We are surrounded by a wealth of technology and innovation. We are promised a world of plenty; a super-efficient system of production and distribution; and a life of leisure. And yet the reality is ecological crises, “secular stagnation”, and eye-watering inequality. In the first of a three-part article, Adam Booth examines the rise of the sharing economy.
In the first of a three-part article, Adam Booth examines the rise of the sharing economy, which has featured heavily in the media because of firms like AirBnB and Uber. These new models are presented as offering a revolutionary new dynamic phase in the life of capitalism. But the reality under capitalism is far from this utopian promise.
Part two will examine the impact that new technologies and business models will have on the future of employment and work; whilst part three reviews Paul Mason’s new book, PostCapitalism, on the subject of information technology, and looks at the solution to the contradictions posed by modern technology within the limits of the capitalist system.
Plus ça change, plus c’est la même chose.
(The more things change, the more they stay the same.)
In the second half of the second decade of the 21st Century, we are surrounded by a wealth of technology and innovation, with driverless cars, 3D printing, and an emerging “Internet of Things” connecting people and objects across the globe. Techno-Utopians and libertarian capitalists promise us a world of plenty; a super-efficient system of production and distribution; and a life of leisure. And yet what is the reality for the 99%? Ecological crises, “secular stagnation”, and eye-watering inequality.
For the vast majority, technological progress has not been accompanied by rising living standards, increased wages, or a reduction in the hours of the working week. Despite the incredible technological and scientific potential at society’s fingertips, the most basic problems – of disease, poverty, and homelessness – are not even close to being solved.
Far from being placated and satisfied with what capitalism has to offer in the year 2015, after seven years of global economic crisis, millions of people are rising up, getting organised, and rebelling against the governments and elites who defend this senile system.
Nevertheless, the propaganda continues. In the post-war boom, on the back of mass industrialisation and automation, it was asserted that “we are all middle class now”. Today, despite the gloomy projections from the more serious bourgeois economists, we are told that the next “revolutionary” change is just around the corner. Soon – so the story goes – we will all be free, liberated, entrepreneurial capitalists!
This is the myth that is being peddled across the advanced capitalist world as a supposedly “new” form of economy emerges out of the ashes of the 2008 crisis: the “sharing” (or “on-demand”) economy.
Some, such as those Utopians and libertarians highlighted above, have optimistically proclaimed that we are witnessing the birth of a new, rejuvenated era for the capitalist system. Others, such as Paul Mason in his new book PostCapitalism, have (more soberly) highlighted the contradictions that modern information technology and the “sharing” economy pose within the confines of capitalism – that is, within the limits of private ownership, commodity production and exchange, and production for profit.
But what is the reality? With a plethora of on-demand services now only an app, a swipe, and a click away, are we seeing the dawn of a new smart-phone fuelled era? Does the sharing economy really represent a fundamental change in how society is organised and run? And with a combination of information technology, automation, and high-density networking, has the nature of work and jobs been radically transformed for the better?
Only a click and a tap away
AirBnB and Uber are just the best known examples. But these are only the tip of the iceberg when it comes to the world of the “sharing” – or “on-demand” – economy. Alongside rooms (or whole apartments and houses), it is possible now to “share” everything under the sun, from cars and bikes to tools and textbooks.
Similarly, it is not just taxi-rides that one can order at a moment’s notice; there are now apps for ordering cleaners (Handy), food supplies (Instacart), or restaurant meals to your door (Deliveroo) within minutes. Indeed, companies such as TaskRabbit match an army of “taskers” prepared to do any manual labour – be it assembling furniture, repairing computers, delivering parcels, or mowing the lawn – with those who require such services.
Whilst often lumped together, the “sharing” and “on-demand” economies have clear key differences. Both have risen to prominence within a similar time-frame, on the basis of a proliferation of smart phones, apps, and a young, tech-savvy, interconnected population. The former, however, is focussed on the so-called “sharing” of goods; the latter, on the provision of “on-demand” services.
The revolutionary potential offered by such technologies and models is clear. Rather than wastefully producing houses and cars that are only used for a fraction of their lifetime, we can efficiently share our resources in order to maximise their use. And with the possibility of requesting a whole range of services with nothing but a few taps on a screen, those with skills and time can be matched effectively with the needs of individual users.
The Orwellian world of the “sharing” economy
But whilst the potential and possibilities offered by the “sharing” and “on-demand” economies are clear, within the limits of capitalism, a revolution they are not.
Capitalism, as Karl Marx explains in his magnum opus Capital, is defined by its nature as a system of universal commodity production and exchange. A commodity, Marx elaborates, is either a good or a service that is produced for the purpose of exchange (as opposed to for individual or societal consumption). Whilst commodities have existed in all forms of class society, it is only under capitalism when commodity production becomes generalised.
Inherent within this concept of the commodity is the question of private ownership, another key pillar of the capitalist system. For if a product can be offered for exchange, it must first belong to the producer or owner who is seeking this exchange.
The sum total of the exchanges between commodity owners, meanwhile, forms the capitalist market. Money and credit are the system’s lubricant, keeping the circulation of commodities in motion. And, finally, we see the driving force behind capitalism linked to the question of private ownership: competition between individual producers in the pursuit of profit, obtained through the exploitation of the working class.
Here, then, are the fundamental elements of the capitalist system: commodity production and exchange; private ownership; the market; money and credit; profit and the capital-wage labour relation.
Which aspect of capitalism, one must ask, has been “revolutionised” by the “sharing” or “on-demand” economies? Profits have most certainly not disappeared, as the Guardian points out:
“Joining the sharing economy as a provider of services – accommodation, transportation or whatever else the market calls for – gives you a chance to make money while being part of a “movement”. It sounds tremendously appealing, doesn’t it?…
“But make no mistake: it’s a business. And you forget that at your peril, regardless of how you’re participating in the sharing economy.
“Here’s the bottom line: none of the businesses that have sprung up to serve the sharing economy are…non-profit entities. Rather, they are corporations whose goal is to make a profit out of a much less formal sharing economy that already existed…
“…you don’t get to becomeone of the most valuable venture capital-based businesses in the world, as Airbnb has done, and to be worth an estimated $10bn (more than some hotel chains) if all you are is part of a “movement”. Nope, you have to have found a way to make being the middleman pay off very handsomely indeed – and that’s capitalism 101, not a movement.”
The private ownership is still there, of course: just try staying in an AirBnB flat beyond your agreed dates and see what happens. And it is still fundamentally a market-based economy, with money exchanged for goods and services – i.e. commodities. If this is truly “sharing”, then one might as well classify all sectors and industries within capitalism as being part of the sharing economy, as this so-called “sharing” – i.e. the exchange of money for commodities – is a fundamental trait of all markets.
So what is the “revolutionary” aspect of the “sharing” economy? In reality, there is no sharing taking place here at all. Sharing implies some kind of altruistic reciprocity and/or communal ownership. Indeed, such reciprocity of kindness was (and still is) present in the predecessors to companies such as AirBnB; for example, with online communities such as CouchSurfer, which allowed travellers to find a bed for the night for free thanks to the kindness of others.
No, what we have is not sharing; there has been no abolition of private property or establishment of mass communal ownership. Rather, what we have is the mass conversion of owned products and consumed goods into rented services.
The great trick of the “sharing” economy has been to change the name of things without changing the thing itself. Renting and wage labour – which have existed since the dawn of capitalism – have simply been rebranded as “sharing”. Private ownership, and all the capitalistic laws that flow from this, have not been abolished or changed. The “sharing” economy is just typical commodity exchange given a new gloss and a fancy, trendy, modern spin for the internet age. This is a world of euphemisms that the Big Brother of Orwell’s dystopian classic 1984 would be proud of.
Anthony Kalamar, in an article on OpEdNews.com, describes this “sharing” zeitgeist as “sharewashing”, whereby businesses hide their real profiteering nature behind the kind, smiling mask of “sharing”. In the process, the possibility of a genuine sharing economy –a socialist economy based on communal ownership and a plan of production – is pushed to the side. And whilst these companies may help reduce waste in a certain sector, on a societal level they act to expand the market.
“The key difference between the promise of the actual sharing economy, and the flood of sharewashing companies seeking to hide under its mantle, is that the latter inescapably involve monetary exchange, for profit, in stark contrast to any definition of “sharing” your mother, presumably, once taught you…
“It alsodisables the very promise of an economy based on sharing by stealing the very language we use to talk about it, turning a crucial response to our impending ecological crisis into another label for the very same economic logic which got us into that crisis in the first place….
“…for over a hundred years it has been all about growth — find new markets, develop new products, find new ways to get people to consume. That economy’s gotta grow, baby. And all the for-profit sharewashing companies listed above are also growing big time. They don’t counteract the growth juggernaut of the mainstream economy —they add to it, because they share that economy’s market logic of neverending growth for profit. Those spare rooms, empty car seats, and idle hands can be translated into money, once they are brought to market. Social relations which might have been characterized byreal sharingare brought back under the aegis of monetary calculation and the logic of growth.” (Kalamar, “Sharewashing is the new Greenwashing” – our emphasis)
Author Tom Slee, meanwhile, makes the same point in an article for the radical left online magazine the Jacobin:
“Such examinations clearly show that the entrepreneurial wing of this movement dominates more community-minded initiatives. This tension has led to rapidly changing business models, leaving the original ideas of community-based sharing farther and farther behind as sharing economy models have become attractive to large enterprises…
“The “sharing economy” has seen a rapid slide away from collaborative sharing towards further deregulated and precarious employment — the direct consequence of venture capital funding and the growth imperatives that come with that money. Such a project won’t bring us any closer to the more equitable society we want to see any time soon.”
Rise of the rentiers
The “sharing” economy, then, is characterised by the conversion of ownership into rents. In turn, the companies that run these peer-to-peer rentals – matching supply and demand – take a cut of the rent as their profit. In this respect, there is another importance difference between the “sharing” economy and that of archetypal capitalism: rather than the capitalists’ profits being a slice of the surplus value created in production, the companies at the centre of the “sharing” economy derive their profits from taking a proportion of the rents, which in turn are a share of the surplus value generated in real production.
Marx explains in Capital how all new value in an economy is created through the application of labour. Surplus value, in turn, is simply the unpaid labour of the working class – the value created by the workers above and beyond their own wage costs, which the capitalist in effect gains for free.
This surplus value is then divided up into profits, interest, and rents. The owners of money (the banks and financiers) who charge interest and the owners of property (the landlords) who charge rents, therefore, are not creating new values, but are merely re-distributing value (and surplus value) that has already been created in the process of commodity production.
With the rise of the “sharing” economy, therefore, we are seeing the rise of parasitic rent-seeking capitalism on a vast scale. The main “revolution” of the “sharing” economy has been to turn personal property into private property – that is, to turn the personal property of millions of ordinary people (homes, cars, etc.) into a source of profits for the capitalists. Put simply, it is the mass conversion of small-scale personal property into capital.
Whilst AirBnB and other such companies may help improve in allocating specific resources more efficiently, they are not re-investing their profits into solving the problem of scarcity where it exists. In other words, they are doing nothing to develop the productive forces.
The case of AirBnB is a perfect example. This major player of the “sharing” economy is ultimately benefitting from the fact that there is a lack of housing and affordable accommodation in society. But rather than re-investing its profits into solving the shortage of housing, as would occur within a socialist plan of production, AirBnB simply spends its profits on advertising and marketing in order to expand its share of the market. This is the basis for its entire business model.
At the same time, there are many examples of how AirBnB, rather than helping to solve the housing crisis, is actually responsible for exaccerbating it. Many landlords who previously rented to long-term tenants are now instead choosing to cash-in and turn their properties purely into short-term lets and holiday homes, at much higher rates than those on the long-term rental market. The result is to price renters out of areas they could previously afford and to reduce the supply of housing available to rent. Instead of efficiently allocating resources, then, AirBnB actual serves to increase scarcity.
The example of Uber highlights the same point. Here is a company that benefits extraordinarily from the dire state of public transport in many cities across the world. But rather than using its profits to invest in public transport, Uber – like AirBnB – spends its money on advertising and marketing. Of course, as long as Über is a privately-owned, profit-seeking company, this makes perfect sense. Uber, AirBnB, and other such businesses are only following the laws and logic of the capitalist system, which is driven by competition and the pursuit of profit.
Similarly, companies in the on-demand economy, by classifying their workers as “self-employed” rather than as “employees”, avoid any obligation to provide training or equipment. Rather than investing to improve the skills and tools of the on-demand workforce, and thus help raise productivity across the sector, these firms are just taking advantage of the mass unemployment and low-waged, unproductive labour that exists in swathes across society as a result of the crisis of capitalism. Instead of helping to develop the productive forces, these companies are actually profiteering from the symptoms of society’s stagnation.
Another important difference between the “sharing” economy and a genuine socialist plan of production should also be highlighted in this respect. Whilst a “sharing” economy might be able to allocate resources more efficiently and reduce waste within one sector, the role of workers democracy and a planned economy within socialism is to direct and allocate resources (ultimately social labour time) across the whole of the economy, according to where there is scarcity or need in society.
Under capitalism, it is price signals and the market that play an equivalent role in allocating resources, primarily through directing investment. However, this is done – in capitalism – not on the basis of need, but because of a mismatch of supply and demand for certain commodities, and the possibility for the capitalists of making super-profits by pouring capital into this-or-that sector.
Within those sectors covered by the “sharing” economy, therefore, the allocation of resources may be more efficient. But the companies leading the way in the “sharing” economy (or, indeed, the capitalist economy in general) do not operate to address social needs, but only to make profits. The allocation of resources between different sectors and across the economy as a whole, meanwhile, is still left to the anarchy of the market, which is in fact highly inefficient – hence the fact that such absurd contradictions exist across the capitalist system: mass unemployment alongside overwork; homelessness alongside empty homes; austerity alongside excess capacity and piles of idle money in the hands of big business. Far from being an efficient system, therefore, there is a great waste of resources under capitalism, due to its own internal contradictions.
The fact that investors are pilling money into the “sharing” economy – a purely rentier economy – is yet another reflection of the enormous spectre of overproduction (“excess capacity”) that is haunting the world economy. With inequality at unprecedented levels, there are huge piles of profits accumulating in the hands of the 1%. But with massive levels of overproduction still existing on a world scale, there is little to be gained from investing these profits in real production – hence the rise of speculation, the growth of asset bubbles, and the increasing instability on the stock markets (such as the recent dramatic fall of the Shanghai stock exchange).
This rise of the rentier economy, in the form of the growing “sharing economy”, then, does not herald a new dynamic phase for capitalism; rather, it demonstrates the opposite: the impasse that capitalism has reached in being able to develop forces of production – industry, science, technology, and technique.
In short, the so-called “sharing” economy, far from signalling the dawn of a new era of collaboration, equality, and common ownership, is simply the growth of parasitic capitalism with a bit of lipstick on to make it seem pretty. Like the prostitutes of old who would hide the symptoms of their diseases with makeup, turning sores into beauty spots, the rotting capitalist system in its epoch of senile decay – no longer able to develop the productive forces and take society forward – has tried to mask its most unattractive and repulsive features as something to be revered.