Someone on the Internet was Wrong!
Normally I ignore and archive the news-related emails from LinkedIn, but last week an article caught my eye since it was about the sharing economy in China. I was surprised that type of business would thrive in China – a country that isn’t known for its appreciation for capitalism or economic freedom – so I clicked on it.
I was immediately disappointed. Near the beginning of the article, I ran into this gem of a quote:
“After all these years, China is finally embracing its communist roots,” said Andy Tian, an entrepreneur and co-founder of Asia Innovations Group in Beijing. “That’s the essence of communism: communal sharing.”
Being a lover of economics, I’m used to people not understanding the subject very well and posting articles full of fallacies on the internet for all to read, but confusing communism and capitalism is impressively bad. It’s also baffling to me that “entrepreneur” and “communism” were used in the same sentence in that way.
The sharing economy is capitalism. The business owners own their resources – whether it be basketballs or umbrellas or bicycles – and charge users to rent them. If they don’t charge enough to cover expenses or if there isn’t enough demand, they will go out of business. If there’s a demand, they meet the needs of consumers and are rewarded with profit. The author even later explains the companies as such:
In its latest iteration, the sharing economy in China has evolved into something like an internet-enabled rental business. Unlike Airbnb and Uber, which provide a platform that connects users to existing resources, the latest sharing companies in China own the product and rent it out to users.
Communism would be if the government owned the businesses and their resources and shared (rather than rented) the basketballs, umbrellas, etc with the citizens…which would mean that there would be no more umbrellas at the kiosks within a few days.
In fact, the “sharing” economy is actually an inaccurate and confusing name since renting and sharing are completely different. You don’t talk about how a coffee shop shared their coffee with you, and you in turn shared your money with the coffee shop (as my boss joked after I shared this article with him), so we also shouldn’t use the word share when we really mean rent or purchase. “Share” does not have the moral high ground, and there’s nothing exploitative about entrepreneurs trying to solve a unique problem in exchange for money.
Nomenclature aside, it’s still not an excuse to confuse capitalism for communism.