There is a new book by NYU Stern School of Business professor Arun Sundararajan for those readers interested in the rise of gig workers, freelancers and independent contractors. “The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism” analyzes the sharing economy, or “gig economy,” and its influence over workers and work.
I found this book instructive and useful because it thoroughly analyzes a form of economic activity that is attracting participation, investment and public attention on a massive scale. The “gig economy,” “crowd-based capitalism,” and the “sharing economy” all refer to the economic activity that is market-based and relies more on crowd-based networks than centralized institutions and hierarchies. Arun Sundararajan shows that a changing conception of work and workers is at the core of the sharing economy. He makes predictions about the future of work and suggestions for societal changes that the sharing economy might require.
What’s distinctive about the sharing economy, according to this author, is that it uses social forces rather than purely commercial forces to facilitate the exchange of goods and services. Other scholars have analyzed the role of collaboration and sharing in crowd-based capitalism, especially the sharing of underutilized resources. Sundararajan’s particular contribution is an analysis of social connectedness in the sharing economy. Digital platforms have enabled peer-to-peer transactions on a large scale, amongst people who are otherwise strangers. The social connections that people form through these transactions are both motivation and reward for participation in the sharing economy. Thus, the digital technologies that are often cited as a cause of social isolation might also be the source of increasing connectedness, in this author’s view.
The sharing economy’s impact on work is an important part of the author’s analysis. Sharing economy businesses are converting some corporate and government employment to freelance and flexible work. The change is happening across the occupational spectrum, from low-skilled work to professional services. Electronic platforms that match up workers with those who need their services make labor and opportunities available immediately, at a transaction cost that is lower than the cost of other intermediaries like temporary agencies. Workers have the option of exercising more control over when, where and how they work in this model. They also have increasing opportunities to be “generalists,” like a driver with a ride-sharing service who also parks cars, delivers groceries and writes computer code.
Sundararajan acknowledges differing views of sharing economy workers’ experiences. In one view, workers are entrepreneurs who enjoy the power and flexibility to control their lives and innovate. In this vision, workers are independent actors for whom the existing structures of the “employment” relationship are too constraining. In an alternate view, the sharing economy strips workers of the usual employment protections, forcing them to continuously vie with each other on electronic labor market platforms for the opportunity to make an insecure, unpredictable and sometimes inadequate income.
With this tension as the backdrop, Sundararajan offers his general proscription for new workforce approaches in the sharing economy. The primary elements are:
- a new legal classification for sharing economy workers that is neither independent contractor nor employee;
- a new social safety net for workers in the sharing economy, which may include health insurance, insurance against workplace accidents, and some income stability; and
- economic platforms that are structured to facilitate entrepreneurial activity on a small scale and that avoid hierarchical elements in the platform-provider relationship.
While Sundararajan embraces new structures for work and workers, there’s nothing in his analysis to suggest that the global economy could operate without use of traditional business models. At least in the foreseeable future, employment still has a role. The sharing economy and crowd-based capitalism is not likely to be responsible for the demise of employment.