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20170121 The Sharing Economy

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MAIN IDEA:

The main idea here is that the radical shift in economics and property rights as its foundation currently is under way. It is shift from ownership economy to sharing economy when people use staff that they do not own, but rather share with other people or exchange it on peer-to-peer basis rather then produce, sell, and distribute this staff via hierarchically structured corporations.

DETAILS:

Introduction

In introduction author explicitly states the main idea of this book and provides main examples of the new economy: Airbnb, Uber, and Facebook. Important point here is author’s understanding that peer-to-peer exchange is not new, but it was key feature of pre-industrial economy. The main and very radical difference is that it used to be local exchange between neighbors and now it is becoming global exchange between strangers. The relatively detailed review of specific business model provides examples of how exactly it is done.

  1. Cause
  2. The Sharing Economy Market Economies, and Gift Economies

This is about definition of sharing economy and its nature as notion covering all Market-To-Gift Spectrum of exchange. The key features:

  • Largely market based
  • High impact capital both material and human
  • Crowd-based networks
  • Blurring lines between personal and professional
  • Blurring lines between fully employed and casual labor
  • Extensive use of crowd funding
  • Importance of platforms
  1. Laying the Tracks: Digital and Socioeconomic Foundations

This chapter discusses history of Internet development and digitalization of exchanges from e-bay buying and selling to digital currencies, 3d printing, and even digitization of trust.

  1. Platforms: Under the Hood

This is about necessity and nature of platforms for sharing economy. It provides an interesting graph for relationship between markets vs. hierarchy and complexity vs. specificity of products or services:

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  1. Blockchain Economies: The Crowd as the Market Maker

The final chapter in this part is about blockchain logic with its distributed transaction posting and its implementation for digital currency (bitcoin) and decentralized services platforms.

II Effect

  1. The Economic Impacts of Crowd-Based Capitalism

For economic impact author initially discusses deficiencies of usual methods of measuring economy such as GDP and overall difficulties of measuring digital economy. After that he points out four key economic effects:

  • Altering capital impact, for example increase ration of use of existing car with Uber
  • Economies of scale would be overcome by economies of networks
  • Increased Variety = Increased Consumption
  • Democratization of Opportunity due to use of platforms and crowd financing, which dramatically decreases cost of entry into practically any economic activity.
  1. The Shifting Landscape of Regulation and Consumer Protection

This chapter is about dramatic changes that will necessarily come in the area of regulation that would become less government centric and more peers controlled. Here is a nice graph for this:

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  1. The Future of Work: Challenges and Controversies

Here author looks at the change in nature of work with local hands on work providing advantage to semi-skilled workers, while pushing higher skills level workers into more generalist activities with special tasks assigned to machines.

  1. The Future of Work: What Needs to Be Done

This is discussion of need to do something to counter trends that are pushing humans out of labor market. Author seems to believe that the best way to do it is promote self-employment and contract work with some guarantied safety net. It also seems to be consistent with what people really want:

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Concluding Thoughts

Here author briefly restated main points he made in each chapter and reaffirms his believe that we are in process of moving away from managerial capitalism of XX century to crowd-based capitalism of XXI century that will provide for much more informed decisions by consumers, new regulatory framework to rebalance private-public relationships, and establish new, yet unknown form of society.

MY TAKE ON IT:

I fully agree that we are in process of revolutionary change in the method of economic organization of society comparable with industrial revolution. However I do not share most of ideas about shared economy, mainly because I believe that value of material assets is going down dramatically, therefore idea of savings coming for example from sharing car looks a lot less attractive if cost of car represents not 6 month of earnings, but rather 6 days of earnings. In this case instead of Uber self-driving car picking one up on demand a person would have one’s own car finely tuned to personal needs and idiosyncrasies. Similar approach could be applied to just about everything. To put in simple, I believe in dramatic increase in ownership of everything made possible by dramatic decrease of costs of everything, rather than savings due to increase in asset utilization via sharing. Similarly instead of massive service economy where everybody makes living by serving everybody, I believe we are moving to automated economy when machines are serving everybody, while humans are busy conducting self-serving activities some of which would include non-quantifiable services to each other.

 

 


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