Sharing Economy: An emerging trust dynamics?
Bruna Santos
Is the sharing economy helping us rewrite social contracts?
In the process of preparing materials for the workshop Beyond Us, promoted by the Between Crowds and Empires module in Brazil in 2015, I was provoked to write about ‘alternative economies’ — examining their polarities and taking into account the different perspectives and experiences we see across China and Brazil. It has become increasingly apparent that the so-called “new economy” must be analyzed through the lens of power distribution, individual vulnerabilities, and, ultimately, social contracts.
In reflecting upon these ‘alternative economies’ and the trends that produce them, I continued to wonder, Does the sharing economy phenomena illustrate a paradigm shift?
My hypothesis is that yes, it does, because it has woven new social dynamics into our marketplaces and therein developed channels for peer-to-peer exchange. In the still-nascent era of digital platforms, trust and reliability have become accessible to the masses. No longer restricted to institutions, these are now tools belonging to the individual.
This transformation has manifested as a host of apps and platforms that circumvent institutions and facilitate more direct exchange. Consider the rapid emergence and expansion of Uber, Airbnb, TaskRabbit, Lyft, China’s Didi Kuaidi, B2B, and B2C, not to mention the myriad of replicates that subsequently emerged elsewhere. This trend — whether referred to as the collaborative economy, sharing economy, or peer economy — has developed more quickly than our understanding of it; we are all overwhelmed by the soup of buzzwords proposed to describe it. While the shift towards digital platforms will certainly evolve economies in ways we cannot predict, I highlight here two major shifts in agency and ownership that have emerged thus far: the idea of distributed power, and the idea of innovative and/or effective asset utilization.
How will on-demand access to goods change the way we think about ownership? How does on-demand ridesharing affect the way we perceive our right to mobility? The “sharing economy” — the most inclusive and broadly accepted term for apps and platforms providing on-demand goods and services — is a system that activates the untapped value of assets through new business models and marketplaces. Those assets include cars, land, skills, utilities, and time. When you see individuals using TaskRabbit, an online marketplace for outsourcing errands, you are not only witnessing a ballyhooed economic trend, but a new way of organizing economic activity different from the traditional, corporate-centric model.
An emerging trust dynamics and how it (may) affects social contracts
What’s the difference between leaving the towel you dropped on the floor of a hotel bathroom and picking it up and washing it when you stay in a room you booked through Airbnb? Hotels and Airbnb are based on different ideas of trust. Personal interactions formed the basis of the trust behind any informal couchsurfing. Systems that allow both clients and providers to provide ratings and reviews have made it possible for 21st-century companies such as Airbnb to rely on “the possibility of a trust built through the platform.”
Normally, ‘institutional trust’ is large-scale, hierarchical, centralized, and standardized. Conversely, ‘peer trust’ is built upon bottom-up, decentralized, personal trust. This shift results in the emergence of disruptive new business models and, more importantly, changes in how trust is built, lost and renewed across systems and societies.
Since the Industrial Revolution, institutional trust has been the norm. We depended upon universities, companies and massive corporations to establish and enforce rules and regulations in exchange for safe and reliable goods and services. Yet the erosion of institutional trust goes beyond a newfound skepticism regarding the size, structure and equity of institutional systems; institutional trust simply isn’t designed for the age of digital platforms.
How does this influence social contracts? Social contracts play an important role in defining rules and responsibilities between states and citizens. In its most primitive stage, the social contract was property-centric. Two centuries before the emergence of the 19th century modern state, the social contract served as the foundation of relationships between individuals, and between individuals and governments. This evolved into our modern understanding of democracy and the democratic state, in which ultimate power lies with citizens who delegate authority to the state.
The real power of the sharing economy, or “crowd-based capitalism” (as Arun Sundararajan likes to call it), is that it may offer us new perspectives on the social and economic value that can be created from any of a number of assets in ways that were not possible before. If we examine some of the business models that have arisen with the sharing economy, we appear to be in a process of “disintermediation,” in which we remove the middlemen through the use of web technologies. We could transition from a society of passive consumers to active and connected collaborators, producers, providers — you name it.
Regardless of how the space occupied by the sharing economy grows and what you choose to call it, let’s not be cynical about the potential power it has to humanize the way we live, work, travel, and consume in the 21st century. The reflection I have proposed in this text connects it to the potential emergence of new social contracts, which is likely to include what could be called a larger conceptualization of “we.” Such a conceptualization could address the global relevance of climate change and the wide reach of globalization, that together extend responsibilities to others (people, species, and ecosystems) beyond traditional national borders.
