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MP Anna Kontula, Committee for the Future, the Finnish Parliament
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Resources, such as an apartment or special skills, are used to balance out income fluctuations in official working life or to supplement transfer payments.
A growing number of Finns live in a world where their earnings can fluctuate substantially from one month to the next. While social security can partly compensate for periods of low income, due to heavy and unpredictable bureaucracy, it is not something people can fully rely on. The sharing economy is growing out of this uncertainty. It provides opportunities within local communities for the shared use of resources (such as cars or tools) and the exchange of resources, which helps maintain a stable everyday life even in times of lower disposable income. It also offers occasional low-threshold opportunities for earning income.
However, it is obvious that the sharing economy challenges the traditional labour markets.
Consequently, the sharing economy, boosted by the uncertainty associated with people’s livelihoods, expedites the trend of replacing stable and formal full-time jobs with less certain occasional jobs. There have already been comments—particularly in the transport and lodging industries—about unfair competition. This was in response to major platforms taking advantage of a decentralised structure to play by rules that were originally intended to cover non-professional activities at the micro scale.
With this in mind, it would be essential to think about ways to take the elements of protection and moderation that have been introduced in the formal labour market and transfer them to the sharing economy. Failure to accomplish this would inevitably lead to a situation where the growth of the sharing economy results in weaker general terms of work.
It is clear that it will, for instance, increase the number of self-employed people who fall awkwardly between the categories of entrepreneurs and wage-earners in our existing legislation.
What will happen to capital?
In addition to technological development and the increasing general uncertainty associated with livelihoods, the third factor behind the sharing economy is a shift from the ideal of permanent ownership to greater appreciation for the right of use. It is a question of an ecological choice but also of the fact that shared use and ownership are becoming easier.
Many forecasts suggest that the buying of access will grow at a faster rate than the buying of ownership, especially in cities. Owning things no longer gives the owner the status it did a few decades ago and the rapid obsolescence of technology means that it does not always make sense to buy it for personal ownership. Alternatively, buyers have to think about more efficient ways of using things to pay off their investment or to divide the purchase price between multiple users.
At the same time as the change in consumption culture, we may be facing a larger transformation of ownership in the process of the accumulation of capital. In the industrial-era society, the factory was the key location for genindustrial-erating added value. Only the wealthy could afford to invest in large production machines, which meant that capital was accumulated among a relatively small segment of the population.
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Futurists predict that this mechanism is now being challenged and will be challenged even more by the proliferation of 3D printing, which facilitates the decentralisation of physical production into small local units, thereby representing a comeback for the traditional idea of the village workshop. In principle, the same type of developments could also be seen in energy production with the introduction of solar panels and other renewable mini power plants.
However, development could also be different. History tells us that capital is inclined to maintain its tendency to accumulate even in changing circumstances. On the other hand, the first phase of the sharing economy has been characterised by monopolisation, with resources concentrated in a small number of popular platforms. If this trend were to continue, it would represent merely a new form of capital accumulation.
Nevertheless, it is no exaggeration to say that we are, at least, seeing new potential for the opposite trend, namely the dispersal of capital. Part of the sharing economy model is that the capital required for adding value is dispersed and the platforms that act as intermediaries for services typically have no more right to the services than a marketplace supervisor has to the products sold by market sellers. This business model challenges the traditional service businesses where companies are slowed down by the costs associated with real estate, vehicles and other fixed assets.
What to do?
The sharing economy is neither good nor bad. It is a structure that is only just taking shape and that, for the time being, contains ingredients for both of these alternatives. With wise politics, we could prevent the threats and redeem the promises.
Currently the national regulation foundation for the sharing economy is practically non-existent, however. There are no rules related to taxation, insurance, protection of privacy and many other issues, and in the meantime, platforms have started to create their own order across national borders. They are forming communities of their own, with their own rules, hierarchies and sanctions.
As a result of monopolisation, some of these platforms are growing and becoming heavyweight companies. This development trend could be turned by, for instance, legislation that would protect the right of platform users to the data they produce themselves, such as photos and reputation assessments. This would make the competitive selection of intermediary platforms easier in the same manner as the right to keep one’s telephone number launched the competition among operators.
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Mr Robert Unteregger, Future Council Foundation (Switzerland)