Friday, May 23, 2014

why the 'sharing' economy is 'keeping up with the joneses'

For an explanation of the current infatuation with the so-called 'sharing economy' then it's worth considering some of the ideas of Thorstein Veblen outlined in 'The Theory of the Leisure Class: An Economic Study of Institutions'.

Published in 1899 it's a detailed social critique of 'conspicuous consumption', as a function of social-class consumerism.

Veblen was probably one of the great grandfathers of behavioural economics.

His view of people was generally one of 'irrational creatures who relentlessly pursue social status with little regard to their own happiness'.

This was clearly counter to the dominant classical economic theory.

When Veblen describes nineteenth-century aristocrats as spending their 'leisure' time fox hunting or learning obscure languages he says; that in order to be successful (as a signal), the signs of this conspicuous display needed to portray themselves as at least superficially useful or socially beneficial.

That is, it needs to pretend to be something other than what it really is.

Eg: fox hunting as some sort of duty to protect the livelihoods of serfs/farmers.
The learning of obscure languages is probably the 19thC equivalent of our reading of self-help books.

Perhaps compare these 19th century aristo behaviours with some of today’s celebrities.

Bono has accrued considerable wealth but - as he is not likely to trouble the pop charts again and therefore bugger-all to do all day - turning up at the UN to save the world is helping to resolve some sort of cognitive dissonance around leisure and privilege.

Don't even get me started on royals.

The language of this sharing (or collaborative) economy manifests in terms like 'empowered people', 'co-creation', 'peers' and 'crowdfunding', yet this movement's poster child - AirBnB - closed its latest round of funding with an injection of $500 million, led by private equity firm TPG.

Because these imagined socially beneficial properties of the so-called collaborative economy serve to solve a cognitive dissonance for buyers of those services.

It disguises the real motivation - which is, of course, status-seeking.

In other words, it’s marketing.

The idea of a 'sharing economy' is simply an extension of our culture's other dominant marketing idea - conspicuous authenticity.

When the big supermarkets joined in the ‘organic’ game a few years back one would have imagined that those who truly believed in the benefits of organic produce would have welcomed this as a good thing.

Now that ordinary shoppers could have access to organic produce then surely that would mean we would all have the opportunity to eat healthier and live in a better environment, right?

But the more organic became available to the mass of ordinary consumers, the less it is serves as a source of distinction for the status seekers.

Hence the original organic brigade moved on to ‘local diet’ as the next logical step. Then when that caught-on then ‘artisanal’ became the next expression of more-authentic-than-thou. (8 dollar toast, anyone?)

In ‘The Authenticity Hoax’, author Andrew Potter describes a ‘basic fusion of the two ideals of the privately beneficial and the morally praiseworthy’ as the ‘bait-and switch’ (or cognitive dissonance) at the heart of ‘the authenticity hoax.’

‘This desire for the personal and the public to align explains why so much of what passes for authentic living has a do-gooder spin to it. Yet the essentially status-oriented nature of the activity always reveals itself eventually.‘

This same bait and switch is at the very core of the collaborative economy.

Which is fine, as long as we recognise this.

The collaborative economy is no revolution. It is ordinary consumerism, built on the same economic system and appealing to the same ‘irrational creatures who relentlessly pursue social status with little regard to their own happiness’ as described by Veblen in 1899.

The the collaborative economy is pure marketing of a kind of fake authenticity that solves a cognitive dissonance problem for status-seeking consumers – their (pseudo) anti-consumerism hipster beliefs clash with their regular consumerist behaviours, so using the likes of Airbnb or LeftoverSwap allows them to tell themselves a story about authentic living with a do-gooder spin.

To paraphrase Potter, we live in the world of bullshit, but as long as you know it is bullshit, and as long as they know that you know it is bullshit, then it's a game we can all play.

As the bottom inevitably fell out of social media marketing as a thing a whole slew of social media analysts and such like have had to move on somewhere in order to dodge the rubble falling down around them.

A new shiny object was required.

Enter stage right; the sharing economy. But don’t go lighting the campfires and singing Kumbaya just yet.

The sharing economy is simply the new keeping up with the Joneses and the good old branding and consumer capitalism that we advertisers love.

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