I) Introduction - Shared Economy

It is based on the old notion of rural/village sharing or bartering of capital stock but using the latest technology (smart phones, connectivity, internet, etc.

It has capital-light, technology-driven ability to unlock value what were previously neglected or under-utilised goods & services

It is definitely a productivity driver & will create more value in the broader economy than it destroys. Industries already in the sharing economy include global holidays & short-term property rental, car sharing networks, skills exchanges, crowd financing for banking & investment, shared workspaces, new marketplaces for unwanted goods, etc.

"...The share is shaking things up the world over; how it's empowering communities to make real changes, and that it is taking the efficiencies of an interconnected digital space and applying them to real-world problems......it's an ecosystem built around sharing services and resources - or, its people exchanging things they have and skills they possess......it offers undeniable efficiencies: if you happen to have a spare room just sitting there, a property with unused parking space, a video camera you barely use, or a car that remains under driven for most of the day, then there is a way to make a little cash by connecting with somebody who is prepared to pay for short-term use..."
Andrew P Street, 2014

Some examples include taxi (Uber), Airbnb (accommodation), life-style hints (Lifehacker ), knowledge/communications (TED), etc; the hiring tools (OpenShed, Freegler, Friends with Things, etc); odd jobs (Airtasker); locating a car park (Parkhound, Parking Made Easy, FindACarPark, etc)

Organisations developing this concept vary from those seeking to redistribute resources in a more effective way to those seeking to make money out of developing the possibilities created by the new technology by either creating new markets or entering existing markets.

It works by buyers and sellers registering; they are rated on the quality of the interactions and those that don't reach of a prescribed standard are banned. It relies on communities acting ethically and honestly; with users rating one another.

To the established firms in this space already competition is appearing like Uber competitors include Backseat, RideSurfing, Coseats, Transfercar, etc; for Airbnb, competitors include VRBO

The taxi industry pays massive fees to operate, has a stringent licensing system and makes huge investments in fleets of vehicles and comprehensive radio and digital networks. On the other hand, its major threat, Uber provides a relatively unregulated car share service which has little accountability and responsibility but provides good customer service. Similarly for Airbnb, where in New York there are rental restriction laws that prohibit renters from subletting their apartments for less than 30 days at a time; in California it is legal to be a squatter after residing for more than 30 days.

"...it's going to take the legal system awhile to catch up with the realities of this new model..."
Andrew P Street, 2014

Our current legal system is based around ownership of goods and the resultant accountabilities and responsibilities. In contrast to this status quo, a collective ownership model is a burgeoning legal headache. Examples of activities challenging the status quo include food sharing networks and neighbourhood power generation like solar leasing.

It is expected that a shared economy will work best in neighbourhoods/communities that already have a level of trust and accountability.
Part of the problem is that governments, bureaucrats and society, etc look at handling future problems with our past or present mindset. Just because something worked in the past, there is no guarantee that it will work now and/or in the future. There is a need to look with "new eyes" at the challenges created by on-demand/shared economy.

. Henry Ford mass production of cars is a good example of the concept of the on-demand economy. Henry Ford's moving assembly line with mass labour to make building cars much cheaper and quicker, with the result that automobiles moved from being a rich man's toy to transport for the masses. Just as Henry Ford gave the masses access to a motor car, current day entrepreneurs are trying to supply to a wider audience the luxuries that were once the preserve of the wealthy and elite.

Some examples
- Uber provides chauffeurs

- Handy supplies cleaners

- SpoonRocket delivers restaurant meals to your door

- Instacart keep your fridge stocked

- Click on the Midicast app and a doctor will visit within 2 hours

- Axiom will supply a lawyer

- Freelancer.com & Elance-oDesk Link up to 9.3 m. workers for hire with 3.7 m. firms

The on-demand economy has profound implications for everything from the organisation of work to the nature of social contract in a capitalistic society. For example, since the 1970s, the dominance of the firms and the trade unions in manufacturing has changed with many jobs being automated or outsourced overseas; corporations have abandoned the notion of providing lifetime employment with one organisation. It is estimated that around 50 m. American workers already work as free-lancers (The Economist, 2015a).

The two major forces driving this are:

i) technology - cheap computing power that allows home-made videos to rival products from Hollywood studios, 3-D printers manufacture products, shared economy allows society to tap and rent under-utilised resources such as your spare room, vehicle, etc

ii) changing social habits - people used to be divided into those that own the means of production and those that work for them. Recently, the divide is between people who have money, but no time, and people who have time but no money. This gives workers more flexibility in how and when they work. On the other hand, it reduces security as fewer workers are being employed full-time with guaranteed pay and benefits. For example, the Uber drivers get paid only when they work, and are responsible for their own pensions and healthcare. Risk previously borne by companies is being pushed back to the individual.

Linked with this is the fact that the transactional cost of using an outsider to fix something, rather than in-house, is falling.

. The battle with the on-demand economy around safety and regulatory issues is all described as "teething problems" of a new industry

. On-demand economy gives consumers greater choice, with society gaining because otherwise idle resources are put to use, eg if not for Uber, most of its cars would be parked and idle in garages

. Regulators have not caught up with the new situation of the on-demand economy: with most laws, rules and regulations still give preference to full-time employees and treat freelancers as second-class citizens.

"...gaping contradiction between the utopian possibilities and the hyper-capitalist realities of the sharing economy..."
Neal Gorenflo as quoted by Tom Slee, 2016

Search For Answers

designed by: bluetinweb

We use cookies to provide you with a better service.
By continuing to use our site, you are agreeing to the use of cookies as set in our policy. I understand