This is the first of a trilogy of posts describing what I foresee will be the natural evolution of the economy, manufacturing, and logistics, respectively. This post presents how I expect our actual economy to be transformed into one of gigs (Gig Economy), followed by one of sharing (Sharing Economy), then circular (Circular Economy), and finally creative (Creative Economy).
Gig Economy: The first evolution of our economy will be to a Gig Economy. In the gig economy individuals provide products and services through the internet to other people utilizing the resources we have at hand. I believe it all started in 1995 when eBay allowed us to sell our belongings through the internet. The innovation was that eBay does not sell anything, they simply connect buyers with sellers. This model where a software connects supply and demand is the basis of the gig economy. Thanks to the internet we now have Uber (use a personal car to transport people), Airbnb (rent a room in your house), EatWith (cook at home and sell the food), DogVacay (take care of pets), Rent the Runway (rent clothes), Streetbank (rent things to neighbors), Yerdle (exchange things instead of selling them), Zigair (like Uber but with planes), GetMyBoat (rent your boat), Gofundme (raise money for a cause), ScienceExchange (rent the services of a research lab), among others.
It can be argued that the gig economy already started because we have the basic infrastructure to do it. However, its development has been somewhat limited until the existing laws are adapted to accommodate the reality that in the gig economy companies, but freelancers, who provide services. Uber has been the leader establishing the legal basis for the gig economy. Their main argument is that they are not a taxi company, they are a software company. They do not sell transportation, they facilitate that someone with a need for transportation gets connected with a driver. The driver does not work for Uber, neither does Uber offer the service, the freelancer does. This small detail has allowed very interesting loopholes that have made feasible for the gig economy to start. Note that it is easy for the government to regulate taxi companies, but how can the government regulate many freelancers given that the customer knows they are freelancers? To make matters more complicated, if the freelancers are fined by the government Uber will cover them. In the long run government cannot do anything effective to stop this. This same genius argument from Uber applies for almost anything. For example, according to law you cannot sell food unless you have the necessary permits as a restaurant. But what happens if you do not have a restaurant, but you simply offer your homemade food over the internet on a site that “does not sell food,” but they connect hungry people with people who decided to add one more portion to the food they were going to prepare anyway? As mentioned earlier, connecting supply and demand is the basis for the gig economy and it is just starting. One may ask, but what warranty does the customer have that the freelancer is good and the freelancer that the customer is good? The answer is that the customer and the freelancer rate each other so the both have to behave well. The rating given to a customer or freelancer becomes the equivalent of their credit report. In other words, as a freelancer I can opt to only offer my services to people with high ratings, and vice versa. The gig economy should be at its peak by 2020.
Sharing Economy: Once the gig economy is established we will have to ponder if we will buy things or simply rent them every time we need them. Logic dictates that if we can easily rent what we need, then it is not worth buying them. The Sharing Economy seeks to reduce consumerism through sharing things with other people. It is also known as collaborative consumerism. In the sharing economy vision it does not make sense that each one of us has a fully stocked toolbox in our house that we use once a month. If you have great tools you should share them with the others and if you need a tool you borrow it instead of buying it. Clearly, a consequence will be that manufacturing companies will see the demand for their products be dramatically reduced. This will have a devastating effect for manufacturing companies whose current economic model (in the Consumerist Economy) depends on selling their products to feed the cycle where we buy-use-dispose.
Notice that the gig economy will establish the required infrastructure to supplement our income through sharing our products and services. The sharing economy is when we stop buying products because we prefer to borrow them. I project that by 2025 the economy will be shared and the economic models of the manufacturers will be forced to change.
Circular Economy: I project that manufacturing companies will have a tough decade between 2025-2035 because they will face two great challenges simultaneously: (1) the quantity of products sold will be drastically reduced because of the gig and sharing economy; and (2) there will be scarcity of natural resources used for raw materials and excess of trash. This combination will lead us to the Circular Economy. It suffices to recognize that the natural resources are limited and that the world population will continue growing to argument that the consumerist economy is not sustainable in the long run. Simply there will not be enough natural resources to continue with this model. The vision of the circular economy seeks to make manufacturing and consumerism sustainable. For this one needs to redesign the entire industrial system so that it is inherently restorative and it has no waste. In other words, it needs to be redesigned so that all waste that is generated as a consequence of the industrial system becomes an input for something else in the planet. The circular economy requires that we use renewable energy, eliminate toxic chemicals, and we change the manufacturing materials for eco-friendly materials of superior quality that can be reused. As I explained in a previous post (in Spanish but easily translatable), true sustainability will only occur when there is no other option but becoming sustainable. Circular economy is what industrial engineers call systems thinking, at a global scale. (If you are an industrial or systems engineer please pause and re-read the previous sentence…)
In the circular economy products will not be plastic nor metal, but they will be from organic materials that play some other role when discarded (e.g., fertilizer for plants). These products will be designed in a modular manner to replace components instead of simply discarding them like we currently do. Hence, products will have to be manufactured to last. Evidently, this changes everything in the consumerist economic model where the quality of the products is designed to be low so they will have to be replaced often and another unit can be sold. In this new model, manufacturing companies will opt to rent their products to customers instead of selling them. They will become big players in the gig economy. Note that if a company that manufactures washers seeks to rent them instead of selling them they would build them with the highest quality in an attempt to maximize its useful life. If you have enough money you will always be able to buy instead of renting, but in general the economic model of companies will change to rent-based. The circular economy goes hand-in-hand with other initiatives such as Industrial Ecology, Cradle-to-cradle (seeks to extend the useful life of goods), and the sharing economy. I project that by 2040 the economy will be circular for the masses (the rich will always have resources at their disposition.)
Creative Economy: I foresee that when the circular economy is at its peak, robotics and automation will be at a point where they have replaced the majority of human beings in their job posts. What will happen when robots and automation reach a level that they can replace the majority of workers? I am talking about robots that build and train other robots. My wife always says in her ergonomics class that: “Human beings were not make for working.” But what will humans do to generate income if robots are the ones working? What humans can do that robots will never be able to do is be creative. Hence, when we reach this point the economy will become the Creative Economy. Humans will once again value the artist, philosopher, musician, and writer. There will be a lot of time for creativity! Governments will be in charge of administrating automated products and services, and the income generated by them will be used to pay us for “being creative” (whatever that means.) Although I believe it is untimely, some people are already advocating for a universal basic income, which basically means that we are given a subsidy by the government (i.e., they pay us for being citizens.) In the creative economy some will claim their right to be lazy, others will want to work claiming that being lazy is a right not an obligation. What I am describing is known as a Post-Capitalist Economy.
Let us consider the evolution of the economy in the context of transportation. Currently we aspire to own a car for exclusive use. Soon we will consider offering the vehicle or transportation in it as a service over internet (gig economy). Eventually we will not own a car and depend on others borrowing their cars (sharing economy). Then you will rent a service that will allow you to use any car (circular economy). Finally, we will use autonomous vehicles as collective transportation. I explain these changes as if they occurred abruptly, but we all know that in reality they occur gradually.
I have always been enjoyed thinking about the future, although I recognize that by doing more questions arise than the ones that can be answered. Undisputedly, the next decades will be extremely exciting with all the changes that they will bring. Some countries will ride the wave, while others will swim against the current until they are obliged to yield. I hope this post reaches some leader seeking to think ahead of the times and facilitate the evolution of our economy. Thinking about the future allows us to visualize where we want to go; as the famous English writer Lewis Carroll said: “If you don’t know where you are going, any road will take you there.”
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