The Sharing Economy and Crowd-Based Capitalism: Challenges in Regulating Platform-Driven Markets feat. Arun Sundararajan

Finding a ride, booking an overnight stay, running errands for someone— these amenities have been around for a while. But peer to peer platforms that offer these services have dominated the market in recent years. In his book, The Sharing Economy, professor of technology and economic expert Arun Sundararajan unpacks the concept of crowd-based capitalism. He breaks down his extensive research and presents numerous real-world examples, including Airbnb, Uber, Etsy, and more.

As the line between personal and professional blur in commercial exchange, how do these changes affect government regulation, the job market, and our overall social fabric?

Episode Quotes:

Why did you use ‘The Sharing Economy’ as a title for your book, as opposed to the on-demand economy? And why do you think that these underlying principles are still applicable six years after it's been published?

I am still convinced six years later that the future of capitalism in the United States is going to be what I described as crowd-based capitalism— where we create platforms of increasing influence — that sits somewhere between that 18th-century marketplace and that 20th century. The visible hand of Alfred Chandler’s traditional organization will be the new template for organizing the economic activity of the 21st century.

Are sharing platforms leading to a shift away from mass markets toward community-based markets, or even a mix of community-driven markets and trust-based mass markets?

I think it's an aspirational part of my argument. I'll explain what I mean. In my reading of economic history, a lot of the connection, the human connection, was stripped out of commercial interaction. As we invented mass production distribution and the organization of the 20th Century, we made commerce more faceless and impersonal, as opposed to being connected. And this is one of the things that drew me to the sharing economy when I started participating in it. You know, you'd have a conversation with your BlaBlaCar driver in Europe. With your Lyft driver, you'd sit in the front seat. You'd fist bump, and you'd chat with your Airbnb host.

The role of the GPS technology in making the shared economy work and flourish

At the foundation of our ability to utilize the capacity of assets more effectively is the rise of sophisticated personal technology, like PCs everywhere or more importantly, the smartphone. A significant fraction of the world's consumers now have the extremely powerful general-purpose GPS-enabled device that they carry around. The fact that your consumer has that powerful device that can run software that can track their location, allows you to start to think about business models that may not have worked in the absence of this widespread consumer technology.

Thoughts on how the shared economy is challenging and changing the employee-employer relationship globally, and how government regulations on workers are affected?

We seem to have tied it in many countries across the world to this one arrangement of work. Which is, I provide all of my labor and talent to you, you pay me a salary, and therefore you are the natural party. The employer also provides me with the safety net dimensions that the government has decided that the private sector will provide, rather than the government providing it themselves. And that's where we run into trouble in a platform world. Because the nature of the relationship between the individual and institution is fundamentally different here. It's not as tightly coupled, and it's not as exclusive as General Motors' relationship with its factory workers. You know, I think a lot of people idealize the idea of employment as being sort of the best way to organize work.

Show Links

Guest Profile

• Arun Sundararajan Faculty Bio at NYU
• Arun Sundararajan on LinkedIn
• Arun Sundararajan on Twitter
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His Work

• Arun on Google Scholars
• The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism