23 May 2021 - Written by Hamideh Iraj

This week interview is with Professor Juliet Schor, the author of the book “How the Sharing Economy Got Hijacked and How to Win It Back” https://www.ucpress.edu/book/9780520385672/after-the-gig. She talked about digital transaction platforms where strangers are sharing their spare resources in an informal peer-to-peer market using search and matching algorithms. In these platforms, service providers are employed as contractors as opposed to employees. The platforms reduced the cost of search and the risk of transacting with unknown others in order to unleash the potential of sharing and create economic impact and wonderful social benefits. In the early days of platforms in 2008, non-profit community-based platforms and for-profit platforms were active players in the market. However, things turned out rather differently; the for-profit platforms scaled very rapidly, hijacked the sharing economy and dominated the market. The scalability of the platform business model allowed them to create a monopoly and define the rules of the game. This winner-take-all feature remained to be a unique characteristic of platforms and encouraged more and more venture capitalists to invest in platforms with the hope of creating giant companies and massive benefits. In the meanwhile, the working conditions of platform workers were reduced drastically. Platforms shifted the risks to workers and made them more and more vulnerable. However, in some other aspects, platform characteristics are not different from the characteristics of the bigger job market. They are part of a long-standing trend towards creating more precarity and shifting the risk to workers. With a highly-heterogeneous workforce comes highly-heterogeneous experiences; some people are earning a living out of the platforms while some hobbyists are earning an extra income. Moreover, the specificity of the exchanged services is correlated with the returns; so many people can drive a car therefore driving on a platform does not pay well.

It is also important to investigate the platform economy in the context in which it emerged. A service platform is a post-2008 phenomenon so it owes its initial adoption to the platform promises; to solve problems of the global corporations and create new economic transactions to revive the economy and reduce class inequality after the economic recession. For example, back in 2008, college students who could not find a job in the recession, started driving on Uber, they helped in destigmatising the driving job and this, in turn, encouraged more highly-educated people to join platforms as a service provider, especially those who have lost their jobs in the recession. This trend will probably continue as the income of the middle-class people stagnates and more people are willing to have a side hustle and earn extra income. The question at this point is how can we solve this problem? The potential for good use of platforms still exists and platforms can be part of a different economy. There are two approaches: The first approach is creating a new alternative model such as platform coops and the second approach is changing the business model of the existing for-profit platforms radically by constant pressure for reasonable wages, regulating this highly unregulated market and securing workers’ rights. Professor Schor has a pluralistic vision; she believes there is no best way and no answer would be a panacea; we may need to adopt a hybrid approach using a combination of solutions and arrangements based on principles of fairness and democratic governance.

In Loconomics, we are working on an alternative business model. We believe that it is possible to use platforms and a fair business model that works for everyone and provides better working conditions for service providers. The new business model borrows ideas from existing platforms in matching supply and demand while considering service providers’ rights, dignity, and well-being.

The interview is available here: https://www.youtube.com/watch?v=ZYns-5x5ubQ