Are we moving away from a centralized economy

This is a theory I’ve been working on in my head for a little while now, so if it seems half-baked please forgive me.

You often hear the rise of entrepreneurship as a recent, latter-day kind of phenomenon. As though, with the rise and maturation of Silicon Valley, becoming an entrepreneur is a modern, almost hip, idea.

The reality, of course, is quite different. Before the rise of the Corporation in the 19th and especially 20th centuries, almost everybody worked for themselves. Sure, some self-organized into groups, collectives – but even then, these organizations served to reinforce their self-employment.

Then came the rise of the corporation and the creation of the modern ‘job’. Of course, by the middle of the 21st century, to have a job meant security, an income and a pension for life once you hung up your work boots.

Perhaps that reality still remains for some, but for so many the pace of technology improvement over recent decades has had a real and profound impact on the way we view the concept of work.

Now, more than ever, we understand the value of knowledge – and the fact that our jobs, as we experience them today, will likely not exist in the same form a decade from now. If we don’t embrace technological change, we risk being left behind by it.

So it is with other functions once taken for granted as beyond the purview of individuals, but now, seemingly overnight, taken from the hands of large companies and placed within our grasp. All we need is a little bit of technology.

Uber, Lyft and AirBnB are just the beginning.

The impact these companies are having on the transportation and hotel industries is transformational, tectonic.

And now the second wave is starting to crash down on our shores; companies like BlaBlaCar (a European ride sharing platform) are attracting billion dollar valuations, and they’re doing it based on hard results – and the almost unlimited potential they’re beginning to unlock in the ‘shareconomy’.

It’s an exciting time to be alive. Even the oldest, most stoic sectors of the economy are being affected. Kickstarter has turned traditional manufacturing on its head by allowing designers to pre-sell products without investing in expensive tooling work.

The banking industry is finding itself threatened by peer-to-peer lending services, as well as virtually commissionless ‘crypto-currencies’ like Bitcoin.

It’s the early days of this new economic paradigm, but it’s endlessly exciting. Not only from the standpoint of enhanced participation in the economy (anybody can drive for Uber, or rent a spare room on AirBnB), but for finally unlocking the incredible amount of excess capacity that exists in the real economy.

If you own a car, then on average it will sit idle and unused 95 percent of the time.

If you travel a lot for work, until AirBnB came along you had precious few options to make your apartment work for you whenever you left for a trip.

All of a sudden, both of these items – each a heavy investment on your part – becomes a potential profit-making engine, rather than a mere necessity of life. And the power of that is transformative.

If our car ultilization increased to, say, ten per cent, we could effectively halve the number of cars we need on the road. Just imagine the environmental impact of such a shift.

Recently, Beijing banned cars from its roads for a period of three weeks, to dissipate the smog in time for a World War Two commemoration display. Below is a photo taken the day before the display, and to its right a photo taken the day after the ban was lifted.

Beijing Smog

Photo Credit: CNN

I bet you just coughed looking at that, didn’t you?

We don’t write this article as an endorsement, necessarily, of any particular company – Uber and AirBnB have certainly done some bad things along the way – but the net impact these trailblazers are having on the world is immense and inarguable.

It means that we will, ultimately, need fewer cars on the road, fewer houses built and we will have a greater variety of options in our everyday lives.

Where is it heading?

So where else could this trend go, and what is the impact going to be on our lives in the long term?

Already, we can see it’s going to be easier to handle certain everyday tasks. It will become easier to get a loan, as we no longer have to abide by archaic bank-driven criteria and nonsensical formulas, nor deal with onerous minimum loan amounts.

Transportation is going to become even cheaper, with the rise of competition and the inevitability of more efficient technologies (like advanced ride sharing).

As more efficiencies are realized in logistics and transport, it’s likely we will also be able to use these platforms as a cheap, fast way to send items to each other as a substitute for the post.

These platforms will, however, also have the impact of consolidating existing mechanisms that might be offering a better deal to the consumer. For instance, as I write this in Berlin, Mel and I are staying in a nice subleased apartment, paying 750 Euros per month. For an equivalent apartment on AirBnB, it would cost at least twice that amount.

Naturally, as a result, you are seeing apartment owners and occupiers moving in droves to AirBnB, which leaves the local market with a starkly reduced supply, driving local rents ever further skyward. You get the feeling here that, at some point, the authorities might well step in to alleviate the kind of extreme inflation that seems to be occurring in the past few years.

In terms of the next big shareconomy platform, we would dearly like to see an ‘Uber for stuff’. That is, a platform, whereby individuals in need of objects on a temporary basis (e.g. a lawn mower) can hire one on a peer-to-peer basis from somebody in their local neighborhood.

Of course, the concept could extend to other rarely-used, but expensive, items like trailers, barbecues, tents, sporting equipment, the list goes on and on.

The community benefits of such a platform, not to mention the efficiencies from reducing the need to own so much stuff (in theory, a whole street could share a single lawn mower) make such an idea really appealing and, we’re sure, ultimately inevitable. But it’ll be a marketing challenge.

As the number of people on the planet grows, and our access to technology improves and continues to democratize, we will see more and more brilliant ideas propping up to take advantage of the existing economic capacity we have and squeeze ever more out of our existing resources.

It simply has to happen, we don’t have a choice. If we’re to survive in ever-increasing numbers, we’ve got to adapt. These companies are a start, for sure, but one gets the feeling we’ve barely scratched the surface of the potential of the shareconomy.

We’re really looking forward to it.