September 1, 2016
This blog was first published in 2012 and now republished and slightly updated in 2016.
By Benita Matofska, Chief Sharer, The People Who Share
I’m frequently asked to define the Sharing Economy and decided it was high time to pen the definitive answer. A clear definition is needed not only for purposes of clarity and to enable meaningful discussion, but also to provide a precise aim and direction to those working to enable, foster and create a Sharing Economy.
The Sharing Economy is a socio-economic ecosystem built around the sharing of human, physical and intellectual resources.
It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations.
Whilst the Sharing Economy is currently in its infancy, known most notably as a series of services and start-ups which enable P2P exchanges through technology, this is only the beginning: in its entirety and potential it is a new and alternative socio-economic system which embeds sharing and collaboration at its heart – across all aspects of social and economic life.
The 'Sharing' in the Sharing Economy refers to the use and access of shared physical or human resources or assets, rather than the fact that there is no monetary exchange. A Sharing Economy enables different forms of value exchange and is a hybrid economy. It encompasses the following aspects: swapping, exchanging, collective purchasing, collaborative consumption, shared ownership, shared value, co-operatives, co-creation, recycling, upcycling, re-distribution, trading used goods, renting, borrowing, lending, subscription based models, peer-to-peer, collaborative economy, circular economy, on-demand economy, gig economy, crowd economy, pay-as-you-use economy, wikinomics, peer-to-peer lending, micro financing, micro-entrepreneurship, social media, the Mesh, social enterprise, futurology, crowdfunding, crowdsourcing, cradle-to-cradle, open source, open data, user generated content (UGC) and public services.
A Sharing Economy is a sustainable economic ecosystem comprised of the following 10 building blocks:
- People: people are at the heart of a Sharing Economy; it is a People’s Economy, meaning that people are active citizens and participants of their communities and the wider society. The participants of a Sharing Economy are individuals, communities, companies, organisations and associations, all of whom are deeply embedded in a highly efficient sharing system, to which all contribute and benefit from. Human rights are respected and safeguarded. People are also suppliers of goods and services; they are creators, collaborators, producers, co-producers, distributors and re-distributors. In a Sharing Economy, people create, collaborate, produce and distribute peer-to-peer, person-to-person (P2P). Micro-entrepreneurship is celebrated, where people can enter into binding contracts with one another and trade peer-to-peer (P2P). Within business, people – both co-owners, employees and customers – are highly valued, with their opinions and ideas respected and integrated into the business at all levels of the supply chain, organisation and development. I call the people who are driving the Sharing Economy, Generation Share.
- Production: in a Sharing Economy, people, organisations and communities as active participants produce or co-produce goods and services collaboratively or collectively or co-operatively. Production is open and accessible to those who wish to produce. Internet technologies and networks enable the development of products and services in a collective manner, transcending geographical boundaries. Local production with positive (or minimal) environmental impacts is celebrated. 3D printing offers a more local production of goods, shortening supply chains and increasing efficiency and access. Social responsibility is strong and public services (including social support) are co-produced – developed and provided – by a wide range of actors acting across social levels; families and friends, local communities, charities, social enterprises, business and government.
- Value & Systems of Exchange: a Sharing Economy is a hybrid economy where there are a variety of forms of exchange, incentives and value creation. Value is seen not purely as financial value, but wider economic, environmental and social value are equally important, accounted for and sought after. The system embraces alternative currencies, local currencies, timebanks, social investment and social capital. The Sharing Economy is based on both material and non-material or social rewards and encourages the most efficient use of resources. This hybrid incentive system enables and motivates people to engage in productive activities. In a Sharing Economy, waste has value, it is viewed as resource in the wrong place. A Sharing Economy enables ‘waste’ to be reallocated where it is needed and valued.
- Distribution: in a Sharing Economy, resources are distributed and redistributed via a system that is both efficient and equitable on a local, regional, national and global scale. Shared ownership models such as cooperatives, collective purchasing and collaborative consumption are features of a Sharing Economy, promoting a fair distribution of assets that benefits society as a whole. Participatory democratic systems enable the development of structures and legislation that promote and safeguard an equitable and efficient distribution of resources at all scales of society.
Idle resources are re-allocated or traded with those who want or need them to create an efficient, equitable, closed loop or circular system. Recycling, upcycling and sharing the lifecycle of the product are features common to a Sharing Economy. ‘Waste’ is viewed as ‘resource in the wrong place’ and the system uses technology to re-distribute or trade unused or ‘sleeping’ assets, generating value for people, communities and companies. Access is promoted and preferred over ownership and seen as distributed or shared ownership. Being a member of a car club, for example, and paying for what you use, is seen as preferable and smarter than bearing the cost, burden, resource wastage and idling capacity of ownership.
- Planet: a Sharing Economy puts both people and planet at the heart of the economic system. Value creation, production and distribution operate in synergy or harmony with the available natural resources, not at the expense of the planet, promoting the flourishing of human life within environmental limits. Environmental responsibility, including the burdens of environmental damage, are shared; among people, organisations, and national governments.
Goods and services within a Sharing Economy are designed for sustainability rather than obsolescence, promoting not only the re-use of resources, but also models that have a positive impact on the planet. For example, rather than simply reducing negative impact through carbon reduction, a Sharing Economy creates goods and services that positively enhance the natural environment, such as cradle-to-cradle (C2C) or circular economy models. An example would be a pair of trainers made from recycled materials that have seeds implanted in their biodegradable soles; as the trainers degrade, plants grow.
- Power: a Sharing Economy both empowers its citizens economically and socially and enables the economic and social redistribution of power. Both facets hinge on an open, shared, distributed, democratic decision-making process and governance systems, at the local, national and global level. This robust eco-system facilitates this opening and sharing of opportunities and access to power. Power is shared or distributed and the infrastructure enables citizens to access power and decision-making. Systems that enable and promote fair pay, reduce inequality and poverty such as Fairtrade are supported and preferred. It supports people to become active citizens, deeply engaged in their communities and in the development of the environments they live and work in.
- Shared Law: in a Sharing Economy, the mechanism for law making is democratic, public and accessible. Rules, policies, laws and standards are created via a democratic system that enables and encourages mass participation at all levels. Laws and policies support, enable and incentivise sharing practices among citizens and within business, such as car sharing, peer-to-peer trading and a variety of forms of resource sharing. Laws, policies, structures and infrastructure create a system of trust with insurances, assurances, social ratings and reputation capital at the forefront.
- Communications: in a Sharing Economy, information and knowledge is shared, open and accessible. Good, open communications are central to the flow, efficiency and sustainability of this economic system. A fundamental tenant of the Sharing Economy is that communications are distributed, knowledge and intelligence are widely accessible, easily obtained and can be used by different individuals, communities or organisations and used in a variety of different ways for a myriad of purposes. Technology and social networks enable the flow of communications and support the sharing of information. This system promotes easily accessible education of a high level, through a wide range of diverse services (both public and private), enabling everyone to access the information, skills and tools they need to succeed. Promoting the message ‘Share More’ is at the heart of Sharing Economy communications.
- Culture: the Sharing Economy promotes a WE based culture where the wider community and the greater good are considered. Health, happiness, trust and sustainability are notable characteristics. Sharing is seen as a positive attribute, people who share are celebrated, encouraged and enabled. A shareable lifestyle is championed and preferred. A sharing culture is embedded across sectors, geographies, economic backgrounds, genders, religions and ethnicities. Diversity is celebrated, collaborations between different groups applauded and incentivised. Sharing and collaboration are seen as the vital lifeline connecting groups at all levels; from the individual local level, to that of neighbouring communities, to that of nation states and supranational bodies.
The sharing of resources is part of the fabric and eco-system of a sharing society; externalities are always considered and integrated. Business culture is based around the most efficient use of resources and a collaborative business culture. Conscious business, social business, sustainable business, ethical business, social enterprise, business as a force for good are also features of a Sharing Economy. The predominant business models of a Sharing Economy are: access based models, services, subscription, rental, collaborative and peer-to-peer models. Disruptive innovation, sharepreneurship, creative entrepreneurship, intrapreneuship and micro-entrepreneurship are common features of a Sharing Economy.
- Future: a Sharing Economy is a robust, sustainable economic system that is built around a long term vision, always considering the impact and consequences of present day actions on the future. By considering long-term implications, futurology and being able to see the ‘big picture’, a Sharing Economy presents a stable and sustainable economic system. Systems thinking, and the need for a systemic approach to change is fundamental to the success of the Sharing Economy.
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