The genesis of the sharing economy

This is the first draft of our story.

What is happening today, where is this leading to and what can we do? Beneath i present you my personal answers to these questions.

I don’t have to tell you about the crises we experience today because that’s probably the reason why you are reading this magazine. I will just mention two amongst many problems we face today: the first is that we overcrop our planet and the second is that one billion people are still hungry.

On the other hand lots of initiatives pop up trying to revert these crises. Wiser.org used to list well over 100.000 initiatives, but this site has been discontinued now. Here i just want to mention ouishare.net and thezeitgeistmovement.com.

Being a mathematician i have always approached the matter from a modelling point of view. Before i present a simple analysis framework i’d like to make a little meta analysis. Roughly speaking i see to camps: the regulars and the alternatives. The regulars have their established economists that have thourough analyses, but they stay within the box. The alternatives have myriads of solutions but barely any sensible analysis. They try and get out of the box though. To name one analysis that i come across quite often: the debt economy is fundamentally inconsistent because when you have to pay back your debt with interest, you can’t pay back the interest because you never got that money in the first place. The problem with this analysis is that it doesn’t appreciate the fact that banks are part of the economy (i leave the rest of the argument as an exercise to the reader).

So now for the analysis framework. For me economy is about this planets resources and our transformations of these resources. We use a planning to transform these resources and we don’t do that at random but we have all kinds of goals that we want to achieve (like food, shelter, education, care and the like). Now in this framework i define economy as the algorithm that translates our goals into our planning. Note that the amount of goals actually achieved by our current planning is an interesting candidate for Gross Global Happiness.

analysekader

Now any such algorithm basically answers two questions:

  1. Who does what?
  2. Who takes what?

Next i observe that our culture has two memes (paradigms) from which to build such an algorithm. The oldest and still widest in use is the care principle, it answers the above questions as follows:

  1. I do what i can, what is good for us, what inspires me.
  2. I take what i need, what is good for me, what inspires me.

But when several 1000’s of years ago tribes started to interact with each other and experienced their interaction partners as different from themselves (this is the heart of Charles Eisenstein’s analysis) they formulated other answers. The second meme is the market principle, the aim of a negotiation is:

  1. I do the least possible
  2. I take the most possible

Now the main problem with the market principle is it’s enormous amount of transaction costs. Let me explain what transaction costs are using cell phones as an example: as a society we only need one cellular network for our phones but instead we have several. In the Netherlands, which is where i live, we have three networks, meaning that my society is paying up to three times as much as necessary to operate cell phones. This is apart from all the costs spent on bundles and plans. The same holds for virtually any branch of economy.

It is intersting to remark that the scarcity model needs growth to survive. So the scarcity model was viable as long as there was abundance. But now that the scarcity model has actually created scarcity it is no longer viable, hence our crises.

Some people estimate that 95% of our current economy are transaction costs and i tend to believe this estimate (in the Netherlands we have three cellular networks where one would suffice, but when we look at the number of insurance companies, all selling the same products…).

My mathematical intuition always made me feel that the answer to all the above problems is nearby but everybody is overlooking it. So i started a lateral approach, more by accident, than wilfully. First i decided to make a distinction between the rules that describe the new economy and the rules that are necessary to make this new economy feasible for human beings like myself. So i came to the question: what does an awoken economy look like? Here i define an awoken economy as an economy for and by awoken people.

To answer this question i go back to the crises and analyse them. And the analysis isn’t that hard actually: it’s about the decisions we take and the concerns that we take into account when taking these decisions. It’s not hard to see that it all boils down to the analysis that when we operate in our economy (as an entrepreneur, employee, consumer or civil servant making policies) we should take all relevant concerns into account, and we don’t do that at the moment. Luckily there is also an affermative formulation of this analysis: we can take more concerns into account when taking economic decisions than we do now.

But then, in our analysis framework, the answer to how to actualy do that is astonishingly simple: use the care principle instead of the market principle. And the beautiful thing about this answer is that this answer is not remote to us, each of us does that at home, so that’s what we need to do: make an economy that feels like home.

So now when we look at what is happening today, we can see where this is leading to: to an economy that feels like home, in which we use the care principle. Where the market principle is about trade, the care principle is about share. So i believe the sharing economy is where we are heading. And when we operationalise the notion of sharing economy we can see where it is already emerging.

The point is that the sharing economy at home is very simple, it is executed at the kitchen table, so our question becomes: what does a global kitchen table look like? In other words, sharing at home is easy, but what does sharing at a global level look like? What do we have to share and how do we do that? So now we go back once more to our analysis framework. Our kitchen table consists of five constituents:

  • resources
  • labour
  • knowledge
  • planning
  • goals

So to make a sharing economy we have to share these 5 constituents. And what do we see happening today?

  • We use sites like foodsharing.nl to share our resources.
  • We use sites like durftevragen.nl to share our labour.
  • We use the internet to share our knowledge, have a specific look at eg. lifehacking.nl.

What is still missing is sites to share our goals and planning. So this is what we can do. For this i have developed a simple entity model that can serve to operationalise this quest, but i refrain from going into details here for this is a rather technical matter. The main idea is still easy to grasp though: represent goals as functions on the planning (details will soon be available at guts4roses.org).

So i believe that when people trust each other and they want to cooperate they will construct a transparent environment in which they are able to take each others concerns into account. This transparant environment is the bank of the future. What is needed on top of that is a new google. Old google you feed a search term and you get a list of hits in return. New google you feed a goal and in return you get a planning how to achieve your goal in cooperation with your fellows in the sharing economy.

This bank of the future is emerging now, it is the totality of all the sharing sites around the world. All that we have to do now is to construct this new google.

So i have shown you a utopian model of the new economy: the sharing economy based on the care principle. Mind you, this model is just as utopian as, but not more utopian than the free market model. I’d like to remark that there are good reasons to believe this is what is going to happen, i mention two of them:

  • Gandhi said: this world has enough for everybodies needs, but not for everybodies greeds.
  • Jesus said: it is better to give than to take (better in the sense that it makes you happier).

Both are scientifically proven to be correct.

Now how will this sharing economy emerge?

First let me note that it is first and foremost a matter a people deciding to take each others concerns into account. As such it is a matter of awareness. As there will always be people that don’t want to do take their fellows concerns into account i believe that current economy will not be replaced by a sharing economy, on the contrary they will exist next to each other, like mammals have two distinctly functioning parts in their brains, when the latter emerged during evolution the former didn’t disappear either. From a current economic perspective the sharing economy will be an economic entity, so it will interact with current economy using the market principle and currency. Note that within the sharing economy money will be a resource just like any other resource: we will have one bank account that we all take from as we need.

1. Next i believe that as awareness is growing so will the sharing economy grow, and it will grow by replacing trade by share, step by step. Currently we have many rules governing our trade. In fact these rules are distrust in disguise. And as our awareness grows, so does our trust and consequently these rules will be obsolete, one by one. (partial implementations connect a subset of the 5 connectors)

2. Later on, when the sharing eonomy is establishing itself it will no longer need to interact with current economy and it will become more and more autarchic.

3. Using the analysis framework presented above we can identify all mentioned framework constituents. Next we can identify (possibly overlapping) groups by the different sets of algorithm rules these groups adhere to. And this is the realm in which we can see the sharing economy emerge. (these are projections of the utopian model along the lines of decreasing awareness)

emerging-sharing-economy

 

4. One very natural way in which the sharing economy emerges is when existing local sharing economies (eg families) connect using a five-fold connection: by integrating their five constituents.

Apart from these four above mentioned natural dynamics i can imagine six more ways of implementing the sharing economy:

5. Another development path that has been present for a long time already is the sharing of infrastructure. Railroads are built to be used by everyone at operating costs. This model can be copied to virtually all branches of economy, eg the production and distribution of food can be organised in such a way and this is happening already in modern formats.

6. Yet another long living example is the free masonry. These masons took pride in responsible craftsmanship. Todays freelancers can form a sharing economy when they cooperate instead of fighting against each other.

7. Finally i’d like to introduce an amalgam between the sharing economy and the big society. This is interesting in it’s own right because one of the current trends is that current economy apart from banishing labour also is no longer able of fulfilling basic societal needs like elder care and libraries. I propose 7 rules that can be used to locally implement the sharing economy. I explain the concept by applying these 7 rules to a big society supermarket:

  1. Everybody monthly pays the same amount of money.
  2. Everybody does what he can to run the supermarket.
  3. Everybody takes what he needs to live from the supermarket.
  4. Everything that members do and take (rules 2 and 3) is public.
  5. Only sustainable products are distributed.
  6. Nothing is thown away.
  7. Non-members can buy as usual cutomers, profits are equally shared among the members.

8. Individual relationships can be transformed from trade to share. Especially when relationships are based on trust (like eg an outsourcing relationship) this is the way to go. From the perspective of the market logic this is viable too because trust lowers transaction costs.

9. Facilitate the coalition of the willing to start a sharing economy through a care relationship between the (local) government and the coalition. The government organises housing and food through local partners like social housing projects and a fall back basic income. The coalition takes care of the neighborhood: maintenance, public services, elder care and education. From here local economic activities can start.

10. we can organise national sharing (or gifting) days. on such a day everybody lives the care paradigm/blanc’s principle/pay it forward (you go to the shop and instead of paying you just take and check out what you need). we plan what we will do to help each other days in advance, this includes becoming aware of what you really need. some work may even be done before of after the sharing day. companies eg can share their office space and facilities. the government can chip in a fair amount of free money. we could have as many sharing days in a year as necessary to produce all that we need in the remaining days with full employment (instead of 90% of the people working 100% of the time we have 100% of the people working 90% of the time and spending the remaining 10% of their time on the sharing days).

Let me conclude with the happy message that is captured in the above: our economy can still grow to serve all of humanity but it can’t grow within the current market paradigm, we will have to switch to the care paradigm (i do what i can and i take what i need) which is much more in line with our nature. All that withholds us from doing so is that we need to trust each other. This is the task of the altruists in our society, they will lead the way.

The new google is an open source project that is starting from guts4roses.org and goes by the name of Search and Share.

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