What’s Wrong with the Sharing Economy?

It is a supreme irony of our time that at the same moment the disciples of Ayn Rand (author of The Virtue of Selfishness, among other libertarian sacred texts) wield greater economic, political, and cultural influence than ever before, many of the innovative business models created by this new generation of world-conquering, high-tech entrepreneurs are said to be leading us toward the “sharing economy.”

Not only Rand, of course, but legions of capitalism’s defenders have maintained for ages that sharing ran counter to human nature and would lead only to inefficiency and destruction. No one will maintain property unless it is private! No one will work if the proceeds are equally distributed! All the way back to Adam Smith, we have been taught that we owe our dinner not to the grocers’ benevolence, but to their self-interest. Today, however, “sharing” refers not to benevolence or egalitarianism, but to the ruthless monetization of everything. Dusty as the Communist Manifesto may be, Marx and Engels told us what to expect: capitalism wants nothing more than to convert everything into cash.

What I find particularly interesting about the “sharing economy” are the ways in which its appearance provides telling insights into the depth and direction of economic inequality. Air B&B, for instance, promotes itself as a clever way for people to make new friendships, while earning a little extra money, by renting their spare rooms to travelers. The real driving force behind Air B&B, though, is rising economic inequality.

Air B&B may have used internet technology to make the process of subletting a house or apartment faster and more efficient, but subletting itself is hardly new – and internet technology is not the only thing that has changed in recent years. The average rent for an apartment in New York City now hovers around $3,000, yet wages have not kept pace with increasing rents. It would take about seventy percent of the median U.S. income to pay for an average apartment in New York. No wonder, then, that working class renters are cramming themselves into closets and renting out their couches to make ends meet.

But the “sharing economy” has an even more insidious side to it. A recent report by New York’s Attorney General revealed that six percent of Air B&B “hosts” controlled thirty-six percent of bookings and thirty-seven percent of “host” revenue. In other words, more than a third of Air B&B rentals in New York are not individual renters with spare rooms, but a small number of heavily capitalized entrepreneurs, renting and then subletting apartments as a commercial enterprise. The New York Attorney General’s report correctly notes that this activity distorts the housing market, as residential apartments are effectively converted into hotel rooms. But what we can also identify here is the compounding effect of economic inequality. As wealth becomes more unequally distributed, the wealthy are able to use their wealth to gain control of resources with which more wealth can be made by taking advantage of the increasing vulnerability of the less well-off.

This isn’t sharing. This is exploitation.

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