The Sharing Economy as an Economy of Freedom

The so-called sharing economy has arrived. In this economy, the services sector has grown as information technology connects individuals who wish to provide services, such as transportation or gardening, with those who wish to buy them. Companies in this economy, like Uber and Airbnb, help match buyers and sellers but do not tend to employ the latter. Rather, people who provide services deal directly with their clients. By giving people more opportunities, the sharing economy also expands liberty.

Regulators and incumbents have already tried to prevent the disruptive entry of these new providers. A prime example is the battle against Uber. But a recent article highlights a set of social critics who dislike the sharing economy as a whole, and not just particular industries within it. Opponents of the sharing economy – and everyone quoted in the article who does not participate in this industry is a critic – presage attempts to regulate it by imposing burdensome work rules.

The article sketches the lives of a few people who make their living in this world. Although their stories are vivid, the article does not capture analytically the three great advantages of the sharing economy. First, it reduces transactions costs, matching in real time idle resources and people with those who need particular resources or skills. That is why, as the article does mention, consumers can get better deals. But these deals help service providers, too, who are better able to find work when transaction costs are reduced.

Second, the sharing economy employs people who would otherwise be unemployable, because it creates jobs for those who need flexibility, not just for those who would like to work in other parts of the economy, but cannot find a job.

Third, the sharing economy creates classes of jobs that did not previously exist. For instance, by eliminating transaction costs, people are encouraged to find someone to do a chore that they do themselves badly or not at all. The sharing economy is fundamentally a pie-expanding economy.

Now to the critics: Guy Standing, a professor of Development Studies at the University of London’s School of African and Oriental Studies, attacks the sharing economy’s uncertainty – workers cannot be sure of their next gig. But people work “at will” in traditional jobs as well. Employees are laid off from companies every day, often leaving as specialists in skills that are no longer needed. As the article implies, many of those in the sharing economy are undertaking a diversity of tasks (driving, gardening, being a chef). Such diversification helps address uncertainty.

Dean Baker, co-director of the Center for Economic and Policy Research, worries about “self-exploitation” of free-lance workers in the sharing economy. He observes that “many of these people would be earning less than the minimum wage,” but offers no evidence to back up either this claim.  The concept of self-exploitation, moreover, is an oxymoronic imitation of the old Marxist trope of false consciousness. Workers know their own interests better than Dean Baker does.

Finally, we have Stanley Aronowitz, the professor of sociology at CUNY and professional deconstructionist who was famously embarrassed by the publication of “Transgressing the Boundaries: Toward a Transformative Hermeneutics of Quantum Gravity” in Social Text, a journal that Aronowitz co-founded. The article, which argued that gravity was a social and linguistic construct, was a spoof. Aronowitz denounces jobs in this new economy as having no future and no “possibility of upgrading,” and constituting “wage slavery.” But there is no reason to believe that workers cannot learn by doing, thus upgrading their skills as they move from one opportunity to another. And the term “wage slavery” attempts to deconstruct and invert the essence of markets, where the freedom to choose has allowed the vast majority of people to live ever more abundantly over the centuries. The benefits are no more a social construct than gravity. The sharing economy is just another variation on this happy truth.