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?

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.

3-Exchange

In the dominant economic system, exchanges are characterized by a permanent need for equivalence. For each manufactured product, and each service, an equivalent counterparty is expected. In order to reach this equality and facilitate the assessment of the counterparty, we use money as an intermediate. The classic economy has allowed exchanges between individuals, who do not necessarily trust each other, to multiply, since the compensation perceived was considered as reliable and safe. This economy model has offered an international framework for trade, supported by currencies (solid and stable) and by contractual laws (fixing faults).

In the sharing economy, the instance of equality is not always the goal. In many aspects, some behaviors of exchange, which could be also be found in the sharing economy, seem like the gift /counter-gift logic. Far from being an idealist system, this transaction method has received increasing attention thanks to new technologies.

The internet can show us all the benefits of this gift /counter-gift approach in real time, and tt also gives a lot of visibility to people who adopt this behavior. On Couchsurfing, I can gather positive recommendations from people I hosted and be considered as trustworthy member, which will significantly help me if I want to be hosted in the future. The internet is composed of millions of these types of communites, which are based on collaborative principles.

However, when communities appear, compiled of members that can trust one another, the role of money and laws starts to fade. It is a phenomenon we can expect in the coming years, as the confidence found in the monetary system becomes undermined.

4-Consumption

In the dominant economic system, created in a time of scarce resources and limited communication means, the concept of ownership and consumption cofounded themselves. Before consuming we needed ownership, and it was  difficult at the time to fulfill needs with limited resources, and to do so in a punctual manner.

In the sharing economy, the age of access announced some years ago by Jeremie Rifkin, will be soon a tangible reality. According to Rifkin, in 25 years the simple idea of ownership will be seen as limited or totally old-fashioned. Having access, rather than ownership, will be what determines our social status. The development of shared mobility is a demonstration of this phenomenon. This is probably the key concept on which the idea of collaborative consumption is based. Thus, since a car is not used 10 hours a day, would it not be more efficient and costly to distribute its use among those needing a car at different at times periods?

The significant development within means of communication, allowing individuals to interact with each other at anytime and anywhere, has facilitated a better allocation of resources. It is probably here that we will find the real potential for progress in our economies.

This article was translated in English by Deskmag