The Dilemma of the Sharing Economy

Carlo Ratti and Richard Sennett—

In 1899, the American sociologist Thorsten Veblen coined the phrase “conspicuous consumption” in his book The Theory of the Leisure Class. The phrase was double-edged: Veblen was critical of the wealthy flaunting their wealth, but he recognized that more ordinary people used goods and services to establish “the reputability of the household and its head.” In short, status matters. Today, conspicuous consumption, which defined much of twentieth century material culture, is at a turning point.

Over the past ten years, the internet and the pervasiveness of social media have brought about new channels through which to behave conspicuously. Twenty years ago, a typical way for a wealthy student to show off was to drive to campus in a flashy car. Many students today think it’s hip to arrive by city bike or by sharing a Zipcar or an Uber. Bragging online can then ensure that everybody knows about that special morning ride. If symbolic experiences can be communicated directly online, why bother to possess?

The internet has heightened the prestige of sharing by turning it into a communicable experience. In Veblen’s era, status was attached to the things that one had that others didn’t; the act of pooling goods and services lacked prestige. Visitor accommodations such as Airbnb have grown because it’s no longer a sign of declining status to take in lodgers, especially when such practice allows the crafting (and sharing) of new life narratives. Sharing can make good business sense, too—with the average two-bedroom Airbnb apartment in New York City earning the renter a respectable $3,700+ per month.

Mobility is another key candidate for the sharing economy. In the US cars are idle, on average, 95% of the time. By one estimate, each shared vehicle could take between ten and thirty privately owned vehicles off of the street—a dynamic that could grow exponentially with the advent of self-driving. Self-driving vehicles promise to have a dramatic impact on urban life, because they could blur the distinction between private and public modes of transportation. “Your” car could give you a lift to work in the morning and then, rather than sitting idle in a parking lot, give a lift to someone else in your family—or, for that matter, to anyone else in your social media community, neighborhood, or city. This could lead to a condition in which—theoretically—everyone would be able to travel on demand with just one-fifth the number of cars in use today.

The replacement of individual status consumption with an economy of shared experiences would not be painless. Traditional manufacturers could face disaster. Moreover, the new canons of prestige favor brands over small businesses. Companies such as Whole Foods threaten to put many small organic retail stores out of business. The ubiquitous Apple stores cut out local re-sellers who offer mixed, not monopolized, goods.

The status attached to sharing knowledge and life experiences once defined the elites, insiders versus outsiders. For instance, Benedetta Craveri traced the eighteenth-century “civilization of conversation” among a network of salons littéraires which allowed the knowledgeable to mingle with the aristocratic. In this light, today’s pervasive ability to communicate instantaneously and share universally is a gain for democracy. But everyone sharing everything is also a recipe for dumbing-down, as in most reality TV. The counter to this would be a critical kind of commentary built into sharing networks such as those that were featured in the live broadcasting of recent social traumas— from Dallas to Nice or Munich.

If Veblen were alive today, he would probably applaud replacing individual status with collective sharing of this sort. But this is not a high-tech nirvana. The sharing economy entails a profound disruption of current modes of production; it could destroy small-scale retail enterprises and it could diminish, rather than enrich, our culture. In other words, we need to learn how to share “well.” The internet, big data, hand-held age is the beginning of a new story which did not figure in the pages of Veblen’s book—the drama of being conspicuous, to one another, without consumption.

Carlo Ratti is an internationally renowned architect, urban planner, and scholar. He carries out research at the Massachusetts Institute of Technology Senseable City Laboratory, investigating the intersection of technology and the built environment.

Richard Sennett teaches sociology at the Massachusetts Institute of Technology and the London School of Economics. His recent publications include The Corrosion of Character and Respect in a World of Inequality.

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