Circular Economy, the Access Economy Or a New Blockchain driven Sharing Economy?
This is a reposting of my research article in intelligenthq.com: Circular Economy And A Blockchain Driven Sharing Economy?
The Circular Economy, the Access Economy is a fairly recently emerged concept that is considered by many to be a more appropriate expression to describe what has become known as the larger concept of “Sharing Economy”. Some have suggested that the sharing economy is not so much about sharing as some corporations that rose from the concept became increasingly centralised. After all, those that offer rooms, sustainable energy, or car drives do so for money rather than sharing out of the goodness of their hearts. Another trend highlights the concept of social impact, the way to create a sustainable economy, better ways to reward work, and how the new technology blockchain is disrupting and offering solutions to correctly reward the healthy peer to peer P2P basis foundation of the circular economy / sharing economy.
According to these expanding concepts, its advocates define that its drivers are incentivised to do so by the rewards that come as a result. Something critical for the advance of this concept and its success in mitigating income inequality and other major issues coming from the destruction of conventional work 9 to 5 concept. The foundations behind the idea of access rather than sharing are the fact that people get access to goods and services through using various technologies, apps, and websites. This is considered by some to be more worthwhile than actually owning these assets as a community or a sound P2P.
The access economy and the circular economy.
The access economy has created all kinds of challenges for businesses, and some will need to change strategy if they are to survive. For example, it is very challenging for hotels to be able to compete with thousands of people renting their properties via all the home sharing platforms, given that the costs of running a hotel are high, and the costs of using those platforms are low and rely on the involvement of the masses. As Sharon Ede (2014) of Post Growth puts it:
“The Access Economy seeks to minimise the demand for materials… of better-managing waste.”
the Circular Economy unfinished Lines
All of this seeks to make systems and services more efficient and effective, particularly in terms of cost. Additionally, it allows “idle assets” to be put to good use. People can rent out a spare “idle” room in their house which means this room does not go to waste so much. In a sense it involves making more of what is already available — space in cars, space in homes, tools that are infrequently used, and so on, so that there is less waste and greater sustainability of our activities.
We do this in this case not by looking at ways to cut down emissions but rather by meeting our daily needs in a less wasteful way in the first place — by using what is already available and which can be accessed. It is argued by some that this may be more of an attractive prospect to individuals who do not consider themselves to be particularly environmentally friendly, and this is another advantage of the circular economy.
The centralised and decentralised parts of the Circular Economy / Sharing Economy.
There are various business cases for a circular economy is compelling but the complexity is to define what makes sense in the centralised and decentralised parts of the sharing economy main players and actors. A serious Analysis by the global player McKinsey estimates shifting towards the circular economy could add $1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five years. Under the Waste & Resources Action Programmes.
Moreover, under the same report in the section Waste & Resources Action Programme’s Circular Economy 2020 Vision, the European Union (EU) alone could benefit from an improved trade balance of £90 billion and the creation of 160,000 jobs. In the light of this manufacturers are most likely to reap the benefits quickest given their reliance on raw materials. The McKinsey report also argues that a subset of the EU manufacturing sector could realise net materials cost savings worth up to $630 billion per annum by 2025.
Disownership is the new normal
Greg Satell (2015) of Digital Tonto has also commented on the access economy. As he states:
“Rather than assets managed by centralised organisations we have ecosystems managed by platforms. Capabilities are no longer determined by what you own or control but by what you can access.”
Similarly to the discussion above, according to Satell this means that there is a need to focus less on creating efficiencies and more on creating connections. It is explained that the internet itself was in many ways envisaged and built in the beginning on principles and concepts of access. After all, as described, the World Wide Web can be seen on any computer, and so this makes access universal. Making this updatable by many different people has created even more access. Ultimately this has led to a marketplace that is described as being “dominated by ecosystems”. This includes networks of developers and online shop fronts like Amazon that rely on the input of many to be as successful as they are.
The concept and framework of the Circular Economy — Ellen MacArthur Foundation.
The Ellen MacArthur Foundation, in particular, has been one of the leading organisations that have highlighted the concept of circular economy and has been working with business, various governments and academia to build a framework for an economy that is restorative and regenerative by design.
For this organisation the concept and framework of the circular economy seek to rebuild the flow of value capital, whether this is financial, manufactured, human, social or natural. This ensures enhanced flows of goods and services. The Ellen MacArthur Foundation developed a system diagram that illustrates the continuous flow of technical and biological materials through the ‘value circle’.
Outline of a Circular economy by ellenmacarthurfoundation.org
To synthetise and according to them:
A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.
Circular Economy and Collaborative Economy Jeremiah Owyang.
Another researcher and thought leader highlighting these concepts for a long time with a body of research and execution worth to read and follow is Jeremiah Owyang. A known thought leader and researcher SF, Silicon Valley, Founder, Crowd Companies Council Jeremiah has lead a work on these areas both theoretical and practical. According to him:
The Collaborative Economy enables people to get what they need from each other. Similarly, in nature, honeycombs are resilient structures that enable access, sharing, and growth of resources among a common group. Our latest version of the Honeycomb framework, Honeycomb 3.0, shows how the Collaborative Economy market has grown to include new applications in Reputation and Data, Worker Support, Mobility Services, and the Beauty Sector. This is a market map to help you understand how every industry can benefit from the Collaborative Economy by partnering with new startups. You can find the bellow infographic that defines the concept if you subscribe to the registration page in the link.
Jeremiah Owyang Collaborative Economy Honeycomb 3.0 infographic
Circular Economy, social Impact, the complexity, and its ecosystem?
Another part of the concept of sharing economy associated to the circular economy is the concept of Social impact. The social impact theory was created by Bibb Latané in 1981 and consists of three basic rules which consider how individuals can be “sources or targets of social influence. According to these sources, Social impact is the result of social forces including the strength of the source of impact, the immediacy of the event, and the number of sources exerting the impact. The more targets of the impact that exist, the less impact each individual target has.
Independent of the different concepts and theories what is critical is that it is this willingness of sustainability that leads to the conclusion that connections have to be focused on to achieve success in the Circular Economy. By creating open connections that allow people to communicate and collaborate, greater innovation can be achieved. This can already be seen to have been a success in a variety of different ways, not least of which are the so-called “sharing economy” titans.
Moving forward it seems likely that to succeed, collaboration, openness and a willingness to share will be of paramount importance for the circular economy / sharing economy. This involves being part of solid and open and transparent networks on platforms and competing through the use of technology, the emergence of connected objects through the Internet of Things IOT and the advent of new technologies such as blockchain, as well as API use and the sharing of P2P platforms and data brings new solutions and challenges to this world and concepts.
Circular Economy, Social Impact, Blockchain, Future of Work and What’s Next?
The blockchain technology is a particular interesting concept in relation to the circular economy and sharing economy at large and how the concept of work is being disrupted. The world is now going through a crisis of data, system of work and identity mostly provoked by a fast emerging set of technologies that disrupted very fast concepts and values, mostly about the way we see work and rewarding.
The influential new tech business author and evangelist William Mougayar, the author of “The Business Blockchain”, and a board advisor to the Ethereum Foundation, the non-profit that oversees the development of one of two blockchains seeking to popularize the software worldwide, on this offers a solid view on the how blockchains and digital currency could change the way we work, and special how we are compensated. This is one of the critical areas of the P2P, crowd sourced and crowd based and sharing economy weaknesses: how to reward people in a cashless increasingly machine driven world.
In the words of William Mougayar in an article The Theory of a Blockchain Circular Economy there are already some sound solutions emerging in a sort of Economic Chain of a Blockchain-Based Circular Economy Market Place that can reward the various players in a sound healthy way:
We are in the early stages of a new chapter in the nature of work. The blockchain will enable us to do our jobs and be compensated inside new circular economies that have their own currency units and their own work units.
This, I believe, is one of the greatest themes to emerge from blockchain technology.
Most work today is compensated via bilateral agreements between a worker and an employer according to a simple contract: you work in X job, and we will compensate you in Y currency.
But what if we had greater autonomy over how we choose our own work? With more control, we would then be able to perform new types of tasks that may or may not resemble what is traditionally considered labor, and earn cryptocurrency instead of fiat currency.
As a result, instead of doing one job we could hold several paying jobs that are diversified, while not being tied down by the constraints of a single employer.
Already, a number of blockchain based businesses are compensating users for their ‘work’ via digital tokens.
Steemit for example, rewards users who vote-up or write posts on its decentralized content platform.
The theory of decentralized transportation platform La’Zooz is that you earn Zooz points, just by driving your car while the app collects data about your driving patterns.
The Economic Chain of a Blockchain-Based Circular Economy Market Place by William Mougayar
Many predict that these patterns that have emerged only so very recently, is only set to increase but one must argue that this was always part of the DNA of human tribes along history. The challenge now is how to manage all these trends and basic sharing concepts in a world, increasingly complex driven by technology and corporations, not for profit, Socent driven social enterprise activists that need to master digital identity and marketing online and in social media. This is the challenge and in general how all the people that want to give others access to their daily life stuff, services that if it means that they can benefit from doing so can do so in the effective and reward platforms that have the DNA correctly set up.
Given the advances and in part the success is already been seen with the advent of fantastic organisations, and by the big actors and players in this field, therefore it is easy to agree that the concept will be for greater access and connections rather than less. But a lot of work is still in the process and much more needs to be done.
Originally published at www.intelligenthq.com on August 7, 2016