The Sharing Economy
Is information technology (IT) and the Internet of Things (IOT) taking us “Back to the Future”? Yes, according to NYU Professor Arun Sundararajan, author of the above referenced best seller text. In the introduction of his very readable treatise he points out that circa 1900 approximately 50% of the American labor force was self-employed in an agricultural dominated economy. By 1960 self-employment had shrunk to 15% in the hey days of industrial capitalism and mass production of physical goods. Fast forward to 2016 and U.S labor statistics estimates that approximately 80% of the labor force is participating in some variation of flexible/contract/self-employment.
“Crowd –Based Capitalism” is empowering individuals to embrace entrepreneurial employment and eschew working in traditional corporate and professional employment models. The IOT has spawned a digital employment market. Silicon Valley took the lead in facilitating creation of burgeoning networks of Science Technology Engineering and Math (STEM) specialists and linking them through Peer-to-Peer (P2P) expert networks into an ongoing range of opportunities. A combination of academic/career/professional credentials, along with P2P reputational ratings, are utilized by individuals to rank the professionals on IT marketplace networks
There’s really nothing particularly radical or new age about the concept of crowd- based capitalism. The next time you view a movie take a few minutes and look at the production credits. The list of camera, makeup, costume, pyrotechnic professionals, etc. is an illustration of traditional crowd – based capitalism that’s been the foundation for work in the movie industry since its inception in the silent picture era. IT and IOT has enabled a mushrooming high tech industry that is constantly reinventing itself, where the key to productivity is the capability of high performance professionals, to embrace a mutually beneficial crowd –based professional services relationship between buyers and sellers.
It’s important not to confuse crowd-based capitalism with low wage casual contract workers. This cohort is popularly referred to as the “Precariat”. They are the unskilled workers who are being displaced from diminishing full-time unionized mass production factory jobs, or the young unskilled and underpaid workers in low -end service jobs. They represent a sober second thought as the left behind classes in the wealth creation of the new service economy.
But for generation X and the new millennials, class crowd-based capitalism in professional careers is the preferred mode of employment. Sunnararayan quotes from a 2015 World Economic Forum panel;
“The younger generation really aspires for this kind of career. They don’t want nine the-to-five job, working with the same employer, needing to be on –premise. They like the flexibility, they like the independence, and the control they have.
Crowd-based capitalism is catching on with professionals associated with traditional professional services such as law and consulting. In the legal services marketplace an LLM in family mediation opens the door to go beyond the parameters of the practice of law and link with a P2P professional association of mediators. An LLM in International Relations opens the door to link with a P2P association of non-governmental organizations (NGOS) A “Combined LLM- Medical Law & Ethics provides a legal professional with the career credential to become a P2P participant in a vibrant sector in the health profession.
Lawyers and wealth management consultants have created a crowd based capitalism model with the Society of Trusts and Estate Practitioners (STEP) where clients and services are referred through a P2P network. Legal project management is emerging as a stand-alone all-encompassing P2P professional discipline Distinct new multi-disciplinary professions that encompass law and emerging areas, such as privacy, have formed P2P expert networks The list could go on and on but the points been made.
Crowd-based capitalism is linked to the “Sharing Economy”. The added value in physical and intellectual property is now derived from sharing rather than one person/corporation control. The author uses Uber and Airbnb to illustrate how individuals are adding value to their vehicles and properly through renting (sharing) usage through Crowd-based capitalistic networks. There are frequent analogies to service networks as well.
In the professional services field, the author recognizes the importance of regulation. Regulation enables the user of a service to have trust in the professional and service capability of the provider. P2P networks are providing this function in the “21st century professional services economy”. As is the case with high-tech in the utilization of P2P networks, there is nothing new in the recognition of regulation as a mechanism to establish trust and ethical conduct as critical to a functional economy. It’s merely a modern day application of a system that can be traced back to the middle ages.
In the middle ages, merchants established trust by leveraging two factors. First, trust was built by creating a situation where one’s reputation mattered (overseas agents known for corruption would over time fail to profit). Second trust was built by creating communities of shared interest that connected reputation to economic self-interest (the formation of merchant coalitions who adopted common hiring policies and penalties meant corrupt overseas agents had more to lose)
In closing, it’s once again “Back to the Future”. This is the direction that crowd-based capitalism and P2P networks are taking the professions. Professionals with post graduate LLM credentials who get with the program and embrace the “21st Century New Professional Services Economy” have much to gain. Those who don’t just won’t.
Economies that adopt the formal rules of another economy will have different performance characteristics than the first economy because of different informal norms and enforcement.
Put differently, history suggests that it is neither possible nor economically viable to simply adopt existing rules and apply them to a new economy. The challenge, then is to determine what comes next.
 Guy Standing, A Precariat Class. London. Bloomsbury. (2014)