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Shareholder Societies or Social Capital Exterminators?

Niccolo Caldararo, Ph.D.
Dept. of Anthropology
San Francisco State University
A recent article in the Financial Times by April Dembosky and Tim Bradshaw (2013) describes what some are calling the new “shareholder societies.” The article starts off with the story of how two San Francisco residents have used the online business, Airbub, to rent out the “spare” room they have in their apartment. This was a financial boon to the couple who had suffered job loss and live in San Francisco’s tight rental market. The article goes on to discuss other situations where people are using online media to arrange for business between individuals, or “doing business with their friends and neighbors rather than buying from faceless corporations.” This includes renting equipment like tools, providing services as in driving people from place to place and walking dogs or picking up laundry. These are services mediated by websites like TaskRabbit (Tozzi, 2013). This is touted as the new “sharing economy.”
However, the closer one looks at this new economy it looks less new than it seems very much like the desperate measures people take during depressions and recessions. Those out of work or working part time or at very low pay scales, must find ways to get by and selling their time is one effective route. Renting tools is just one step away from pawning them, doing odd jobs is a familiar last resort to the welfare and homelessness, though many homeless people and welfare recipients can be found in the ranks of the unemployed and underemployed.
On inspection many of the “sharing economy” successes are found to exploit the social capital that makes societies work. In the case of Airbub, it involves both this exploitation as well as encouraging residents to involve themselves in illegal activities and sets groups of neighbors, property owners and hotel owners and workers at odds.
Airbub, and several other businesses like it, lists online rentals that are targeted to vacationers. The company owns no units, leases none and only acts as a listing agent. However, those who rent through its service and those who offer rooms or apartments for rent, are circumventing rental laws in most localities. In San Francisco it is illegal to rent a room in an apartment without the agreement of the owner, and renting apartments for vacationers is in violation of local laws regulating the hotel industry. Also, most rentals violate laws regarding rental agreements where the renter is constrained from renting the premises for more than the legal rental agreement. Taxes are also required to be paid on vacation rentals which neither Airbub nor most of those who rent properties through the service pay. Therefore the service puts the service in conflict with both the City and the hotel industry and the workers in the hotels who depend on vacation renters’ money. Refusal to pay the tax means Airbub’s clients are freeloading on the taxes paid by the hotels for services their renters are using. Lost tax to the City means other taxpayers are carrying a heavier burden that would be reduced if the tax was collected. Thus the service undermines the social contract of taxation. This does not touch on the tax avoidance issues involved regarding profits accrued by the renters, nor in the case of companies like TaskRabbit the requirement by most states for companies involved in such money transmission from one individual to another to have a license with the state where the business takes place to engage in the exchange. TaskRabbit has recently contracted with such a licensed company in Chicago to be the transmitter and they now are only acting as a listing agent (Tozzi, 2013).
A more immediate deterioration of social capital comes from the degradation of the social environment where people live in apartments or neighborhoods where there are these Airbub-like ad hoc rentals. The coming and going of more people at all hours of the day and night in what are residential districts upsets those tenants not providing rentals and degrades their living comfort and privacy according to a recent article by Steven T. Jones and Parker Yesko that appeared in the San Francisco Bay Guardian (2013). Interviews with such tenants demonstrated a general feeling of exploitation. This was supported by an article that appeared in the bilingual Mission District paper, El Tecolote.
A more general issue is the effect these rentals are having by producing disputes between tenants, between landlords and tenants and the role they are playing in the removal of rental units from the open and legal rental market. In some cases, legal renters rent out one apartment and live in another. In others, the landlord excusively rents units only via an Airbub-like agency thereby avoiding San Francisco’s rent control laws. In any rental market tourist rentals only drive up rental prices and make the rental market tighter. Some cities like New York have taken specific action to counter this process, New York made it illegal for renters to sub-let their apartments even when they are away. Other cities are ignoring the effects for the present.
The theoretical argument that uses of commodities like housing in a manner encouraged by Airbub make s a more efficient use of resources, is the same argument behind hedge funds and derivatives, but instead these efforts only make markets less stable, take advantage of good will (in the case of neighbors and housing, but in commodity trading it encourages manipulation as in the case of the Libor scandal, Goldman Sachs’ Asset Backed Securities with Paulson, and the credit crisis in general where people were encouraged to buy homes they could not afford, for more detail see Caldararo, 2009). The social effect of hedging behavior was reported in Traditional economies by anthropologists. Barth (1967) described how hedging – taking advantage of minor discrepancies in prices – operated in the economy of the Mountain Fur people of Darfur. The process had the effect of profits for a few speculators but also undermined the traditional economic relations associated with kinship and neighborhood obligations based on ceremonial labor exchange. Thus we can see that derivatives and hedging are not new, nor is the behavior without risk of damage to the underlying economy and social relations that sustain it.


Barth, F. 1967. “Economic spheres in Darfur,” in Themes in Economic Anthropology, Edited by R. Firth, 149-74. London: Tavistock.

Caldararo, Niccolo, “Derivatives and debt: the market as god and marking as proselytizing,” Chapter 4, In: Finance and Banking Developments: Editor: Charles V. Karsone, 2009.

Demboskey, April, and Bradshaw, Tim, “Shareholder societies,” The Financial Times, Thursday, August 8th 2013:5.

Jones, Steven T. and Yesko, Parker, “Into thin air,” The San Francisco Bay Guardian , August 7th, 2013:14-20.

Tozzi, John, “TaskRabbit jumps out of handling pay,” San Francisco Chronicle, 18 August, 2013:D2.

This is the first time I post a comment on the Anthro News. While there is a long field for “Name”, it won’t take all the characters of my name. Will the AAA correct this so that those with names longer than the Anglo-Saxon standard can include our fuller names? I find this ethnocentrism of digitized forms common (though less so now than before) but especially frustrating to find on a AAA publication site!

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