Collaborative consumption. On-demand services. The gig economy. Peer-to-peer business. Numerous names describe the same phenomenon: the rise of technology-enabled sharing. The likes of Uber, Airbnb, TaskRabbit, Lending Club and Rent the Runway are creating new markets, reshaping business models, escalating competition and transforming employment.
We’re in the throes of transition to what leading sharing economy expert Arun Sundararajan calls “crowd-based capitalism.” And while the concept isn’t new, it is changing everything – the economy, government regulation, what it means to have a job, and our global social fabric.
The growing momentum of peer-to-peer economics is undeniable and it extends well beyond car-sharing or house-renting. Even highly skilled jobs, like consulting and teaching, are shifting to more gig-like models. To a degree, the sharing economy is a back-to-the-future move, explains Sundararajan, a New York University Stern School of Business professor, and an affiliated faculty member at NYU’s Center for Urban Science+Progress and its Center for Data Science. “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.”
Today’s 21st century sharing economy platforms represent early examples of a different way of organizing economic activity. There is no one model. It’s not a pure sort of marketplace. It’s not a traditional organization like a hotel or train company. It’s somewhere in between, says Sundararajan who has researched, written, taught and spoken about the digital transformation of business and society for almost two decades. It’s this tricky in-between space that raises big questions about economic growth and the future of work.
Sundararajan explores this new paradigm in his just-published book, “The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism” (MIT Press). Drawing on extensive research and a variety of real-world examples, he explains the fundamentals of crowd-based capitalism, demystifies emerging blockchain technologies and clarifies the dizzying array of emerging on-demand platforms. He also highlights important policy choices and suggests possible new directions for self-regulatory organizations, labor law and funding our social safety net.
It’s true the leading businesses powering the concept of the sharing economy are no longer insurgents and newcomers. The size and scale of the Ubers and Airbnbs rival and even surpass some of the world’s largest enterprises in transportation, hospitality and other sectors. But the sharing economy has not hit a wall as some suggest, argues Sundararajan, in “Secrets of the Sharing Economy,” a Bloomberg View interview posted yesterday.
We’re experiencing a profound shift in how we think about everything, from utility to capital to labor to employment, he says. As the economic power of these technology-driven firms continues to grow, the biggest impact on business and our daily lives is yet to come.