Like Jack ferrying a donkey to market, trading it for magical beans and then escaping the confines of conventional society in ‘Jack and The Beanstalk’, the giant he disturbs is analogous to the giant gray-market behemoth suddenly disrupting our economy, stomping on established forms of commerce and “grinding its bones” to make its bread.
With cutting-edge internet technology we are witness to the rapid reintroduction of ancient forms of economic models into western society. Technologies are “disruptive” when established systems — codified by laws, regulations, and cultural conventions — are effectively circumscribed or abandoned by new habits of mass culture. And we are certainly experiencing a lot of disruption.
What used to be called “the gray economy,” economic transactions neither conventionally legal nor seriously illegal, is exploding. Historically called barter, trading, or sharing, such an economy is not a black-market. Black-markets are moneyed transactions which are explicitly hidden from view, and therefore untaxed and unregulated; gray-markets are generally untaxed and unregulated but visible. Black-markets mostly involve the selling of illegal or stolen goods; gray markets involve ordinary legal items or services.
A traditional gray-market model is the garage sale. In a garage sale, an owner of household items elects to publicly sell them in a visible location to people, mostly strangers, who happen to come across the sale. There are no receipts, taxes paid, or recording of transactions. Items with a value from 25 cents to hundreds of dollars are sold between folks who may never meet again. Despite being advertised in the paper and on telephone poles, government and the tax man “look the other way.”
Suddenly, however, the internet has spawned a nation-wide efflorescence of entrepreneurship, and people are flocking to forms of commerce long thought gone. Airbnb and websites like it allow people to rent their vacant bedrooms to travelers and have altered the travel industry. San Francisco, like Sonoma and virtually every other municipality where such overnight rental activity is technically illegal, recently threw-in-the-towel and cut a deal with Airbnb for the collection of hotel taxes. Lyft and other ride-sharing services are similarly disrupting the taxi industry. Lawn mowers, idle except for two or three days per month, are earning income for owners who rent such tools and equipment by the day via the internet.
Here in Sonoma Valley, Facebook facilitates a sharing and barter service with over 1,000 members. People with possessions no longer wanted offer them for trade to others with different things. Thus a lawn chair can be traded for a delivery of fresh organic produce; a coffee-maker can be traded for house-cleaning services. It’s the true “free market.
This all represents the retrieval of forms of commerce from long ago, forms rendered less workable due to dispersed population, lack of community coherence, fear of strangers and crime, a “throw-away” ethic and the historically high cost of promoting an economic activity. In a virtual instant, the web has swept away such hindrances and has effectively created an online “market square.”
Farmer’s markets were one remaining artifact of older economic forms, ironically a by-product of the sterility of super-markets and industrialized farming. Now the web has replicated the form of farmer’s markets for essentially anything that is used by people.
“Fee-Fie-Foe-Fum” — The tag-line of the sharing economy.