Skip to content
CityAM
Main navigation
  • News
    • News
      • Latest Business News
      • Economics
      • Politics
      • Tech
      • Banking
      • FTSE 100 Live
      • Retail
      • Insurance
      • Legal
      • Property
      • Transport
      • Markets
    • From our partners
      • AON
      • Bayes Business School
      • Canada BIDs
      • Central London Alliance CIC
      • Destination City
      • Halkin
      • Olympia
      • Inside Saudi
      • Tottenham Hotspur Stadium
      • Santander X
      • YEAR SIX Dividend
    • Featured

      Starmer vows to end system ‘failing our kids’ ahead of expected social media ban

      Keir Starmer speaking at London Tech Week conference, discussing innovation and technology advancements in the UK.

      Submit a story

      Tell us your story.

      Submit
  • Opinion
  • Sport
    • Latest Sports News
      • Sport
      • Sport Business
    • From our partners
      • The Morning Briefing: SBS x CityAM
      • Aramco Team Series
      • LIV Golf
    • Featured

      Can football conquer the US? Why culture is key this World Cup

      GettyImages 2281127577 featuring a significant news event or business setting, capturing key moments and interactions

      Submit a story

      Tell us your story.

      Submit
  • Life&Style
    • Life&Style
      • Life&Style
      • Toast the City Awards
      • The Magazine
      • Travel
      • Culture
      • Motoring
      • Wellness
      • The RED BULLETiN
      • Do it with Shared Ownership
      • Media Speak Hub
    • Featured

      The best places to eat sandwiches in Lisbon, from bifanas to pregos

      Bifana do Afonsos famous bifana sandwich showcasing tender pork in a freshly baked roll with savory sauce.

      Submit a story

      Tell us your story.

      Submit
  • Investec
  • Events
  • Latest Paper
Monday 14 December 2015 9:11 pm

Uber, drills and the death of ownership: Why the future is renting… everything

By: Express KCS

Add as a preferred source on Google

If markets are so great, why do firms exist at all? To a non-economist, that might seem like a bizarre thing to ask. Yet the growth of the misleadingly named “sharing economy” is making it one of the most important questions for understanding the future economic structure of our world.

We have traditionally thought that these islands of planning (firms) – with their hierarchies, staff oversight, HR departments, and standardised contracts – exist because there can be significant transaction costs to buying in labour on an ad hoc basis as opposed to employing staff permanently. But changing technology is enabling entrepreneurs to find ways of lowering these costs, leading to a future in which there is a lot more renting and a lot less buying.

This fascinating development is outlined in detail by professor Mike Munger in the IEA’s recent book Forever Contemporary: The Economics of Ronald Coase. The essential insight is this: we buy many products or services not because we want ownership of them per se, but because we want access to the service they provide. Many people own a drill, for example, so that they can make a hole in the wall to put up a picture should they need to. Most of us (though not all) own cars as vehicles to get from A to B. Firms want workers to undertake a particular role.

Until recently, in order to access these services, we would have bought a drill, bought a car, and permanently hired the worker. We would have sought to own rather than rent these services because the cost of transacting each time we wanted them would have been too high. We might not have had the information or the mechanisms in place to ensure that we trusted that the product, service or labour we were renting was of good quality, or might have lacked the ability to undertake the transaction quickly and cheaply.

Now entrepreneurs are solving these problems for us. Despite the protestation of taxi drivers, ride-sharing apps like Uber are not just successful because of a lighter regulatory regime – but because they give us options and price information instantly, provide trust mechanisms through ranking systems and driver identity features, and allow for immediate payment without even having to open your wallet. In short, they make it more efficient to rent services. And what is true of Uber, Airbnb and others is increasingly applying to renting drills or finding freelance or “gig” workers.

The implications are profound. As Munger outlines, this revolution is not so much about the production of new goods or services, but about using what we already have more intensely. Apps and entrepreneurs that lower transaction costs could lower the number of drills, properties, cars or even full-time contracted workers that we require to undertake services. Production of goods like drills might plummet as a result, as middle-men find ways for us to use a smaller number of goods or services more efficiently, releasing labour and resources for other pursuits. And as these mechanisms exist for workers too, the whole idea of the firm in many sectors might dissipate – replaced with the hiring of workers for specific tasks.

Of course, not all markets will evolve in the same way. We simply do not know what all the implications will be. That is why it is crucial that, as far as possible, we leave a free economy to find the most productive uses of resources according to consumers’ wants and needs, and allow different organisational structures to provide them most effectively. As Tim Knox of the Centre for Policy Studies has observed, over-regulation is a threat to this happening, particularly regulatory capture. Existing players in markets have incentives to lobby governments to erect barriers to entry to these new rental-enhancing technologies.

Yet these new entrepreneurial ventures also make the traditional regulation versus deregulation debate outdated. By their very nature, the totally new models of doing business and the within-market regulation many of these technologies facilitate will usurp the need for state-based regulation, which will eventually be superfluous. Whether the regulators are willing to give up those powers and resist meddling is another question.

Share this article

  • Facebook
  • X
  • LinkedIn
  • WhatsApp
  • Email

Similarly tagged content:

Sections

  • Opinion

Categories

  • Opinion

Trending Articles

  • KPMG’s Summer Friday half-day rollback signals deeper woes for Big Four giants

  • Inflation expectations at record high in interest rates signal

  • London Tech Week sums up everything wrong with UK tech

  • UK economy falters as deeper damage to growth to come

  • KPMG report on AI found riddled with AI hallucinations

More from CityAM

  • Ask the expert: Should I invest instead of buying a home?

    Personal Finance
    Marianna Hunt discussing financial strategies at a business conference, wearing a professional suit, engaging with the aud...
  • Fintech boss defends sacking entire HR department for ‘creating problems that didn’t exist’

    Tech
    Modern computer workstation with sleek design, featuring dual monitors, ergonomic keyboard, and contemporary office decor.
  • KPMG’s Summer Friday half-day rollback signals deeper woes for Big Four giants

    Big Four
    KPMG office building at Canary Wharf showcasing modern architecture and corporate environment.
  • Job cuts at Big Four firms fuel worker burnout

    Prof Services
    Business professionals discussing strategy in a corporate meeting room, emphasizing collaboration in a modern office setting
  • TG Jones owner Modella puts jobs at risk in shoe retailer overhaul

    Retail
    High streets emptied out as retail sales fell in May.
  • ‘Sounds too good to be true?’ City watchdog clamps down on social media insurance scams 

    Insurance
    The FCA has appointed Liam Coleman interim chair of the FOS.
  • More Than Half of UK Businesses Say Hiring Has Become Harder as Employment Costs Rise by Almost 10% in a Year

    Business Wire
  • James Reed: UK needs entrepreneurs desperately. So I’m gonna fund them

    Opinion
    James Reed discussing business strategies at a conference podium with a focused audience in the background
  • Terms & Conditions
  • Privacy Policy
  • Cookie Policy
  • News
  • Markets & Economics
  • Politics
  • Opinion
  • Life&Style
  • Personal Finance

Follow us for breaking news and latest updates

  • Facebook
  • X
  • Instagram
  • LinkedIn
Copyright 2026 CityAM Limited