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The sharing economy vs. the dominant model

The sharing economy VS. the dominant model. By William van den Broek

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We sometimes need to go back to the basics, especially during a time of structural crisis like the one we are experiencing now, which has called the principles or our economy into question. We cannot not understand what the “sharing economy” means if we do not ask ourselves what “economy” means. I would stand by this definition: the economy is a human activity consisting of production, distribution, exchange, and the consumption of goods and services. If we focus on the structural changes needed in our current economy, we would have to answer questions such as these: How to produce? Do other ways of producing exist? How are goods and services distributed? How and why do agents exchange with each other?

This is a guest article by William van den Broek from Mutinerie

I have always asked myself whether or not we could compare, point by point, the dominant economic model born from classical theories with the sharing economy, an emerging and promising model which still has to prove its worth.

1- Production 

In the dominant economic system, production is planned, organized and structured by specific agents and companies, which are focused on organizing in a hierarchical and pyramidal way. Producers looking to improve competition through the economy of scale, possibly owe thanks to standardization and labour division. We instantly think about the needles factory of Adam Smith. Goods and services produced by companies are protected through patents and licences, which guarantees exclusivity and also aims to value certain innovations.

In the sharing economy, it is not always easy to clearly distinguish one unique person from the origin of a product. One product could have been designed and shared online by one anonymous source, operated by another for commercial purpose and finally gone viral within the internet community.The creation process is now open. Thus, it is easy to understand that intellectual property rules and the principles of produceur responsibility have now been shattered.

Open source innovation and creation are elements that operate organically. Everyone is free to contribute to the final result, and the coherence assured by different platforms and filtering mechanisms, are now able to give birth to added high value creations. Wikipedia is a solid example of this process. However, even if the formation of open source creation comes from the internet and relates to intellectual and cultural production, it is now being applied to concrete goods. It is already possible to participate in the creation of an open source car or make agricultural machines right in your own home.

2-Distribution

In the dominant economic system, distribution is organized from the “top-down”, which means: from the factory to the producer. Therefore, supply chains are long and not often seen as ecological. For example, components designed in USA are produced in China and Indonesia, assembled in Romania, and ultimately consumed in France. There are relatively few companies in comparison to the amount of consumers, which can be defined as the “few-to-many” scheme.

In the sharing economy, it is more likely that the amount of intermediates will be significantly reduced. New means of information and communication have allowed the establishment of a certain “many-to-many” system, much like Isaac Asimov prophesied. The development of a horizontal distribution system, such as P2P, is a result of this phenomenon. Yet, it is far from being the sole example or even being limited to dematerialised goods. Ebay, Craigslist, AirBnB, Couchsurfing or Supermarmitte, are classic examples of distribution platformes based on the “many-to-many” approach.

This concept also applies to agricultural products. Initiatives, such as community supported agriculture or La Ruche qui dit Oui, aim to make the distribution channel shorter by guaranteeing reasonable prices for producers without penalising consumers.

 ▶ Next page: Exchange and consumption 

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