Arun Sundararajan is the Harold Price Professor of Entrepreneurship and Professor of Technology, Operations and Statistics at New York University’s Leonard N. Stern School of Business, and an affiliated faculty member at NYU’s Center for Data Science and NYU’s Center for Urban Science & Progress.
His best-selling book, “The Sharing Economy,” published by the MIT Press, was the winner of a 2017 Axiom Best Business Books Award, and has been translated into five languages. Arun has also published over 50 peer-reviewed scientific papers and over 35 op-eds. We talk to Arun about the Sharing Economy, the end of ownership, and the trouble with GDP.
Let’s start with “The Sharing Economy.” A terrific work, in which you argue that we’re in a major transformation that impacts not only businesses, not only how we work, but also government and society at large. Can you take us through the big picture?
I think that what we’re seeing now is a fundamental reorganization of how the world’s economic activity is conducted. In the second half of the 20th century, the economy in the United States and western Europe was dominated by large corporations that hired people full time and produced goods and services for mass markets. This is a form that evolved over 200 years before that from the person-to-person marketplaces of Adam Smith in the 18th century through the emergence of the railroad, the telegraph, the telephone, mass distribution, mass production to become the dominant way of organizing economic activity. What I’m seeing happen in the first half of the 21st century is the replacing of this corporate model, this industrial capitalism model with a different one that is much more centered on platforms where some of what used to happen within the traditional company is delegated to a distributed crowd of individual entrepreneurs, so to speak. So we’re moving away from the industrial economy towards much more of a sharing economy or a platform economy or a crowd-based capitalism economy where the intermediary sort of aggregates the demand. They provide search, discovery, matching. They provide some trust and risk management, but what you essentially have is hundreds of millions of consumers transacting directly with millions of tiny businesses who aren’t local like the 18th century merchants of Adam Smith, but are now reaching a global market powered by platforms like Facebook and Google and Airbnb and Uber and so on.