The Trust Economy (San Francisco, February 4th, 2014)

I am not an anthropologist, but I play one on my blog...

I recently went to a lecture on the peer-to-peer economy.  In America, we talk about the peer-to-peer economy as this newfangled thing. In China, it is just the economy. But already, I am digressing.

America has, for a century, been a b-to-c economy, meaning business to consumer. Big businesses make stuff; consumers buy stuff. There were little offshoots of consumer-to-consumer, think flea markets and garage sales. However, the business-to-consumer was, for all intents and purposes, the entire economy.

Then, in about 2000, came eBay, the first mass consumer-to-consumer market in America.

I think the most bizarre thing about the emergence of eBay is how long it took to replicate in different business verticals. But, now, for the first time¹, comes the first really viable addition, Airbnb. Airbnb is a private rental platform where by people with spare bedrooms are competing with hotels, peer-to-peer. 

While I was at this talk the other day, the speaker asked, “Why is this (the peer-to-peer economy) emerging?”

There are two obvious answers, economic reasons (economic hardship) and technological reasons (the internet can now facilitate these interactions). Lots of people can, have and do write on this. All the reasons are fascinating, but I feel there is an additional cultural reason rarely discussed.

There has been a quiet cultural revolution at play in the last decade. I am at a bit of a loss as to what to call it; but I am going to go with the us-and-us revolution.

To understand this cultural revolution, I, with virtually no history education am going to begin in the early 20^th century. In the early 20^th century, with greater and greater mass migration and “fast” transportation, a monumental, global us-and-them ethos arose. Sure, many things led to both world wars, but I would argue that migration and transportation, resulted in an us-and-them ethos contributing to escalation. Before the 20^th century, people were just far less likely to interact with people from 100 miles away let alone thousands! Suddenly there was no implicit contract which had, here to date, been provided by the communal village knowledge of people’s reputation. Without that knowledge, transience people could take advantage of their transience (or just simply do things in ways that were not locally acceptable) and non-transient people rightly would distrust outsiders. This bred the deeply rooted us-and-them ethos.

Us-and-them ethos + some differing beliefs (+ hostility)  = wars

Hence, world wars. Eventually these world wars took their toll on the global ethos, and the cold war started. Everyone focused on their own portion of the globe and their own people. “You don’t cross this line… and we will all go about our way focusing on our own backyards.”

But these were just lines. In America, men brought home women from Asia, in Europe families sought to be reunited across lines despite having new very separate lives.  And then kids starting backpacking through Europe. Tendrils across these us-and-them designations grew and grew.

I would argue that slowly, between 1980 and about 2000, the concept of us-and-them got progressively harder to determine. The other day, I hear on the radio (ok... streaming podcast) that there was a Korean vs. American soccer game. The announcer asked who the Korean American’s were rooting for?  This was an excellent question and the root of the us-and-us cultural revolution. Who is us? Who is them?

And then came Marc Zuckerberg. (Happy Birthday to Facebook today, February 4^th, by the way.) I am not super fan. I think he is smart and I think he was mostly in the right place at the right time. But I am about to credit him with significantly affecting global change.

I think Facebook dramatically eroded the us-and-them ethos. I have friends who post their political views. Some of those views I absolutely fundamentally disagree with. They are still friends. In the end, the pictures of their kids are still cute and I know that although I think they are entirely wrong on their political choices, their choices are rooted in the same deep-seated hope and desire for a better future.

With mass travel, cheap telecommunication, ridiculously easy sharing (and over sharing), we still entirely believe in the concept of us-and-them, but we also have come to realize the lines are utterly arbitrary, fleeting, and constantly changing.

Now add to it the growing “small world” effect we are becoming aware of, also frequently illuminated by Facebook. I work in the cruise industry, so it is not a huge surprise to me when I realize a friend in Sweden knows a friend of mine in Australia. But at this point, I think more than half of people on Facebook have had the experience where suddenly they realize a childhood friend, from perhaps a state away, is a mutual friend of someone they only recently met at work. Our large networks are folding back over into themselves. We are more and more aware it is indeed a small world.

I am loosely a Santa Barbara girl. In Santa Barbara, an area of roughly 140,000 people, you generally can’t make it through a week without running into someone somewhere. I don’t even live there and when I am there, generally, within a few days, at the mall or the grocery store, I run into someone. The entire town of 140,000 is a collection of individuals one degree of separation from one another.

When you are one degree of separation from every person you interact with on a daily basis, the social contract strongly inhibits negative action. You just can’t screw people over twice in a town that small.

And I think this is what the internet has done. It has expanded the enforcement of social contracts to entire strangers. Yelp being a great illustration of this.  A car mechanic that constantly does poor work will inevitable be exposed even in a city with millions of people.

Thus I feel we have entered the era of trust and the trust economy. When I go onto eBay and buy something, I generally trust I will receive it as advertised. Don’t get me wrong, I think there are people out there (Nigerian princes) trying to defraud people. But I also think there are radically fewer of them than there are of people just honestly trying to sell their used items on eBay.

And as people have more and more decent interactions with strangers, facilitated by the internet, I think only better things are to come. These acceptable positive interactions are like an economic lubricant.  The more acceptable internet based economic transactions you have with complete strangers, the more you choose to engage in.

The talk I was at was hosted by a vaguely environmental group.  Part of the argument here is that this will lead to a better use of resources. I don’t want to buy a $100 drill for the ten minutes I am going to use it this weekend, but would rather borrow it for $20. This leaves me with $80 to spend on other things. (The concept of “better” resource use is left to the be{er}holder.)

It is still going to take the legal system quite some time to figure out how to assist ensuring honest peer-to-peer interaction. (After all, if the drill breaks was it because I was using it improperly, probably, or because it was improperly maintained?)

But all in all, I think we are on the cusp of a momentous shift in the economy, and while economists and technologist speak about all sorts of reasons, I think our growing awareness of membership in one humanity, with a bazillion arbitrary groupings, is not a negligible component in the emergence of the peer-to-peer economy.

Stupid: The once imperative necessity to distrust.

Cool: The growing emergence of trust.

Footnote 1: I can  hear my friend Aaron Brown contesting the “first time” claim in the statement above. I believe Airbnb is the first, mass, peer-to-peer platform selling something other than eBay’s specialty of small consumer goods. Craigslist is not a platform, but rather a listing service.