It’s Time to Prioritise the Global Sharing Economy

ECONOMICS, COOPS-COOPERATION-SHARING, 22 Oct 2012

Rajesh Makwana and Adam Parsons – TRANSCEND Media Service

There is much talk about the need for greater sharing in our societies today, in everything from household goods and peer-to-peer services to cooperative enterprises and the ‘commons’. But we often fail to acknowledge one of the most important examples of sharing in the modern world: systems of universal welfare provision.

Systems of welfare are essentially complex ‘sharing economies’ that exist in a variety of forms in different countries. The principle of sharing underpins how they work by ensuring that members of society take collective responsibility for securing the basic human needs and rights of all citizens. Through the process of progressive taxation and redistribution, we share a portion of the nation’s financial resources (personal income and assets, as well as company profits) for the benefit of society as a whole.

Social welfare systems in both rich and poor countries are often far from perfect and not always efficiently administered, but they remain a vital expression of social justice, solidarity and equitable wealth distribution that can reduce inequalities and strengthen social cohesion. They are also staunchly supported by many millions of people who have long recognised the role that an effective sharing economy can play in creating a fairer, more just and healthy society.

However, the process of establishing and strengthening the sharing economy is still in its infancy in some parts of the world. Many low-income countries do not have the resources they need to build effective systems for redistributing wealth and income through taxation and the provision of public services. Furthermore, a lack of generosity and the self-interest of donor countries has severely compromised existing systems of overseas aid – currently one of the only mechanisms used by rich industrialised nations to finance the ‘global sharing economy’. These realities point to the urgent need for scaling up sharing between countries as well as within them.

Rather than strengthening and scaling up the sharing economy on a national and global basis, for decades governments have pursued polices that undermine systems of social welfare and exacerbate poverty and inequality. Since the 1980s, governments have increasingly rolled back those policies that share the proceeds of growth more fairly across society, in favour of promoting unregulated wealth creation by the few. Today, the very basis of the sharing economy is being eroded in countries where austerity measures are dramatically reducing public spending on social welfare and essential services.

Global emergency

In a world that is already highly unequal, neglecting polices that redistribute income and wealth has resulted in what can only be described as a global emergency. For example, poverty rates across OECD countries have been rising for a decade and took a sharp turn for the worse after the global financial crisis of 2008. In poorer countries, just under a billion people are officially classified as hungry while almost half of the developing world population is trying to survive on less than $2 a day. At the same time, 300 million people are currently affected by global warming and 300,000 people lose their lives every year as a result. Altogether, around 15 million people die every year largely due to a lack of access to nutritious food, basic healthcare services, or clean water for drinking and sanitation – equivalent to more than 40,000 preventable deaths every single day.

The underlying causes of the many urgent problems facing humanity are complex and addressing them will necessitate extensive reforms to the institutions and policies that underpin the global economy. In this process of world rehabilitation, almost every aspect of society will need to be restructured – from the way we extract, produce, distribute and consume resources, to the influence that multinational corporations wield over society and policymaking. But we cannot wait for these transformative changes to take place while millions of people are facing a condition of life-threatening poverty. We urgently need to take a bold step towards saving lives and ending extreme deprivation today – and despite what politicians keep on telling us, doing so is eminently affordable.

According to research in a new report by Share The World’s Resources (STWR), governments could harness more than enough money to reverse policies of economic austerity, prevent life-threatening deprivation and mitigate the human impacts of climate change. By utilising the policy options summarised below, we could mobilise over $2.8 trillion every year to bolster the sharing economy both within and between nations. These figures are only broad estimates, but they demonstrate the potential for governments to collect and redistribute huge quantities of additional public finance for critical human needs – often money that they have led the public to believe does not exist or cannot be found.

• Tax financial speculation:                               $650bn
• End fossil fuel and biofuel subsidies:          $531bn
• Divert military spending:                                $434.5bn
• Stop tax avoidance:                                           $349bn
• Increase international aid:                             $297.5bn
• End support for agribusiness:                        $187bn
• Redistribute IMF resources:                          $115.5bn
• Tax carbon emissions:                                      $108bn
• Cancel unjust debt:                                             $81bn
• Protect import tariffs:                                       $63.4bn

Total:                                                                                     $2,816.9bn

The structures, mechanisms and expertise needed to utilise this additional finance have long been in place. For example, there are numerous international agencies working ceaselessly to provide disaster relief and prevent poverty-related deaths throughout the world. The international community has already established an array of funds and other programs to facilitate climate change adaptation and mitigation programs in developing countries. And in terms of social protection, many low-income countries already have various systems of welfare in place to provide essential public services to their citizens. According to calculations by the United Nations, it could be possible to ensure that a basic level of social protection is available to the world’s poor for as little as 2% of global GDP.

The economic benefits of sharing

Making better use of existing institutions and available finance also makes sound economic sense at a time when economies across the world are contracting and unemployment is rising. Reinforcing the global sharing economy could save countless lives and enable millions of people in the Global South to contribute to the social, economic, political and cultural life of their nation. Reversing austerity measures would also have a significant impact on economies by increasing the health, wellbeing and disposable income of citizens in these economically advanced regions. In an interdependent world where trade and financial relationships span the globe, this massive investment in human lives could stimulate demand, create employment opportunities and substantially increase government revenues.

Many European governments understood the need to scale up the sharing economy after the Second World War when they brought in a comprehensive package of social welfare policies despite levels of national debt that surpassed those of today. President Roosevelt introduced similar commitments in the US during the country’s most severe economic depression as part of the New Deal series of economic programs between 1933 and 1936. In 1948, the US went on to kick-start a massive transfer of financial resources to a number of European countries as part of the Marshall Plan, designed to aid reconstruction and economic recovery in those nations devastated by war. Instead of further eroding these landmark commitments to share financial resources in ways that benefit the wider community at home and abroad, it is high time we scaled up the sharing economy at every level of society.

Implementing the measures highlighted above could yield major gains for humanity and mark a tremendous leap forward for the international community, paving the way for more substantial reforms that must urgently follow. Many of these policy measures would also be hugely beneficial in their own right by helping to establish a world with less military spending, less national debt, less corporate welfare, less inequality, as well as a fairer international trade regime and a greener economy. Achieving these long-standing and widely championed goals would be an enormous step in the right direction for the world as a whole, signalling a triumph for millions of people working towards progressive change.

Overcoming the barriers to progress

So if we have the money, the institutions and technical knowledge needed to ameliorate the worst effects of the global humanitarian emergency – and it makes sound economic sense to do so – why do we continue to neglect and undermine the sharing economy on both the national and international levels?

This question is rarely put to policymakers, and there is a stark lack of public debate about the extent of the global emergency and how easily basic needs could be secured for all people – if only we prioritised doing so. When pressed on these issues, elected officials often claim that their governments have simply run out of money to safeguard their own citizens, let alone help those living abroad. This lack of ambition and political inertia has many complex causes, including the dominance of a purely market-based approach to addressing the world’s problems among policymakers, economists and business leaders. For too long, governments have pursued an economic model that overemphasises the private sector and free markets, thereby undermining the sharing economy by placing profit and growth before the welfare of all people and the environment.

In light of this political reality, implementing even modest proposals such as closing tax havens, diverting perverse subsidies or reducing military spending will require massive public support. The hope for a better world rests with the participation of the global public in a call for reform that extends beyond national borders. As the widespread mobilisation of people power in 2011 demonstrated, only a united people’s voice is stronger than the private interests that obstruct progressive change from taking place. The responsibility for change rests with us – ordinary, engaged citizens – to forge a worldwide popular movement that upholds and strengthens the sharing economy in all its forms.

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Rajesh Makwana is the director of Share The World’s Resources and can be contacted at rajesh(at)stwr.org.

Adam Parsons is the editor at Share The World’s Resources and can be contacted at adam(at)stwr.org.

This article was based on the report ‘Financing the global sharing economy’. For references, further resources and to read the full report, visit: http://www.stwr.org/financing-the-global-sharing-economy.

This article originally appeared on Transcend Media Service (TMS) on 22 Oct 2012.

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