Share
and Share Alike
In his new
book, Arun Sundararajan paints a rosy picture of the revolutionary companies
and platforms that are altering the nature of work.
The Sharing Economy: The End of Employment and the
Rise of Crowd-Based Capitalism by Arun Sundararajan (MIT Press, 2016)
Arun Sundararajan, a professor at New York
University’s Stern School of Business, prefers the term “crowd-based
capitalism” to describe the phenomenon encapsulated by rapidly growing
commercial platforms such as Uber. But, like the rest of us, he also uses the
term “sharing economy,” because doing so “maximizes the number of people who
seem to get what I’m talking about," he writes.
The confusion over terms — other people speak
of the “gig economy” or the “on-demand economy” — is understandable. After all,
sharing economy arrangements have cropped up in a wide variety of industries,
from transportation to housing. The structure of such enterprises varies widely
as well. Some sharing economy ventures truly involve sharing — facilitating an
exchange of services with no money changing hands, as is the case with the
travel platform Couchsurfing. Others look like fairly traditional marketplaces
in which buyers and sellers meet and cut deals over networks such as Etsy.
Providers on some platforms can become microentrepreneurs, free to conduct
commerce on their own terms; others can look an awful lot like employees.
This
smartphone-enabled, venture capital–fueled phenomenon cries out for a
biography, a taxonomy, and an impact analysis. In The Sharing Economy,
Sundararajan supplies all of those things. While much of the book will be
familiar to someone who follows events in this world — he spends a good bit of
time explaining how these platforms actually work — it’s a useful and
fundamentally optimistic attempt to explain where the sharing economy came
from, and where it’s going.
Sundararajan believes that these new
developments are, on the whole, a force for good in the world. Perhaps for that
reason, he overlooks some of the less-rosy economic forces behind their rise,
and brushes off those who argue that platforms such as TaskRabbit are basically
traditional businesses attempting to skirt the rules by which conventional
industries are bound. At the same time, Sundararajan is not so naive as to
think that such new businesses ought not be regulated — and he offers a few
thoughts on what the new regime should look like.
To a degree, the sharing economy is a
back-to-the-future move, Sundararajan explains. In the pre-industrial economy,
most people ran their own businesses or had gigs, either as smallholders eking
out an existence from the land or as urban grunts doing odd jobs. The 20th
century brought a disruptive force: large corporations that employed tens and
hundreds of thousands of people, and distributed safety net benefits.
But as we evolve from managerial capitalism
to crowd-based capitalism, today’s small-time entrepreneurs — and the massive
companies that facilitate them — have huge advantages over their predecessors.
Widely available GPS technology, connected to smartphones, allows for the
seamless delivery of goods, services, and payments. Universally visible online
profiles allow for people with no formal credentials to build credibility
through earning endorsements for services rendered.
·
And yet these convulsions raise big questions
about how government and society can ensure that consumers are protected and
workers are treated well when the closest thing they have to an employer — the
platform upon which they find customers — denies that it’s an employer at all.
It’s
clear where Sundararajan’s sympathies lie. The text is peppered with tales of
sharing economy conferences attended, panels conducted, and test rides taken,
and he largely shares the perspective of those who have pioneered and invested
in this emerging form of commerce. He argues, convincingly, that on-demand
platforms could have many salutary effects. For example, in his influential
book Capital in the 21st Century, economist Thomas Piketty lamented the fact that the
return on investments in physical assets is rising faster than the economy
overall. “With a little additional infrastructure,” Sundararajan writes,
“Piketty's ‘renters’ can begin to experience the other side of the coin by
making money through investing or owning rather than laboring.”
That’s possible. But Sundararajan — a user
and beneficiary of the sharing economy — overlooks some of the less appealing
factors behind its rise. For example, he neglects to mention the pervasive wage
stagnation that has pushed people (many of them with full-time jobs) to augment
their income with microtasks. He also presumes that employees automatically
have less flexibility than contractors, which isn’t always the case. Full-time
employees (like professors!) can often have exceedingly flexible work
arrangements.
Sundararajan buys into the notion that
because the sharing economy creates fundamentally different forms of work, the
old rules and regulations governing work are obsolete. “There is little value
in trying to retrofit old regulatory regimes into the new models,” he writes.
What might make sense for ensuring compliance by a large institutional hotel or
restaurant chain, he thinks, could push the person earning some extra money on
VRBO out of business.
Sundararajan argues persuasively that
networked platform companies will actually have an easier time self-regulating
in the public interest than their traditional counterparts because a provider’s
future business prospects depend on the reputation he or she has built with
customers. But his answer to the question of how to regulate employment,
however, is less satisfying. Facing the prospect of a social safety net
shredded by the growth of mini-jobs that don’t require employers to contribute
to workers’ long-term financial security, Sundarajan posits that many platforms
want to offer employment-like benefits — as long as they don’t come with
employment-like obligations.
To that end, Sundararajan cosigned a letter
with platform companies that are subject to traditional regulatory frameworks,
calling for a “safe harbor” from employment law for platform companies while
they figure out their business models. “How would one relax those constraints
in a manner that allows us to examine what the market will provide naturally,
and what we need the government to step in and make happen?” he writes.
He suggests that platforms could be asked to
contribute to portable accounts for retirement, healthcare, and unemployment on
a pro-rated basis to replace the formal commitments that traditional companies
have to their employees. Longer term, that concept could evolve into a system
of providing basic incomes for all members of society as a way of compensating
for the declining quality and quantity of employment throughout the economy.
Such measures sound good in theory. In the meantime, and in the short term,
letting sharing economy companies off the hook could also let their workers
fall through the cracks.
The sharing economy industry has made great
strides in constructing systems and platforms that are appealing to consumers.
Its next great challenge will be to allow workers to share in the benefits more
fully.
by Lydia DePillis
http://www.strategy-business.com/article/Share-and-Share-Alike?gko=a2f27&utm_source=itw&utm_medium=20160707&utm_campaign=resp
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