Future of Sharing: Will Crowd-Based Capitalism Replace Managerial Capitalism?

Arun Sundararajan, a professor at NYU’s Stern School of Business and author of the recent book The Sharing Economy, believes crowd-based capitalism could replace managerial capitalism in the next 10-20 years. Sundararajan believes crowd-based capitalism is an inherently superior model, one that uses resources more efficiently, which tends to result in increased economic productivity. Crowd-based capitalism, according to Sundararajan, also tends to increase the variety, diversity, and sometimes quality of goods, which results in higher levels of consumption. Economists don’t agree on much, Sundararajan says, but “if there are two things we agree about, one is that productivity growth leads to economic growth, and the other is that increases in consumption lead to economic growth.” Sundararajan’s research also indicates that crowd-based capitalism will have an equalizing effect on the economy by beginning to de-centralize the means of production.

The federal government has an important role to play in solving regulatory issues, according to Sundararajan, particularly in re-evaluating labor classifications. As for municipal leaders, Sundararajan advises they keep in mind what he says is most often overlooked about the sharing economy: that it’s good for a city’s local economy. Sundararajan also believes that platforms need to create a culture that make providers feel like partners, not just resources to be mined. Sundararajan thinks the peer-to-peer rating systems are far from perfect, as they don’t tend to provide a representative view of a customer’s experience, but believes the “basic building blocks for a digital trust grid are in place.” Americans’ sense of the trustworthiness of other people has been on decline since the 1970s, and this could lead to a shift in that trend, according to Sundararajan, one which will likely have major economic implications. “If you look back at history, every time there was a big expansion in the world’s economic activity, it was generally induced by the creation of a new form of trust,” said Sundararajan.