Capitalism, Threatened by the Sharing Economy Trend?

Written by Rita —  March 7, 2014

sharing_economy capitalism trends

Faced with an unsustainable economy, society is trying to establish new channels to generate and exchange value, but is it succeeding at creating less competitive and more open approaches?

Day in, day out we are bombarded with news pressing us to change the way our current socioeconomic system works. At this point, it is undeniable that an economy based on asset accumulation and infinite economic growth is unsustainable. In a world where economic inequalities are growing and the impact of our hyper-consumerist lifestyle is taking us to the brink of environmental disaster, it was only a matter of time until new ways to reinvent the “market” crystallized.

The collaborative consumption model, which is based on the premise that sharing is better than owning, is gaining momentum. Today, most of us have many resources (car, tools, skills …) which we don’t fully utilize and which, therefore, fall into disuse (e.g. that good old bike that you only take out on a sunny weekend or the guitar which you only play once in a blue moon in front of a camp fire). Sharing these idle resources we can help ourselves, the people using them, and even the planet.

sharing_economy

Interest over time on Google Trends for the search “Sharing Economy”

Indeed, this is not a new concept, but in the last couple of years, the sharing economy has become a real alternative to the previous ‘buy-throw away-buy’ model. Although many initiatives are still in experimental stage, many diverse projects have already emerged such as car sharing, home exchange, coworking (sharing a work space) or even crowdfunding (collective financing).

Rebooting the System

The possibilities offered by the democratization of knowledge (with Creative Commons or Copyleft licenses), social media and technology (thanks to mobile Internet, the cloud revolution, the rise of cryptocurrencies, etc.) are helping us change our behaviour as consumers. The social web has allowed immediate access to what we want and is slowly restoring trust among people (even strangers). Gradually, we are going back to valuing having access to a resource rather than possessing it and to seeing value in being able to enjoy something rather than owning it.

“This isn’t a flimsy idea, or a short-term trend, but a powerful cultural and economic force reinventing not just what we consume, but how we consume.”

Rachel Botsman, author of What’s Mine Is Yours

Leaving aside the fact that technology has enabled collaborative consumption, the main reason why it is gaining followers is the crisis we are going through. In times of economic hardship, many people make use of peer-to-peer sites because they are cheaper than traditional business models. For many others, however, it is not about saving, but about using stuff wisely. For example, why pay for a parking space full time when you don’t use it half the day? In fact, there are already several websites like Carpling where you can share your space. This means that you don’t have to pay for a spot when you aren’t using it.

And yet sharing economy is not just about seeking efficiencies and taking advantage of financial incentives, either. The reasons why people choose it go far beyond, to ‘the need to “reboot the system” with new values,’ as Luis Tamayo, social and consumer trends analyst, said in an interview to Spanish newspaper El Mundo. Otherwise, how could we explain the fact that people engage equally well in free, bartering initiatives?

Actually, according to this study by Campbell Mithun, emotional benefits are among the main reasons why people participate in the sharing economy:

Generosity – I can help myself and others

Community – I’m valued and belong

Lifestyle – I’m smart

Lifestyle – I’m more responsible

Cultural – I’m part of a movement

Sharing Economy is Booming

“The trend is clear: access trumps possession.”

Kevin Kelly, founder and executive director of Wired magazine, 2009.

participation collaborative economy growth

Souce: Visioncritical and CrowdCompanies

Some prominent voices have hinted that collaborative consumption movement could become the most enduring legacy of the recession we are still living, a transformation in values that will lead us to abandon the idea of accumulating things for the idea of using them when we need them.

In fact, this fundamental change in the way we get what we need is already resulting in a loss of revenue for traditional businesses. Suffice to say that at the beginning of 2012, AirBnB—an online community where people rent their home to travellers— had 120,000 rooms in offer: a year later, they had 300,000, and in early 2014, they’re offering 500,000. According to a study from Boston University, a 1% increase in AirBnB offer translates into a 0.05% decrease in revenue in the hotel sector.

It is not surprising, therefore, that incumbents are also getting involved in the sharing economy. Avis, a car-hire firm, has a share in a sharing rival. So do GM and Daimler, two carmakers. “The sharing economy is a real trend. I don’t think this is some small blip,” says Joe Kraus, a general partner at Google Ventures, who has backed three car-sharing sites, RelayRides, Sidecar and Uber. In fact, Google is the main investor in this market, which has already attracted over $ 2 billion in venture capital funds.

In the past, new ways of doing things have not entirely displaced the old ones. But almost always they have changed them. Just as online shopping forced supermarkets to do things differently, collaborative consumption will shake many sectors of the economy, such as banking.

The “future-proof enterprise” then is one that thrives in the world as it should and inexorably will be: socially sustainable, cooperative, inclusive, p2p, local, decentralized and more equitable in terms of profits. There’s no viable alternative. Old models based on control, large scale, and protection failed. Companies can no longer act as monolithic, centralized, revenue generation machines. Instead, they must become inclusive, create shared value, and thrive amidst radical change.

Simone Cicero in his blog Meedabyte

Collaboration across sectors

There are many peer-to-peer networks encouraging barter, exchange or totally free use. For example, Mixcloud o Grooveshark for music or Couchsurfing.comBeWelcome or MeetURplanet to find someone who will let you stay in their home (and even take you around the town during your stay). In fact, at the local level there are lots of activities going on, like Freecycle, a site where anyone can donate stuff which they no longer use in exchange for people picking it up and getting rid of it for them. This is happening on a global scale —in Spain, Truequebook encourages school supplies exchange, and in Germany, Foodsharing enables consumers, food producers and retailers to share excess food.

However, there have also been many other initiatives which have started to monetize things never before imagined, turning them into real market niches: A pooch-friendly room in your house is suddenly a pet penthouse via DogVacay and a few dozen square feet in a driveway can produce income via Parking Panda. In Spain, Grownies allows users to buy or sell baby clothes bundles for just over 18 dollars and in Australia, anyone can rent idle tools for $10 a day on sites like Rentoid.

Interestingly enough, it seems the exchange of money affects the culture shaped around these sites. In a Mashable interview, Adrian Manzano, photographer and power user of a number of peer-to-peer marketplaces, including SnapGoods, Couchsurfing, Airbnb and Craigslist, offered his opinion on this regard: “People on Couchsurfing tend to be very open-minded, hippy, free, Burning Man type of people. With Airbnb, you get more ‘regular’ people, just looking to make a buck or save a buck. So, ‘normal,’ whatever normal means.

collaborative economy companies sectors

Source: VisionCritical and CrowdCompanies

Humankind exchanged goods and services even before there was money. Today, technology is once again unleashing our ancestral transactional instinct. Only this time we can do it on a wide scale. As “consumers,” we have a chance to create a new market. And we’re doing so, whether it be to save money, or to change our way of life. Now the question is —will be make good use of this opportunity before it too gets corrupted?

Photo Credits: Ben Grey.

Rita

Rita

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Translator, content writer and geeky linguist in general. I believe information is a powerful tool.