Wednesday, May 28, 2014

A Few Thoughts on the Sharing Economy

Medium has a pretty interesting article that purports to be a general critique of the new sharing economy concept. A few thoughts:

1. What is the sharing economy? Simply put, it is the increased variabalizeability of services driven by a reduction in transaction costs. This is essentially the service and flow economy described in the seminal book Natural Capitalism.

2. Although the sharing economy might have a cultural and marketing affiliation with anti-capitalists wishing for a "righteous return to human society's true nature of trust and village-building that will save the planet and our souls", the sharing economy is still very much a market by and for massive-scale urban populations.

3. The sharing economy drives resource efficiency on the intensive margin, which probably encourages some level of rebound effect. It seems to me that one of the greatest avenues for a sharp critique of the sharing economy is the potential for the rebound effect magnitudes to outweigh any resource savings in an absolute sense in some socially undesirable service.

4. Another possibly powerful critique (also absent from the article) concerns rent-seeking. The increased ability of owners of service-producing goods to derive income from leasing out their goods might reduce their incentive to engage in economically productive behavior.

5. The resentful undercurrent in the article about how the sharing economy is being driven by poverty and unemployment--and therefore is somehow blameworthy--is totally incoherent.

6. The argument that the sharing economy supports and continues existing institutions and systems of racism, classism, and social inequality--and is therefore bad--is weak. Just because a new technology doesn't solve your particular moral hobbyhorse doesn't say anything about its potential effects in other areas.

7. That said, I suspect the sharing economy would actually help in this regard relative to the current status quo. The market mechanism and competition are powerful tools for eliminating discrimination. The sharing economy, by reducing the transaction costs and fixed costs associated with obtaining and selling services, will probably widen the circle of people and activities participating in markets.

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