economy” is translated into real policies for economic democracy.