New forms of production and commerce

• Author: Janelle Orsi
• Profession: Is the Director of the national nonprofit Sustainable Economies Law Center, and she is a 'sharing lawyer' in private law practice in Oakland, CA
• Pages: 415-462

415

CHAPTER EIGHT

NEW FORMS OF

PRODUCTION AND

COMMERCE

PART 1: COLLABORATIVE PRODUCTIO N/

COLLABORATIVE CONSUMPTION

New Modes of Production and Consumption

The sharing economy offers us i nteresting new ways to meet our needs.

Put simply, we will turn less frequently to big businesses to meet our

needs, and turn more frequently to ou rselves and each other. Turning

to ourselves means tak ing a DIY (do-it-yourself) approach to making,

growing, building, repairing, and doing other things that we previously

“outsourced” to conventional commercial businesses. However, since

we can’t actually do everything ourselves, we fortunately have each other.

That also happens to be the primary resource f ueling a sharing econ-

omy: each other.

Turning to one another means connecting with others to meet our

needs, and cooperating to do the many things we cannot easily do on

our own. It means forming babysit ting cooperatives, tool lending librar-

ies, food-buying cooperatives, com munity gardens, car-sharing clubs,

community renewable energy projects, and health care cooperatives. It

means borrowing someone’s car when you might normally have rented

one. It means staying in someone’s home when you might normally

have stayed in a hotel. It means going to a communit y dinner gather-

ing, when you might normally have gone to a restaurant. When people

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come together to provide for one another in these ways, t hese activities

are sometimes called collaborative consumption, collaborative produc-

tion, or just plain shari ng. The phrase “peer-to-peer” or “P2P” is also

frequently used to describe ways t hat individuals borrow, lend, give,

buy, sell, and share with their peers, rather than meeting needs solely at

stores or commercial businesses.

When Sharing Becomes Commerce

The challenging question to answer with many of these activities is:

Are they regulated in the same ways that t ypical commercial businesses

are regulated? The answer will often be elusive. For example, if you go

to a buffet restaurant or salad bar, you will notice that the restaurant is

required, by law, to install a protective “sneeze g uard” over the food.

Compare that to the potluck you host at home, where there are no man-

datory sneeze guards. Now how do health regu lations apply in circum-

stances where larger communities gather to share meals, where people

turn their home into a “restaurant for the night,” or where a group

organizes a public potluck event? These are phenomena of the sharing

economy, and the sharing economy is nothing to be sneezed at. We’ll

increasingly find ourselves asking questions like: will our ca r-sharing

club be subject to the same regulations as a car rental company? Will

our babysitting cooperative need to be licensed as a childcare provider?

Every way that people provide for each other can be put some-

where on a spectrum bet ween the private/personal realm and the public/

commercial realm. On one end of the spect rum, we find people cook-

ing meals for their fam ilies; at the other end of the spectr um, we find fast

food restaurants t hat sell mass-produced food items to massive numbers of

people via drive-thr u windows. Somewhere in the middle of that spectrum

is a point at which regulations k ick in. Where does that point lie, exactly?

That is one of the most intrigu ing questions for the sharing economy.

Because much of what we do in the sharing economy lies in a g ray area

of that spectrum, the job of a sharing economy lawyer will be to advise

people on how to shape their activities a nd relationships to either come

into compliance or move out of the scope of regulation. Most of the time,

clients will prefer to move out of the scope of regulation and will likely

be surprised to find themselves there in the first place. Many activities

and enterprises in the sharing economy are not commercial to begin

with; but when they start to get organized and scale up, they beg in to

adopt qualities and practices more sim ilar to commercial businesses.

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New Forms of Pr oduction and Commerce | 417

Purposes of Regulation

It is helpful to think about the purposes behi nd the regulation of com-

mercial and productive act ivities, in order to thi nk more clearly about

the applicability of those laws to shar ing activities. The purposes fall

into a handful of categories, including

• Laws that protect consumers: A large number of commercial

regulations exist to protect consumers from the stores, services,

and companies they patron ize. We have regulations related to food

safety, product safety, public health, and many more. These are t he

laws that tell us how to label products, how to operate safely, what

licenses we need, what inspections we are subject to, what warn-

ings and disclosures we must give, what standards we must meet,

what records we must keep, when we can operate, what warran-

ties we must make, what insurance we must carry, what consumer

information we must keep private, and so on.

These laws recognize that large businesses driven by profit

motives may not always be fully accountable to the people they

serve. In that respect, the regulations are somewhat out of place

when applied to small-scale, cooperative, and/or community-based

activities, where there are high levels of accountability and involve-

ment and much lower levels of risk. In essence, laws that protect

consumers from producers do not apply well when the consumer

IS the producer, or when the consumer has a very close or collab-

orative relationship with the producer.

• Laws that protect a marketplace: Some regulations are targeted

less at the protection of consumers and aimed more at regulating

the availability of goods a nd services in a market place or at ensur-

ing the ability of certain entrepreneurs to make a secure livelihood.

Such regulations may seek to prevent f looding of a marketplace by

capping the number of enterprises operating wit hin an area. For

example, cities may grant only a l imited number of taxi cab permits

because an oversupply of cabs in a city might make it more diffi-

cult for each cab driver to make a liv ing. Cities might also cap the

number of mobile food vendors operating in the streets. On the flip

side of preventing the flooding of marketplaces, laws may also seek

to prevent a single business from dominating an industr y. However,

due to the highly dispersed and decentralized nature of commerce

in the sharing economy, antitrust law will not be discussed here.

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