06 May 2011

The Rise of Collaborative Consumption

Sourced from YouTube, 31 May 2010

Rachel Botsman, co-author of "What's Mine is Yours: The Rise of Collaborative Consumption", at TEDx Sydney, 2010

Excerpt from Grist, 4 May 2011

'Lots of the most interesting changes in the direction of sustainability are happening outside green politics (ie. the stuff I'm always writing about). One that's always fascinated me is the spread of sharing economies, or "collaborative consumption." Grist had Rachel Botsman and Roo Rogers, authors of What's Mine Is Yours: The Rise of Collaborative Consumption, in to visit the office a while back and they got me fired up about it all over again.

Now there's a big feature piece in Fast Company, "The Sharing Economy," in which Botsman and others discuss a dazzling variety of new start-ups based on peer-to-peer sharing of things, spaces, and services. They're popping up like dandelions in my backyard...

The key to this extraordinary surge is information technology, which has lowered transaction costs by orders of magnitude. It has become incredibly cheap to connect people so they can coordinate and exchange information. When I was a kid, growing up in Ancient Times, if I wanted to sell my old banana-seat bike and get a bike with gears, I had to call the newspaper, dictate a for-sale ad, and mail them a check. Or tack up flyers around public places. I might have found a buyer, but the time and effort required would have been substantial. And I would have had no way to pinpoint the real market value of the bike, ie. how much the person who wanted it most would pay.

Today, I can post a quick ad on Craigslist, sift through email responses (effectively an ad hoc auction), and arrange for someone to arrive at my door with money for the bike, and it costs me virtually nothing, maybe a half-hour of work. As these tools get easier and easier to use, bikes will circulate more. They will be used for more of their productive lives, instead of rotting in garages and landfills. Fewer new bikes will be needed than would otherwise have been the case. That's the idea, anyway.

The same is true for cars. The average car in the U.S. spends about 90 percent of the time just sitting there, taking up space. Now, there are more and more services that allow peer-to-peer car rental and ride sharing, which means, over time, existing cars will get used more often and fewer new ones will be needed. (Again: hopefully!) The same goes for other "underutilized assets" like tools (the average power drill is used 15 minutes over its lifetime) and sports equipment.

Another underutilized asset? Space: guest rooms, unused garage or shed storage, vacant apartments, summer homes, hotels during off seasons, etc. It's becoming easier for those with idle space to connect to people who happen to need it. Again: as existing spaces are utilized more fully, fewer new ones will be needed...or so goes the hope...

From an environmental perspective, it's a way for that fond and long-held hope, dematerialization, to start getting real traction. It turns out the ownership model, in and of itself, builds in a huge amount of resource inefficiency. We buy things that, by definition, as individuals, we cannot utilize fully, and they spend most of their time simply being owned (think of all your books and CDs, if you still have them). Now the ownership model is beginning to give way to the access model, wherein what's prized is access to services and experiences.

From a sustainability perspective, the crucial thing about an access model is that efficiency and durability are baked in; the profit incentive is naturally oriented toward getting the maximum number of human use-hours from the minimum amount of stuff. Just where we want the incentive to be! So greens have direct stake it seeing sharing models spread and flourish.

From an economic perspective, this puts real stress on the conventional ways of assessing an economy's performance. As sharing spreads, more and more socially productive activity will be "off the books" - no money will exchange hands, or if it does, it will be be a direct exchange, which, if it can be tracked at all, will basically count as a gift. Enterprises like Wikipedia, YouTube, and open-source software, which are based on the coordination of distributed, voluntary efforts ("social production"), add hugely to consumer welfare but do not produce much if any in the way of profits.

John Quiggin, in a great piece on this subject, notes one of the implications: "if monetary returns are weakly, or even negatively correlated with the value of social production, there's no reason to expect capital markets to do a good job in allocating resources to supporting innovation." If venture capitalists systematically underinvest in social production innovations, there's a good argument for government intervention.

Quiggin also notes another implication: "If improvements in welfare are increasingly independent of the market, it would make sense to shift resources out of market production, for example by reducing working hours." (Matt Yglesias also discusses this.) If jobs can be shared, just like things and spaces, then people will have more free time to engage in non-market but value-added activities, on what amounts to a hobbyist basis.

All this socially productive activity will not count toward GDP and will not be captured as value by traditional economic models. Eventually, it will militate in favor of alternative economic measures like nef's Happy Planet Index or Bhutan's gross national happiness, which try to capture well-being directly.

From a social perspective, it seems to me sharing models answer a deep need among those in rich developing nations (particularly the US) for an increased sense of connection and community. We tried retreating to our well-appointed redoubts in the exurbs and accumulating stuff, and it's not working. We're getting richer but not any happier - widening inequality and social distance are hurting us more than increased consumer power is helping us. People yearn to be knit into networks of trust and support. Peer-to-peer sharing is one way to start building that kind of social capital...'

No comments:

Post a Comment

Please leave your comment here. Please note these stories are posted for information rather than for debate; if you wish to disagree with something posted, no problem, but since I post both things that I do and don't support, it would be appreciated if the criticism was about the issue.