Temporality of Social Capital in the “Sharing Economy”

Giuliano Morse

1. Introduction………………………………………….3

2. Theoretical lens 1 (Robert Putnam) Introducing Social Capital Through the eyes of Robert

Putnam ……………………………………………...…....5 Bridging and Bonding V.S. P2P Social Capital ………..8

3. Case Study Temporal Dynamic of P2P Social Capital Through

Barhdi’s Study on ZipCar.………………………………10 Labor Exploitation in the Context of Neoliberalism and

Collaborative Enterprise……………………………...…14 Exploitative Labor……………………………………….19 Transition of Trust: From Traditional to P2P

Trust……………………………………………………...20

4. Theoretical Lens 2 (Bourdieu) A Better explanation of P2P Social Capital…………….21

5. Conclusion………………………………………….25

6. References……………………………………….....29

Consider the following quotes that prescribe radically different ideological

frames to the recent phenomena known as the Sharing (Collaborative) Economy.

“The collaborative economy is defined as initiatives based on horizontal networks and participation of a community. It is built on "distributed power and trust within communities as opposed to centralized institutions" (R. Botsman), blurring the lines between producer and consumer. These communities meet and interact on online networks and peer-to-peer platforms” (OuiShare, 2015).

“It’s ironic that we call the new concept the ‘sharing economy,’ when in fact, we are creating the purest form of ferocious, self-empowering capitalism – a ‘perfect’ marketplace where every asset or service has a calculable, precise value between an individual seller and buyer” (Goodale, 2015).

The Collaborative Economy, also referred to as the Peer-to-Peer Economy, Mesh,

Collaborative Consumption and most famously as the Sharing Economy, is in large part

seen as a new and improved form of capitalism - entailing the “shared creation,

production, distribution, trade and consumption of goods and services by different people

and organizations” (Morgan, 2014). The sharing economy has captured public attention,

and wallets, by framing its business model as a solution to the post 2008 crises -

providing extra revenue stream to the unemployed, low and middle class labor force. The

New York Times wrote “rather than capitalistic approach (it) is about shared access

rather than private ownership” In an article called The Rise of Anti Capitalism (Rifkin,

2015). Joe Kraus, a general partner at Google Ventures stated, “the sharing economy is a

real trend. I don’t think this is some small blip… People really are looking at this for

economic, environmental and lifestyle reasons. By making this access as convenient as

ownership, companies are seeing a major shift” (Geron, 2013).

While Airbnb may be the most-known example of this Collaborative Economy, it

is merely one of over 100 companies that offer the public a fractional income stream out

of their own physical (unused or forfeited) assets. For example, 1.7 million people

globally are participants of car-sharing services, ranging from Uber, BlaBla Car,

Scooterino, Lyft and more (Geron, 2013). Increasingly, people from all over the world

are choosing to stay in other peoples homes through AirBnB instead of Hotels, travel

using Uber instead of unionized Taxi’s and even Washio instead of local laundry mats.

The insight behind this growing phenomenon is that any kind of service that could once

be offered by a large corporate entity can now also be accessed through other peers

(fellow members of the public) as long as participants are willing to sell access to what

they own (facilitated by a large tech company, of course). The trust that is normally

created by formal institutions in order to facilitate a transaction (such as a brand name

hotel or verified taxi company) is now created from person to person (P2P). All of the

Collaborative Economy enterprises have an Ebay-style rating system so that people on

both sides of the transaction can develop trust. Consumers leave reviews after each

transaction, enhancing or decreasing a seller’s reputation. Identifying how people make

these social connections in the Collaborative Economy, thus utilizing social capital, is

central to understanding the changing landscape of business and capitalist imagination.

This paper will introduce an original terminology in order to examine the distinct

form of social capital used in to facilitate transactions in the sharing economy - what will

be referred to as P2P social capital (person to person social capital) in this paper.

Paradoxically, the increase of this social capital does not necessarily correlate with an

increase of civic engagement or diminishing inequality, as Harvard Economist Robert

Putnam theorizes about other forms of social capital in his books “Bowling Alone” and

“Our Kids.” In fact, the increase of P2P Social Capital generated by these enterprises has

an effect on society resembling less Putnam’s idealized 1950’s America, with high

mobility and civic engagement, and more like Pierre Bourdieu’s notion that social capital

has an imbedded exploitative class mechanism. Juxtaposing Pierre Bourdieu and

Putnam’s theories of social capital helps elucidates how the sharing economy can

exacerbate exploitative labor conditions and that it is a not necessarily a better (more

equal) form of capitalist enterprise. Participants of these transactions do not “share”

anything, but rather exchange in the hope of maximizing utility and profit, all the while

surplus value is extracted from third party tech companies. Thus, a Marxist lens is also

useful in revealing how both traditional and sharing economy enterprises have

surprisingly similar effects on society.

Theoretical Lens 1

Introducing Social Capital Through the eyes of Robert Putnam

The central premise of social capital is described by Harvard Kennedy Schools

Seminar on civic engagement as, “social networks that have value” (HKS, 2015). For

example, the alumni network at Johns Hopkins School of Advanced International Studies

does not directly yield profit to those who pertain to it, however, the social value of

knowing alumni who are well connected in high level government and private sector jobs

can lead to a high paying job or economic opportunity from which one may reap profit

and therefore increase general productivity.

Robert Putnam’s work on social capital rests heavily on the assumptions of neo-

tocquevillian social science, arguing that civic engagement is directly correlated to

increased quality of public life and a better functioning democracy. Putnam cites

researchers in felids of “education, urban poverty, unemployment, the control of crime

and drug abuse, and even health have discovered that successful outcomes are more

likely in civically engaged communities” (Putnam 1995, 57). Building from this

assumption Putman introduces the notion of social capital as being a vital mechanism in

the capitalist system for fostering civic engagement.

Putnam’s rigorous statistical study posits that social capital is both beneficial to

the economy and personally (psychological) to the public. As such, he defines social

capital as “features of social organization such as networks, norms, and social trust that

facilitate coordination and cooperation for mutual benefit (Putnam 1995, 66). The reason

for his focus on social capital is that he uses statistical evidence to correlate it with trust,

low crime rates and lack of stress. He distinguishes between Bridging Social Capital

(casual connections among people of different groups) and Bonding Social Capital

(strong connections among those within groups), and notes that Bridging Social Capital is

more effective in having positive social affects because it implies a wider circle of trust

that diminishes an “us” vs. “them” mentality in society (ibid). On the other hand,

Bonding Social Capital can be effective but only for a small exclusive group. At the

beginning of his book "Making Democracy Work" Putnam explains the difference

between Bonding and Bridging Social Capital in his conclusions about Italy's

governmental reforms during the last few decades (Putnam 1993, 3). He claims that "In

the North the crucial social, political, and even religious allegiances and alignments were

horizontal, while those in the South were vertical. Collaboration, mutual assistance, civic

obligation, and even trust - not universal, of course, but extending further beyond the

limits of kinship than anywhere else in Europe in this era - were the distinguishing

features in the North. The chief virtue in the South, by contrast, was the imposition of

hierarchy and order on latent anarchy" (Putnam 1993, 130). The main result of his study

is that governmental reform succeeded in Northern Italy because a flourishing “civic

community” supported by Bridging Social Capital supported it. The public activity of

citizens created an atmosphere of mutual co-operation, vital social networks, equal

political relations and the tradition of citizen participation (Putnam 1993, 6-7)

Putnam is less concerned with how social capital affects consumerism as he is

with civic engagement. His central thesis is that over the past 50 years civic engagement

has decreased in America because Bridging Social Capital has decreased and that the

consequences will lead to a break down of civil society (lack of democratic

representation). In other words, Americans don’t trust or engage with each other in

manner that relies as heavily outside the individual. In order to support this claim he

provides an abundance of statistical indicators that depict how participation in social

activities grew steadily from the early part of the century until the 1960’s and that this

steadily declined ever since. These indicators range from observations of Americans

simply spending far less time together than they did in the past, to the decreasing

participation in organized activities (civic organizations, religions, clubs, school-related

activities). As such - “The proportion of Americans who reply that they "trust the

government in Washington" only "some of the time" or "almost never" has risen steadily

from 30 percent in 1966 to 75 percent in 1999” or how “labor unions provided one of the

most common organizational affiliations among American workers. Yet union

membership has been falling for nearly four decades, with the steepest decline occurring

between 1975 and 1985” (Putman 1995, 47). He captures this idea in the explicit title of

his essay “Bowling Alone,” Pointing to the fact that social disengagement in America has

increased and it correlates to decrease in the kind of social capital that matters most:

“more Americans are bowling today than ever before, but bowling in organized leagues

has plummeted in the last decade or so. Between 1980 and 1993 the total number of

bowlers in America increased by 10 percent, while league bowling decreased by 40

percent” (Putman 1995, pg113).

In order to explain why social capital has decreased, and as such civil society is

breaking down in America, Putnam brings up such factors as longer hours at work, urban

sprawl and the negative consequences of television. Perhaps the most interesting is his

examination of the “The technological transformation of leisure.” He argues that

technological trends are radically "privatizing" or "individualizing" our use of leisure

time and “thus disrupting many opportunities for social-capital formation” (Putman 1995,

216-217). He points to a statistical correlation of televisions becoming widely adopted

inside the home during he 1960’s and at the same time social capital decreased in

America. This leads him to believe that, in part, TV is the root cause. “Television has

made our communities (or, rather, what we experience as our communities) wider and

shallower. In the language of economics, electronic technology enables individual tastes

to be satisfied more fully, but at the cost of the positive social externalities associated

with more primitive forms of entertainment” (Putman 1995, 242).

Bridging and Bonding V.S. P2P Social Capital

The rise of the Collaborative Economy has seen an increase in critical voices,

challenging the notion of whether this new form of capitalism is indeed empowering and

criticizing it for being exploitative. Journalist Susi Cagle claims, “sharing economy

doesn’t build trust — it trades on cultural homogeneity and established social networks

both online and in real life. Where it builds new connections, it often replicates old

patterns of privileged access for some, and denial for others” (Cagle, 2014).

For the purposes of this paper emphasis should be placed on how trust and

reputation is created amongst the public. Collaborative Economy enterprises rely heavily

on creating public trust (through the technology that facilitates a P2P review system) in

order for consumption to occur. No one wants to take an Uber ride with a convicted serial

killer, let alone someone with bad body odor. Creating trust in this context requires

something similar to Putnam’s Bridging form of social capital – necessary in order to

complete transactions amongst complete strangers. Putnam points out that life is easier in

a community with social capital because “networks of civic engagement foster sturdy

norms of generalized reciprocity and encourage the emergence of social trust. Such

networks facilitate coordination and communication, amplify reputations, and thus allow

dilemmas of collective action to be resolved” (Putnam 1995, 66).

Can we place P2P Social Capital into Putnam’s framework? It appears that these

collaborative enterprises create a deformed version of Putnam Bridging Social Capital. If

Bridging Social Capital is the connection of people in different groups and Bonding

Social Capital is the connection of people within a group, then P2P Social Capital is the

temporary connection of people in different groups for the purpose of immediate

consumption. P2P Social Capital suffers from a temporal dynamic in which trust is

created (for the purpose of a transaction) and dissolves instantly (the moment the

transaction is over). No community or group is ever created. Instead a temporary

connection is made and utilized for consumption. The collective power of organization

that comes with bridging social capital does not seem to be created in the Collaborative

Economy, because the foundation of the social capital being created is profit driven and

entirely self interested.

Case Study

Temporal Dynamic of P2P Social Capital through Bardhi’s Study on ZipCar

Collaborative Consumption is still a relatively new concept, and as such, not

many studies have been conducted on its relationship with social capital. However, two

academics, Barhi and Ekhardt, have forged a path and published a study on social capital

creation in the context of a Collaborative enterprise. Their study examines 40 customers

of car sharing service ZipCar (recently bought out by Hertz), and the public’s relationship

with access based consumption. The term access based consumption refers to what

Bardhi defines as “a transactions that can be market mediated but where no transfer of

ownership takes place.” (Bardhi, 2). He argues that it is becoming increasingly popular,

yet it is not well theorized (ibid). While the bulk of their research focuses on the shift of

ownership to access the results of their study reveals an unprecedented insight into social

capital in the Collaborative Economy.

The phenomena of a shift toward short-term access of assets, as opposed to

ownership, is not an entirely new concept. Bardhi notes that, traditionally, access to

assets was predominantly found in the non-profit sector, such as visitors to museums or

book borrowing from public libraries. However, access as a form of consumption is what

differentiates Collaborative Economy enterprises such as ZipCar.

Ownership of property is a core tenant of liberal ideology and as such ownership

is a highly valued concept in society. Historically, ownership is perceived as a means to

capital accumulation, and a way to provide a sense of personal independence and security

(Bardhi, 883). For example, home ownership is perceived as superior to living in public

housing or even rentals. It should be noted that although Bardhi’s study doesn’t delve

into any class mechanisms, he does seem to identify that ownership is deemed to be

superior to access. Due the fact that only the wealthy can own more assets, society

projects a superior status to the wealthy that can afford to own more things.

In contrast, access has been historically stigmatized as an inferior consumption

model. People who have to borrow from the public library as oppose to purchase books,

or rent a car for the weekend as oppose to owning one, are seen as having less power and

forced to access instead of own, where as the wealthy can choose to access or own.

Although Bardhi does not seem to be entirely sure why society is shifting

increasingly to access based consumption, he does provide speculation in an observation

of an increasing liquid society. “In contrast to the solid emotional, social, and property

relations embedded in ownership, access is a more transient mode of consumption,

enabling flexibility and adaptability suitable for liquid consumer identity projects. Access

has emerged as a way to manage the challenges of a liquid society” (Bardhi, 883). He

argues that modernity is marked by more fluid relationships and lifestyles that require

flexibility of access. However, the answer to this question regarding societal shift from

ownership to access is perhaps best explained by the global economic crises. Consumers

are looking for ways to spend less and because the Collaborative Economy enterprises

offer a more widely shared experience, it may be less frowned upon. Bardhi mentions

that an increase in the costs of acquiring and maintaining ownership over time, the

instability in social relationships, as well as the uncertainties in the labor markets have

rendered ownership a less attainable and more precarious consumption mode than it once

was (Bardhi, 884 ).

While access based consumption is increasing it still seems that ownership is

preferred.

“Ownership continues to remain the ideal normative mode of consumption in contemporary American society... Our study suggests that motivations for engaging in car sharing are primarily utilitarian as compared to identity enhancing, and there is also a preference for surveillance and command controls rather than relying on trust and community. In this way our study echoes Marcoux’s (2009) findings in emphasizing the benefits of the market over reliance on community and challenges the romantic view of sharing as “ennobling, humanizing or of greater moral worth” (Bardhi, 871).

Their study reveals that despite an increase in access based consumption,

ownership is still more desirable. The reason for this may just be that access based

consumption is mainly useful for those with less money, who must prioritize access due

to lack of ownership, thus still suffering from lower status perception.

The results of their study also provides insight into the previous sections

comparison of Putnam’s Bridging Social Capital and P2P Social Capital. Bardhi’s study

indicates that the utilitarian nature of access-based consumption, in this case, is disruptive

to community building social capital described by Putnam. He finds that the informants

in his study do not have or want to have “communal links with the company or one

another” (Bardhi, 892). His study captured quotes indicating the lack of communal links,

“I get e-mails from them [Zipcar] and I just delete them. I don’t bother reading them.

Why would I? It doesn’t change what I use Zipcar for” (Rachel). “You see the people in

the parking lot, but I don’t feel like an attachment to them as being another person using a

service I’m using” (Mike). “I forgot a pea coat of mine, which was a family heirloom.

And I put a listing up on the Zipcar message board for that, and no one ever responded”

(ibid). The data from 40 respondents indicate a lack of caring or altruism associated with

negative reciprocity among Zipcar users, this further inhibits motivations to relate to

others and inhibits the positive potential (regarding civic engagement) that could have

manifested through social capital.

For an economy that claims to better the world and bring people together it seems

more likely to actually atomize the public further from forming communities. According

to Putnam’s correlation of social capital and civic engagement it can be argued that the

Collaborative Economy’s P2P Social Capital does lead to the kind of democratic and

egalitarian notions attributed with the phenomena.

Labor Exploitation in the context of Neoliberalism and Collaborative Enterprises

In this section of the paper we will connect Putnam’s observation of diminishing

social capital in America to the rise of neoliberal governance in the 1970’s. A brief

historical background of the neoliberal governance will provide the context for the rise of

collaborative consumption and the damaging effects it has on labor.

The following two graphs from the Economic Policy Institute reveal a distinct

divergence between productivity from income and hourly compensation occurring

somewhere in 1970’s, and exacerbating well into the present. This graph perfectly

compliments Putnam’s correlation of a shift occurring in the 1970’s where he argues that

families, communities societies and values fragmented. While there may be many reasons

for this occurrence, Putnam does provide ample evidence for the disintegration of social

capital as being culpable.

(Winship, 2014)

(Winship, 2014)

Simultaneously to Putnam’s observation of social capital disintegration in the

1970’s, oil prices sky rocketed in light of an OPEC oil embargo. The economic crises

was believed to have been caused by interventionist polices that had guided the US since

the Roosevelt’s New Deal. This perception gave way to the birth the neoliberalism,

which emerged in a policy document called the Washington consensus (essentially the

privatization of state enterprises, economic deregulation and tax reform). The

Washington consensus directly opposed the pre-1973 economic stance. The increased

focus on economic liberalization laid the groundwork for a neoliberal absolute focus on

economic growth.

Economists often define neoliberalism as a concept that is equated with “free

market” and “small government” (Wacquant). The problem is that this captures an

ideology of neoliberalism instead of its reality. The reality is that it often breaks these

political economy rules. This is evidenced by the breaking away from traditional laissez

faire practices during the bailout of big banks in 2008 as well as massive government

spending to support wars in countries where the only explainable success is the creation

of free markets (i.e. Iraq). Neoliberalism is a distilled and disfigured form of liberalism

with less concrete rules about pursuing economic growth. In this sense it feels like less of

an economic theory and more a mode of operating.

Rather than defining neoliberalism in theory it is more useful to observe the

reality of neoliberalism as a mode of operating that pursues economic growth at all costs.

Neoliberalism cherry-picks certain values in its liberal roots while completely reversing

others. It pivots itself around classical liberal tenets such as certain individual rights and

free market economics, but it has created an different idealized outcome that adds a

radically new dimension to its meaning. Instead of pursuing classical liberalism’s

Lockean state of nature, freedom is reduced to be exclusively economic - subverting the

importance of moral freedom intended by classical liberalism. This distortion is

evidenced by a hierarchical formation of liberal tenets, placing economic growth above

individual rights.

Over the past 20 years neoliberalism has become a highly disputed term amongst

academics. One of the most widely established authors on neoliberalism is David Harvey.

In his book “A Brief History of Neoliberalism”, he backs his analysis with work of Cross,

Nawroth and Eecke to define it.

“Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterize by strong private property rights, free markets and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defense, police and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets. Furthermore, If markets do not exist (in areas such as land water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary” (Harvey).

A close look at the wording reveals an inherent mechanism that favors upper

classes of society. The focus on property rights, instead of all individual rights, divides

society amongst those with and without property. Harvey also identifies human well-

being as being inextricably linked to entrepreneurial freedom and skills within an

institutional framework, reducing people to the utilitarian definition. At first glance this

seems to coincide with classical liberalism quite nicely. Protection of property rights and

utilitarianism are certainly central to liberalism. However, it’s what Harvey’s definition

does not include that makes it so different from liberalism. Liberalism sought to protect

individual property rights, amongst many other rights, in pursuit of something greater

than economic growth, a Lockean social contract (a social contract that freely exchanged

the state of nature for security of a neutral guarantor or basic rights and liberties). This

state of nature is the great equalizer of classical liberalism. For rich or poor, black or

white it had a framework that intended to protect the public equally. Of course, history

unfolded a bit differently (institutionalized racism, industrial capitalism and income

inequality) but the ideology created the mechanism, and intent, for society to correct

itself and addressed the potential of such problems faced throughout history.

Neoliberalism has no such mechanism for equality, it is almost exclusively elitist in

nature. It focuses on the rights of the wealthy property owners and suggests that freedom

and happiness are achieved through being useful to the economy. Everyone else is

inherently excluded, leaving them vulnerable to abuses. “Them” being the millions of

impoverished Americans who live in consolidated poverty (black ghettos, low income

neighborhoods) and those who require social assistance (food stamps and social welfare).

Simply put, Liberalism is ideologically the tension of laissez fair economics and

individual rights. Neoliberalism is the pursuit of profit at all costs and above the

protection of individual rights. After the 1970’s real wages stagnated and productivity

continued to grow. In order to keep the system going the graph empirically reveals how a

neoliberal system no longer paid people according to the value they actually produced.

Instead, they would be given a lot of access to credit (leading to the 2008 crises where

banks gave loans to people who could never repay them, then repackaged the risk and

sold them, but this is another story for another paper).

If these graphs scare you, as they should, one can at least find comfort in the fact

that social safety nets were left somewhat untouched during this time. Despite a widening

gap between income and productivity most workers enjoyed (be it somewhat

diminishing) benefits like social security and employer provided health care. These

benefits are precisely what Uber drivers and AirBnB hosts and all participants to the

Collaborative Economy do not have. In this sense, the collaborative economy is an

ultimately liberalized form of non-wage labor, its just exploitative labor in a neoliberal

world. Uber and Aribnb do not provide their hosts or drivers with any of the kind of

benefits that traditional employers do. Additionally, Collaborative Enterprises don’t pay

high salaries. If one has to sacrifice their home in order to rent it out to an AirBnB guest,

there is a cost to that individual who must now find an alternative place to sleep and

shower. The unregulated nature of the Collaborative Economy allows for a competitive

environment where the wealthy can afford to rent out their additional homes or cars, but

middle class people who may only own 1 home and 1 car and find themselves struggling

for money resort to selling (sharing) things they, in reality, need to survive.

Exploitative Labor

Amongst the positive forms of social capital described by Putnam are labor

unions. He also correlates the decrease in civic engagement (starting in the 1970’s) to a

decrease in labor union creation and participation. Not only do most Collaborative

Economy enterprises not have unions but they are also threatening the unions of

competing industries. Some taxi union members are leaving their jobs in order to work

for Uber instead (Cagle, 2014). Taxi drivers are not leaving their union for Uber because

working for Uber offers a more community environment, nor does it offer higher wages.

Quite the opposite. Instead, working for Uber has been describes as exploitative, lower

paying, less security, with no social safety nets and no community of drivers who can

collaborate and change the terms of labor or payment (ibid). The reason why taxi drivers

opt for Uber is because they are simply not able to make enough money anymore as taxi

drivers. In this sense, Uber has destroyed the social capital created by traditional unions

in the taxi industry.

Transition of Trust: From Traditional to P2P Trust

The success of many Collaborative Economy enterprises are built on creating

value through social capital. Because many of these transactions are P2P the

collaborative economy has created a savvy technological solutions to replace the

consumers “trust” that is normally derived from large corporate brands.

Traditionally, brands are a key mechanism for creating institutional trust, they

give the consumer confidence in how a product or service is made and allows them to

evaluate what kind of utility they may expect. In Marx’s astute observation of the

capitalist system, commodities, once produced, must go through a circuit of distribution,

exchange and consumption, so that profit can be returned to the owners of the capital

(and marginally to the laborers). If the circuit does not complete then the system will fail

and economic depression will occur. Despite this oversimplification of Marx’s

observation, we can still derive that, therefore, capitalism, has to ensure sale of

commodities and their consumption. Traditionally, the public is motivated to accomplish

this cycle and consume through advertising.

Communications (Television advertisement, print, radio, digital etc.) create the

motivation for consumers to fetishize commodities. Sut Jhally, Professor of

Communications at University of Amherst, observes that “ with advertising messages on

everything from fruit on supermarket shelves, to urinals, and to literally the space beneath

our feet (bamboo lingerie conducted a spray paint pavement campaign in Manhattan

telling consumers that “from here it looks like you could use some new underwear”), it

should not be surprising that many commentators now identify the realm of culture as

simply adjunct to the system of production and consumption” (Jhally, 2015). In this last

sentence Jhally explains how culture is part of the commodification process. This aspect

is true for both traditional and Collaborative Economies. The difference amongst the two

is that traditional (capitalist) economies rely more heavily on advertising than social

capital. Instead, the Collaborative Economy relies lightly on advertising and heavily on

social capital. Both economic systems utilize and create culture as the grounds from

which to erect consumption through trust.

In most Collaborative Economies the consumption of goods (and thus the

completion of Marx’s capitalist circuit) is encouraged through social capital that creates

trust amongst P2P transactions. For example, staying at an AirBnB requires trusting a

stranger and sleeping in their home. The review system built in to AirBnB app allows

guests to evaluate their choice of hosts, and allows hosts to built trust by accumulating

large amounts of positive feedback. In this sense, the review system is a form of social

currency that facilitates potential monetary transactions.

Traditionally culture is used as the canvas for advertising and thus general

encouragement of consumption. If Sut Jhully’s quote is not convincing enough allow me

to draw upon how major brands use religious and cultural holydays to sell products.

Easter is important in so far as Hershey sells chocolate Easter eggs, Christmas is

important in so far as copious gifts are placed under a tree, the engagement ring was an

idea essentially invented by Da Beers diamonds to get people to communicate love

through a specific (expansive) good and so and so forth. In fact, I challenge you to think

of a cultural experiences that have not been hijacked by capitalist commodification in the

developed world. All of these cultural instances have become moments for advertising to

encourage consumption and develop trust with the traditional institutions.

On the other hand, In Collaborative Economies, consumers shape purchasing

decisions through online review platforms. In doing so they develop networks of trust

that facilitate and encourage consumption. Due to the structure of the review system built

in to the technological features of the Collaborative Economy, experiences becomes

methods of advertising that encourage consumption. If hosts and a guests share a

particularly great experience together their story gets shared online and transmitted to

thousands of others. The virility of such a mechanism creates a form of advertising that is

shared person to person and amplified via technology.

Theoretical Lens 2

A better explanation of P2P Social Capital: Bourdieu and the Class Mechanism

Where as Putnam approached social capital as it dealt with collective values and

societal integration, Bourdieu's instead approached it from the point of view of actors

engaged in class struggle. Bourdieu, like Marx, argued capital formed social life and

dictated social order. “Bourdieu's concept of social capital puts the emphasis on the

power function: social capital (social relations that increase the capability of subject to

advance her/his interests). Social positions and the division of economic, cultural and

social resources in general are legitimized with the help of symbolic capital” (Siisiäinen,

2000) From the Bourdieuan perspective social capital is a resource in social struggles.

Thus far the paper has revealed social capital according to Putnam and how it has

changed in the era of collaborative economy, both the temporal dynamic of instant

connection and detrimental effects of labor in a neoliberal age. However, now this paper

seeks to examine what has not changed. In order to identify this we ask the most

fundamental question to Marx, “in the interest of which class?” Putnam identifies income

inequity as an ever-widening hole that threatens to destroy people’s lives in America. So,

keeping this in mind, one must ask, which class does the sharing economy serve? This

paper argues that what has remained the same is the in this current system Collaborative

Consumption still perpetuates a class system favoring the elite.

In order to explain the exploitative affects of commoditizing social capital in the

Collaborative Economy we must now introduce the work of Pierre Bourdieu. He argues

that capital can present itself in three fundamental forms: as economic capital, “which is

immediately and directly convertible into money and may be institutionalized in the

forms of property rights”; as cultural capital, “which is convertible, on certain

conditions, into economic capital and may be institutionalized in the forms of educational

qualifications”; and as social capital, “made up of social obligations (‘connections’),

which is convertible, in certain conditions, into economic capital and may be

institutionalized (Bourdieu, 193).

The Collaborative Economy has created an economic environment that challenges

Putnam’s observation of decreasing social capital in America. Instead, never has social

capital been most easily convertible to economic capital than through P2P Collaborative

Enterprises. Many of these enterprises position (advertise) themselves as ways to connect

people in order to create social value for the individual (Becoming part of the

community). These individuals become part of a group who share a common experience

facilitated by the institution. Yet the value that may or may not be created for the

consumer is converted into capital not just for the consumer, but also for the institution.

This creates a system of social connections based strictly for profit maximization of the

institution and deprives consumers of the opportunity to create a social connection with

others outside the context of profit or a real community. In other words, social

interactions are only as valuable as they can be monetized.

Bourdieu’s examination of social capital in 1986 is just as applicable today. He

posits that “the existence of a network of connections is not a natural given, or even a

social given, constituted once and for all by an initial act of institution, represented, in the

case of the family group, by the genealogical definition of kinship relations (or in the case

of AirBnB, by the collaborative consumer’s utilitarian definition of economic relations)

which is the characteristic of a social formation. It is the product of an endless effort at

institution, of which institution rites… mark the essential moments and which is

necessary in order to produce and reproduce lasting, useful relationships that can secure

material or symbolic profits”(ibid). In other words, the network of relationships is the

product of investment strategies aimed at establishing and reproducing social

relationships that are directly usable for, ultimately, profit. “ i.e., at transforming

contingent relations, such as those of neighborhood, the workplace, or even kinship, into

relationships that are at once necessary and elective, implying durable obligations

subjectively felt (feelings of gratitude, respect, friendship, etc.) or institutionally

guaranteed (rights). This is done through the alchemy of consecration, the symbolic

constitution produced by social institution and endlessly reproduced in and through the

exchange (of gifts, words, women, etc.) which in exchange transforms the things

exchanged into signs of recognition and, through the mutual recognition and the

recognition of group membership which it implies, reproduces the group” (ibid).

Bourdieu’s explanation of social capital seeks to remove itself from a strictly capitalist

economic definition, and is broad enough in that he seeks to examine human ontology. In

terms of the Collaborative Economy the consecration that is exchanged are not gifts as

described, but trust. The very recognition of a group membership that is created through

technology and the imbedded review system creates trust amongst consumers and

mutually encourages consumption that can then be converted to economic capital.

In Marx’s observation of the capitalist circuit, profit is returned to the owners of

capital. In an Uber or AriBnB transaction some might argue that there are two owners of

capital. The first is the host, who owns a resource (Car = Uber or Home = AirBnB) and

the second is the corporation (AirBnB or Uber) who owns the transaction process through

the app. However, the hosts are not the owners of production because AirBnB takes a

significant profit and the hosts have limited terms on the grounds of the transaction that is

dictated by the tech company. For example, hosts cant change the app or the percentage

that the corporation takes. Additionally, this profit is distributed amongst the two owners

of capital in a way that creates a class mechanism. The Elite being the few highly paid

employees at AirBnB, who earn their salaries by taking profit margins from host’s

resources in exchange for facilitating the transaction. The hosts, a lower class, who earn

some money from the transaction but will never own the transaction process or have

equal say in the way transactions are structured.

Conclusion

Over the past 40 years the evolution of work has been characterized by a number

of trends — the lengthening of the workday and workweek, the decline of real wages, the

reduction or elimination of non-wage protections from the market (like fixed pensions or

health and safety regulations), the proliferation of part- time work, and the decline of

unions (Ascoff, 2015). At the same time norms in the organization of labor have shifted

with the dawn of the Collaborative Economy. Temporary part time work is increasing

and employers are decreasing benefits and job security. As the gap between hourly

compensation and productivity continues to grow the elimination of such benefits poses a

serious, increasing inequality and decreasing the quality of life for those most vulnerable.

The Collaborative Economy offers consumers the opportunity to make extra cash

by selling (not sharing) access to their unused assets. There are some benefits for

participating in these kinds of interactions. Consumers can access assets they need easier

or cheaper, and sellers can create additional income streams from unused time or assets.

In a post 2008 crises world, these benefits of the Collaborative Economy have been

framed as the solution to diminishing quality of life and inequality.

The reality is that this new system functions as a Band-Aid on a tumor. If indeed

the biggest problem facing the future of American prosperity is, as Putnam believes,

diminishing of cohesive bridging social capital, then the arguments in this paper reveals

that the Collaborative Economy, as it stands, is not the cure. In fact, It is, as Bahdi

believes, “utilitarian” and lacking “relying on trust and community.” The social

connections created via these online review platforms function to create quick and selfish

connections in order to complete a transaction. While this may not be the cure to

capitalism, others believe that it still better than noting. However, I argue that a public

discourse that glorifies the community aspect of Collaborative Enterprises is drawing the

public’s attention from seeking real cures to inequality, lack of transparency, and

corporate greed.

Bourdieu allowed this paper to explore Collaborative Enterprises and social

capital within a Marxist framework (despite Bourdieu avoiding labeling himself a

Marxist). Bourdieu reveals the price tag of every social connection we make in the

service of institutions. He argues institutions prime the cultural landscape in order for

social life to take place in a manner that perpetuates a class system and increased profit

for the institution. In the German ideology of 1845-1846 Marx states that the “the

production of ideas, of concepts, of consciousness, is first directly interwoven with the

material activity and the material intercourse of men, the language of real life” (Marx,

47). He goes on to say that “ life is not determined by consciousness, but consciousness

by life” (Marx, 48). At that time Marx was concerned with ruling class being able to

manipulate the proletariat through ownership of the modes of production. He developed

the concept of dialectical materialism to explain that the production of consciousness and

ideas was directly related to material life and vice versa. As such, Marx believed that

class structures exist without us being necessarily aware of them. Class for Marx is

harmonized to Freud’s unconscious in that human interests arising from class shape their

social existence without any consent [Zizek, pg 11]. Accordingly, everything is

determined by class structure; culture, politics, natural environment and even social

interactions.

The disconnect of public perception and reality of the Collaborative Economy is

best explained through Marx’s theory of dialectal materialism. These enterprises

perpetuate a class structure that goes largely un-criticized. The fact remains, that despite

promoting a (ineffective) sense of community these enterprises function for profit and

even more interestingly, they take a cut of profit from the owned assets of the public. Lets

not forget that every AirBnB stay begins with a % of the exchange being sent straight to

the AirBnB Corporation. Companies like Uber and AirBnB are generating massive

profit on “your” car, apartment, labor, and time.

While their may not be a clear solution to fixing capitalism, there is a pretty

obvious solution to the woes of the Collaborative Economy, that is, simply make it

Collaborative. Worker owned collaborative enterprises could very well create real

Bridging Social Capital as well as distribute profit equally amongst workers, thus

dismantling the class mechanism. If workers own the means of production there is a

real sense of community that is being created from fellow workers, peers, instead of the

current experience that forces the creation of communities hosted by a multibillion-

dollar corporations. Cooperatives could design their own apps that provide these P2P

services.

The best part about this alternative is that it’s not a new idea. There are already

powerful coalitions of cooperatives in cities from New York to London to Mondragon

Spain. In New York low-wage workers who joined these cooperatives saw their hourly

wage increase from $10 to $25 over the past few years (Scholz, 2014). “In the United

Kingdom, there are currently 200,000 people working in more than 400 worker

cooperatives. And these cooperatives have more than a 160 year-long history in the

UK. The largest among them has a turnover of £ 24 million” (ibid). Technologists and

cooperatives have already come together to form enterprises such as Fairmondo, a co-

op-based version of eBay. These types of enterprises would need to be collectively

owned, democratically controlled, efficiency derived by anchoring employment, offer

health insurance and benefits.

Works Cited

"About Social Capital." Harvard Kennedy School. Accessed May 20, 2015. http://www.hks.harvard.edu/programs/saguaro/about-social-capital.

Ascoff, Nicole. "Jacobin." Jacobin The Smartphone Society Comments. 2015. Accessed May 20, 2015. https://www.jacobinmag.com/2015/03/smartphone-usage-technology-aschoff/.

Bardhi, Fleura, and Giana Eckhardt. "Access-Based Consumption: The Case of Car Sharing." Journal of Consumer Research 39, no. 4 (2012).

Bourdieu, Pierre. The Forms of Capital. New York: Handbook of Theory and Research for the Sociology of Education, 1986.

Bradshaw, Della. "Sharing Economy Benefits Lower Income Groups - FT.com." Financial Times. 2015. Accessed May 20, 2015.

Cagle, Susie. "OPINION: To Get a Fair Share, Sharing-economy Workers Must Unionize | Al Jazeera America." To Get a Fair Share, Sharing-economy Workers Must Unionize. 2014. Accessed May 20, 2015. http://america.aljazeera.com/opinions/2014/6/uber-sharing-economyunionstaxis.html.

Cagle, Susie. "The Case Against Sharing." Medium. May 27, 2014. Accessed May 20, 2015. https://thenib.com/the-case-against-sharing-9ea5ba3d216d.

Geron, Tomio. "Airbnb And The Unstoppable Rise Of The Share Economy." Forbes. 2013. Accessed May 20, 2015.

Goodale, Gloria. "With Big Growth for the Sharing Economy, Has It Become Selfish?" The Christian Science Monitor. March 15, 2015. Accessed May 20, 2015. http://www.csmonitor.com/USA/Society/2015/0321/With-big-growth-for-the-sharing-economy-has-it-become-selfish.

Jhally, Sut. "Advertising at the Edge of the Apocalypse - Sut Jhally Website." University of Amherst. Accessed May 20, 2015. http://www.sutjhally.com/articles/advertisingattheed/.

Marx, Karl, and Friedrick Engels. The German Ideology. International Publishers, 1845.

Morgan, Jacob. "Why The Collaborative Economy Is Changing Everything." Forbes. October 1, 2014. Accessed May 20, 2015.

http://www.forbes.com/sites/jacobmorgan/2014/10/16/why-the-collaborative-economy-is-changing-everything/?ss=power-productivity.

"OuiShare - Connecting the Collaborative Economy." OuiShare. Accessed May 20, 2015. http://ouishare.net/en/about/collaborative_economy.

Preston, Jack. "Global Sharing Economy Revenues Could Hit $335 Billion by 2025 - Virgin.com." Virgin.com. 2014. Accessed May 20, 2015. http://www.virgin.com/entrepreneur/global-sharing-economy-revenues-could-hit-335-billion-by-2025.

Putnam, Robert. "Bowling Alone: America's Declining Social Capit." Journal of Democracy 6, no. 1 (1995).

Putnam, Robert. Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press, 1993.

Rifkin, Jeremy. "The Rise of Anti-Capitalism." The New York Times. March 15, 2014. Accessed May 20, 2015.

Scholz, Trebor. "Platform Cooperativism vs. the Sharing Economy." Medium. December 5, 2014. Accessed May 20, 2015. https://medium.com/@trebors/platform-cooperativism-vs-the-sharing-economy-2ea737f1b5ad.

Siisiäinen, Martti. "Two Concepts of Social Capital: Bourdieu vs. Putnam." ISTR Fourth International Conference, 2000.

Winship, Scott. "Has Inequality Driven A Wedge Between Productivity And Compensation Growth?" Forbes. 2014. Accessed May 20, 2015. http://www.forbes.com/sites/scottwinship/2014/10/20/has-inequality-driven-a-wedge-between-productivity-and-compensation-growth/.

Harvey, David. A Brief History of Neoliberalism. Oxford University Press, 2007.

Wacquant, Lo"ic. Punishing the Poor. Duke University Press, 2009.

Zizek, Sublime Object of Ideology, 1989