We are in love with things, tangible and intangible. Be it land, consumer electronics, cars, or some trendy toy we must have. We may even fall in love with a brand, an abstraction disembodied of any physical manifestation. The notion of ownership seems to be etched into our DNA since we crawled out the primordial soup.
Once we own something we cling to it. Not only we value it more than its intrinsic market value (a.k.a The Endowment Effect), we would be reluctant to give it away possibly due to our loss-aversion nature (as shown by Tversky and Kahneman, 1991).
It is assumed humans are hardwired to be loss averse due to asymmetric evolutionary pressure on losses and gains: for an organism operating close to the edge of survival, the loss of a day’s food could cause death, whereas the gain of an extra day’s food would not cause an extra day of life.
In 2005, experiments were conducted on the ability of capuchin monkeys to use money. After several months of training, the monkeys began showing behavior considered to reflect understanding of the concept of a medium of exchange. They exhibited the same propensity to avoid perceived losses demonstrated by human subjects and investors.
You see, we were programmed back when hoarding was not a viable option, living day to day, keeping our assets close to our chest, fighting others to take what they owned providing ourselves with better chances to survive for one more day and procreate.
It was after all the best strategy.
This land is not for sale, someday I hope to build on it
Love and Death, Woody Allen, 1975
Cornucopia
Then came plenty. The late 20th century was a time of unimaginable abundance. Never before in human history have we had so much out for grabs. And grab we did. It was the age of bigger is better.
Looking at US advertisements from the 1950s one is immediately cast into a orgy of vibrant colors, shiny consumer products surrounded by smiling faces. If you just buy this ketchup, or that washing powder you’ll soon be as happy as they are. If you cruise down the neighborhood with your sparkling new V8 Cadillac you’ll be the envy of them all. So promised the god of ad(s).
Brains designed in an age of scarcity were being attacked by an amount of available resources they could barely handle. Like a child in a chocolate factory, bathing in the intoxicating smell of cocoa they were overflowed, and just couldn’t get enough.
This addiction forming environment infected western culture and the euphemism: consumer culture was coined.
Not Everybody Needs A Spear
Anyone who has ever moved knows the feeling. The amount of things you pack after a couple of years in some apartment are much greater than you thought you ever owned. You become aware of how many physical objects you have purchased along the years. This awareness soon fades once unpacked in the new place, and you keep hoarding more. As the american cliche goes: “you can never have enough closet space”.
But you can.
Let me ask you to run a quick mental inventory of your current residence. Try to estimate the number of household objects that you use on a daily basis. Now try to give a rough estimate of those which are rarely used (did you think about the power drill?).
Most of us have or would buy a power drill at some point in life. We would only use it once every couple of months, possibly even less, however we thought it would be a good idea to own one. Why?
At first it may sound silly, and you may wave the question altogether. I beg you to pause for a second and let it sink in. Why did you buy that power drill? One plausible answer would be that once you needed it you’ll be forced to buy one anyway, so the rational thing would be to prepare for the situation ahead of time. The deeper answer is that you are preparing yourself to fight a lion.
Your ancestors living on the savanna had to prepare for the worst. There was no time to go get a power tool to fight of the lion when he pounced hungrily into the village. The smart thing would have been to prepare the tools that would fend off the lion ahead of time. One could presume then that we decide to by a power drill due to that ancient part of our brain that instructs us to be as ready for future events as possible. This however overlooks a fundamental difference between the savanna folk and their 20th century counterparts.
The villagers living in the scarcity of the ancient savanna had little resources. They could not have afforded to prepare for every menacing situation, nor did they have the time or materials to equipe everybody with the tools to defeat a hostile lion. Their strategy was based on cooperation. Simply putting it, they had enough spears to fend off a lion but fewer spears than the total available number of able bodied spear carriers. Any other option would be a foolish waste of valuable resources.
And yet we buy power drills.
PaaF (Product As A Function)
When you buy a product you do not buy a physical object, rather a function. A car is worthless as a mechanical and electrical set of components, its only value is in its ability to transport yourself from one place to the other. The same goes for many other daily products, kitchen utensils, cleaning fluids, computers, and even food. The intrinsic value of each of those products is in its function. One may even go further and state that the product is the function.
The only objects that may escape this functional reduction are works of art. A painting is purchased for its emotional and aesthetic value, seemingly not serving any function. However that is not entirely true, as the awe in the presence of beauty feeds our brains as much as food does our bodies.
If we accept this functional abstraction, we would be forced to admit that what we own, are a set of functions some of which happen to be embodied in physical objects. You do not need a washing machine, you need a cleaning function, you do not need a car, you need to be able to travel freely from one point to another. The fact you own all those functions is a relic of a past that is about to change.
The Times They Are A Changin’
Two seemingly disjoint technologies are about to transform the notion of ownership as we know it. The first is 3D printing, while the second is blockchain.
Blockchain, often wrongly synonymous with Bitcoin, is a technology that allows keeping a distributed trusted ledger of financial transactions. Blockchain is just one implementation of such a ledger and not even the best one, but it exemplifies how such ledgers may work.
Every transaction is recorded, approved in a non-refutable way, and available for everybody to see. No central authority is required in order to approve transactions, nor can any central body intervene and modify the ledger (or at least would find it very costly to do so, see 51% attacks).
Such public ledgers are not limited to monetary transactions, rather can support any type of transactionional contract where one side provides resources in return to some monetary or other value.
Imagine you want to go from point A to point B. Some company has parked cars in the streets that anyone can open using a personal identity token. You swipe your token across the car door, and it is now yours. Once you arrive at your destination and get out of the car it is not yours anymore. You owned it for the duration of the drive, no more no less.
In blockchain dialect, you have registered a transaction onto the ledger. The trasnaction holds the exact usage details such as mileage driven, fuel consumed, etc. You will then be charged accordingly.
This simple example can be extended over other types of currently owned products (remember the power drill?). Many types of daily household products can be acquired for a limited amount of time, used and returned to a central or distributed storage. Once you need a power tool, or similar, you’ll just have to order it from storage, own it for a limited amount of time, then return it paying for the partial temporary ownership via a blockchain-like transaction.
Skeptics would claim that such a service is impractical, however Amazon have shown that they can send just about anything anywhere on a global scale at unparalleled levels of service. It is only logical for companies like Amazon to embrace a temporary ownership functional model as it provides additional revenue stream reusing products on a subscription like model.
But Amazon, or for that matter any centralized global company, are not the only plausible players. Local authorities, nation states, even small communities can use blockchain technologies to keep a local public ledger allowing for partial temporary ownership. It can either be centralized as in the case of a local authority providing cars to the city goers, or community oriented where power tools are distributed at private homes, locatable and available on a moments notice to whoever needs them. The underlying ledger allows both.
But partial temporary ownership is just the half of the story. Some products cannot be partially owned. You do need a sofa to sit on, and dishes to eat dinner from. No one in his right mind would partially own his china.
There is one company that almost got it right. IKEA. If you ever purchased anything from IKEA you’d know that it comes as a set of parts you need to assemble yourself. You take a flat pack of nuts bolts and MDF units, follow instructions and voila a new sofa sits in the middle of your living room. But why go to all this trouble?
With the advances in 3D printing it seems plausible that every house would sometimes own a multifunctional 3D printer that could easily print small household products. For larger ones you’d have a local shop that could manufacture the bigger things on demand.
Should you need a new china set for the guests coming on Friday, you’ll simply shop online for the 3D digital file, buy it directly from whoever designed the plates you liked, and print them at home. If you want a new closet, you’ll do much of the same, with the only difference being using the local large 3D printer shop nearby (which would most likely be fully automated).
When objects become digital blueprints that can be 3D printed in an instant, they would go down the same path music did when iTunes was born. Anyone, anywhere can sit in the comfort of their own home and design new products which would then be sold via online channels. One could only imagine the next Spotify for Products.
Not all types of owned objects are going to be shared or manufactured on demand. Some would never undergo this transformation due to sentimental value, or deep emotional attachments. Homes, for example, are more than a set of enclosing walls and a driveway, the carry memories and trigger comforting emotions. However most functional products could be partially temporarily owned.
But there’s a slight complication.
The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin’
And the first one now will later be last
For the times they are a-changin’Bob Dylan, The Times They Are A Changin’, 1964
The Ownership Conflict
When you own a car you regularly tend to it because you know that if you don’t it will break down. This does not hold in cases where shared resources are acquired then relinquished. The endowment effect that compels you to keep your car tidy and in good mechanical condition is much weaker where there is no emotional attachment to one’s property.
The obvious solution would be to create a set of negative and positive incentives for users of shared resources forcing the latter to keep them in good condition for the greater good. However trying to set such incentives is quite challenging. A 100$ fine for improper use of a shared car would be negligible for one, while detrimental for another. On the other hand trying to create an adaptive incentive scheme would be much too costly to maintain, track and update.
Which brings us back to ethics.
No rule set, however extensive can capture every perplexity of human nature. There could be no fixed set of laws without judges to interpret them. In order for a shared ownership model to work we must develop ethics. A culture whose underlying strata grows people who see the value in cooperation rather than rivalry and opportunism.
And there’s one more hitch.
Shared resources such as cars or tools need to be maintained which naturally calls for some central agent. However, as the large scale social experiment in centralized fair distribution of resources called the Soviet Union has shown, it is bound to fail. The main reason is that the managing agents are biased, and would in time act in their own best interest which is rarely aligned with the greater good.
One elegant way around this built-in systemic fault is to use the migration period between privately owned functional resources and shared ones in order to create a decentralized management infrastructure.
Suppose every private car owner places his car on a public blockchain, allowing it to be shared for profit. Each usage of the car is translated into a transaction fee paid to the original private owner. However, it is the original owner’s responsibility to maintain the car, and fix any wear and tear it may experience. Assuming the revenue covers the maintenance allowing for a profit margin, we have created a distributed for-profit shared resource scheme that may actually work.
Moreover, this interim transition period should allow for the cultural and ethical change required for shared resource schemes to function optimally, keeping private ownership while allowing people to experience the nature and benefits of resource sharing.
Or maybe we should leave it to the machines.
The Mechanical Solution
With the recent stampeded for all things AI (Artificial Intelligence) one may ponder the possibility of putting shared resource management in the hands of machines. The latter do not suffer the biologically induced biases our brains have developed throughout evolution, and should be trusted (if correctly programmed) to make impartial decisions.
In the age where autonomous cars are programmed to make moral decisions regarding who to save in case of an accident it is not unfathomable that objective beings would be able to manage, control and maintain shared resources for the greater good.
Or they could become Skynet.