- City Fajr Shuruq Duhr Asr Magrib Isha
- Dubai 04:52 06:05 12:13 15:36 18:15 19:28
Leading the session titled ‘The Future of the economy is ‘shared’" at the fourth World Government Summit, Professor Arun Sundararajan, a thought leader on the impact of digital technologies on businesses and society, highlighted the emergence of the shared economy, a system of peer-to-peer based sharing of access to goods and services, and its impact on the way society and governments organise a wide range of economic activity, from transport and real estate services to grocery shopping.
Peer-to-peer, community-based platforms have grown significantly over the years with increased interest from investors. With remarkable potential, these platforms have equalled in size and value and, in some cases, exceeded the more traditional companies of the 20th century.
Uber, a rideshare application, is valued the same as mid-size and large size car companies. Similarly, Airbnb, a service that allows individuals to list their own apartments, has almost two million listings and is projected to book more nights by the end of this than the world’s largest hotel chains. In addition, BlaBlaCar, a rideshare service that connects car owners and co-travelers to share city-to-city journeys, is used more than the US national rail system.
These peer-to-peer platforms were created without a single dollar of investment in infrastructure.
Commenting on the transition to and growing importance of a shared economy, Sundararajan, said, "These new and growing peer-to-peer platforms and services will not eliminate old, traditional services, but will present new opportunities for governments and societies. We have to collaboratively rethink the ways of organising economic activity. One of the ways to do this is through crowd-based capitalism."
Sundararajan discussed the intricacies of crowd-based capitalism and the blurred lines that result from this system.
"Crowd-based capitalism provides greater efficiency in allocating assets, labour and capital through peer-to-peer interaction. This type of capitalism and interaction blurs personal and professional lines in the provision of commercial services. People are now sharing their personal space on a commercial basis."
This, he says, has led to the resurgence of gift economies, where services are given without an explicit agreement for immediate rewards and allowed people to connect to a social network.
With the emergence of the shared economy, governments and economic ecosystems have encountered regulatory challenges.
"These regulatory systems were put in place for 20th century capitalism, which regulates institutions rather than platforms and individuals. We have to rethink the way we control economic activity and the role governments will play in regulating these services."
He added, "Peer regulation is key. With a million users on platforms such as Airbnb, it becomes difficult for the government to regulate these activities. We need to create a system where an entity other than the government implements regulation but is still overseen by the government. Another solution is the delegated regulation through data, where today’s advanced regulatory technologies that detect fraud, for example, can be put into action to solve the world’s biggest problems."
Sundararajan also spoke about issues that have arisen in labour policy and the funding models for social safety nets. With the emergence of peer-to-peer platforms and the changing job market environment, more people are taking freelance positions or engaging in personal services.
He said, "The shared economy has blurred the lines between full time jobs and casual labour, where normal boundaries for full-time jobs are no longer applicable. More than 25 per cent of the US workforce serves freelance positions or engage in self-employment. This number is likely to double in the coming years."
Where social safety nets are no longer funded by employers or governments, governments and economies must find new ways to fund workplace protection and related benefits.
He added: "Partnerships and cooperation between the government, the peer-to-peer platforms and individuals, are key to bringing about alternate methods of funding. Some have even suggested implementing a universal basic income independent of employment status."
According to Sundararajan, a shared economy could lead to a more equal society. With this kind of economic organization, the workforce becomes a part owner to a means of production, acting as micro-entrepreneurs.
In conclusion, he said: "Governments can replace old, more inefficient methods of dealing with these platforms by implementing solid transition plans, re-training and re-skilling workers that were displaced by the emergence of these services and finding new ways to start their own Airbnbs, for example. The shared economy should be seen as an opportunity to grow and encourage job creation rather than a threat."
Follow Emirates 24|7 on Google News.