OD&M: Designing for sustainable economic transformations (Part 2)

 In Reports

Part 2: On the sharing economy

By Chris Giotitsas and Alex Pazaitis.

As a global society, we are facing what could be understood as an existential dilemma with the sharing economy. As a phenomenon, the sharing economy has been increasingly gaining attention since -roughly- 2004, as it gets more and more share in the global markets. But sharing, as a practice, is not a new phenomenon. It has been present in communities since the dawn of human history. And, frankly, in our current form of economic organisation we have not always been very fond of it…. 

Those of us who have been old enough to witness a primitive type of audiovisual technology called “Digital Video Disc” (aka DVD), have often found ourselves irritated with -and simultaneously amused by- aggressive anti-piracy ads like this one. In all their ridiculousness, comparing a downloaded movie with car theft, what they were basically tackling was early forms of peer-to-peer file-sharing.  

So what has happened in less than 10 years that made sharing (esp. over the internet) from a criminal activity to the whole “sharing is caring” story? 

Apparently, the answer lies in some people making enormous amounts of money through sharing. A glimpse on the net worth of Mark Zuckerberg or the market value of tech start-ups like Uber or AirBnB nicely illustrate this. On the other hand, a closer look in their underlying infrastructures (and also their tax returns) shows that, despite profiting on sharing capacities, they are not equally interested in sharing themselves. So, to put it bluntly, what is interesting about sharing, is the sharing economy. What is less obvious is what it is about the economy that is of the interest of sharing. 

In a broader view, the economy can be described as a system that caters for the production and distribution of the means necessary for our subsistence and well-being. In the specific kind of economic system we broadly refer to as capitalism, economic affairs usually involve two main institutions: (a) private property; and (b) market exchange. The latter is fundamentally dependent on the former, and, respectively, the former rationalises the latter. This line of economic understanding also by and large underpins the definition of the sharing (or collaborative) economy from the European Union (European Commission (2016). A European Agenda for the Collaborative Economy. Available)

“[…] the term “collaborative economy” refers to business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals 

And further it is pointed out: 

“Collaborative economy transactions generally do not involve a change of ownership and can be carried out for profit or not-for-profit” 

More or less, the understanding of sharing on behalf of the EU is reduced to the extent it can relate to these fundamental institutions of property and exchange. The focus is then placed on regulating issues evolving around these relations, concerning both things and people, including labour, liability and taxation. 

Nevertheless, the same document still cannot move away from pointing out -even if in a footnote- a certain element that is significantly different: 

“Collaborative economy services may involve some transfer of ownership of intellectual property […]” 

And I would add a hint: often without conventional market-based transactions. Earlier examinations of the phenomenon focus exactly on this dynamic, explaining those conditions that allow them to have massive economic impact. Harvard Law Professor, Yochai Benkler, more than a decade before the EU became interested in the sharing economy (Benkler, Y. 2004. Sharing Nicely: On Shareable Goods and the Emergence of Sharing as a Form of Economic Production. The Yale Law Journal, 114(2): 273-358), eloquently argues on sharing as a form of economic production and nicely summarises his position as follows (again in a footnote, yet for different reasons here): 

“I am concerned with the production of things and actions/services valued materially, through non-market mechanisms of social sharing […] 

And then continues: 

“Sharing’, then, offers a less freighted name for evaluating mechanisms of social-relations-based economic production” 

The phrase “valued materially” concerns the real value of sharing, not the one expressed in financial markets or the balance sheets of Facebook’s partner advertising companies. It relates to the very human interaction of sharing stuff and our own time and capacities in things we consider meaningful, from food, shelter and rides, to knowledge, information and technology. The meaning, or value, of this interaction, contrary to the so-called sharing economy, is not guided by price signals between the people, commodities and services. It is a form of an economy, i.e. a system catering for human subsistence and well-being, based solely on social relations. And this is partly why a Harvard professor has to come up with a “less freighted name” for it, as we can all imagine the all-too-freighted name of it that any Fox News anchor would instinctively shout out based on the above definition alone. 

And here lies the real transformative dynamic of sharing as a form of economic production. It is this element that allows a group of uncoordinated software developers create better a web-server than Microsoft; or thousands of people, contributing their knowledge with no predefined structure, roles or economic incentives, create a digital encyclopedia that outgrows Britannica. But such sharing-enabled success stories typically don’t mobilise huge cash flows and don’t create “added value”, which basically entails an understanding of value stemming exclusively from selling stuff to people.  

Going back to our existential issues with sharing, our general position as societies is that we basically think of sharing as a nice thing to do, but lack the institutions to really appreciate its value for our economic system. This massively restrains the actual dynamics of sharing, which are gradually subsumed by the dominant private-property-and-market-driven system. 

There are of course great alternatives in the digital economy alone that build on this sharing capacity in a more humane and socially-minded way, from early neighbourhood tools and rides sharing platforms, to Free and Open Source Software, open design projects and Wikipedia. There is frankly as much sharing taking place on Facebook as in Wikipedia, at least on the front end. But the underlying value models and, subsequently, potential outcomes for the majority of the people involved are vastly different. 

For this we need to finally mature with regards to our issues with sharing and, eventually, make a choice for the kind of sharing for which we would design our institutions and societies. And hopefully that would be the one that would help us escape the current dead ends on the social and ecological front. 

<<Part 1: On the circular economy

Part 3: Needs-based design as an alternative paradigm >>

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