Juliet Schor On Whether the Sharing Economy Really Adds Up
We caught up with Boston College sociologist Juliet Schor to discuss how the so-called sharing economy is taking over the world, one Uber ride at a time, and what the implications are for the environment. Back in 1992, Schor created a stir nationally with The Overworked American: The Unexpected Decline Of Leisure
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EarthTalk: Briefly describe your definition of the “sharing economy.”
Juliet Schor: I think one of the interesting things about the discussions about the sharing economy is that it is an entity without a clear definition. So one group of people confines the sharing economy to the sort of use of “underutilized assets,” to use their term, or idle capacity. So when it’s a person-to-person situation, in which one person has some unused capacity and an asset– whether it’s a car, a home, some durable goods, some space–and they then get involved in a person-to person or peer to peer either lending, renting or giving of that. And so that’s I think probably the part of the sharing economy that almost everyone agrees, in terms of the definition. Well, except that some people think whenever it’s a renting, it’s not really sharing. But then, there’s also things like what’s called the on-demand economy, or the “gig economy,” which is really more about labor services. So ride-sharing apps like Uber and Lyft, where it’s less about a person who has excess capacity in their car and more about someone wants to make some money driving. Or errands sites like TaskRabbit, or delivery platforms. And those are typically talked about as part of the sharing economy, but they really are something pretty different. And people also use the gig economy and the on-demand economy to talk about those. And then just the last thing I’d say is, there’s a whole other set of labor platforms, like Mechanical Turk, which are these task-based, many of them low-wage labor platforms – global – that aren’t really talked about in terms of the sharing economy, but they’re not so different than something like TaskRabbit when people are doing online tasks. And finally, another big part of this which is also not often lumped in with sharing economy is crowdfunding.
E: Is it fair to say most of those, or many of them, are an extension of the traditional capitalist economy, and only a few of what you just discussed are really actually sharing?
Schor: Well, in terms of actual numbers, when you say “most,” there are lots and lots of small platforms that are not particularly capitalist in their orientation. Many of them are really trying to do different sorts of things. Like time banking, for example, or Yerdle, which is a free-cycle. So there are lots and lots of them. The really big ones– like Airbnb, Uber, if we want to call that, and so forth—tend to operate in pretty traditional ways in terms of profit maximization. At the moment they’re not profit maximizing they’re maximizing market share, I think, but basically longer-term interested in that. I think in the crowdfunding space, you see a real mix. I mean, something like Kickstarter, which has maintained a very different set of principles than a traditional bank. You have GoFundMe, Indiegogo. A lot of these are really much more people platforms than corporate platforms.
E: Okay do you have like a preferred definition? Like, “this is my idea of the sharing economy.” And which ones would fit that?
Schor: Well, I have a paper that’s coming out which sort of confines it to that first thing I mentioned, which is the underutilized assets. On the other hand, I feel like there’s also virtue in a broader—a bigger tent, if you will. Something like a time bank, which I think fits well with a sharing economy, or a food swap. There are a lot of innovations at the grassroots, and the non-profits, and the neighborhood and community level, and so forth, which are in not about making money. They’re about creating a different kind of economy, which I think are really sharing economy entities. The platform cooperative movement, for example, which is about building platforms that are owned by their users, or maybe sometimes just by the providers on them. All of those things I think should go under sharing economy, and they don’t necessarily fit that first definition. So, I’m not too concerned about a definition. I think it’s really just important to make sure that we’re clear about what we’re talking about in any different context.
E: Right, and for you, it’s cooperative, or it’s using what you already own that would otherwise not be used. I’m trying to simplify.
Schor: Oh. There isn’t—I can’t. It doesn’t work. I mean, I think sort of coming up with a…there isn’t just one definition that works because there’s too much variation here. You have so many different variables we’re dealing with, whether it’s what actually is the transaction that we’re talking about, the for-profit, not-for-profit… One of the things I did very early on in my research was create a two-by-two matrix in which the two issues I highlighted were, is it a peer-to-peer or a person-to-person, versus a business-to-person. Like, Zipcar owns the cars. That’s a business-to-person. Airbnb, the individuals own or rent the rooms. Now, Airbnb is getting more to be on it, companies that come on with lots of units. So I think that issue is really important: person-to-person versus business-to-person, and then nonprofit versus profit.
E: Okay, great. Let’s move on to the environmental piece of it. Like, why should an environmentalist care, and what can at least certain kinds or parts of the sharing economy do to help the environment?
Schor: This is a great question and, I think, a really difficult one to answer based on what we know at the moment. The sharing economy was born, or sort of emerged, with a lot of rhetoric about how it was green, and how it would reduce carbon footprints especially. So you have the idea that car-sharing will reduce the number of cars on the road, and if people didn’t own cars then they would drive less. Airbnb saying, “Oh look, we don’t have to build a lot of new hotels because we have excess capacity in people’s homes.” And anyway, people stay in neighborhoods and they used public transportation and so forth. Well, I think there is something to those arguments, but if you really want to figure out what the impact of any new kind of economic behavior or practice is, you need to think through all of its effects. The sharing economy became popular, in large part, because it offered cheaper options to people. Good options, for a given quality. So Airbnb cost a lot less than a hotel, for example, particularly in center cities. Uber, way underpriced traditional taxi cabs. When the price of something goes down, people buy more of it. And of course, the companies also tout their ability to create this demand. One of the things they say is, “Look, we’re creating income and jobs,” and so forth. But if that’s right – and I think there’s evidence that it is – that also means they’re creating pressure on environmental resources. So Airbnb, the one I know best… I think of a really big impact of Airbnb is that it has made it a lot cheaper for people to travel, which has a big carbon footprint. We have found in our interviews, for example, that some people travel just to get out of their house so they can rent it. They fly somewhere and Airbnb in that place at a cheaper rate. And they also talk about how they travel more. So, the environmental impacts are complicated to quantify. They vary a lot by the sector. Something like Uber has been shown to have a number of effects. One, it’s pulling people off public transportation and putting them in private vehicles. That’s really bad from an environmental point of view. I think that’s probably the biggest thing that it’s doing. On the other hand, it is probably reducing some car ownership, and that might have an impact in the other direction. It varies a lot across different kinds of households, places, services, etc.
E: Okay, so if you’re thinking about a sustainable society that’s environmentally-friendly that we’re moving toward, or we want to move toward, do you see a place for a sharing economy? It’s a complicated question, but is that…?
Schor: Absolutely. I mean, I think that part of these things that I’m talking about are not inherent in the sharing part of it. The fact that the sharing economy makes something cheaper that’s very environmentally damaging… If you want to have a sustainable outcome, you’re going to have to deal with that. So, either you make airplanes that don’t pollute so much so that people can move around without such a big impact, or you tax the fossil fuels so that the extra money that people get from saving—from Airbnb or the people who are earning on it—so that money doesn’t go into such carbon-intensive activities. I think you have to think about it in its larger context. You’re not going to get to sustainability—sharing economy is really not going to do very much to get overall a sustainable society. You need a lot of other things: you need the renewable energy, you need carbon taxes, you need good public transportation, you need a different kind of food system. I think sharing economy could certainly be an important part of that. And particularly if we’re talking about the nonprofit stuff, because with the nonprofit stuff it’s not about just being able to consume more because it’s cheaper. With the nonprofit things, like a food swapper, a time bank, or so forth, people are generally doing things in low carbon-intensity ways because they have multiple motives for them. It’s not just “how can I consume more by getting a low price?” thing.
E: Okay, great. With car sharing, for instance, there there was talk early it would be used to get to public transportation and back, so yeah, it depends…
Schor: And there is some new data showing that there’s some of that. So again, it really depends. There are some people for whom Uber makes it more feasible to use public transportation. And that’s particularly in sort of heavy commute kinds of areas, center cities, where it’s really difficult to commute by car. Within cities, I think probably you’re going to see more impact of Uber on pulling people off public transportation.
E: That’s unfortunate. I do have a friend who uses Uber to get to Metro train on her way to work, though.
Schor: Yeah. And what area is that?
E: It’s Rockville, Maryland. Just outside of BP.
Schor: Right, like one of the worst traffic places in the country.
E: Yeah, exactly. Let me move on to just talking about the Web. Which – it was created to be democratically accessible, right? But it’s evolved so there are only a few players like it. Airbnb have an outsized role and monopolize it. So, do you have any ideas about how to counteract that to make it more democratic? Because the platforms that you prefer seem to be the small local ones that really encourage sharing, but they tend not to become the dominant platforms.
Schor: Yeah. Well let me say a couple of things. I think that one thing that’s important to sort of think about is we think about the sharing economy is, there are really two very successful platforms, not counting the funding stuff. And that’s Airbnb and Uber. They’re huge. They’ve grown really, really rapidly; they have enormous valuations and tons of capital behind them, and also lots of political clout. Whether or not there are going to be more Airbnbs and Ubers in other parts of the sharing economy, I think, is an open question. To me, one of the interesting things is that on the labor side, a lot of these platforms have struggled. Because they haven’t been able to get the right mix of getting the consumer—what they want—and being viable for the producers, or the providers.
E: You’re talking about the more authentic—for want of a better word—sharing platforms.
Schor: No, here I’m talking about a lot of the capitalist ones like TaskRabbit and … some of them have gone out of business. The delivery services and so forth. And they’re different. I mean, some of them aim at different segments of the labor market. So you haven’t seen the same kind of success and growth that you have with Uber and Airbnb; they’re really unusual. The nonprofits are also small and struggling in that sense. One theory is that it’s just all about network externalities, and that’s why these platforms… I think for Airbnb, that makes more sense. I think for Uber, it’s not so much that. Uber’s a kind of a ruthless, predatory company, and they were able to take advantage of this situation in taxis with lots of rents sitting there because of barriers to entry. So it was like a big, fat pot of gold sitting there, and they swooped in and grabbed it. There’s a lot more competition now, in many ways, in that field. And that’s a local market, unlike Airbnb, which is really a global market because the consumers are moving all over the globe in a way that… With the ride stuff, it tends to be a little bit more local, so local alternatives to Uber have a better chance than local alternatives to Airbnb. I’m sort of—this is a long-winded way to answer you. I don’t think that – well, I think that there will be potential anti-trust actions against these companies, possibly. I think the other thing is that in the end, I mean sort of eventually, it’s not going to be clear how much the platform actually is contributing to the market. So let’s take Airbnb, for example. Now what is it that Airbnb did? Well, it handles the payments in a kind of seamless way; it creates ratings and reviews, which are really important for strangers to be able to hook up with each other; it has a certain insurance function; and it’s got this software and shows you a market. Now those first few things are probably going to be outsourced from these programs. I think that the ratings and reputational data is not going to be platform-specific, because people are going to be using so many of these platforms. It’s going to become more like a credit rating situation, where you have independent entities that manage your ratings and reputation. So that’s gone. The insurance, anybody can do that, provide that insurance. It doesn’t need to be with the platform. And the software’s gotten pretty regularized the payment systems and so forth lots of places can do that. So you have to ask yourself, what is this platform really providing anymore? Especially when the software that the platforms developed originally is now very easily replicable. So you can–there are companies now that are just going out there and giving you all the software you need like that to start a sharing economy platform.
E: So it’s not just going to be dominated by a few giant companies.
Schor: It might be. It might be, because power is really important in markets. And so you can get incumbents, and they can dominate markets for long periods of time if the government doesn’t go up against them or if another big entity doesn’t come in to fight with them. And that’s one possibility. And the other is that they’re vulnerable to competition because they’re not really providing anything that other people can’t easily get. They don’t have a monopoly on anything that’s really very valuable, and that makes them vulnerable. But we don’t really know. I mean, one of the things—and you can look at examples from the tech world that would support both sides. You could look at Google and Facebook and say, “Wow, look, you get a monopoly here, you’re set. You’re going to dominate.” But of course, people always bring up the MySpaces of the world, which was dominant before Facebook. So, is someone going to come along and create a better mousetrap? Maybe. Could you get a decentralized alternative with a lot more democracy and user control? Lot of people are working on that now.
E: So from an environmental and sustainability standpoint, and – well this is pretty conjectural, but could we have a model with a few giant companies that’s still just wonderful environmentally? Or is it really preferable to have lots of competition and lots of little niches, and therefore maybe people will be more vocal, and the platforms will care more about the environment?
Schor: Well, that’s another great question. I think the size is, in a way, less important than who’s controlling it. One of the interesting things about these platforms is that you can have much more democratic control of the platforms even if they’re big. Because it’s not a face-to-face world. It’s an online world in which you could have… you know, there’s a photographer’s cooperative called Stocksy. Photographers all over the world join it, and they put their pictures up there, and they’re sold and they get a high—and they’re all owners of that cooperative. You can imagine many other big, global platforms that are all user-owned, and they have democratic processes to decide things. And they might be very green! Chances are, they’d be a lot more green than some of the big companies. On the other hand, you could imagine that there are some big platforms that might have ownership, who cares a lot about the environment, and they try and do things in green ways. And there are others who couldn’t care less. I think that the more democratic control you have, probably the better, although that’s not—you need other things too, I mean—that’s not a sufficient condition for getting something green.
E: But you could have democratic control of a larger platform.
Schor: Right. Right. Probably, we’re going to want a mix of these things. One of the things that I’ve really come to believe over the years, as I’ve thought about alternative economies or different kinds of economies for decades now, is that rather than searching for the optimal type of economy, the optimal type of enterprise, the optimal state-market relations and so forth…I think we’re in a period where we’re going to be really better-served by a much more diverse, pluralistic, hybrid kind of development. I mean, for one thing, we need to experiment with new forms because we’ve had really a narrowing to the dominance of that corporate form. And I think also just that hybridity, or pluralism, is a good in itself. It creates a more… As in ecosystems, a more diverse ecosystem is a more resilient one.
E: So you want variety, democracy, and experimentation.
Schor: I think so, yeah.
E: Great. Any final thoughts or comments?
Schor: I guess the final thing I would say is that, like any other economy, the sharing economy—what it is will not be determined just by its formal structure. It will, in part, be determined by political power and by economic power. And there’s a whole group of people now who are working to try and stop the sharing economy from being completely co-opted by venture capitalists and billionaires and people who just care about making money, and see the potential for something that is really much more progressive, democratic, socially just, accessible, and so forth. And so for people who are interested in the sharing economy, I suggest trying to connect up with those sorts of people. There’s a movement for platform cooperativism—it’s probably the most organized of those forces—but then, there are also many local initiatives under the sharing economy rubric that are nonprofits, community-based, and so forth.
– Okay. Any suggestions whom interested people should link up with?
– Well, on the platform cooperativism, there’s Nathan Schneider and Trebor Scholz. Trebor is at The New School, and they’re been doing a series of gathering and conferences, and you can go online and find that. For the local stuff, it really varies by location, so I think it’s really more a matter of figuring out which part of this you’re interested in. Is it pop-up repair collectives, or food swaps, or time banks, or used good exchanges, etc.?
E: Okay. But everyone can get involved.
Schor: Yeah. Just Google it! There’s tons of stuff online about it.
E: All right. Thank you very much.
Schor: Thank you. It’s been a pleasure.