Per Bylund Profile picture
Aug 24, 2018 20 tweets 4 min read
There's a whole lot of buzz about the #sharingeconomy. Many seem to think it is something new, with some calling for a 'new economics' to explain it while others deride the 'gig economy' as a higher level of exploitation, inequality, and poverty. Neither is a good analysis.
First things firs: the sharing economy was facilitated by advances in technology alongside consumer preferences changing from goods to services and thus from ownership to lease. These are not separate processes, but mutually constituting changes where each increases the other.
The advances in technology that brought about the sharing economy are those that allow for cheaper, faster, and more accurate communication, verification of factual claims, decentralized corroborated trust/reputation etc. They overall lower transaction costs by making information
both available and trustable. The terrifying idea of 'getting into a car with a stranger' is no longer a problem if that stranger's reputation can be tracked, is publicly available, and is backed up by the experiences of many others doing the same thing (as with #Uber, #Lyft).
The availability of such information also means we don't need to rely only on first-hand (or second-hand through family and friends) trusted experience, but can, as it were, rely on the experience of unknown others - third-hand trust. This changes our behavior because the cost of
making a mistake is much lower: getting into the car of a shady Uber driver is on average much less of a risk than doing the same as a hitchhiker or even taking a regular taxi. This change of behavior in response to 'outsourced' trust means the technology can progress further.
The sharing economy, as the term implies, also means we can 'share' (make available) productive resources in much more effective ways. In a sense, it undermines the materialist view of value creation by dissolving the difference between 'personal' property and private ownership
of the means of production: your personal car can now be both your personal property and your source of income - and you, as the owner, decide when and how. It doesn't change the economic categories, but releases the economic analysis from the material goods. This is all well and
proper, since the economy is about the creation and distribution of *value* and not of material things. As value is subjective, so is the distinction between consumer good and production good. Every thing can be both, and what is what depends on how you use it. In other words,
the effect of the sharing economy on the study of economics may (and likely is) the liberation of economic analysis from materialist biases. Economics becomes the subjectivist social science it was always meant to be. So in terms of economic theory, the sharing economy can help
make the study of economics what it should be and always should have been: the study of the creation and distribution of [subjective] value and the unplanned social orders that emerge in the prosperity-creating process.
But what about exploitation? I find the argument that the 'gig economy' makes people accept lower wages highly fascinating. Suddenly it is a problem to these critics, mainly on the left, that 'workers' own their own capital. When personal property becomes capital, a source of
income, then the obvious implication is a decentralization of capital ownership. I'm not saying companies like Uber are in any sense perfect. They could certainly go further, by e.g. implementing free pricing between drivers and riders. Why not allow drivers to set their required
minimum to provide a ride? Why not allow riders to set their max to get a ride? (This may actually be the next step in the sharing economy - an open-marketization of fares and fees.) The common argument that drivers (which is usually the example used) don't make a 'living wage'
is also a bias that remains from the materialist and industrialist view of economy. It assumes that a job is all about the salary, and that what matters is the monetary outcome of it. But many of those who choose to drive for a ride-share company do so because it is a *flexible*
type of work, which is itself a value. Sure, it may not be as high-paying as 'full-time' employment, but any choice includes a trade-off of value: to many, flexible work hours make up for the lower pay; for others, it doesn't - so they instead seek traditional employment. The
solution to the low wages in the sharing economy is not regulation, but more competition - and proper market wages. In fact, the reason ride-sharing companies can pay low wages (which, judging from my discussions with many a driver, exceed those earned by taxi drivers!) is the
regulations already in place: primarily the barriers to entry in ride-sharing and elsewhere that keep overall wages down by providing employers with artificial influence (power). The expected outcome of the low-transaction cost economy should be the ultimate gig economy, where
all or most hierarchies (such as firms) dissolve into market relations - and where those who (choose to) work earn a market wage. What stands in the way for this development is not employers or even capital owners, but those artificial restrictions that produce their privilege.
It is a sad irony, really, that those restrictions - regulations - that are intended to protect workers from employers (in the industrial age) is what stands in the way for worker liberation in the new era...

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More from @PerBylund

Aug 17, 2018
Scarcity is a somewhat misused term in policy and popular-economic commentary because it is used in the sense that something is scarce if it is valuable and we have "almost run out" of it. Hence "post-scarcity" is made out to mean "we have plenty." But scarcity as "almost out of"
is a terrible definition for actual analysis, and thus not how it is used in economics. Because "almost out of" is relative actual use or actual existing reserves - or both. And it assumes value as an objective aspect of the resource, given technology. Any analysis based on such
sloppy, shifting, and interdependent definitions will itself be sloppy, shifting, and indistinct. As usual, therefore, the terms mean different things in economic analysis than they mean in everyday speech. (Just like 'theory' in science means 'the best bloody explanation we know
Read 22 tweets
May 12, 2018
The term #capitalism is highly confusing. The definition is clear enough: the private ownership of the means of production (capital). But the implications are very different depending on one's political or economic perspective. Both are right and wrong. Let's take a look at them.
Politically speaking, private ownership of the means of production provides owners with power. Why? Because society is dependent on production of value, and production is undertaken using capital. Whoever has ownership of capital can then influence society. Consequently, it is
only intuitive that owners of immense capital can make demands from policy-makers, who need to at least consider this perspective when making new laws. So the power of the state (usually thought of as the power of "the people") is in a sense limited by capital ownership. And, no
Read 19 tweets
May 3, 2018
Three commonly held but untrue views seem to nicely summarize this "report":
1. Selling your goods below cost is a success strategy
2. Being "big" means you cannot be disrupted
3. Government wants to save us from "market power"
#1 only produces a return if one can then raise prices and still sell big volumes *and* no one else can enter the market. How can firms "protect" their staked-out market space? Without government privilege there's only one way: by offering goods of higher quality at lower prices.
So to be successful, either the firm produces better goods or they're more efficient (lower cost). Neither is much of a problem for consumers. And if they charge prices above what consumers think it's worth, both the good itself and the purchasing power of their money, they fail.
Read 13 tweets

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