Report Proposes "Shared Regulation" for the Sharing Economy

A new report from the RSA outlines the possibilities and challenges, especially regarding regulation, associated with the sharing economy. (Fair Share)

As the sharing economy—in all its diverse and much-debated manifestations—plays an increasingly significant role in local economies worldwide, the relationship among states, municipalities, sharing companies, workers, and users becomes ever more complicated. At the heart of a new Royal Society for the encouragement of Arts, Manufacturers and Commerce (RSA) report is the nagging question of regulation: Who should set standards and limits for sharing platforms, and how should those standards and limits be defined? Per the RSA, a sharing economy that privileges the common good (and not just the interests of the actors directly involved) requires a dispersed regulatory structure report author Brhmie Balaram calls "shared regulation." After first examining the basic characteristics, opportunities, and trade-offs associated with a particular segment of the sharing economy (namely, profit-generating sharing platforms that have successfully scaled up to become viable players in mainstream markets), Balaram submits a persuasive, if still somewhat vague, vision of a new regulatory mode that extends the concept of self-regulation to encompass a number of stakeholder groups.

In Fair Share: Reclaiming Power in the Sharing Economy, Balaram first dismisses the handwringing over various definitions of the sharing economy by proposing an alternative framework, one focused on "shared value creation." (She name-checks Shareable's own Neal Gorenflo as among those who insist on drawing attention, instead, to the extent to which platform cooperatives provide a substantive alternative to conventional sharing marketplace models.) Sharing platforms, observes Balaram, do not produce value by producing goods or services. Instead, the platforms' users themselves generate value by sharing their goods or services; as the network grows, value balloons at a pace exceeding a simple sum of individual parts. Thus, for Balaram, the key to success in the sharing economy is scale. Here, she zooms in on businesses that have scaled up (think Airbnb and Uber) rather than on sharing sectors that have scaled out (municipal bikeshare programs).

Balaram defines sharing platforms in terms of "shared value creation." (Fair Share)

While also covering topics including the future of the "gig economy" and the potential of distributed and/or platform cooperatives, "Fair Share's" main thrust has to do with regulation. In a profound understatement, Balaram observes: "The growth of the sharing economy globally is outpacing our legal and political institutions." Merely extending the conventional model of entrepreneurial self-regulation to the sharing economy would not do enough to protect key actors in the sharing economy, she argues. Instead, RSA proposes a new approach: shared regulation. "Rather than relying on governments and platform providers to resolve what they see as problems in the sharing economy, shared regulation encourages greater participation from platform users (consumers and workers), community organizers, legal and administrative professionals, investors and designers in tackling issues," explains.

Beyond an insistence upon including more than just government and owners in the regulatory process—and gesturing toward blockchain technology as a promising mechanism for network growth and management—RSA's shared regulation scheme offers little more in the way of conceptual novelty than tactical instruction. Nonetheless, and despite its contestable definition of the sharing economy itself, "Fair Share" is an important reminder of the significance the regulatory question likely holds to the future of sharing. And it concludes with a second critical reminder: That sharing should, ultimately, be about serving everyone's interests—not just those of platform owners, users, and workers. "This means that we should be taking a holistic approach to addressing issues in the sharing economy," writes Balaram.

Fair Share proposes a new model for regulating the sharing economy. (Fair Share)

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