THE SHARECULAR ECONOMY: INTRAGENERATIONAL EXCHANGE — INTERGENERATIONAL SUSTAINABILITY

1. INTRODUCTION

We as humans beings are facing a sincere challenge. For current generations the pace of change and increasing complexities of life have made it possibly more difficult than ever before to satisfy personal needs and desires. At the same time we are — partly unconsciously — following practices that harm our natural basis and thereby inevitably destroy attainable qualities of life for future generations who are not yet alive.

Is there no way out of this dilemma, and sustainable development illusionary? I argue for a possible solution which in its core is based on principles of human history and requires an adjustment of our economic system towards two promising approaches: a merge of the shared and the circular economy.

Let us begin with the former. The shared economy — i.e the preference for sharing over owning of tangible goods in a social exchange process — is by far no longer just a small economic niche but has developed to a competitive opponent of a currently ownership-based consumer society. From cars to couches to cuisine, from collaborative consumption, contributive production, to open and peer-to-peer knowledge, countless initiatives already exist that are providing added value to the pillars of our economy. As stated by Chris Anderson, founder of the OuiShare hub and collaborative economy platform, “The past decade was about finding new collaboration and innovation models […], the next decade will be about applying them to the real world”, the shared economy has the potential to establish connections and social interactions between people in an equal way that a purely market-based system is not capable of (Ghiglino and Goyal, 2010). Yet a shared economy alone is not a sufficient replacement. Albeit it does provide an answer to improving intragenerational exchange processes of goods and thereby satisfying essential social and physical needs, nothing has yet been said about how goods should be produced that we aim at sharing. Our contemporary linear paradigm of industrial production — i.e extract, produce, consume and dispose — is in itself not suitable to sustain intergenerational qualities of life, and there is rising consensus that an exponentially increasing exploitation of natural resources has irrevocable effects on climate and ecosystems (IPCC, 2014).

Admiring how nature is based upon the core principle of circular relationships, I pledge for a second economic system, which is the circular economy. Applying the lense of biomimicry, the study of imitating nature’s best ideas, the circular economy borrows the idea of circular relationships from nature and applies it to a socio-economical context where in its ultimate goal it seeks to continually rebuild financial, manufactured, human, social or natural capital. Given this principle, a circular economy envisions the production of goods that by the end of their life time can be completely decomposed and fed back into the production cycle.

2. THE SHARECULAR ECONOMY

Having laid out the principles of both economic systems, in the following I want to sketch a world in which the economic principle is the sharecular economy, a merge of the shared and the circular economy, and that successfully meets both intragenerational exchange as well as intergenerational sustainability.

To begin with, let us imagine a typical urban neighbourhood. Amongst other factors, emotional distance and alienation but also financial benefits desire people to share goods they have ownership over with others in their neighbourhood. In a way these people become co-producers of tangible goods that most likely have been produced by a globally operating, multinational corporation that is specialised in the cost-efficient production of goods. As in the market-based economy of today, this company aims at selling its produced goods to the consumer segment that has a preference for ownership over access.

The other consumer segment, in the following referred to as the end-consumer, instead values use over actual ownership and is paying a fee to his neighbour, the co-producer, for the ‘rental’ of a specific good that he desires. However, next to co-producing neighbours, producing firms are likely to adapt to the new form of end-consumer demand and likewise begin to offer the rental of goods for a wider spectrum of particularly lower-priced consumer goods that have not been attractive for leasing in the past.

Over the course of a products’ usage, the end-consumer is providing valuable feedback to a product design and development platform that is run by the producing company. Feedback is either given through intentional end-consumer interaction with the platform or, after consumer confirmation, automatised through in-built sensoric data tracking measures, such as already commonly used in digital software development processes (cf. automatic crash reports, bug tracking). The feedback provided leads to incremental improvements of a product’s usability experience but also to improvements with wider environmental impacts such as its ecological footprint. Just as corporations, traditionally only focused on production and sale, will begin to interact with end-consumers through sharing contracts, co-producers will have the opportunity to gain access to product design platforms and license design patterns of goods that they want to produce themselves, given the existence of at that time mature 3D printing technology.

At a certain point in time, a good reaches the first end of its life cycle and will require some degree of maintenance. In our localised sharecular economy, it is the role of a repair store to acquire knowledge around the repairment, maintenance and decomposition of goods. Due to the complexity of many goods we will see a specialisation of each of these stores on certain type of good. Additionally, by providing an engaging workplace to the retired elderly and physically or mentally disadvantaged people, a repair store fulfils an important role for the social cohesion within a neighbourhood. The work of the people who are employed in a repair store is financially rewarded by a monthly fee paid by the (co-)producer for the maintenance of the good that he is sharing with the consumer, and thus does not have to take care of the maintenance himself.

Albeit such a system allows for multiple repetitions of a goods’ life cycle, at a particular point a good cannot longer be directly fed back into the shared economy. Under these circumstances, the repair store fulfils the important function to decompose goods and provide reusable components back to the producing companies. As a second source of income, it can sell raw materials and resources to upcycling companies in the neighbourhood that convert these resources into new materials or products of better quality or higher environmental value. However, the possibilities for upcycling and reusability will to a large extent be dependent on the design pattern of the decomposed goods. Therefore, also repair stores gain access to the product design and development platforms to provide information on the ‘circulability’ of a product and to indicate possibilities for improvements.

Apart from the potential to addressing intergenerational claims for equally attainable qualities of life and improved intragenerational exchange, a localised sharecular economy offers other unique opportunities. Firstly, it aims at closing the circle in the closest possible unit of urban areas, which is the neighbourhood, and thus reduces the need for long transport distances, except for situations in which goods have to be delivered to the neighbourhood in the first place. Secondly, it creates working opportunities for people at the very place of living and thus demands less flexibility for daily commuting between home and the workplace. Thirdly, it significantly facilitates social exchange processes of any kind between neighbours and establishes connections where there would likely not have been any otherwise.

3. IMPLICATIONS AND DYNAMICS

What implications can be derived from a sharecular economy, what wider effects would this system have on our society and finally, how do we get there?

First of all, departing from a globalised market economy, a sharecular system shares some fundamental similarities. As in the market-based economy, there will still be competition amongst firms for the good of the most circular product designs, incentivised by backflows of reusable components and raw materials in the light of increasing scarcity over resources. Furthermore, market share is gained through loyal co-producers and end-consumers that are satisfied by the ease of (re)usability and possibilities for commitment to improvements. Nonetheless, multinational corporations that had only focused on the linear production paradigm coupled with a low durability of goods for the sake of increased future sales will have to change. And in fact they already do, yet often perceiving the growing shared economy as a threat to their businesses rather than an opportunity. If consumers become co-producers and share goods, the claim is, businesses will become obsolete in satisfying needs through the provision of goods. However, what is overlooked is the enormous opportunity inherent. Producing companies can solely focus on what they do best: product development and design by making use of the vast technical and personal resources that they have to their availability. In a sharecular economy, firms therefore fulfil the role of developing and designing products in the most ‘circular’ way to feed technological and organic resources back into the production cycle. Noteworthy examples of multinational corporations that already make use of this opportunity are Philips, Renault, Cisco or Unilever and more than hundred others jointly collaborating at the Ellen Macarthur Foundation.

Apart from the supply side, far more dynamics are to be expected on the demand side. Countless grassroots initiatives built around social sharing shed light on the vast potential of local bottom-up approaches. One of their greatest challenges, however, is to gain a level of professionalisation that will guarantee the long-term persistence of these initiatives. The role of municipalities in this context could be to provide certain rewards, be it either in monetary terms, physical space and capacities, or by other means of encouragement, to successful local initiatives and their respective neighbourhoods.

Until now we have only spoken about the sharecular economy in the context of tangible consumer goods. Yet another important questions is how widely applicable such a system would be? Let us for a moment reflect on changes in the energy sector. Facilitated by significant technological advancements in renewable energy sources, particularly of solar PV and concentrated solar power (CSP), consumers have gained increasing access to decentralised energy production, independently from the large-scale utility companies. Similar to tangible goods, decentrally produced energy could be shared between co-producers and end-consumers, assisted by a specialised repair store that is collecting valuable information for future technological improvements aimed at closing the material cycle of these technologies. In other service sectors such as the financial sector peer-to-peer lending, crowd-funding and financial online communities bring together credible borrowers and investors for mutual benefits. All these developments highlight that in the end people aim at making use of the service a good provides to humans and not its pure physical existence.

Albeit all the dynamics described above, certain sectors will remain in which a sharecular system is not feasible, nor desirable. In sectors with a high need for coordination, safety and monitoring such as the healthcare sector, society is likely to be better off if these sectors are governed by centralised structures with limited possibilities for user-to-user interactions.

4. CONCLUSION

“What’s mine is yours” (Botsman and Rogers, 2010) and that of future generations. By adopting the principle of a shared economy coupled with an increased use of circular production methods on a local level, we as human beings have the unique opportunity to overcome many of the challenges that have been initially caused by an avidity for large-scale, yet unsustainable growth. Albeit many of the technological requirements for a complete shift towards a closed production cycle might not have been discovered yet and will require further research, over thousands of years of existence we already have gained all the social capabilities that we as human beings need to turn away from a ‘too big too fail’ perspective towards the shared belief that ‘small is beautiful’.

References

Botsman, R. and Rogers, R. 2010. What’s mine is yours the rise of collaborative consumption. HarperBusiness: New York.

Ghiglino, C. and Goyal, S. 2010. Keeping up with the neighbors: Social interaction in a market economy. Journal of the European Economic Association, 8 (1), pp. 90—119.

IPCC. 2014. Headline Statements from the Summary for Policymakers. [report].