The sharing economy, a new way to reduce inequality?

Jeremy Rifkin argues that the « sharing economy », a system gathering suppliers of underused assets and demanders for low transaction costs, will replace capitalism before the middle of the 21st century. The machines will multiply and spread producing goods and services at zero cost, replacing human labour. Only a few people will have to program the machines and companies of the sharing economy will replace big companies. With no hope of generating profit, companies will disappear and be replaced by a community, free of labour and individualism. He paints an optimistic picture of a world where individual will collaborate more. As said Richard Waters in the Financial Times, it is not sure that people will become more altruistic thanks to freedom of labour. As Voltaire said “Our labour preserves us from three great evils –weariness, vice and wants.” Wealth and income inequality could also be widening if some advantaged individuals enjoy all the gains. For example, the ones programming the machines could have the power to do everything they would like with the program. Individuals emerging from poverty would have limited opportunities in a world without labour.

Jeremy Rifkin seems to describe a futurist economy, close to science fiction. However, the sharing economy is already spreading all over the world. According to Navi Radjou and Jaideep Prabhu in Project Syndicate, the peer-to-peer and the Do It Yourself economy is already lowering the cost of production and the shared companies are growing significantly. An MIT Sloan Expert evaluates the sharing economy as a $110 billion market. What would be the short term impact on wealth and income inequality?

The European Commission explains that most of the employed are below 35 years old and are programmers and software developers. Inequality emerging from intergenerational and skills gap will increase with the sharing economy. Competing with traditional companies the sharing economy will destroy some jobs. The net job creation effect is not known for the moment but it could be interesting to analyse it.

Contrary to Rifkin, Ayesha Khanna and Parag Khanna see the sharing economy as a potential disruptive peer-to-peer capitalism without regulation. The sharing economy is more inclusive as low income individuals can easily sell or buy services. But some sharing companies are not paying the same taxes as traditional companies and do not participate in the redistribution of revenues aiming at reducing inequalities. Work is more flexible but, if workers are less protected and working hours are not regulated, the sharing economy could create a generation of “slaves”, working all day long for lower wages and cumulating jobs. Regulation will allow the sharing economy to increase and redistribute its gains to reduce poverty and inequality.