The Sharing Economy Was Dead on Arrival | JSTOR Daily

By Mike Bulajewski

Pity the sharing economy CEOs. Fueled by venture capital dollars and an earnest, socially conscious mission statement of doing well by doing good, these plucky Davids took on the incumbent Goliaths in their industries and won. They may not have brought them down completely, but category leaders Airbnb, Uber, and Lyft have established themselves as serious players over the last decade, and investors have responded enthusiastically. The trio have been rewarded with billions of investment dollars at sky-high valuations while the stock market awaits their triumphant IPOs. The objective of “doing well” is in hand, but how does the social impact balance sheet look?

In their early stages, these startups promised that their services would heal a society ravaged by out-of-control consumerism, restore authentic communal bonds, reduce carbon emissions and other environmental impacts, and finally replace the outmoded hierarchies of corporate life with new, networked economic structures where everyone could be their own boss. But the good intentions of yesteryear soon evaporated to reveal a markedly different reality. In New York, San Francisco, Paris, Amsterdam, and Berlin, city governments have cracked down on illegal home rentals, blaming companies like Airbnb for rising rents, housing shortages, floods of visitors, and transforming local communities into tourist playgrounds.

The company initially deployed the standard David-and-Goliath narrative to portray any rule that limited its growth as the efforts of a large, corrupt hotel industry using government to eliminate competition. In the media, Airbnb portrayed itself as the defender of the little guy standing up to bullies, but this became hard to maintain when the company was itself the target of protests. In Berlin, activists installed anti-Airbnb billboards around the city with the hashtag #boycottairbnb before the city enacted a ban. In Barcelona, and Venice, protesters took to the streets, hung banners and sprayed graffiti. In their home city of San Francisco, activists occupied the atrium in Airbnb’s headquarters to draw attention to the company’s negative impact on the local community.

For a company like Airbnb, which spent years burnishing its brand as a socially-conscious company concerned about having a positive impact on society, to be the target of protests—in its own headquarters, no less—must be a true humiliation. It’s difficult to recall a company that has failed quite so catastrophically at delivering on its socially conscious marketing.

And yet, these negative impacts were entirely predictable. It doesn’t require an economics degree to realize that allowing landlords to make a killing by converting their properties from long term to short term rentals will drive up rents and housing prices. Why didn’t we see it coming? How did sharing economy companies manage to evade scrutiny for so long?

Answering that question requires tracing the origins of the idea of the sharing economy. It emerged from Lawrence Lessig and Yochai Benkler’s theories of gift economies in digital media sharing, remix culture, and open source software development. Lessig and Benkler fuse the non-commercial, communitarian ideals of the 1960s with the venture capital-funded tech industry, arguing that these companies are the leading edge of an emerging form of capitalism that will transform society along the lines envisioned by the counterculture.

These ideas are far less novel and innovative than their proponents claim. Not only is Lessig and Benkler’s future here today, it has been with us for half a century. Their genius is not in articulating a new vision of the future, but in giving a fresh veneer of youth to an economic arrangement already in steep decline.

Origins of the Sharing Economy

The term sharing economy has many synonyms and near-synonyms, like gig economy, peer economy, collaborative economy, grassroots economy, and mesh economy. It is primarily used to refer to the “sharing” of physical goods or labor. Since the “sharing” occurs in exchange for money, critics have frequently noted that “selling” is a more accurate term.

In his 2008 book Remix: Making Art and Commerce Thrive in the Hybrid Economy, Lessig applies the term to non-commercial sharing of digital media on internet platforms like YouTube and Wikipedia. In earlier writings, he attributes the coinage to Andy Raskin, a journalist and entrepreneur who wrote about Creative Commons, Lessig’s organization.

In Remix, Lessig takes aim at intellectual property rights on the internet and the commercialization of artistic work, defending the free flow of information on the internet unencumbered by restrictive copyright licenses, which enable artists to be compensated for their work. For Lessig, these licenses are founded on an elitist model of cultural production that he calls “read-only culture” where a small group of professional artists and musicians sell their work to a passive audience. This model is rendered obsolete by the advent of digital technologies that enable richer, more vibrant and democratic forms of culture that Lessig calls “read-write culture,” where passive audience members become amateur participants, endlessly modifying cultural products, creating and freely distributing derivative works to be enjoyed by all.

Lessig discusses the economic models behind remix culture through the twin concepts of commercial economies and sharing economies, a sharp analytical distinction that draws on Yochai Benkler’s “Sharing Nicely: On Shareable Goods and the Emergence of Sharing as a Modality of Economic Production.” Drawing a contrast to the commercial economy defined by exchange mediated by price, Lessig writes:

A “sharing economy” is different. Of all the possible terms of exchange within a sharing economy, the single term that isn’t appropriate is money. You can demand that a friend spend more time with you, and the relationship is still a friendship. If you demand that he pay you for the time you spend with him, the relationship is no longer a friendship.

Lessig’s work celebrates the efforts of unpaid artists who distribute their work on the internet for free, leading critics to describe his system as “digital sharecropping” or a “cult of the amateur.” For Lessig, sharing economies are defined by exchange without compensation, and participants are in fact hostile to the very idea. The book includes an anecdote where Lessig found himself seated on an airplane next to a teenager in possession of a large collection of pirated DVDs. He relates the following conversation:

“So,” I said, “could I rent one of those from you? How about $5?”

I’m not writer enough to describe the look of utter disappointment on his face. Suffice it to say that I had found the single most potent insult to hurl at Josh.

“What the fuck?” he spit back at me. “You think I do this for money? I’m happy to lend you one of these. But I don’t take money for this.”

I had crossed a line. But with that crossing, my respect for Josh grew. I didn’t agree with how he had acquired his collection. Yet his rebuke reminded me of a different economy within which culture also lives. There exists not just the commercial economy, which meters access on the simple metric of price, but also a sharing economy, where access to culture is regulated not by price, but by a complex set of social relations. These social relations are not simple. Indeed, these relations are insulted by the simplicity of price. And though I hope not many trade on capital acquired as Josh acquired his, everyone reading this book has a rich life of relations governed in a sharing economy, free of the simplicity of price and markets.

Sharing is defined here as exchange mediated by social relations. After describing the inherent hostility between sharing and commerce, Lessig goes on to explain that a commercial entity can nonetheless profit from non-commercial activity by becoming a hybrid. It can, for example, create a platform that supports large groups of volunteers who share within a community. From the company’s behind-the-scenes view, sharing is effectively unpaid labor and a source of value creation and profit. However, the profit-making side of a hybrid must be submerged, out of view of the volunteers. Lessig warns against hybrid companies who are over-eager to monetize their communities, drawing too much attention to their profitable activities and engendering the community’s hostility and eventual decline. For hybrid entities to succeed, the community must remain uncorrupted by the taint of commerce. Members must understand their interactions with each other as expressions of generosity and reciprocity rather than sources of profit. Lessig’s paradigmatic example of a hybrid is Red Hat, Inc., a multinational corporation that sells business software and services based on open source software, most notably the Linux operating system.

In Remix, Lessig makes occasional ironic references to Marx, Lenin, and communism to suggest that the sharing economy isn’t capitalism as usual. Genuine left-wing academics have made even stronger claims. Writing at the height of the dot-com boom, Richard Barbrook celebrated the rise of what he called “cyber-communism”, suggesting that the emergence of gift economies and voluntary labor on the internet, particularly in the open source movement, was nothing short of the supersession of capitalism from within—“the American road to communism,” as Barbrook put it. The basis for his enthusiasm is the belief in a radical disjunction between gift economies and market economies, an idea popularized in the 1970s countercultural movements by the French avant-garde art group Situationist International.

Via the French social theorist Georges Bataille, the Situationists borrowed the notion of the gift from the anthropologist Marcel Mauss, who studied the practice of gift exchange in indigenous societies. His exemplary case was the potlatch, a ceremony found among Native American tribes of the Pacific Northwest, in which tribe leaders display wealth and status through acts of extravagant gift-giving.

Since Mauss’ groundbreaking work in the 1920s, anthropologists and thinkers have maintained a sharp distinction between gift exchange and commodities exchanged through markets. Commodity exchange is held to be rational, calculated, impersonal, alienated, anonymous, individualistic, self-interested—lacking in any moral or social meaning. It stands in contrast to and is incompatible with gift exchange, which is altruistic, socially embedded, and supportive of social relationships.

This distinction appears in Remix as the difference between commercial economies of professional compensated labor and sharing economies of uncompensated amateur production. Lessig argues that the contradiction is overcome in the hybrid corporation. For Lessig, the hybrid conceals the profit-making side of the business to ensure that community interactions are governed by the social logic of gift exchange. In this way, the hybrid ensures that members won’t begin acting as self-interested market participants, who might, for example, expect compensation and a share of the profits.

The Sharing Economy Was Dead on Arrival
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The gift economy mediates the relations between individual members, but also between members and the company’s employees, who are paid to manage and maintain the community and its infrastructure. Hybrids that depend on user-generated content—Lessig includes sites like Flickr, Slashdot, YouTube, and Second Life—own the technological infrastructure that the community depends on. Community members rarely pay for access. Instead, access to the infrastructure is itself a gift, reciprocated by members through active participation, adherence to the rules, and a generous spirit. The for-profit entity is itself subject to these norms. Lessig draws a lesson from the success of Red Hat and the Linux community:

Now, as Red Hat demonstrates, there is a delicate balance to be struck between the commercial entity and the sharing economy. Red Hat succeeded in maintaining the loyalty of the community because of how it behaved. It respected the terms of the license; it supported development that others could build upon; indeed, as [Robert] Young estimates, at one point more than 50 percent of the core kernel development team worked for Red Hat and both Red Hat and VA Linux Systems gave stock options to Linus Torvalds. Many from the GNU/Linux community helped Red Hat understand what appropriate behavior was, and the company took great steps to make sure its behavior was appropriate. A key element to a successful hybrid is understanding the community and its norms. And the most successful in this class will be those that best leverage those norms by translating fidelity to the norms into hard work.

Lessig stresses the difficulty of conjoining a commercial entity with a sharing economy, but despite their divergent logics, he is nonetheless optimistic about the growth of this model. Although some anthropologists believe that commercial economies and gift economies are radically incompatible, Lessig argues that profit-minded entities will invest in and participate in gift economies because it is in their self-interest to do so.

To support this claim, he makes two arguments. First, he observes that profit-seeking firms often forgo their intellectual property rights and freely reveal their innovations. He cites Eric von Hippel and Georg Krogh, who observe this in the open source software movement. Through a game theoretic model, they demonstrate that, far from a purely altruistic act of generosity to a community, sharing can be rational, profitable behavior for self-interested actors.

Second, Lessig asks how a gift economy and a profit-seeking firm can coexist without questions of exploitation arising and destroying the union. He argues that even when some participants in a gift economy are acting altruistically, this isn’t necessarily incompatible with profit-seeking behavior by others. It is simply a matter of “appropriate compensation.” Community members receive prestige, social bonds, relationships, and the pleasure of altruism, while the commercial entity reaps financial rewards. For Lessig, these are simply different kinds of compensation appropriate to each. However, managers of hybrids must learn that it is in their interest to respect some limits to ensure the sustainability of the resource they exploit. Profit-making that interferes with the social benefits that motivate sharing is destructive to the community and therefore also destructive to the profit-making entity that depends on its work.

From Digital to Physical Sharing

In Remix, Lessig references Benkler, who coined the term commons-based peer production to describe non-hierarchical, non-commercial, decentralized, individualistic methods for coordinating labor processes practiced by Wikipedia editors and Linux software programmers.

Benkler’s “Sharing Nicely” extends his analysis of cultural production on the internet to the domain of material goods, taking us one step closer to the sharing economy as it exists today.

Anticipating many features of the sharing economy, the article identifies certain classes of resources and goods that are amenable to social sharing: they must be “lumpy” (indivisible, only purchasable in lump sum rather than units) and “mid-grained” (relatively widespread private ownership). According to Benkler, these two qualities lead to overcapacity, which is more efficiently provisioned and distributed through social sharing than price systems or hierarchical, command-based structures like firms.

Benkler gives a series of examples of shareable goods which will be familiar to any observer of sharing economy companies:

Automobiles come with standard packages of seats, and PCs come with processors and storage disks well beyond what most users will require. There are many other such goods. Books (rather than their content) are an excellent example. In order to read a book one can borrow it from a library or buy it. Once purchased, the book has much more capacity to deliver its primary functionality—communicating its content—than a single nonobsessive individual can consume. This overcapacity is the source of the secondhand book market (market provisioning), the public library (state provisioning), and the widespread practice of lending books to friends (social provisioning).

Like Lessig, Benkler distinguishes sharing from commercial transactions. Indeed, Benkler’s central argument is that the rise of commons-based peer production constitutes a partial retreat of market- and firm-based systems for organizing labor in some areas of the economy, while also admitting that traditional bureaucratic organizations like NASA and IBM can be closely involved in managing and profiting from it.

Two case studies ground his analysis: First, carpooling schemes, where solo drivers offer rides to commuters at public transportation hubs so that they can drive in high occupancy vehicle lanes. And second, distributed computing projects like SETI@home, where individuals contribute their unused computing power to solve complex calculations. Benkler notes that these projects seem capable of supporting a range of participant motivations: reciprocal, altruistic, or self-interested.

Owners can implement one of several strategies to allow access to their shareable assets: non-selective access, which can be either fully open (e.g., a city park) or on a first-come-first-serve basis (e.g., a library book); and selective access, based on price (i.e., excluding those who can’t afford to pay) or social criteria (e.g., only sharing with friends or family). Of the selective access strategies, Benkler argues that social criteria may be superior because the informational transaction costs are lower. The price mechanism requires precise specification of the terms of the exchange, which is costly compared with the approximate, informal norms of reciprocal gift exchange.

Beyond transaction costs of different sharing arrangements, Benkler is concerned with the motivations of participants and adopts a position similar to Lessig on the question of the compatibility of markets and social norms:

A comparison of market and social systems for organizing production by utilizing shareable goods in terms of motivation, then, will reveal money (or any other expression of market exchange value) and social-psychological rewards as alternative sources of motivation. The pursuit of one sometimes complements, but sometimes undermines, the value of the action as measured in terms of the other. The relationship of the two is culturally and historically contingent. Capturing the potential for human action that could be motivated by the exchange of love, status, and esteem, a personal sense of worth in relations with others, is the strong suit of social production (and sometimes, depending on time and context, the state—as in “Uncle Sam Wants You!”). Social production rewards action either solely in these forms or, if it adds money, organizes its flow in such a way that it at least does not conflict with and undermine the quantum of self-confidence, love, esteem, or social networking value obtained by the agent from acting.

Similar to Lessig’s conception of distinct forms of compensation appropriate to commercial economies and sharing economies, Benkler believes that money and social-psychological rewards are different but comparable forms of motivation that, with care, can be combined in non-conflicting ways, and that social production in gift economies operates as something like a market in which social rewards are currency:

[P]henomena I describe here and elsewhere—sharing of material shareable goods and peer production of software, information, and cultural goods more generally—resemble an ideal market in their social characteristics, but with social cues and motivations replacing prices as a means to generate information and motivate action.

In his later work, Benkler cites experiments that demonstrate that the actions of participants in the Prisoner’s Dilemma game are sensitive to the way it is framed. Participants are much more likely to engage in cooperative actions if the game is labeled “Community Game” than if it is labeled “The Wall Street Game.” Benkler shows how this can be applied to business problems through the example of the sharing economy rental car service Zipcar, a short-term car rental company which represents itself as a “car-sharing” service and its customers as a community. This framing has allowed Zipcar to increase revenue and customer compliance with rules.

In essence, Benkler believes that encouraging altruistic behavior among customers can be an economically rational cost reduction strategy for a firm, similar to the way that cooperative production of open source software is profitable for firms like Red Hat.

From Gifts to Profits

Benkler and Lessig claim that market economies and sharing economies have the potential to be in conflict. They must remain relatively independent so that production in the sharing economy is not corrupted by commercial interest. But in today’s social media landscape, it is apparent that social currency can be exchanged into money, and that both social rewards and financial incentives may motivate users simultaneously.

StackOverflow, a user-generated Q&A website for programming questions, and GitHub, one of the most popular source code repository services and host of many open source software projects, have become important to software developers as ways to develop reputation and demonstrate competence to prospective employers.

In their documentary television episode, Generation Like, the authors Douglas Rushkoff and Frank Koughan explore how financial and social motivations intertwine for YouTube users. The accumulation of quantifiable social rewards like comments, likes, shares, and subscribes is pursued both for its own sake and for the instrumental purpose of developing relationships with brands for product placement opportunities. Conversely, securing a product placement deal is both financially rewarding and a form of social prestige. It signals a certain level of success, status, and validation of the user’s ability to develop an audience.

Rushkoff and Koughan further note that the concept of selling out—compromising the integrity of one’s art by commercializing it—is no longer a relevant or even intelligible concern for many creators of culture on social media sites, indicating a collapse of the traditional assumption that commerce and art (or, stated more broadly, markets and gift economies) are in conflict.

What’s Mine Is Yours

The next phase in the intellectual development of the sharing economy came in 2010, with the release of Rachel Botsman and Roo Rogers’ book What’s Mine Is Yours. Compared with Lessig’s and Benkler’s work, this books offers strong ethical justifications for sharing. For Lessig, sharing is valuable because it promotes creativity and cultural diversity. Benkler emphasizes that the motivations behind sharing lead to stable systems and values sharing for promoting altruism and individual autonomy. But Botsman and Rogers present the sharing economy—or what they call collaborative consumption—as a solution to contemporary social and ecological problems caused by the widespread culture of hyper-consumption in Western countries.

The first third of the book offers vivid denouncements of contemporary society. They discuss the Great Pacific Garbage Patch, a mass of plastic debris polluting the ocean, which they describe as “a hideous illustration of the way we’ve ignored the negative consequences of modern consumerism.” They describe the accidental death of a Wal-Mart security guard who was trampled by Black Friday shoppers as “a sad and chilling metaphor for our culture at large.” These critiques buttress their argument that the sharing economy is not just a viable alternative, but a morally and socially necessary one.

According to the authors, the blame for hyper-consumerism lies with the advertising industry and with credit card companies. These groups inculcated the public with a desire for more and better, and an addiction to novelty and conspicuous consumption. Blame also falls on product manufacturers for shortening product life spans to increase sales, and finally on “autistic capitalism” for promoting the belief that money and shopping equal happiness.

The Sharing Economy Was Dead on Arrival
via Flickr/ITHAKA

For Botsman and Rogers, hyper-consumerism is individualistic and selfish. It crowds out generosity and authentic human relationships, leaves us estranged from our neighbors and disconnected from local communities. But they are careful to emphasize that they aren’t criticizing capitalism as such. They believe the problems they identify are caused by social values of greed, hyper-consumerism, and materialism that emerged after the 1950s. This is in contrast with the enlightened self-interest of Adam Smith and Milton Friedman, which they believe is beneficial to society as a whole. Botsman and Rogers paint a picture of capitalism as fundamentally ethical, and problems that might seem to stem from capitalism are in fact caused by the immoral values of ordinary consumers, who force helpless CEOs and business leaders to destroy the environment and undermine communal values.

Both Lessig and Benkler take the traditional view that sharing and commerce are not completely compatible. They can come into conflict if not managed carefully. For Botsman and Rogers, the relationship between gift economies and market economies is straightforward and unproblematic. They argue that self-interest is actually a form of altruism because it ultimately serves the greater good:

We are experiencing a tipping point from the pursuit of “what’s in it for me” toward the mind-set of “what’s in it for us.” But more than that, we are beginning to see that self-interest and collective good depend on each other. It is in my self-interest to stop global warming; it is in my self-interest to participate in elections; it is in my self-interest to correct an online entry on Wikipedia.

Benkler portrays cooperation and self-interest as distinct but potentially complementary. For Botsman and Rogers, they are simply identical. But there are also similarities. Benkler’s claim that the altruism of peer production is really a marketplace where social cues and motivations are used as a price system could be seen as equivalent to Botsman and Rogers’ statement that correcting an online entry on Wikipedia is a self-interested action.

Despite calling for cultural change, a return to communitarian values, and limiting our ecological impact, Botsman and Rogers aren’t challenging the fundamental premises of capitalism. On the contrary, the key actors in their story of social transformation are venture capitalists, business executives, startup founders, coders, and designers, who help to create services that spread communal and ecological values.

Spirits of Capitalism

“The history of capitalism cannot be separated from the history of its criticisms,” says the French management theorist Eve Chiapello. The arguments and justifications for the sharing economy are deeply connected to these criticisms. Benkler and Lessig imagine a future where capitalism is more authentic and cooperative, less about selfishness, competition, and self-interest. Botsman and Rogers condemn contemporary society and the economic incentives that created it, offering collaborative consumption as the solution—a healthier version of capitalism. But before we get too caught up in dreaming about the future, we might first look to the past. Is this new version of capitalism truly new?

Chiapello’s 2005 book The New Spirit of Capitalism, co-authored with the sociologist Luc Boltanski uncovers the history of how post-war capitalism and working life has been restructured in reaction to the criticisms that have been leveled against it.

This account of how businesses have responded to critics is provocative because it differs so sharply with how we’re accustomed to thinking about it. We usually assume that capitalism is ideologically self-sufficient. If the question is raised about why capitalism is good, we assume the answer has something to do with libertarian beliefs about freedom, private property, and individual autonomy. So, when we think of anti-capitalist protests like Occupy Wall Street, we typically assume that Wall Street is comfortably indifferent to the indignation of the crowd gathered outside their door. What has perhaps escaped our notice is that libertarianism doesn’t so much justify capitalism as criticize efforts to put limits on it.

Boltanski and Chiapello suggest that for capitalism to function in a society, it needs a broader justification. Workers are asked to give up autonomy and control over the products of their labor, and investors are asked to grow their investments far beyond what’s necessary for even the most outrageous luxury lifestyle. Both of these groups need to be persuaded that their participation in capitalism brings personal benefits and that the system is just and contributes to the common good. But who determines what a good society looks like? Surprisingly, Boltanski and Chiapello argue that in capitalist countries, the answer is left-wing critics.

Boltanski and Chiapello argue that there are four different critiques of capitalism:

  1. Alienation, disenchantment, inauthenticity
  2. Lack of autonomy, freedom, creativity of individuals, subordination at work, oppression
  3. Material insecurity, exploitation, inequality, poverty, suffering
  4. Egoism, opportunism, greed of the rich

They identify three successive spirits of capitalism which have appeared in Western countries over the last century that differed in how they responded to these four lines of criticism. The first is the bourgeois entrepreneurial spirit that was dominant in the 19th century up to 1930s, represented by wealthy industrialists and robber barons. This spirit of capitalism was justified by promising greater autonomy to individuals, giving them the chance to leave their traditional, rural communities and experience the excitement and adventure of the city with all its technological wonders. It offered security by emphasizing frugality, thrift, hard work, and the value of the small family firm. It linked its vision of the common good to charitable giving to the less fortunate. During the Great Depression, the tide turned. The public found these promises to be hollow and many became sympathetic to anti-capitalist critiques of insecurity, inequality, and exploitation of their society.

The old regime was found to be illegitimate, and a new spirit of capitalism emerged: the Fordist compromise of the 1940s to the 1970s, characterized by mass production, large hierarchical corporations, and professional management. The ideal of the bureaucratic “organization man” displaced the free-wheeling rugged individualism of the 19th-century robber barons. Security was provided through rational planning, long-term careers, and the welfare state. The demand for autonomy and excitement was answered with career growth and the opportunity to climb the management ladder in the bureaucratic firm. Fairness was ensured through meritocratic advancement and management by objectives.

The Third Spirit: Connexionist Capitalism

Over the last two centuries, the four critiques previously mentioned have been expressed in society with varying degrees of strength. In some periods they are synthesized together and, in others, articulated separately and in opposition to each other. In the social upheavals of the 1960s, which saw widespread rebellion and political protests in Western capitalist countries, the critique of alienation and the demand for autonomy were unified into what Boltanski and Chiapello call the artistic critique, while the critiques of exploitation and egoism became the so-called social critique.

In France, the social critique was represented by trade unions and workers’ councils and was primarily concerned with the exclusion of unskilled and semi-skilled workers. At the same time, groups of artists, students, and young intellectuals took up the anti-authoritarian ideas of radical groups, such as the Situationist International, surrealist art movements, and radical political philosophy. They used these ideas to express the artistic critique. They sought liberation from hierarchical power, cultural commodification, and social alienation and demanded opportunities for self-expression, creativity, and autonomy. In May 1968, a general strike involving two-thirds of the workforce significantly disrupted the French economy, and the risk of revolution was averted only when President de Gaulle dissolved the National Assembly and called for new elections.

In the years that followed, employers in France and in other Western countries faced high levels of resistance in the workplace and continued disruptions of production. They responded by putting in place a series of reforms aimed at pacifying an unmotivated and rebellious workforce. These problems were initially viewed in terms of the social critique (relating to economic inequality), but employment experts and sociologists of work soon began to interpret the unrest in terms of the artistic critique. Employers restored control by restructuring workplaces to offer more individual autonomy, increase job satisfaction through greater flexibility and opportunities for self-expression, and reduce the use of authoritarian and dehumanizing management techniques.

The Sharing Economy Was Dead on Arrival
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However, these developments came at the cost of discrediting of the social critique, reversing some of its gains. In light of the artistic critique, the institutions associated with the provision of economic equality and security—particularly unions and the welfare state—came to be viewed as oppressive hierarchical structures that limited the authentic expression and creativity of individuals. Boltanski and Chiapello point out:

Measures aimed at giving wage-earners greater security were replaced by measures directed towards relaxing hierarchical control and taking account of individual ‘potential’. In a political reversal, autonomy was, as it were, exchanged for security. The struggle against the unions, and the concession of more autonomy and individualized benefits were pursued with the same methods—that is, by changing work organization and altering productive process.

Through an analysis of the management literature of the 1990s, Boltanski and Chiapello argue that the artistic critique, which was at first a subversive movement hostile to the social order, soon became reconciled with what it opposed. It ultimately aided in the transition away from a society dominated by the manufacturing sector, unionized factory work, Keynesian economic policy, and state-backed welfare provision.

The third spirit of capitalism arose as a response to the artistic critiques of the 1960s, a spirit that Boltanski and Chiapello call the connexionist world, highlighting the fact that organizations modeled on networks became important. Ideally, this world offers greater flexibility, dynamism, and autonomy compared to the rigid, hierarchical pyramid structures of Fordism. But the connexionist world also changed working conditions for blue collar and service workers in the West. They found themselves facing a decline in fixed work hours, increased use of subcontracting, removal of worker protections, increased work intensity, weakening of unions, and transferring of costs from employers to the state and to individual workers—all justified with countercultural values of freedom, autonomy, and self-expression.

Boltanski and Chiapello discover that the rules of the game had changed. Through an analysis of bestselling management books like Who Moved My Cheese?, they show that the advice for how workers should live, survive, and thrive in this new connexionist world began to revolve around the idea of the project:

…social life is composed of a proliferation of encounters and temporary, but reactivatable connections with various groups, operated at potentially considerable social, professional, geographical and cultural distance. The project is the occasion and reason for the connection. It temporarily assembles a very disparate group of people, and presents itself as a highly activated section of network for a period of time that is relatively short, but allows for the construction of more enduring links that will be put on hold while remaining available. Projects make production and accumulation possible in a world which, were it to be purely connexionist, would simply contain flows, where nothing could be stabilized, accumulated or crystalized.

Workers in this world are primarily judged by their activity rather than efficiency. The purpose of activity is to create or join new projects, which is best achieved by exploring the network and forming new connections to individuals with whom one may be able to collaborate. There is little distinction between work and life. Both are conceived as a series of temporary projects. The constant extension of the network is crucial to one’s continued success and the enhancement of one’s employability, so the desire to connect, to collaborate, to communicate is ever-present.

In a connexionist world, successful workers know how to invest themselves in a temporary project, to feel enthusiastic about it and to know how to trust other participants and partners with whom they have few long-term social bonds. Because projects are temporary, they must also know how to disengage, to make themselves available for new projects and new connections. They must be adaptable, versatile, intellectually and physically mobile, autonomous, self-directed, and self-starters.

Activity in the connexionist world is sometimes portrayed in impersonal network terms, but there is also a humanistic side:

The descriptive terminology of the connexionist world is pulled in two different directions: either towards a thematic of action without a subject, where the only entity that counts is the network… or towards a neo-personalism, which emphasizes not the system, but human beings in search of meaning. This second orientation is dominant because it is on it that the normative, ethical dimension of the projective city largely rests. Hence the importance accorded to face-to-face relations, to taking responsibility, to trust, to situations experienced in common, to giving one’s word (which is worth all the contracts in the world), to mutual aid, to co-operation in establishing partnerships, in setting up projects, in constructing networks.

Getting the Gig

The New Spirit of Capitalism was first published in France in 1999, years before Benkler, Lessig, and Botsman’s writings went on to inspire the founding of sharing economy companies. All these writers are concerned with very similar subject matter: the rise of network forms of organization in the economy; subcontracting as a replacement for the hierarchical firm; access over ownership; autonomy and flexibility; and the influence of countercultural ideals on contemporary corporations.

However, there’s one important difference: Benkler, Lessig, and Botsman write about the future, claiming that these ideas will usher in a new society, transform the way we do business, heal broken communities and save the planet from ecological disaster. But The New Spirit of Capitalism is an economic history book, tracing the implementation of precisely the same ideas from the late 60s up to the late 90s. So while there may be novel aspects of the sharing economy, it turns out that the ideas that Benkler, Lessig, and Botsman promote as overturning the status quo are the status quo.

The Fordist spirit of capitalism was born out of the Great Depression and lasted 39 years. In 2008, investment in sharing economy companies was peaking, and many techno-utopian visionaries were heralding their arrival as the first glow of a new era, an era which was already four decades old. In fact, it was in decline: In 2008, the country was in the midst of the Great Recession, and new public concerns began to emerge. The topics of inequality, unemployment, bankruptcy, austerity, debt, and the greed of Wall Street were on the agenda. Boltanski and Chiapello’s social critique of capitalism returned.

The sharing economy’s evangelists promoted it in terms of the artistic critique of capitalism: liberating workers from bureaucracy and hierarchy, freeing individuals to be autonomous entrepreneurs, and facilitating authentic human connections among producers and consumers. They emphasized these countercultural values partly out of habit. As Fred Turner argues in his book From Counterculture to Cyberculture, Silicon Valley has had a long-running alliance with the 1960s counterculture. Digital technology companies are used to leveraging hippie values to market their services, inspire the devotion of their users, protect themselves from government regulation, and motivate highly educated workers who want to feel that they’re making the world a better place.

But after 2008, the public no longer believes in the utopia inspired by the artistic values of autonomy, self-expression, personal empowerment, and authenticity, in part because it has turned out to be a utopia for the few. For the majority, those same values take on a different cast.

In the context of the sharing economy, the word “entrepreneur” today means an independent contractor—a worker without a minimum wage, benefits, or labor protections who may have gone into debt to buy a vehicle or other equipment. Freedom from corporate hierarchies means workers are subject to the whims of anonymous rating systems rather than managers and supervisors. No-one is fired or dismissed in the sharing economy—that’s too old-fashioned. Rideshare drivers are simply “deactivated,” left with no choice but to sue the company to seek a termination process that is both fair and transparent. The authentic human interactions promised by Airbnb have had the side effect of raising rents, gentrifying neighborhoods, and taking property off the long-term rental market.

Critics now refer to this form of work as the gig economy. There’s no clearer evidence that the artistic critique is in decline, when “gig”—a word traditionally associated with musicians—becomes a term of criticism.

How many times have we seen the stock character of the corporate office drone who dreams of escaping his or her conventional suburban lifestyle to seek greater freedom, excitement, and independence in more creative but uncertain work? This narrative dovetails perfectly with self-help literature like Who Moved My Cheese?, which instructs readers to embrace the insecurity and precarity of contemporary work life. Ideas like these are the influence of the counterculture. It turns out that sincere, well-meaning liberals and progressives have reproduced the opposition between the artistic critique and the social critique, inadvertently enabling corporations to use these ideas to undermine worker protections and create new, more precarious forms of app-enabled work.

The trajectory of the sharing economy—and perhaps the internet industry as a whole—begins with a utopian dream and ends in a much more negative, if not dystopian, reality. Why did this happen? Some critics on the left might say that it proves that these companies were cynical and insincere; they don’t genuinely believe in their supposed ideals. It was all just marketing designed to pull the wool over our eyes—a thin veneer concealing a darker truth.

With the benefit of history, we can see that in fact, by abandoning the social critique, the left played a leading role in enabling the transition into a new form of capitalism that has proven to be devastating to society. But perhaps, as work life is restructured and capitalism is justified in reference to new standards, a fourth spirit of capitalism will soon emerge. It should come as no surprise that companies like Airbnb, Lyft, and Uber, who claim to be changing the world, no longer have the credibility they once had. They were built on a set of ideals that have reached their expiration date.