Putting the sharing economy in dialogue with the welfare state: a response to Juliet Schor

Sharing has attracted a lot of attention as an alternative principle to organize economic transactions. Proponents of the sharing economy claim it is more ecologically sustainable than capitalist market economies because it promotes multiple and more intensive use of the same resources and more social because it stimulates the development of social relations between people that share resources. The rise of a number of large-scale for-profit sharing initiatives such as AirBnB and Uber has cast doubts on these claims. Juliet Schor, who is a professor of sociology at Boston College, is one of the leading voices in debates on sustainable lifestyles and the sharing economy. On Friday 5th of June, she addressed the question whether the sharing economy is a sustainable alternative or hypercapitalism during a lecture organized jointly by think tank Oikos and the Faculty of Social Sciences of the University of Antwerp (see http://www.greattransition.org/publication/debating-the-sharing-economy for the content of Schor’s lecture). This article are the typed up notes of the comments I made as a discussant in response to her lecture.

New projects in the sharing economy almost univocally get a positive response from the media and the general public. It is hard to be against these small and sympathetic projects, often set up by volunteers or starting entrepreneurs or companies. However, there are some big questions to be asked about the sharing economy that cannot be answered on the level of individual initiatives, but require a much broader perspective. In this sense, Juliet Schor’s strategy to look beyond the individual projects, identify the underlying ‘movement’ and the ideas on which this movements operates and couple this to big societal challenges and emerging social needs is to be applauded. Only this broader view allows us to assess the true transformative potential of this diverse range of often little social actions and projects.

Whereas Schor is focused on the ecological question – is the sharing economy an ecologically sustainable alternative? – and derives the need for a new economics from that, I in my own work on social innovation and welfare state restructuring have put the social question central. Under capitalism, the social question refers to the need for social protection against the risks people run on the labour market. At least in Europe, this means addressing the future of the welfare state, since welfare institutions were historically established to address the social question. The question I want to raise here is: what is the relationship between the sharing economy and the welfare state? How does sharing relate to redistribution?

To address this question, let’s take one step back. The sharing economy has a positive social image because it uses ‘needs talk’. As Juliet Schor claims, it is about ‘meeting human needs with a dramatically reduced energy footprint’. Taking matters into one’s own hands and addressing human needs directly, without recourse to corporate strategies or bureaucratic procedures, sounds attractive. The sharing economy – just like most contemporary social innovations – appeals to our increased sensitivity for participation, emancipation and autonomy, which are the core principles of the new social movements, and contributes towards ‘do democracy’ and active citizenship. It also seems to move use beyond political left and right distinctions. Who can be against the addressing of human needs?

Still, from the perspective of how the social question was addressed during most of the 20th century, the question is: what about social rights? During the 20th century capitalist economies have been made more humane by establishing social rights. The social rights tradition has been the most successful attempt to reduce the destructive nature of capitalist labour markets. It has partially de-commodified human existence, which means that it has made people for their livelihood less dependent on their position on labour market (the extent to which people are able to collect an income by selling their labour to employers). Social rights have been institutionalized in welfare states, which include bureaucratic procedures to guarantee universal access and equal treatment of citizens.

Given this characterization of the sharing economy in terms of social needs and the welfare state in terms of social rights, what can we say about how they relate to one another? From the perspective of the sharing economy movement, two challenging issues are raised for the welfare state. Firstly, what role is there for the active citizen in bureaucratic welfare states? Can citizens become more than ‘passive’ recipients of services and benefits, having their participation reduced to participation in the labour market and paying taxes on the incomes thus raised? Secondly, the welfare state is predicated on an economic growth. Economic growth enables redistribution through the coupling of productivity rises to higher wages and more collective consumption via tax-funded public services. However, the goal of economic growth has strong negative ecological consequences and is therefore not readily accepted as ‘good in itself’ by the sharing economy movement. These are fair points that should be taken seriously by welfare scholars.

From the perspective of the welfare state, there also two issues that challenge the sharing economy. Firstly, although bureaucratic procedures have impersonating effects and may at certain moments disempower citizens in their attempts to gain active control over their circumstance of life (not the least because presumably neutral state procedures also embody race, class and gender hierarchies), they do actually contribute to the equal treatment of citizens and universal access to services and benefits. Community-based actions tend to be less good at this, because they are dependent on willingness of some people to take action, which is necessary uneven in geographical as well as social terms. Secondly, welfare scholars will point to the increasing amount of social needs that need to be catered for, needs related amongst others to ageing populations, migration, family restructuring, and therefore to the need for economic growth. Can all these needs be satisfied with the resources circulated and generated in the sharing economy?

I see two possible lines of thinking to start addressing the dilemmas raised above. The first line of thinking revolves around a rethinking of the social rights tradition, for which I take inspiration from the work of Hartley Dean and Nancy Fraser. We tend to identify social rights with the welfare state and see them as institutional rights, i.e. guaranteed and sanctioned by public institutions. This ignores, as Dean claims, the process through which rights are socially constituted and negotiated. When we start seeing social rights as something that has not been invented by the welfare state, although the latter certainly re-invented social rights and made them adequate for industrial capitalism, but as “socially negotiated expressions of human need” (cfr. Dean), then we might find a space to construct a dialogue between the welfare state and the sharing economy. The question then becomes if and how the sharing economy, through its purported socially transformative potential, enables the social negotiation of human needs. Does the negotiation of needs through sharing economies lead to people satisfying their needs through self-sufficiency within a market environment or do they find forms of mutual support and cooperation in the sharing economy? As Juliet Schor shows the sharing economy can go both ways, so the question is can we develop robust and effective institutions that push the sharing economy in the direction of mutual support and cooperation?

A second line of thinking is related to what is perhaps the biggest problem facing Western welfare states, namely long term unemployment and precarious employment of low skilled people. Our late capitalist economies simply do not produce sufficient decently paid jobs for low skilled people. The labour market activation strategies developed over the past three decades to address these problems work on the supply side by retraining labourers. This has led to more dynamic labour markets, but not too less poverty and precariousness. The reduction of social protection, which is deemed de-activating, has led to the creation of in-work poverty and many of the newly created jobs do not go to work poor households. The sharing economy movement claims to allow for a diversification of income streams and create new types of work. The big question is whether it can address the problem of long term unemployment that many welfare states are struggling with or whether it just creates platforms for survival strategies for groups of people in precarious income positions.

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