Old Economy vs. New Economy. Keynote speech at the annual EUKN EGTC Conference

Keynote@Conference on the Civic Economy - Time to get ready Organized by European Urban Knowledge Network (EUKN)
in cooperation with the municipality of Amsterdam &Pakhuis de Zwijger Amsterdam 20.10.2014.
Old Economy vs. New Economy
A juxtaposition.
Time to get ready for the civic economy.
By Thomas Dönnebrink,
OuiShare Connector Germany
Freelance Expert Collaborative Economy
Illustrations by Thuy Chinh Duong

Präsentation by Thomas Dönnebrink - OuiShare Connector Germany & Freelance Expert Collaborative Economy / Illustrations by Thuy Chinh Duong
@ Conference on the Civic Economy - Organized by (EUKN) in cooperation with the municipality of Amsterdam & Pakhuis de Zwijger - Amsterdam 20.10.2014

Thank you very much for the invitation to this Conference and for entrusting me with the first
keynotes of the day.
My name is Thomas Dönnebrink. - I am based in Berlin working as a Freelancer on the
Collaborative Economy. And I am one of the connectors of OuiShare, a global network of people
interested in promoting a collaborative & sharing society.
I want to present you a comparison of two economies: One that I want to call old, as it starts
showing symptoms of age. And one that I want to call new – for now – as it is about to be born. –
Or more precisly – is already alive and kicking.
Of course this juxtaposition will be schematic, at times provocative and therefore simplistic.
Nevertheless I hope this presentation will contribute to the conference some food for thoughts
and debate about the bigger pictures and can add some cents to the discussion of what is new
and might be promising and challenging.

Here is what you can expect
First I will give you an overview of the Collaborative Economy, my home turf and the angle from
which I will look at the contrasted economies in the second part.
In the third part I shortly present what some people think will happen next.
I assume succeeding speakers and contributors will follow up with much more detail and
precision hereafter.

Let‘s start with regarding the collaborative economy.
We distinguish four different fields, which of course overlap & reinforce each other.
Best known and most widely spread is the field of collaborative consumption.
Less known, but likely even more disruptive to the status quo in the future are the fields of
collaborative production and collaborative finance.
In a fourth field called openness or collaborative learning, concepts like open software, open
hardward, open knowledge, open government and governance are summarized.
Aspects of this field of openness play an important role in all three fields mentioned before.
I will add a few words to each of the four fields later.

Talking about the collaborative economy we like to start with a quote of Chris Anderson, the
former chief editor of the Wired magazines, who summarizes well the first 20 years of this
millenium in two sentences.
He says: The past decade was about finding new collaboration and innovation models on the
web. The next decade will be about applying them to the real world.

Let me elaborate on his statement for a minute.
Looking at the first decade we see platform like Wikipedia, Linux, Wordpress, flickr, Facebook,
Youtube &Twitter popping up and growing strong and influencial.
They allow extending communities to share music, knowledge, code, picture, videos, news with
the entire world.
A whole generation, the DIGITAL NATIVES, have grown up in this online world of collaboration &
sharing. It is part of their natural DNA and behaviour.
What‘s next is that this behaviour and attitude of collaboration & sharing gets applied to the real
world. Thousands of platforms - like blabla car, arbnb or food sharing - examples used in the
illustration - are emerging everywhere, enabling people to access and share not just digital goods
online but real world assets.
What we are seeing is a merging of the online & offline world.

To summarize this development, we can distinguish four phases:
Phase 1 We connect to share information
Phase 2 We connect to each other to form social networks
Phase 3 We connect to share bits
Phase 4 We connect to access and share atoms
In a nutshell: sharing & communal use reaches new dimensions through new technology and new
experiences.

What is driving this collaborative economy? We see four main drivers at work.
No.1. Rapid expansion of technological innovation and digitalisation through Internet & mobile
No. 2 A longing for community & participation after decades of autistic materialism.
No. 3 An increasing environmental consiousness &awareness of the planet‘s limits
No. 4 Economic constraints. Necessity as the mother of innovation
Driver 2 &3 are actually to a large extent a renaissance of traditional behaviours and modes of
connectedness,
Nevertheless in their drive to alter the status quo we can consider them to be expressions of
social innovation.
These drivers of social innovation are joining force with the drivers of technological innovation
and are therefore creating a new disruptive quality
which I suggest to call COLLABORATIVE INNOVATION
I consider this collaborative innovation - an important origin as well as engine - for the value shift
I see unfoalding.

There are certain pre-conditions to the collaborative economy.
1. Trust: Digital Technology, GPS, Social Netzwerks are enabling collaborative technologies like e.g
reputation systemes to create Trust. Mistrusted strangers become trusted frangers or friends.
2. Belief in the commons is created by: a value shift concerning importance of property, life styles
& aims in life.
3. Idle capacity is increasingly realized and considered inefficent and wasteful (classical example:
the car 23/24)
4. Value of growing networks allow for better and better matching and transaction costs are
developping towards 0.
The more the pre-conditions are improving - and all four do - the faster and wider the
collaborative economy will extend.

Now let‘s have a closer look at the four areas of the collaborative economy. First: collaborative
consumption.
WHAT do we share?
(Almost) Everything can and will be shared as long or as soon as necessary pre-condition -
mentioned in the last slide - are met.
HOW do we share?
We actually are observing a renaissance of traditional marketplace behaviour like reselling,
bartering, renting, lending, etc.
We do share without or with money and with or without using technology
WHY do we share?
Even though economic considerations of saving or earning money often comes first.
Environmental and social reasons of achieving more recource efficiency and connectivness with
other people gains increasing importance.
So what are the resulting effect?
1. Access beats ownership
2. Raise of new business modells
3. Raise of new Collaborative Lifestyles/Opportunities
In a nutshell: Not just what we consume, but how we consume changes

Second: Collaborative Production
Coworking spaces are doubling every 12 months for five years in the row now.
More and more people are coming together in an increasing number of fabrication labs and
hackerspaces to develope, create and produce collaboratively.

In the past preaggregated capital & infrastructure was usually the precondition to start
production.
Now increasingly easier and cheaper access to means of production give more and more people
the opportunity to become producers.
This can be considered a democratization of production.
Open Hardware provides one with licence free tools and components.
FabLabs & Hackerspaces gives one access to spaces and machinery.
Open Communities enables one to hook up with the right people and get free access to valuable
knowlege
Marketplaces like Kickstarter or Etsy gives everybody the opportunity to raise funds or sell their
produce
This democratization of production will also foster its (Re)localisation.
Michael Bauwens encapsulated it well in his speech at the recent Degrowth confrence in Leipzig:
If it‘s light it should be global. If it‘s heavy it should be local.

Just to give an example how far collaborative production can challenge established structures,
I want to present Wikispeed. An open source car project.
The achieves 100 MPG, runs on less than 3 liters. The first prototype was built in 3 months by 40
volunteers with almost no budget. The car consists of modular components bringing product
cycles down to just days allowing rapid experimentation & application of new innovations.
In contrast the traditional automotive industry has product cycles of seven years, involving big fix
costs, both making change & innovation costs huge.
How disruptive these differences will play out in the years to come has to be seen.

The collaborative Finance seems to develop into another game changer.
We distinguish between crowdfunding, crowdinvesting & crowd lending.
All variants provides everybody with new opportunity to raise money & bypass banks.
The 5,1 Billion $ of wordwide collaborative finance raised in 2013 were still neglectable peanuts
for the banking industry.
The 1000 Billion $ the Forbes Magazine predicts for 2020 however will not feel like peanuts
anymore.
A look at the Top 11 crowdfunding campaigns to date shows that each of the hardware, video
game, or real estate projects has raised multiple millions.
Even a funny campagne to make a potato salad managed to raise 55.000 $

Due to time constraints I can‘t dig into the potential of the vast disruptive force of this fourth field
of the collaborative economy.
For the sake of completeness I just want to emphasize the fact that the free online encyclopedia
Wikipedia managed to make proprietary versions - like the 200-year-old Britannica or the highly
funded Microsoft Encarta obsolete within a few years.

The collaborative economy is on the rise and increasingly sinks into the public awareness as these
front page covers of widespread magazine Illustrates.
As the Economist puts it:“It’s time to start caring about sharing”.

To sum up the first part - The Collaborative Economy is changing
NOT ONLY how we ...
... live, travel & move around
... learn, work, produce & finance
BUT ALSO HOW we
... experience our environment & communal life
... And how we think & act
As Charles Eisenstein, the US social philosopher says:
Every system is build upon values and a story. If you want to change the system you have change
the underlying values and the story that upholds it. The best leverage to system change.

This leads us to take a look at the systems: old economy vs. new economy.
As mentioned at the beginning the assessments will be schematic, at times provocative.

To give a first overview of the old economy and society.
It is characterized by the two main players: the state and private enterprises looking for power
and for profits. Both are organized in hierarchical pyramids and function in a top-down manner.
Dominant features are competition, order & control achieved by means of extrinsic motivation
via rules, punishment or incentives. The state and corporations function as intermediaries, which
try to insure, control & secure scarcity via access barriers, access control and monopolies in order
to guarantee (high) profit and (unchallenged) power. Accompanying inefficiencies and
intransparencies are accepted or even desired. Personal property is of highest value allowing
exclusivity & status, also echoing the underlying worldview of the homo oeconomicus trying to
maximise personal benefit

A first overview of the new economy and society draws a different picture
People have become players themself. Peers organize the satisfaction of their needs among each
other - beyond market & state They are organized in peer networks that show horizontal
structures like a pancake. Dominant features are collaboration, trust, self-organisation and
intrinsic motivation. Old division between producer vs. Consumer or employer vs. Employee are
blurring or merging into one. - People become prosumers & microentrepreneurs. Peers interact
directly with each other - bypassing intermediaries and thus creating more transparency and
efficiency. Personal property is valued less as access to property and participation in the
commons allows for inclusion & belonging also echoing the underlying worldview of the homo
collaborans wanting to do what benefits his/her surrounding.

Let me elaborate on this first overflight for a few minutes. I will continue the juxtaposition of the
old and new economy under six headings. Starting with the general circumscription.
The old economy is a market or trade economy, but how to call the new one: Collaborative? P2P?
Care? Solidarity? Or Civic Economy. Open to debate. The focus of the old economy is on the
material world, on objects and products that have to be pushed into the market.
Success is expressed and measured in GDP performances. As a greed economy people try to take
as much as they can and give as little as possible. Internalising profits and externalising costs,
It is Ego-centric and extractive as well as exploitive in nature.
The focus of the new economy is people and the immaterial world.
Success is expressed in Gross National Happiness Index or other forms of measurements.
As a need economy people give as much as they can and take what they need (like in families and
circle of friends). It is Eco-centric and additive as well as contributive in nature.
The old economy shows a tendency to create inequality, the new economy more equality.

Concerning the conception of the world of both systems
We already mentioned the homo economicus, the lonely fighter
separated from nature which he treats and exploits as commodity
and separated from other human beings with who he competes for resources
in a world perceived as full of scarcity. Focus is on quantity, transactions, products and objects.
Success is measured in absolute and relative aggregation of private ownership.
The homo collaborans, considers himself as part of nature which he tries to sustain-and
he feels connected with his fellow humans with who he collaborates and shares goods and
experiences in a world perceived as full of abundance. Focus in on quality, connectedness,
people & relationships. Success is measured in felicity, usefulness and meaning.
The old economy shows a tendency to exclusion & enclosure,
the new economy is more inclusive, open & transparent.

Speaking of planet & environment.
The old economy regards & treats nature & natural resources as commodities, fit for exploitation.
It‘s sales oriented economy is based on accelerating product-in trash-out cycles increasingly
accumulating waste and toxic residues.
Depletion of the resources finally create scarcity & conflict.
The new economy considers itself an inseparable, interdependent & symbiotic part of nature.
The decelerated need oriented economy is organized in closed cycles, avoiding disposal or use of
toxic components.
Circular arrangements and fair distributions avoid scarcity & conflict.
The old economy creates monocultures and degenerates the natural basis of existence.
The new economy has a stronger inclination to (bio)diversity & sustaining the natural livelihood.

Contemplating people in both systems
People in the old economy tend to have a more static position, usually fulfilling one role
(like one profession, one job, or a certain task)
Often this role is defined and directed by others and express a dependency relationship.
Regulations, control, punishment and incentives become means for extrinsic motivation.
People in the new economy find themselves in more dynamic settings.
They tend to have multiple roles and thus increasing options and chances
for more autonomous and active lifestyles.
Which not necessary will make life easier or more enjoyable
as we have to relearn to deal with regained freedom and self-determination.

Concerning interaction in both systems
The old economy is dealing with independent, isolated entities. Independence and dependence
are the prevailing relationships. Competition is the dominant pattern causing entities to work
against each other creating a dog-eats-dog-society where exploitation, exclusion and
monopolization is rewarded with a competitive advantage. Regulations, laws and control have to
keep mutual mistrust in check & balance.
The new economy consists of networks of connected entities. Interdependence is the prevailing
relationship. Collaboration is the default fostering a trust-enhancing society
where sharing, exchange, network effects &the activation of the full potential of the people
achieves better results.

And finally looking at the comparision of organizations.
In the old economy organisations are fairly static units with rigid borders & hierarchical top-down
rule. Goals & processes as well as responsibilities and liabilities are often well defined. Tasks &
responsibilities clearly separated. Both tend to specialization and entrenched habits. Established
structures often involve a great deal of fix costs - causing inflexibility & immobility.
Typical activities of the old economy are: control, direct, manage, plan ahead, aggregate, budget,
execute
In the new economy units tend to me more dynamic, flexible and created ad-hoc with crossing
borders and P2P self-organization.
Goals and processes are formulated ad-hoc or as needed.
Tasks & responsibilities are less separated leaving more space for serendipity & innovation.
The units are often lean and can therefore be very flexible and mobil.
Typical activities of the new economy are: coordinate, ad-hoc building & evaluation, enable,
improvise, experiment.
The old economy tends to centralization & bureaucratization. The new economy inclines more to
decentralization.

The awareness is rising that our current economical system, the old economy, and the direction it
is heading is neither sustainable nor desirable.
A questionnaire of the conservative German media foundation Bertelsmann revealed
that 88% & 90% of the Germans and Austrians desire a new economic order
One that bears in mind the environment, sustainable resource usage & social balance in society.
A staggering result!
Now is the question, how to get to the other side?
And what will happen next?

Jeremy Rifkin,
Economist, Head of Foundation on Economic Trends:
Predicts hybrid economy &
eclips of capitalism till 2060
Leading to 3. industrial revolution
& collaborative commons
Charles Eisenstein
Visonary, Culture philosopher
Expects collapse of old system
due to a future crisis.
Prediction when & where
difficult - like snapping of tight rope.

Here two voices
1. Jeremy Rifkin, Economist & head of the Foundation on Economic Trends, makes a quite precise
prediction
He sees currently a parallel flourishing of both systems partially cooperating, partially competing.
Nevertheless he dates the eclipse of capitalism around the year 2060 and predicts that the old
model will cease to unilateral determine the economy. Reasons for this development are on the
one hand the increasing substitution of the old system through barter, DIY & cooperative
structure. People will have own solar panels instead of buying electricity, will share cars instead
buying an own ones and will exchange spaces among each other instead of renting hotel rooms
Another reason for the decline he sees in a paradox deeply embedded in the capitalist theory and
practice, the margin costs which turns problematic if they reach zero.
Charles Eisensteins, visionary and social philosopher, also expects a collapse of the old system,
but he says that it will be difficult to say when and where this will happen – most likely triggered
through some sort of crisis or disaster.
He compares the old system to a big rope, difficult to cut if it’s loose, but as it tightens a small cut
can be enough to snatch it. When and where this will happen he considers unpredictable.

“Another world
Is not only possible,
she is on her way.
On a quiet day,
I can hear her breathing.”
Arundhati Roy
Indian author & activist

I want to close my key-note with a quote of Arundhati Roy, Indian Author & Activist
Another world is not only possible, she is on her way.
On a quiet day, I can hear her breathing
I think the following two days we will hear many stories of people, projects and initiatives that
will express this spirit of another world possible. They are not the only ones. They are popping up
everywhere: in this city, in this country, all over Europe and in more and more parts of the world.
It is time to get ready for the new economy - and to name the newborn – “civic economy“ - feels
like a good choice.

Further Information
on
www.ouishare.net www.sharitories.net

OuiShare
Is a global community, think and do-tank.
Our mission is to build and nurture a collaborative society
by connecting people, organizations and ideas
around fairness, openness and trust.
Shared values & principles
Openness – Transparency – Independence – Impact –
Feedback - Action – MeetPeopleInRealLife –
PermanentBeta – Inclusion - Play

Community Building
1 Magazin ouishare.net
2 Global Conferences
2 Tours (LATAM/Europa)
5 Internationale Summits
100+ Facebook Groups
200+ OuiShare Events
19000+ Facebook Fans
> 30 cities in Europa, Lateinamerica & Near Osten
2. International Conference 05.-07. May 2014
“Age of communities”

30-city Europetour
Think Tank& Do Tank

Allowing local governments to map priorities for local objectives
to the opportunities in the collaborative development
3 Phases:
• Awareness (understanding opportunities)
• Facilitation (mapping resources, understanding problems)
• Building (building or igniting collaborative structures)
1. Presentation on Smart City Exhibition Bologna (22.-24.10.2014).
See www.smartcityexhibition.it/en or www.sharitories.net
For more information contact simone@ouishare.net or Stina

The Collaborative Sharitories Toolkit will consist of three phases
1. Awareness phase. Helping authorities to map local priorities
to a collaborative economy strategy for addressing questions
like: how to improve mobility, or how to use to generate more
income, or how to adjust regulations. Support explanation
cards and a serious board game will help understand the
opportunities.
2. Facilitation phase. First helping authorities to map existing
players and resources and understand their problems. Second
look into current regulations
3. Building phase. Helping authorities to build up collaborative
structures both directly or by igniting the collaborative
community to help them through challenge prices or other
means and tools.

Thank you !
Thomas Dönnebrink
OuiShare Connector Germany
Freelancer Collaborative Economy
www.about.me/thomasdoennebrink
thomas@ouishare.net
@tdoennebrink
+49 176 32335744
Illustrations by Thuy Chinh Duong
chinh@harry.do @chinhzilla

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