How the sharing economy makes us all richer

The Mirror tells us that we Brits have £48 billions' worth of unused stuff cluttering up our households. This is exactly why the sharing economy makes us all richer.

Brits are so unwilling to bin unused items that they have £48billion of stuff stashed away.

Researchers found a typical ­home has a hoard worth £1,784.

Consider what that sharing economy is. It is renting out those things which already exist, isn't it? Putting them to use instead of leaving them to rot in the attic. Or in the case of some AirBnbs, it's is the attic being rented out.

Of course, this all already happened. We did borrow the lawnmower or the electric drill from the neighbour. But this took place in Polanyi's web of mutual obligations. What this new economy of apps and websites is doing is lifting it all up a stage into more Smithian impersonal commerce. The advantage of which is that it all takes place on a larger scale, we are dividing and specialising on a larger, thus more efficient, scale.

The net effect of this is that it does indeed make us all richer. There's something called the Solow Residual, that being a crucial source of economic growth. It's the bit of economic growth which comes from doing things better, rather than by feeding more resources into the system.

So, we've some stack of things lying around doing nothing. This is capital - it's all been bought and paid for and it is indeed capital of society. We now put this to work by sharing it around those who actually need it to do more than clutter up the basement. We're getting more output from that same capital base we've already got as a society. That's an increase in that Solow Residual, we're richer by having become more efficient in our use of extant resources and capital.

Sure, he very phrase "sharing economy" is more of the usual hippy dippy nonsense but it's still true that it does indeed make us richer.