The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism (Airbnb)

Published:
January 1, 2022

Airbnb has fuelled the sharing economy like no other. It's made possible a new way of life, a culture shift and whole new industries. But what is its impact on the world? While we see change and progressive development as a positive, it's alway necessary to keep track of the wider impacts.

Sharing isn't new. Giving someone a ride, having a guest in your spare room, running errands for someone, participating in a supper club - these are not revolutionary concepts. What is new in the "sharing economy" is that you are not helping a friend for free; you are providing these services to a stranger for money.

In this book, Arun Sundararajan, an expert on the sharing economy, explains the transition to what he describes as "crowd-based capitalism" - a new way of organizing economic activity that may supplant the traditional corporate-centered model. As peer-to-peer commercial exchange blurs the lines between the personal and the professional, how will the economy, government regulation, what it means to have a job, and our social fabric be affected?

Drawing on extensive research and numerous real-world examples, Sundararajan explains the basics of crowd-based capitalism. He describes the intriguing mix of "gift" and "market" in its transactions, demystifies emerging blockchain technologies, and clarifies the dizzying array of emerging on-demand platforms. He then considers how this new paradigm changes economic growth and the future of work.

Below are short excerpts from each chapter.

Buy it on Amazon here or view it on MIT Press here.

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Introduction (pp. 1-20)

I live in Manhattan. I don’t own a car, which isn’t unusual. Less than one in four Manhattan households own a car. But sometimes, I need a car. And it’s hard to find an affordable rental car in Manhattan. You often have to travel a few miles, to Queens or New Jersey, to rent one that costs less than a hundred dollars a day.

Meanwhile, the streets around my apartment are filled with hundreds and hundreds of parked cars. Beat-up old Corollas and snazzy new BMWs. (Although I haven’t seen a Tesla in my neighborhood as yet. That’s the car...


1 The Sharing Economy, Market Economies, and Gift Economies (pp. 23-46)

It is May 2015, and I’m contemplating the future of capitalism at OuiShare Fest, a gathering in Paris with a decidedly non-capitalist vibe.¹ Over a thousand sharing-economy enthusiasts have gathered in and around the main venue, a giant red tent called Cabaret Sauvage, for a celebration that feels part TED, part Burning Man, and part Woodstock. I’m sitting outdoors enjoying the springtime sun with two of the founders of OuiShare and eating my conference-provided lunch, a bowl of organic lentils and beets. Behind me, preparations are afoot for the Love Fest, an allnight party that brings the three-day event to...


2 Laying the Tracks: Digital and Socioeconomic Foundations (pp. 47-68)

The Internet has existed as space for commercial exchange for over two decades. Now well into the new millennium, it is easy to forget that in the mid to late 1990s, the Internet was both a scene of frenzied excitement and a site of deep apprehension, fear, and moral panic. After all, although some Internet enthusiasts like Howard Rheingold were staking out the “virtual frontier” of the Internet, others were warning people that the Internet was a potential minefield of illicit affairs, pornography, and (of course) fraudulent activities.

Over the past two decades, as both the utopian speculations and paranoid...


3 Platforms: Under the Hood (pp. 69-84)

In their 1987 article, “Electronic Markets and Electronic Hierarchies,” MIT professors Tom Malone, Joanne Yates, and Robert Benjamin made a bold assertion: digital technologies will lead to an overall shift away from “hierarchies,” the modern corporations that permeate mature economies, and toward “markets.”¹ This was a startling prediction. At the time, electronic markets were largely unknown and very rudimentary, coordinated by bulletin board service providers that facilitated the exchange of software, or by Usenet groups, e-mail-like discussion forums resembling today’s Google Groups, whose users sometimes facilitated the trading of items like live concert recordings.¹

The emergence of Uber, Lyft, Airbnb,...


4 Blockchain Economies: The Crowd as the Market Maker (pp. 85-102)

In June 2015, the New York City venture capital firm Union Square Ventures (USV), well known as an early lead investor in the social media giant Twitter and the microblogging platform Tumblr, announced a $3.4 million seed investment in a new company called OB1.¹

When the investment was announced, there was little public information about OB1. Internet searches for the company were more likely to yield discussion groups about spelling the name of theStar Warscharacter Obi-Wan Kenobi. The company’s own website, a serene, detail-free, Zen-white page, offered no additional details, simply stating a promise: “Helping make trade free...


5 The Economic Impacts of Crowd-Based Capitalism (pp. 105-130)

In 2001, the 100 or so residents of Gigha, a small island located off the coast of Scotland, collectively bought out their entire island, including its 47 cottages, 4 farms, a hotel, quarry, wind farm, and 54-acre garden, for £4 million. Gigha, which had peaked in population in the 1700s, had been in decline since the Industrial Revolution—however, since the residents banded together to co-own the island through a development trust, things have been looking up. Others have started to move to the island. In 2003, one such new arrival was California native Don Dennis.

For less than the...


6 The Shifting Landscape of Regulation and Consumer Protection (pp. 131-158)

When Airbnb’s cofounders were developing their peer-to-peer accommodation platform, hotel regulations were the least of their worries; Chesky, Gebbia, and Blecharczyk were plugging holes in their air mattresses, making breakfast for strangers, writing code, and stuffing and selling boxes of “Obama O’s” and “Cap’n McCain’s” cereal in order to raise money.

But as Airbnb’s growth accelerated—2013 saw them more than double their host numbers—the office of the New York state attorney general Eric T. Schneiderman, fresh on the heels of a successful effort to purge online platforms like Yelp of their fake reviews, turned its attention to providers...


7 The Future of Work: Challenges and Controversies (pp. 159-176)

Over the past decade, labor lawyer Shannon Liss-Riordan has successfully fought for the rights of employees as diverse as baristas, janitors, and exotic dancers. In 2014, she took on a new fight—this time on behalf of Uber drivers she alleges are being incorrectly classified as contractors rather than as employees.¹

The workers suing Uber maintain that the platform wants the cost advantages of working with contractors while simultaneously maintaining the control of working with employees. According to Liss-Riordan, the performance of Uber drivers is “managed” based on user ratings, and they receive guidelines from city managers directing them toward...


8 The Future of Work: What Needs to Be Done (pp. 177-202)

There is no question that the economy is undergoing a major shift that may prove as significant as the Industrial Revolution. But change is not what is in dispute here. Rather, the key questions that remain to be answered are whether or not the change will ultimately create a better world of work, and what can we do to nudge things in the right direction.

Will the sharing economy ultimately represent the rise of the microentrepreneur—a generation of self-employed workers who are empowered to work whenever they want from any location and at whatever level of intensity needed to...


9 Concluding Thoughts (pp. 203-206)

Writing a manageably sized book about a topic one is passionate about forces some tough choices, and I omitted from the discussion some topics of great interest to me. In aiming to strike a balance between practicality and prophesy, I have focused the book more heavily on the immediate future of crowd-based capitalism, rather than on the more distant future. The accommodation, transportation, and freelance labor sectors have been the earliest to see big changes induced by crowd-based capitalism, but commercial real estate, health care provision and energy production and distribution will soon follow. And the digitization of the physical...

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