you're reading...
Byte into thoughts

How new is sharing, even in economics?

Currency and the economy are not mutually inclusive: goods and services moved among people long before monetary standards; there’s a reason a dowry includes cows rather than cash.  Money, doesn’t have to be currency, it does have to be a unit of account, a store of value, and a means of payment.

Economies move far more fluidly when a monetary standard exists.  Cows can be a store of value (milk) a unit of account (I have five) and a means of payment (it gets my daughter married).  But, all cows are not created equal and it is difficult to determine a cow’s worth compared to other cows or other forms of payment (like chickens).

A trade that takes place then means both parties accept the valuations.  Trading a cow for three chickens implies that both parties believe that one cow is an acceptable means of payment for three chickens.

Standard money makes the above exercise much, much easier.  One USD is indistinguishable from another and it is very easy to find someone who will accept it as a means of payment.  Rather than go out and find someone with chickens who needs a cow, I can simply find someone with chickens who will take my cash.  Making trades easier allows for far more trades and an economy as we know it today.

It is hardly an interesting observation to note that modern technology makes people more interconnected.  What is interesting is to note how people use their new ability to be interconnected.  It’s easy, if you have the appropriate means of payment, to buy things.  It is a lot harder, particulalry if you’re among the millions of people who don’t own a shop, to sell things.  Consider the challenges of the typical garage sale: making people aware of the sale and attracting people who actually want what you have at a price you’re willing to accept.  E-Bay very nicely provides a way to match buyers and sellers of the garage sale variety.

But, there are many more instances where people have un or under-used assets.  In a world we once knew intimately, the world of say, 2010, it was quite difficult to make money off of my car that went unused between 9 and 5: I had no easy way to connect with potential buyers.  Now, though, we have the “sharing economy” where web companies connect those with things like unused cars and apartments to those willing to pay to use said underused asset.

For all the sentiment about an “alternative to consumerism,” the sharing economy functions by means of exchanging goods and services for a standard means of payment: money.  The difference is that it is now much easier for anyone to be a seller.

I began with the barter system because the same technology that allows for the sharing economy could make a barter system efficient enough to work.  Remember that any exchange requires finding someone who has what you want who also wants what you have and that without a standard means of exchange (most people want money, few people want cows) fewer trades will occur.  Technology allows me to connect with many people, even those who live far beyond my village hamlet.

It does not seem far-fetched to suggest that an Internet search could connect a cow owner looking for three chickens with a chicken owner willing to trade three chickens for a cow.  And so, high technology and trendy startups provide a new way to make a very old system work efficiently.  And to some, removing the cash gives consumerism a bucolic halo.



No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Twitter Updates

Error: Twitter did not respond. Please wait a few minutes and refresh this page.

%d bloggers like this: