For a couple of centuries now, the whole point of industry has been to produce more stuff. But look what havoc that’s caused to the planet. A necessary fashion accessory for residing in New York City might soon be hip waders.
But there’s an alternate economic future. Technology will allow us to do something never before possible: live better while producing less stuff. The key is to optimize everything, and new companies such as Airbnb and developments like the Internet of Everything are showing how this can work.
This kind of optimization could have a huge impact on the environment, a point the world’s leaders seem to be missing. In April, the U.N.’s Intergovernmental Panel on Climate Change (IPCC) published a dire report about global warming, and wonks everywhere again wheeled out their proposals involving emissions policies and alternative energy. Far as I can tell, not one of them suggested encouraging technology that would transform the way society thinks about consumerism and industry.
If anything, governments are working against such change, trying to shut down the likes of Airbnb or RelayRides. Those moves might protect the status quo in the short term but could help turn Milwaukee into a tropical resort in the long run.
Airbnb gets a lot of publicity for its role in the sharing economy. You have extra room in your house or apartment; Airbnb provides a mechanism for you to efficiently rent that space out to travelers—or to hosts of sex parties. CEO Brian Chesky thinks we should pull back and see a broader implication of his service. New hotels are built based on peak demand, so a city can handle a surge when, say, it hosts a major convention. The rest of the time, its hotels might stand half empty. Airbnb creates an accordion-like hospitality industry in a city so that during peak demand, the overflow can go into people’s homes. Big new hotels don’t have to get built, saving capital, energy and material. The city optimizes what it already has instead of producing more.
Another example of optimization is ZocDoc, which allows users to make doctor appointments online—sort of an OpenTable for health care. One result is that patients can find open slots from cancellations and no-shows, filling up physicians’ schedules and allowing the same number of doctors to serve more people. CEO Cyrus Massoumi calls it the “hidden supply of health care.” Again, this lets society do more with what already exists, instead of building another doctor’s office.
These are just tantalizing fragments of the optimizing trend. We’re increasingly optimizing the stuff around us. Internet-based services like Lyft, RelayRides and Zipcar optimize cars. The average single-owner car sits parked 23 hours a day. It won’t take much sharing before the number of cars needed in the world starts to dive. In fact, thanks in part to car sharing, U.S. car sales seem to have peaked in 2008.
The Internet is opening up ways to optimize anything that’s underutilized: bikes, tools, food processors, sewing machines, even that necktie you wear twice a year. In the emerging wave of connected things, a chip in your mower or blender will tell the network when that item is idle and ready to be rented or borrowed. No human intervention needed.
This isn’t just a story of technological innovation. Just because technology builds it doesn’t mean people will embrace it. But people globally are embracing the sharing economy. Maybe they’re stirred by concerns about the climate, or by the economic muck of the past six years. “There is an ongoing paradigm shift about what it means to own a car, a bicycle, a household appliance, a book, a film or a piece of clothing,” writes Brazilian activist Pablo Barros. “The value of a product is beginning to be seen in terms of its use, not in its outright ownership, as per traditional consumer models.”
Or as Jeremy Rifkin, author of The Zero Marginal Cost Society, writes: “This collaborative rather than capitalistic approach is about shared access rather than private ownership.”
While sharing instead of owning may sound radical to some, this kind of optimization has been part of the business world for ages. Henry Ford’s assembly line was a breakthrough in optimization—making more cars with the same number of people. The concept flows through to the present. In data centers, virtualization software spreads tasks to computers that have extra capacity at any given moment, allowing fewer computers to do more work. What’s new is that the Internet ratchets up optimization from business to all of society.
So if optimization plays out, we’ll be able to live well—drive cars, visit cities, wear nice clothes, cut big chunks of wood on a table saw—without having to own each thing we use. We’ll share. That will vastly reduce the amount of stuff that gets made and the energy burned to make and distribute it.
Can that make a difference? The IPCC report says: “For developed countries, scenarios indicate that lifestyle and behavioral changes could reduce energy demand by up to 20 percent in the short term and by up to 50 percent of present levels by mid‐century.”
Optimization will stir up trouble. It’s profoundly disruptive. If fewer cars are made, car companies will lay off workers. Multiply that across the economy. Companies might make less money, which means some people might make less money. Gross domestic product, which measures how much a country produces, might fall. This will all seem alarming. Economic success has always been defined as growth—making more is equated with doing better. We apply that to individuals, companies and nations.
But a lot of theorists like Rifkin and Barros are asking whether that’s an outdated way of thinking. In an optimizing economy, making more won’t be the same as living better. And making less might actually keep us on this planet a while longer.