The Peril and Promise of a Sharing Economy

The rapidly growing influence of Silicon Valley owners over sharing economy platforms is a troubling development. The growing strength and pervasiveness of these platforms means their owners have significant power to impose their visions of what it means to be a citizen or worker in cities across the globe.

Airbnb, for example, seems free to distort property prices and create a grey, unregulated market for short-term accommodation. Uber meanwhile continues to erode hard won labour rights and turns a blind eye to acts of discrimination committed by its drivers.

The rapidly growing influence of Silicon Valley owners over sharing economy platforms is a troubling development. The growing strength and pervasiveness of these platforms means their owners have significant power to impose their visions of what it means to be a citizen or worker in cities across the globe.

Airbnb, for example, seems free to distort property prices and create a grey, unregulated market for short-term accommodation. Uber meanwhile continues to erode hard won labour rights and turns a blind eye to acts of discrimination committed by its drivers.

One way to combat this could be a sharing economy that is less concerned with making money and more focused on creating social and environmental value. A proposed solution is to create a more democratic sharing economy. In other words, a sharing economy holding the corporate owners accountable by the wider public and users and workers govern platforms together.

Democratising the sharing economy is no mean feat. Research I have conducted with colleagues at the Open University and the University of Leeds shows how platforms can work. They also face the challenge of maintaining their democratic nature and not becoming centralised and more commercially driven.

For-profit democratic sharing economy platforms are very few and far between (we could not identify any successful examples). Therefore, we turned to the non-profit sector and looked at Freegle, a democratically governed UK offshoot of the Freecycle Network, in our study.

Freegle is a grassroots organisation that runs an online platform, very similar to Freecycle, which helps keep unwanted items out of landfill. The platform enables people to freely, and directly give unwanted items such as furniture and electronics to others in their local area. Since its founding in 2009, Freegle grew rapidly and it claims to have approximately 2.3m users across the UK.

The Promise

Hundreds of volunteers that left the Freecycle network established Freegle. The volunteers left after a long running dispute with the central Freecycle management over the erosion of Freecycle’s grassroots ethos. Therefore, Freegle provides some promising evidence that democratic sharing economy platforms, at least in the non-profit sector, can emerge from well-established centralised platforms.

Freegle has also been successful in building a community of hundreds of volunteers across the UK that governs the platform. Online forums discuss major decisions about the future of Freegle and then volunteers vote. In particular, the development of a financially sustainable business model, aligned with Freegle’s grassroots values, has been the topic of extensive discussion.

These discussions and democratic processes have been key to Freegle resisting considerable external pressure to become more business-like. Therefore, we can hope that similar democratic processes could help for-profit sharing economy platforms become less business-like and more focused on their environmental and social impact.

Within the community, volunteers provide each other with a great deal of mutual support and share their knowledge. They discuss issues such as how to increase the number of people using the network, and whether or not to offer certain items (such as potentially dangerous chemicals and potentially offensive magazines) on the platform. Therefore, we can also hope that additional democratic sharing platforms would create opportunities for users to learn from each other and develop new social relationships.

The Perils

There are some downsides to running a democratic platform, however. The most prominent being that Freegle’s democratic model has made growing the network even more challenging than it might otherwise have been. Lengthy decision-making processes, based on discussion and voting, have meant missing opportunities to expand.

It also means that financial backers geared toward supporting streamlined, for-profit companies are not investing because of the complexity of Freegle’s structure. These issues suggest that efforts to create a more democratic sharing economy may face considerable resistance, in particular from actors with a more commercial focus.

Perhaps more worryingly, in the six years since the founding of Freegle there is strong evidence that democratic participation has fallen. This seems tied to the enthusiasm of Freegle volunteers ebbing away. In turn, decision-making has become more centralised.

This is a trend often seen in democratically governed organisations outside the sharing economy, including cooperatives and grassroots associations. It raises an important and challenging question: how can democratic participation in the sharing economy sustain over time?

Finding a solution to this is extremely important if we want to make sure that these platforms are accountable to the people they promise to serve and not just those governing (or profiting from) them. Moreover, if we want to see the sharing economy live up to its promise of helping us transition to a more sustainable and equal economy.

So does the promise of a more democratic sharing economy outweigh the peril? For me, it does. Silicon Valley platform owners are likely to disagree, as democratic governance would erode their profit margins. Therefore, it will be up to citizens, social movement organisations, and governments to promote greater democracy. As our research into Freegle shows, however, these efforts should come from the knowledge that democratic organisations face challenges and external pressures, which corporations do not.

Why the sharing economy needs a democratic revolution is republished with permission from The Conversation