Yes, the collaborative economy is destroying jobs. So what’s next?

Let’s not be blind: yes, the collaborative economy is destroying a massive number of jobs. Is that a disaster though? It is, if we don’t redefine what ‘job’ and ‘work’ means, and how they relate to income. However, if we seriously consider the radical alternatives, this could be a great step for society.

A few months ago, the French economic newspaper “Les Echos” published on its website an interesting paper in which Dominique Turcq argues that the collaborative model will destroy jobs. According to the author, several jobs are being replaced by crowdsourcing. For instance in photography:

Paid jobs are being replaced by work achieved by unpaid amateurs, or by low-paid jobs. Some jobs whose added value used to be recognized with a salary are being replaced by other internet services which supply a similar value at first sight. For instance, sharing photo web services are used by lots of amateur photographers, but don’t always provide an optimal quality. Quality is less professional but still high enough for lots of people.

This is also happening in other industries. Take kickstarter for instance: project creators do not only by-pass banks when they use crowdfunding, but running a campaign can also attract a lot of attention, which thus subsitutes marketing and PR efforts with almost no other cost than time. Another great example is La Ruche Qui dit Oui. This French food retail company claims to distribute about 80% of its prices to producers instead of to the usual actors in the distribution chain. Obviously, the latter willl struggle to survive if this model scales up.

The Era of the Second Economy

Actually, this analysis is nothing new. It was explained in a report by Brian Arthur for McKinsey, called The Second Economy. Hubert Guillaud wrote a good synthesis of it:

For Brian Arthur, this is the sign that a second economy has emerged along with the physical economy. A vast, silent, wired, invisible, and autonomous economy (which means that human beings can conceive it, but are not directly committed with its execution). Its execution is remote and global, always active and endlessly configurable. Actually, the second economy configures itself on the fly, auto-organizes itself, creates its own architecture and auto-recovers itself.

Brian Arthur comes to the same conclusion as Turcq in Les Echos: “Physical jobs tend to disappear in the second economy.” Other people like Douglas Rushkoff also claim that jobs are becoming obsolete.

This observation is often rejected by mainstream economists. For their defense, they brandish the luddite fallacy argument according to which productivity gains always create other kinds of activities elsewhere in the economy, as Schumpeter claimed with the concept of creative destruction.

This may have been true for some decades. However, something new is happening with the collaborative economy. Instead of creating new industries  that are based on mecanisation and thus require the production of new robots and machines as in the 20th century, what we are witnessing with the collaborative economy is a shift from jobs towards unpaid labor from a crowd of volunteers. Take open-source softwares or Wikipedia for instance, and imagine this for the whole economy. Long story short, this is not about less work, but about having fewer paid positions.

Who will be able to pay for products if no one has a job?

Obviously, the big question for now is: what should we do? How can we manage the growing precarization of a population that finds itself without enough employment? Regarding this point, i am highly disappointed with Turcq’s paper, who bascially escapes the question when he states:

Of course from a political point of view, the question of sharing work and income has to be raised, but this is another debate.

What other debate? These questions are highly related to each other! This is a question of how we share the added value that enables technical progess and productivity gains. Is it fair that only companies and organizations take benefits from productivity gains? To the expense of millions of jobless people? This question may remain unsolved if we can’t go beyond a simplified vision of society composed of employees, employers, and shareholders.

Distributing prosperity

The major point of the Collaborative Economy is that value creation is being scattered among society. This makes it difficult to be measured. For instance, consumers are now involved in the co-production of the products they buy. The problem is not only that they do not get paid for their contribution, but a large number of companies would not even exist if they could not use open-source tools created by communities of developers , long before these businesses were even created, for free. In other words, a large amount of the market economy’s profits is built on a large free lunch – the one of the non-market economy.

There is no reason why productivity gains should only benefit companies and shareholders, while those gains were originally made possible thanks to the work of society as a whole. Such a situation would basically mean we exclude simple citizens from their share of the economic pie, while they increasingly contribute to the economic value chain.

A simple solution to this would be to give everyone a basic income grant, without conditions and not means-tested. Philosophically, this would be a compensation for what the French economist Yann Moulier Boutang calls the “retribution for pollinisation”, or a reward for all non-marketable values we create by accident, like bees that fertilize flowers by carrying pollen.

Sounds utopian? It’s true that the current political debate goes in the exact opposite direction, with austerity plans being claimed as a necessity in times of crisis. However, we should not forget how wealthy our countries are. The cost of introducing basic income in France has been calculated. This could be achieved both by transferring some of the existing social welfare budgets, along with ambitious fiscal reforms. In France, economists such as Marc de Basquiat and Baptiste Mylondo have calculated ways of financing a basic income of between 400 and 750 euros (less for children) per month. In many other countries (from Germany to Finland, Netherlands or Spain and Slovenia), similar calculations have been done as well.

A basic income would not only reduce precarity in our countries while simplifying our social welfare models, but this old idea could also address the question of a fair “distribution of prosperity”, as Brian Arthur calls it.

Most of all, since a basic income would partly separate income from jobs, it would put the social utility of employment into question. Is employment the only (and best) way to produce wealth? It seems to me that the financial crisis just demonstrated the opposite: stratospheric wages of traders and bankers only help fuel the mass destruction of our economies instead of building sustainable growth.

And while the “work” of financial markets ended the obsolete economic system, the bees of the collaborative economy shows us the way towards a peaceful, efficient economy in which wealth abounds every day.

Illustration Paternité david_shankbone – French version of this post available here