The sharing economy broadly refers to access-based consumption or people renting their unused goods with others mainly through the use of information technologies (IT). The newly emerging practices are particularly favoured on environmental grounds due to their role in the utilisation of unused sources. The examples of such practices are most evident in transport and hospitality sectors. AirBnB, car clubs, cycle hire schemes, ‘Uber’-like taxi-hire, are clear everyday life examples in cities. As with all emerging forms of consumption, there is no consensus on what sharing or collaborative consumption implies for the economy. In his book The Zero Marginal Cost, Jeremy Rifkin argues that the marginal cost of producing an extra unit of input becomes (close to) zero through IT-based consumption practices. This in turn makes profit-making cease to exist, which might create another crisis for capitalism. While the argument has led to a broad range of negative and positive responses and is therefore not conclusive, it is still crucial to extrapolate the future implications of this current move towards services. Even a massive industry with a long-term vision such as car manufacturing has openly recognised this trend, and they provide alternatives to car ownership through several sharing services. It is clearly an appropriate question to ask what could be the long-term impact of replacing buying goods by buying services or exchanging goods through the use of IT.
We need to go beyond seeking for new regulatory systems
Over the last three years, I have conducted research on shared mobility practices and broader transport innovations in UK cities, particularly London, and its implications for the urban economy. I was particularly interested in the social and governance aspects of these schemes and practices. It was clear from the beginning that it is not as radical as it seems to be. Car clubs are, for instance, described as an extended version of the existing business model. In the policy discussions regarding the sharing economy, what seems to be more prominent is how to regulate it. Regulatory concerns mostly emerge in economic, social or health and safety areas. The recent debate has highlighted the regulatory ambiguities in terms of ownership and responsibility particularly concerning economic competition, security and licensing liability and insurance. The questions that emerge ask whether the conventional industries need to be protected if they cannot keep up with the emerging consumption practices or how to overcome crucial matters such as safety and intellectual rights. The employment impacts from digitisation have also been high on the agenda.
My main take is that we should take a step back and try to understand what is happening before inquiring what should happen. The question of what is going on and what should happen are equally important and are clearly interrelated. The crux of the matter is how to bring them together. Before the search for a regulatory system for the emerging practices of the sharing economy, we need to understand the governance implications from a political economy perspective. Understanding the economics of the sharing schemes is almost impossible without understanding the politics of both production and consumption aspects. To this end, integrating into analysis the role of politics and public opinion for the existing institutions and private sector interests in a new environment of innovation and change is called for. London is surely an interesting case to explore the implications of urban mobilities for the local economy. The increasing population and congestion, social segregation and geographical concentration of wealth, relatively well-developed public transport network and rapidly rising practices such as the car clubs and bike sharing activities make the lessons drawn from London invaluable. In the London context, an interesting question arose in terms of how transport – whether private or public – is financed and what it means for the definition of public transport.
Changing role of government in a new urban political economy
Apparently, the most evident ambiguity emerges in the role of government. The government is no longer a regulator in a typical market economy, but also a promoter or even a user. Currently, the visibility of car clubs and issues over parking space in London are serious challenges, often confirmed by the policy and industry agenda. Local governments, therefore, have a critical role to play in overcoming such challenges. Political leadership is also found to be crucial. For instance, it has been pointed out that a councillor may have considerable power to influence the residents, particularly in terms of car ownership. One practical solution that emerged was that local businesses are turning their parking space into shared space in outer London. In doing so, the local governments become a promoter and a user of these services, which in turn raises questions about what is private and what is public. This is often emphasised in the financial ownership of public transport. The question of what form of public transport does the government purely own except for the London Underground has been raised in the context of whether car clubs should be eligible for exemptions from parking or congestion charges.
In conclusion, the sharing economy enables us to revisit the basics of financial ownership and the changing role of different scales of government. The users, providers and regulators are now so intertwined that it is difficult to differentiate the interests of the traditional industries, the emerging service operators, central and local governments and users. The insights to be derived from the governance challenges of the sharing economy are invaluable for a conceptual reformulation of urban political economies.