Sun, Nov 08, 2015 page8

• Sharing economy a return to past

  • By Hsiao Yu-tang 蕭郁溏
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  Why DOES the sharing economy thrive in a society that has abundant resources and whose citizens enjoy an affluent lifestyle? In an age dominated by capitalism, people vie to buy cars, houses and apartments. When one car is not enough, people buy two and when one house is too small, people buy several.

  Why would people want to ride in other people’s cars and sleep in other people’s beds?

  Last year there were nine start-up companies globally with a market value of US$10 billion or more, and two of them operate within a sharing economy business model. Uber, which takes second place in the list, has a market value of US$41.2 billion, while Airbnb, in eighth place, is valued at about US$10 billion. Why is this happening?

  The sharing economy has been called a disruptive innovation. With its low entry threshold and high level of innovation, could it provide a formula for saving the middle class from extinction? Can the sharing economy create new assets and change the M-shaped society? The sharing economy portends a future in which anyone could become a producer and a micro-entrepreneur.

  Humanity has progressed from tribal self-sufficiency to specialized division of labor and it has arrived at shared resources. Does this mean that capitalism is no longer working? When capitalism reaches an extreme, does it signify the arrival of anti-consumerism?

  Three observations about the sharing economy need to be considered.

  First, the sharing economy is not an innovation, rather, it is a return to the past. In ancient times, barter economies allowed people to share their belongings: They had no refrigerators, so they shared food; they had no warehouses, so they shared tools.

  Following the Industrial Revolution, production developed in the direction of specialized division of labor, under which a single product might be put together by collaborating manufacturers in different nations. Labor force and technology followed the path of the division of labor, with productive forces being put to full use, thus reducing the amount of idle resources, which is also a type of sharing economy. Libraries, video game arcades, comic book rental shops, Internet cafes and bicycle sharing services are all different forms of the sharing economy. As it can be seen, the sharing economy is far from unfamiliar — it has been here all along.

  Second, the key factor in the sharing economy is trust. Through the Internet, strangers have the opportunity to meet and share goods or services. In the sharing economy model, users no longer tap their keyboards — their screens have become kiosks. People can use their smartphones to call a taxi or use their computers to book a room at a bed and breakfast.

  The sharing economy allows real-life interactions to reach all parts of the world. Given the demand for actual interaction, the sharing economy must have trust as its key factor. Online reviews and word-of-mouth recommendations are the most valuable assets. Trust is eternal and good reviews can be passed on forever. Technology is drawing people closer.

  Third, the sharing economy is a form of anti-consumerism, in which the right to use takes precedence over the right to own. To avoid wasting mass-produced commodities, consumerism encourages people to consume them on a mass scale, but each person’s need for commodities would not increase in tandem with mass consumption. Eventually, this devolves into a vicious cycle in which growing mass production and mass consumption results in mass waste.

  Scarcity amid surplus and surplus amid scarcity are the injustices inherent to modern society’s uneven development and its unfair distribution of resources. The former concern about resources being not enough turned into a concern about their uneven distribution.

  The advantage of the sharing economy is that the Internet can be used to gauge the market and equalize the supply and demand ends of the commercial chain. The sharing economy calls for a shift from ownership to retention for use, hence the motto: “Sharing is the new buying.”

  The sharing economy is welcomed by some and hated by others. Most governments, faced with this new revolutionary wave, seem incapable of catching up with it. The core principle of the sharing economy has remained unchanged for thousands of years: to utilize idle resources.

  However, the difference with the modern sharing economy is that the agents acting within the economy have become smaller. The refinement of user networks allowed the units of the sharing economy to shrink to the level of individual freelancers. With Internet access, anyone can join the revolution.

  Minister Without Portfolio Jaclyn Tsai (蔡玉玲) held a number of online conferences about adapting laws and regulations to deal with cyberspace, which shows that the sharing economy is in conflict with laws and regulations. The sharing economy revolution poses a challenge to trust between people and to the public’s trust in government. The sharing economy challenges departmental individualism and the model of capitalism that is built around corporations.

  Hsiao Yu-tang is a legal researcher at the Science and Technology Law Institute.

  Translated by Julian Clegg
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