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Why The Left Is Blinded By The Sharing Economy

The rapid growth of the sharing economy is both inevitable and generally good. But only a fool can believe it will truly disrupt the natural capitalist forces of our market economy.

Sharing?
Sharing?
Jean Peyrelevade

-Analysis-

PARIS — The so-called "sharing economy" is the new utopia taking form on the extreme fringes of the political left here in France. It provides anti-globalists, environmentalists, a few Socialist Party renegades and what's left of the communists with a new tool to fight capitalism. Its somewhat esoteric designation suggests that it is the result of a long process of theoretical reflection. It already has its thinkers, its books and its first Nobel Prize in Economics (with Elinor Ostrom).

Like all bad ideas, it has every chance to succeed.

But what is it really about? The initial observation is indisputable. The advent of the Internet and new technologies have changed relations between individuals. Whether it's housing, cars, household equipment, travelling and commuting, access to knowledge, personal assistance; in other words, material goods or intangible services, everyone can share or exchange with everyone else. One no longer needs to possess to be able to use. The pooling of concerned goods makes it possible to improve their usefulness.

What are the — once again indisputable — consequences of this sharing economy? By replacing individual purchases by common usage, expenditures are reduced. We consume differently, less in the merchant sense of the term, more as citizens. Services offered on open platforms are replacing, at lower costs, market commodities.

Based on this fact alone, private property is bound to diminish in favor of a more cooperative variation. Meanwhile market shares, in the traditional meaning of the term, are dropping compared to direct exchanges which if correctly balanced are similar to cash-less barter.

So far, everyone can be happy by such a description. But the ideological extrapolation soon pushes us over the line. Less private property, less demand, less money, the most determined partisans of the sharing economy think they can destroy the three pillars of the capitalist economy. They foresee a drop in productivism, and a shift to a model of sustainable growth, the erosion of the market sphere in favor of money-less exchange. It is here where we step into a dangerous utopia — based on a double error.

I can appreciate, like everyone, being able to benefit from the French social security system, free healthcare, a good pension, affordable means of public transportation, subsidized theater. The only problem is that free goods, by definition, have a cost (the people producing them need to be paid, they don't work for nothing), and they probably provide lots of common satisfaction, but no monetary revenues. A costless economy is funded by the producers of market wealth, those who, in the literal sense, make the money.

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Sharing a moment in Paris — Photo: Willy Verhulst

The two elements of the economy, market and non-market, must grow side by side at the same rhythm, except if we want the productive apparatus to carry an excessive burden, slowly suffocating even as we think we are richer than we really are (which is currently the case for France). A country's national revenue is the compensation for its creation of market wealth. This is why the true potential of wealth is measured through the market output of the GDP. All the rest (spending on social protection, administration, local authorities, national education, the "sharing" organization) — the non-market economy as a whole, an admittedly essential elements of the collective happiness — relies on a gigantic redistribution.

New industry captains

So, does this new kind of anti-capitalist idealist really believe people are ready to swap more collective satisfaction against less individual monetary income?

The second error is more blatent. The apparent free-of-charge nature of some of the largest platforms (Google, Facebook, Apple…) cannot hide the fact that their founders are unquestioned champions of digital capitalism, with gigantic market capitalizations: sure, selling the information of hundreds of millions of free customers to third parties can generate a whole lot of money.

Besides, I don't believe that we are moving to the large-scale generalization of direct exchanges, of barter with no intermediaries. The Internet, of course, makes it easier to establish connections. These must however be organized. Even though they may even be located in the same areas, the supplier and the demander exchanging services or products have different interests. The former wants to be paid for his service, the latter wants to be delivered all in good time, with the appropriate level of quality. For this precise reason, merchants have always appeared in history at the same time as new kinds of exchanges were born. A useful intermediary, he profits from the guarantee of the efficient execution of a transaction, which he provides to all concerned parties: he acts as a "del credere" agent.

The sharing economy will admittedly keep on growing in the years to come. This doesn't mean the end of capitalism as the sharing economy ideologists hope, but its transformation into new forms. No one will be able to stop digital entrepreneurs from investing in profit-making platforms that will allow them both to make a fortune, and make the rise of a generalized uberization of the economy likely.

In brief, the question is not to decide between the general practice of carsharing, which is supposedly selfless and the capitalists trying to profit from it like the French startup BlaBlaCar. But rather to know, in every industry, which is the right BlaBlaCar to bet on.

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