BY MICHEL BAUWENS, 25/03/2015
Defining the sharing economy and related ideas
Before embarking in an analysis of the impact of the sharing economy on capitalism, it is important first of all to define the ‘sharing economy’, as well as related terms such as peer to peer and commons economy. The underlying commonality is the technological revolution of the networks. In the first era of networks, from 1973 (the invention of the microchip) to 1993 (the invention of the browser for the web), networks were privately owned and used by major corporations and governments. This first era resulted in neoliberal globalization, which hit its stride in the nineties, through the combined effects of two factors. First, business process engineering within the corporations substantially flattened hierarchical structures; and secondly, the reorganization of supply chains on a global scale allowed access to cheap labor power in the Global South. But the second network era, which started in October 1993, is the most significant. This date marks the democratisation of access to the internet with its profound peer to peer structure. The system of routing packets of data, in fact, allows the direct permission-free connection, which leads to effective self-organisation, value creation and distribution between a very rapidly growing numbers of people on the planet – now probably reaching 2 billion people.
This universal capacity, even if moderated by difficulties of access and user training, has generated two important new social logics, which should not be confused. First, peer to peer commoning, which is the capacity for people to jointly construct social objects (open knowledge, free software, open design), called “commons” and defined as open input, participatory processes and collectively oriented output.
Around such objects an open source ‘fair use’ economy has been created – which has reached 1/6th of U.S. GDP and 17 million workers. Second, is the peer to peer exchange economy which allows people to directly buy, sell or rent items from each other. It is the latter which is often misnamed as the sharing economy, even though as a market mechanism no items are properly shared. More accurate terms such as the gig economy (for distributed labor) or the on demand economy, have been proposed. If the first logic can be considered a form of mutualisation of knowledge, the second can be considered a form of mutualisation of physical resources.
The relation between capitalism and the new social forms
These new social forms do not exist outside of capitalism but have different relations to it.
The commons economy, in particular, represents the clearest challenge to the traditional economic system. Indeed, at the heart of this new model are open contributory systems that consist of both paid employees and freelancers operating on the market, but also always a substantial amount of free labour. The new system is based not essentially on hierarchical command, but on mutual coordination of tasks through stigmergy, that is, indirect coordination via signaling. Here we therefore have an essentially post-capitalist logic of contributors that create commons, instead of salaried labor that creates commodities. The commons economy is properly called post-capitalist because this logic did not exist at scale before capitalism.
Nevertheless, these commons logics are inserted in the overall capitalist logic. The reason is simple: to obtain livelihoods, contributors need market-generated income, provided by the entrepreneurial coalitions, which are essentially for-profit corporations. Such coalitions capture the value generated ‘on top of the commons’, and create both livelihoods and surplus capital for their shareholders. In this way, the circulation of the commons is still subsumed to the accumulation of capital.
In the second form, the so-called sharing economy, the exchanges are intermediated through platforms. The transactions between individuals are capitalist, and so are the platforms, which are owned by shareholders who extract transaction fees or sell the attention of participants to third parties.
In both cases, however, I would posit we are witnessing a new form of capitalism, which does not enclose and destroy the commons, but uses it for its own benefit. Thus net-archical capitalism, with ‘net-archy’ defined as the ‘hierarchy of the network’, has learned to directly exploit human cooperation.
The value crisis ensued by the new capitalism
These forms of subsumption are however highly problematic. First of all, it must be noted that the new form of capitalism no longer produces value itself directly, but enables and empowers individuals to create commons and distributed exchange, while capturing the value directly. Let’s think of Facebook as an example of why this is problematic ‘in the extreme’. An empty social media platform has no use value and no exchange value. It is the consumer’s’ use of the platform, which creates an attention pool for its owners, which they then use to sell our attention (and data) to third parties. Note that in this model, although the co-creation and co-production of value is absolutely clear and essential, none of the exchange value flows back.
This is a general problem for the sharing economy, where the new players, such as Airbnb and Uber, do not build material infrastructures, and do not pay salaries, but provide only ‘piece work’ by freelancers. Thus, such platforms actively contribute to the generalization of precarity in society, live off it, and co-create more precarity, even if precarious individuals may benefit from the extra income they gain from their freelance activity. This process exemplifies the value crisis, that is, the creation of a vast crisis of underconsumption due to the further restriction to revenue endowed to labour as a reward for its work. Thus, in this context, the sharing economy is just an extreme form of neoliberalism, the latter being characterised as the economic form in which lesser and lesser of the surplus value goes to the workers, and more and more to the owners and the financiers. A capitalistic system not paying the labour force, which is also the pool of consumers, cannot sell its products. This explains the structural crisis in which the sharing economy is plunging the dominant political economy.
The solution to the value crisis
Clearly, the paradox of the commons/sharing economy is that as individuals are enabled and empowered to create more and more use value themselves, such value is rising exponentially; but its monetization is only rising linearly, and captured in exaggerated ways through net-archical capital.
What are we to do?
The solutions will be once again different for the commons economy and for the so-called sharing economy.
In the commons economy, the peer producers could create their own entities. We have called this by various names, for example, “open cooperatives”, which are cooperative entities that statutorily and legally engage themselves to co-create commons and shared resources. Thus the contributors of the commons can create livelihoods and organise their own ‘self-reproduction’ by constructing an alternative ‘ethical’ entrepreneurial coalitions that re-invest the surplus in the commons and the commoners. Other emerging and rapidly growing entities are called “phyles”: these are business eco-systems and participatory value chains that create global economies around their commons and communities. Examples of such entrepreneurial coalitions are Enspiral in New Zealand, Sensorica in Canada, Ethos in the UK, Crisp in Sweden, Fora do Eixo in Brazil, and Las Indias in Spain.
In the sharing economy, the solution could lie in platform cooperativism. In this case, drivers and riders, travellers and hosts, would create their own non-profit platforms, owned and governed by the stakeholders themselves, and again, re-invest the surplus in the infrastructure of sharing and commoning. Indeed, despite the fact that is based on exchange, the platform itself could be considered the basis of the commons. In social media platforms, the creation of data cooperatives can solve the value crisis, as user-generated data would be owned and governed by the user communities who actually generate them.
The strategy: from prefigurative to transformative
If society is to transition from local solutions to systemic transformation, the prefigurative practices and institutions that are being created will not be sufficient. Society will have to transition from emergent practice to parity and eventually to a full commons-oriented economy and civilization. Such transformation combines the co-production of commons by the citizens-contributors, with an ethical market consisting of commons-supporting entities that create livelihoods, and with partner state models featuring democratic territorial (and trans-local) entities, which enable social autonomy and empower the individual. This shift requires new social movements and political actors that truly understands the commons, support the citizens-commoners in their transformative effort, and ensure the systematization of such practices.
What is the underlying utopia?
What would be the result of this shift? Global and local productive communities would produce all the knowledge needed to solve technical and social problems. Furthermore, the ethical market players would create socially just value distribution mechanisms, reinforced by the partner state, which monitors the overall balance of society. The new mode of production would be free – that is, shared – fair, but also sustainable.
Why would such outcome be desirable? Because open productive communities are not designed for obsolescence. Because the cosmo-localization of such production (heavy locally, light globally), eliminates vast amount of globalized transport costs. Because interlinked ethical entrepreneurial coalitions based on commons would practice transparency and open book accounting in their participatory value chains. Those value chains would in turn result in open supply chains and an open source circular economy employing blockchains. Because shared infrastructures would vastly reduce the amount of matter and energy that is expended on these products and services. Hence, the commons economy and the true sharing economy would not just transcend the social inequality of capitalism, but reverse the ongoing destruction of the biosphere.
The commons and peer production are not just a nice ideas, but will be vital to our future.