Inclusive growth vs ‘sharing’ economy

In 2011, Rachel Botsman brought out “What’s Mine is Yours”, a book describing the fast-growing movement towards using internet platforms as marketplaces for sharing goods and services.
Her view was that this shift offered us the opportunity to live a low-ownership lifestyle, and the narrative was very positive: reduced consumption, community enrichment, reduced costs of access and provision of extra income streams.
However, the sharing economy as we know it in 2017 paints a very different picture.
In the time since she wrote What’s mine is yours, we saw the “sharing” movement spread, but issues also began to emerge.
Firstly, traditional industries tried to protect their interests. They could hear the faint noise of disruption looming, and loudly began to ask about the regulation and governance of these new business models.
Satisfactory answers could not be found, initially to the delight of the consumers due to the lower prices these companies offered, but concern soon set in:
It became clear, as individual companies pulled ahead in the race for dominance, that the power was rapidly centralising in just a few platforms (Uber is the textbook example), which made them feel less like ‘the friendly sharing company’ and more like a big, powerful corporate.
Successes of the business model also meant VC interest grew rapidly; there was a rush to ‘Uberize’ a whole host of services. The low-hanging fruit was the jobs at the lower paid end of the spectrum.
This has resulted in what one commenter called “The Servitude Economy”, where wealthy knowledge-workers manage their lives from their smartphones, while workers do anything for them from stand in a queue at a no-reservations restaurant, to bringing take-away to their desk on-demand, at any hour of the day.
Author Douglas Rushkoff wrote about this phenomenon, and how the involvement of VC funding is the reason that these businesses went from community-based ideas to monopolies & behemoths.
In 2016, 5 years after the publication of her book, I attended a talk at the RSA London where Rachel Botsman addressed these changes. She laid out her fears to the audience and argued that if we let this continue, we will end up at a point where we have recreated the existing system, just with different brands.
Collectively, we need to ensure that doesn’t happen.
Are times changing?
There is a growing awareness of this issue, particularly among those who have been or anticipate being negatively impacted by the dominance of these companies.
Challenger businesses have sprung up, aiming to capitalise on this trend; Juno initially pitched itself as the co-operative alternative to Uber, for example. We have to see this as simply a first attempt, as Juno was acquired in April by Gett and closed its stock options. In fact, in an ironic turn of events last week, Uber was reportedly exploring giving driver stock options.
Time for a new category?
This begs the question, are we on the precipice of a new type of “sharing” business?
I’m discovering more and more businesses who hesitate to call themselves ‘sharing economy’, but they are employing sharing economy mechanics into their business model.
They want to align themselves with Rachel Botsman’s initial vision for the sharing economy, but reject the “sharing economy” label for fear of it undermining their social impact-led brand.
On the one hand, you could say it’s a new type of social enterprise, or on the other, it’s a socially-minded sharing economy business.
My first port of call was to consider how these sharing-economy-for-good companies fitted into the co-operative model, due to their focus on distributing either wealth, power or opportunity among their customers or throughout their value chain.
The majority of these companies did not fall into the traditional definition of a ‘workers co-operative’ (where all employees own shares in the business, e.g. John Lewis in the UK).
Nor could I class them as a ‘consumer co-operative’ model (where it’s owned by individual members and other co-ops, e.g. The Co-Op group in the UK, or Mountain Equipment Co-Op in Canada)
In the traditional consumer co-operative, you are entitled to vote and present motions to the board, but there is little formal structure in place to facilitate any hands-on involvement in the business, be it product development, content, customer service etc.
So how does it differ from these other types of co-operatives, and what sets it apart?
In this new category of co-operatives, we see business models that rely heavily on customer or collaborator involvement in order to deliver their goods or services. However, those who collaborate and share in the success of the company need not be full-time employees of the company itself, unlike workers co-operatives.
These businesses are engaged in true inclusive growth; encouraging and rewarding consumers to be active in their business and share in their success. Crucially, they want their collaborators to benefit from the growth and scale of the business, and they set it up to ensure that the monetary rewards brought by success will be fairly distributed.
What next?
I believe that we need to start recognising the actions of businesses that are working in this way, similar to our recognition of Fair Trade in supply chains.
It’s a crucial step to educating and informing the public so that they can spend their money with companies that do the right thing.
There is already work going on in the European Union to create a kitemark system for sharing economy businesses, but we need to work more quickly.
Unfortunately, legislation will always struggle to keep up with innovation, and the nature of sharing economy businesses mean both consumers and workers are left in a grey area when it comes to established legal rights.
So in the meantime, let’s use inclusive growth principles to actually start sharing, and begin educating consumers to help them make the right choice.
This blog is a personal project — working at giffgaff inspired me to find more examples of companies that make mutual commerce work, however my views are entirely my own, not of my employer.
