The phrase, “sharing economy,” when referring to services like Airbnb or Uber, is, of course, camouflage language. “Sharing” is what we urge our children to do with their toys at playtime. If, however, our kids rent their toys out, it is the “getting paid” economy, in the words of San Francisco’s super-pol, Willie Brown. Lyft’s slogan is “Your Friend with a Car,” but my friends don’t charge for a lift. (Using “sharing” to describe, say, free recycling or a co-op housing’s common kitchen, is another matter.)
In some ways, these new “peer-to-peer” purchases are a step back to a more “informal” economy, the economy of guys repairing cars in their front yards, women doing hair-dos in their kitchens, laborers waiting on street corners for construction jobs, workers selling their home-made lunches to fellow employees, and the like. This is work that is unrecorded, untaxed, and unregulated. In developing countries, many, if not most, workers are in the informal economy. The 21st-century American, high-tech versions are certainly recorded in multiple online receipt systems; whether and how much those transactions are taxed is a matter of struggle now in many communities, as is the issue of whether and how much they are regulated. We have been there before.
Some Past “Sharing”
Here are a couple of relevant examples. In the later decades of the 19th century, most Americans, by best estimates, sometime in their lives lodged (payed for a room, a bed, or a part of a bed) or boarded (paying for a room plus meals). And a high proportion of families, often headed by widows, took in lodgers or ran boarding establishments. Although sometimes it was a matter of convenience, as in middle-class boarding houses for young white-collar and professional workers newly arrived in the big city, most often lodging and boarding was matter of dire financial need on both sides of the transaction. In some urban neighborhoods, poor immigrant families sub-leased out makeshift beds in kitchens to even poorer immigrants. At times in the early 20th century, jitneys – informal, shared cabs – flooded the streets of American cities. A mass transit strike or boycott would spur dozens or hundreds of car-owners to turn their vehicles into quasi-buses, charging what the traffic would bear. They were usually short-lived experiments.
Why did these sharing/paid versions of work diminish in the 20th century? Some of these peer-to-peer arrangements went away because economic needs diminished. Incomes increased and housing became more available and affordable, so the need to lodge or to take in lodgers dropped over the first half of the 20th century. Cities took over mass transit lines and reduced costs, while personal cars became more affordable, drying up the demand for jitney service (except in some poor, neglected neighborhoods).
A broader explanation is that businesses and workers in certain fields used regulation to limit competition. Craft unions historically created barriers to entry, requiring apprenticeship for membership and membership for union-only jobs; their power has faded. The professions, such as dentistry, veterinary, accounting, law, counseling, and, of course, the professoriate have high barriers to entry; their power has not faded. Other sorts of regulations — housing standards for construction work, zoning rules for hotels, quality testing for food growers and processors, drug testing for medicines, and the like — made business entry into certain fields very expensive. If people need to get tested or licensed or inspected – or, say, get a taxi medallion – to work, there are fewer workers and higher income for them. (Such regulations also provide opportunities for “regulatory capture” and plain old corruption.) This is the “free-market” complaint against the 20th-century economy and the case for encouraging peer-to-peer transactions outside of the standard regulatory constraints.
On the other hand, in many if not most cases, regulations arose after public complaints about wide-open, unstructured business: watered-down milk and watered-down beer, spoiled and sickening food, fraudulent patent medicines and imposter doctors, unsafe housing, and the like. The jitney cabs almost instantly drew complaints for overcharging, overcrowding, reckless driving, dishonesty, and the like. Boarding houses were charged (rightly or wrongly) as sites of loose morals, illness-inducing crowding, and neighborhood blights. New health and building standards ruled some boarding houses out. Zoning, starting in the 1920s, protected the quiet and the property values of middle-class residential neighborhoods by penning the rooming houses into the inner city.
Perhaps one reason we are seeing a resurgence in peer-to-peer transactions, tech developments aside, is the greater economic need for them in a stagnant economy. (A contributor to Slate last year called for bringing back rooming and flop houses as the solution to the housing crunch.) In any case, the new, tech-connected “sharing economy” services seem, at this writing, to be so economically attractive – “sharers” are making good money and buyers are saving good money while getting more convenience – that they are likely to forestall 21st century efforts at regulation.
Update, Nov. 19, 2014
I received a couple of quick responses to this post that make some good points.
University of Arizona sociologist Corey Abramson points out that in neighborhoods of scarcity today, the informal economy “never went went away,” including ride services, unofficial restaurants, and even “doctors.” And he notes that in such settings, it is not uncommon for people to indeed pay for rides from their friends or acquaintances, just so as to avoid incurring an obligation to reciprocate.
Writer/photographer Thomas Levy stresses that today’s version of peer-to-peer is really peer-to-middleman-to-peer and that the middlemen — the high-tech companies like Uber — can squeeze a lot of profit out of the often under-employed service providers that they aggregate.
(Re-posted on the Boston Review BR Blog on November 19, 2014.)