With progress comes change, and with change comes alternate names. Whether you say the peer-to-peer, on-demand, collaborative, or sharing economy is immaterial - they all mean the same thing. In a recent article in the Wall Street Journal, Irving Wladawsky-Berger discusses the past, present, and evolving future of the sharing economy as well as the community’s take on it all.

For anyone deeply intertwined in the webs of the collaborative economy, the name Jeremiah Owyang (@jowyang) rings multiple bells for his prominence as an industry analyst. In his eyes, the collaborative economy is a result of the evolution of the Internet economy over the past twenty years, but it’s a phase that allows individuals to go much farther than sharing just information. In his words:

“An entire economy is emerging around the exchange of goods and services between individuals instead of from business to consumer. This is redefining market relationships between traditional sellers and buyers, expanding models of transaction and consumption, and impacting business models and ecosystems. This results in market efficiencies that bear new products, services, and business growth.”

However, there are many different views on the potential of the sharing economy. In 2011, Time Magazine deemed the sharing economy one of 10 Ideas that Will Change the World for its power to make meaningful connections even with strangers. On the contrary, The Wall Street Journal wrote, “If you want to start a fight in otherwise polite company, just declare that the sharing economy is the new feudalism, or else that it’s the future of work and all the serfs should just get used to it, already.” Rather than viewing Uber’s primary function as rides, critics relate Uber’s popularity to its low-wage jobs and new conventions for finding work, as the drivers can neither be deemed employees nor freelancers. They added,

“The only way forward is something that has gotten far too little attention, called dependent contractors. In contrast with independent contractors, dependent contractors work for a single firm with considerable control over their work – as in, Lyft or Uber or Postmates or Instacart or any of a hundred other companies like them. This category doesn’t exist in current U.S. law, but it does exist in countries such as Germany, where dependent contractors get more protections than freelancers but are still distinct from full-time employees.”

The Financial Times reflected their uncertainty on the future of this economy with their plethora of questions surrounding running a collaborative business within a capitalist setting.

“Are the two even compatible? Or is there a fundamental conflict at the heart of an industry that preaches collaboration but, due to being radically commercialised by venture capital money from Silicon Valley, also needs to profiteer from the goodwill of others if it’s to remain viable? For the most part it’s a hypocrisy the community is trying to address…  For now, the uncomfortable truth is that the sharing economy is a rent-extraction business of the highest middle-man order.”

At OuiShare Fest, a 3-day collaborative economy festival in Paris, the most prominent discussion surrounded the fact that this economy is now practically owned by the Silicon Valley’s 1%. In the early days of this economy, the hope was that the sharing market would encourage altruism and decrease income inequality, fostering a sense of idealistic socialism -- however this is not how things panned out. The fact is, as pointed out by Mr. Owyang, that the amount of VC money in this sector outweighs the money that flowed into social media at this developmental stage, and the fact that the one percent clearly owns the sharing startups replaces this idealistic model of socialism with continued capitalism.  

Despite this, the progression of the sharing economy is ongoing. Efficient communication and low transaction costs allow new firms that aim to bring together consumers and providers of goods and services to rise, especially when aided by advanced platforms (Near Me, perhaps?) and innovative applications. This entails a shift away from the classic company workforce towards a large freelance workforce.

There are still many questions left unanswered:

• Is the collaborative economy good or bad for the world?

• Are we seeing the rise of a medieval kind of feudalism?

• Are we noticing the effect of the market’s invisible hand?

• Should we accept that though startups have joined the ranks of billion-dollar companies, this is the way capitalism has always worked?

• Should we celebrate these innovative business models?

 With this trend in the economy, fewer workers can expect to have long term, stable careers with one company. However, this may not be what young workers even want anymore. Perhaps with this trend, young workers are starting to prefer being self-employed for at least a portion of their working lives. A NYT article argues that this trend is inevitable, as the “uberization” of the economy is not so much of an innovation as it is a “culmination of a generation-long trend.”

Despite the list of pessimistic views on the peer-to-peer network, Oywang remains optimistic.

“Capitalism will find a solution to much of the dichotomy at the heart of the space. With time, competition will force companies to improve on worker and user rights. And it’s unclear for how long being an asset-light operation will remain an advantage, especially if and when incumbents step up their game.”

It remains unclear what kind of world this on-demand model will create -- it will both aggravate and improve problems. We believe the future of the sharing economy shines bright, and it will continue coaxing more workers to move from stable jobs to more flexible means of making money. Consumers will benefit from a more connected, social network that encourages an elevated sense of trust as well as efficiency, enabling a world where everybody can control their own lives and do the work they want, when they want it. What do you predict the future holds?