Challenges and Rewards of the Sharing Economy

The rise of the sharing economy has potentially wide-ranging implications for society as a whole. Here are two of the biggest challenges, and two of the biggest opportunities, afforded by its growth.

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T-shirt saying "I love to share"

Don’t we all? (image: CreativeCommoners / flickr)

Recently, we looked at the burgeoning sharing economy and its benefits for individuals. The sharing economy is very diverse, but it boils down to the idea that we don’t necessarily need to own something exclusively and in perpetuity in order to use it. Companies like Zipcar might allow people to share a burdensome investment with others, while services like Couch Surfing allow people to trade resources they don’t need for ones they do. We could be talking about bicycles, baby toys, office space or even spare time. Those who participate in the sharing economy (which almost everyone does to at least a small extent) reap benefits in the form of saving money, reducing waste, and gaining access to things they otherwise couldn’t.

As impressive as these benefits are, the sharing economy also carries much broader implications for society in general. Here are two of the biggest challenges – and two of the biggest opportunities – we’ll face if the sharing economy continues to grow.

Challenges

Taxation

Governments usually fund national priorities by extracting a portion of their country’s economic activity. Typically this comes out of the money people earn for working, though it could come from sales transactions, capital appreciation or really anything. Here’s the problem: a lot of the sharing economy consists of informal bartering, which is virtually impossible to tax. When I get paid by my employer, my company has to track the activity and report it to the IRS (the US tax collection agency). But if instead I receive someone’s used bicycle in exchange for two hours of yardwork, I’ve just made a completely untraceable transaction. The IRS, of course, insists on its due and even has a form you’re supposed to fill out whenever you engage in bartering activity. But it’s hard to imagine everyone carrying around a stack of forms and filling them out multiple times a day.

It’s even more difficult when there’s no actual money involved in the exchange. Just how much is two hours of raking leaves worth, anyway? What about the bike? And which one of us made income on the deal? The answers are subjective at best. In the extreme case, if all my “income” is from barter transactions, I would have no cash and therefore no way to pay the taxes anyway. Perhaps they’d accept a portion of every bike I receive – the rear tire, say.

Unequal distribution

As science writer Kat Friedrich pointed out, the sharing economy is mostly focused on urban environments: sharing things like subways, office space or used books is just easier when everyone involved is physically nearby. For suburban or rural residents, the various benefits of the sharing economy will materialize late, or perhaps not at all. Companies that offer sharing services are likely to see higher costs, and fewer customers, in widely-dispersed communities. Meanwhile, non-profit sharing enterprises often need a certain critical mass of users in order to be useful, and rural communities have a harder time reaching that threshold.

Interestingly, the oldest aspect of the sharing economy – neighbors supporting one another directly – is probably more popular with rural residents than city dwellers. The problem, of course, is that these neighbors are more limited in number, and bring fewer potential resources to the sharing table, than the pool of participants you might get in a city.

One way around this might be to centralize and popularize certain sharing activities: a weekly exchange market, for example, that rural residents would be willing to travel for every Saturday. The internet can also offer some sharing services that don’t depend on physical proximity, like online skill shares.

Opportunities

Community Building

Two cats eating a bowl of cereal

Sharing benefits both parties (image: A. Bishop / flickr)

Forgive me for stating the obvious, but one side effect of sharing with others is that you typically have to interact with them. Spend enough time at skill shares or time banks, for example, and you’ll start forming relationships with your fellow teachers / students / contributors. Bound by a common interest and similar values, such a group of sharers is a seed that could one day sprout into a community.

For an archetypal example of community building through sharing, take a look at the Artisan’s Asylum, a Boston-based hackerspace. It’s a big warehouse outfitted with manufacturing and crafting equipment, all shared by its members. Jewelers, furniture designers and robot builders get access to professional tools and studio space they couldn’t get otherwise. The best part of the space, however, is not filled with machines or materials, but with couches. It’s the central lounge, where makers of all kinds mingle, share ideas and inspire one another. In other words, it’s a collaborative, cross-disciplinary community that acts as a force multiplier for creativity. As the sharing economy grows, this phenomenon will spring up all over the place in lots of different contexts, and we’ll all be richer for it.

Shift in perspective

This is the big one: the more common sharing becomes, the more it will inform our worldview. As it stands now, most post-industrial, capitalistic cultures tend to idealize possession. That is, the more stuff you own, the more successful you are perceived to be. But an economy driven by sharing, and focused on access rather than ownership, carries a different set of ideals: its participants aspire to sustainability, efficiency, and pragmatism. If widespread enough, this will have a noticeable effect on our collective consciousness.

All this is not to say that the sharing economy is necessarily anti-capitalistic, or (gasp!) socialist. In fact, start-ups like AirBNB are counting on a strong sharing economy to turn a tidy profit, while even such stalwart corporations as Daimler and Lowe’s Home Improvement are figuring out how to incorporate sharing into their business plans. And if you’re still not convinced, What’s Mine Is Yours author Rachel Botsman pegs the current value of the sharing economy at over US$110 billion!

So the point is not that the sharing economy will convert us all into communists. Rather, the key takeaway is that even a subtle shift in our relationship with stuff could have profound implications for our society. It could catalyze a new, healthier and more sustainable approach to just about everything we do.

Those are the big implications of the sharing economy that I can see. What do you think of these? Did I miss any big ones? Keep the conversation going in the comment box below!