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The Sharing Economy as a Locust Economy

photo of Michel Bauwens

Michel Bauwens
16th August 2014


“In a locust economy, you cannot just decide to go somewhere and get in your car to drive there. You have to coordinate with other potential users of that shared resource. You have to keep your apartment clean and sharing-ready. You have to do minimum-wage work that you might consider beneath you (though such status concerns don’t bother me, annoying chores do). In the sharing economy, we may not be eating each other literally, but we’re certainly eating into what Richard Dawkins called the extended phenotype of our neighbors. To the extent that your belongings are a logical expression of your genes and memes sharing them amounts to allowing others to eat them. So the harsh bottomline of the locust economies, once the Jeffersonian middle class prey base has been bankrupted, is that we locusts turn on each other. We call it peer production and prosumer economics, but it isn’t Jeffersonian producerism. It is locusts in their cannibalistic phase.”

This article needs to be read in full!

Excerpted from Vencat:

“Locust swarms don’t create new value. At a systemic level, the most charitable thing that can be said about them is that they efficiently strip mine value in a tyranny-of-the-biomass-majority way.

They out-compete other species through sheer numbers, and leave others to pick up the pieces as they return to their solitary, non-swarming grasshopper phase. In this case, human farmers. The collapse of locust swarms completes the cycle in a way we’ll get to.

Locust economies are built around 3-way markets: a swarming platform “organizer” player who efficiently disseminates information about transient, local resource surpluses, a locust species in dormant grasshopper mode, and a base for predation that exhibits a scarcity-abundance cycle.

So long as different locations are not synchronized, a locust market will usually have a surplus somewhere, even if it is a zero-sum or negative-sum market overall. Where that surplus comes from varies. In human farming, it is a natural consequence of the plant-harvest model.

Unfortunately, within the human world, it seems that the prey base is usually some sort of small business sector (either independent or franchisee chains). I will call this the Jeffersonian middle class, as in economic actors driven by the producerist values espoused by Thomas Jefferson (basically “small, local and independent”).

The war between the 1% and 99% seems to play out with the 1% and the 90% collaborating to prey on the 9% in the middle — the Jeffersonian middle class.

This is a very different class than the paycheck middle class, which has a superficially similar financial life. But during hard times, the paycheck middle class turns into the locust class in both production and consumption behaviors.

In a locust economy, the Jeffersonian middle class is a terrible place to be. It is no accident that the worst-hit victims of the locust plagues of the 19th century were small farmers living the Jeffersonian dream handed to them by the Homestead Act of 1862.

Locust swarms are aggressively and energetically social. Remind you of any contemporary pattern of human behavior?

There seems to be an implicit holier-than-thou assumption among sharing economy evangelists that social sharing is primarily about virtuous behaviors like generosity, empathy, minding the planet, conserving resources, avoiding waste and so forth. Only secondarily do they see it as a zero-sum/negative-sum adaptation to recessionary conditions — Bruce Sterling’s favela chic.

They rarely think of it as a predatory behavior at all.

I haven’t yet worked out the details, but it seems to me that there is a curious interplay of scarcity and abundance in locust economics. On the one hand, there is local scarcity. Only so much wheat to eat locally, only so many local coupons offered by restaurants desperate for marketing leverage.

Once you’ve used up your coupon from the local paper, you have to pay full price. But if you can obtain news about another coupon in the neighboring town, the game changes.

Once locusts acquire an informed kind of market mobility through better discovery mechanisms, they can range over a much larger area of wheat fields or restaurants. You can continuously derive savings at the expense of other economic actors (wheat farmers or restaurant owners).

Once you increase your foraging range sufficiently, “local” means the smallest area within which you never have to pay full price.

So the abundance here is an illusion created on top of local scarcity via cheap discovery of transient local surpluses, artificially created by small Jeffersonian middle class actors hopelessly looking for leverage, and co-opted by swarming-platform owners.

Whether it is underutilized inventory of living space, coupons, parked cars or anything else, for most of the people, most of the time, if you have enough of the market navigation information, and are willing to travel a little further than you normally do, you can always find a deal.

The catch is of course, that for platform organizers to be profitable, they have to aggregate such slightly evil locust instincts and create locust swarms. No individual restaurant patron sets out on a 20-mile drive to a neighboring suburb with the malicious intent of helping bankrupt a restaurant there. Most sincerely believe they are just enjoying an exploratory adventure, and most would probably go back if they discovered something sufficiently unique and amazing via a Groupon deal.

But the way the aggregation model for the swarming platform works, the only incentives that can be offered are the ones that work on those least capable of hooking a returning customer through unique value. A truly unique restaurant will likely be well-known and constantly overbooked anyway, and have no need to offer a financially crippling deal. Even if a particular individual charitably decides to return to “give back” to a particular restaurant, there is a good chance the locust attack has put it out of business, making individual good intentions moot.

So the system can only create transient locust swarms out of individual slightly evil intentions. A locust market is one which looks more information-efficient than grasshopper markets, but really just has a pattern of information flow that favors different actors.

I suspect it is possible to design an incentive scheme that would actually be sustainable, but still offer customers some opportunity for consistent savings through nomadic swarming. Some sort of hybrid locust-grasshopper economy.”

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