Could online marketplaces tackle poverty?

• Every day there are tens of millions worth of resources that don’t enter the economy. Overwhelmingly those resources belong to people who are not well off. There is demand for the resources, but no market efficient enough to trade them.

• The untraded resources are in sectors like: home helps, street cleaning, pet-walking, car valeting, babysitting, local deliveries, micro-loans, home-tuition, bike hire, odd hours of formal employment, hire of a video game console or rental of a personal vehicle.

• There are online markets for these sectors: many thousands of them. Even the biggest, (eg: Craigslist, Gumtree) are simply classified adverts transplanted to a computer screen. They do little to remove the risks, time and market entry overheads for people wanting to sell.

• The private sector alone can’t deliver the very sophisticated marketplaces needed to unleash an explosion of new activity at the bottom of the economy. These complex, irregular, low value sectors need marketplaces underpinned by regular purchasing, official promotion, verification processes and dispute settling authority. Politicians control these levers.

• Government could commit its official blessing to a new system of e-marketplaces. If they do it right, the private sector will then compete to build those markets in return for a small cut of each transaction. This is how countries create National Lotteries.

• Opportunities beyond jobs. Any citizen could immediately sell in any market on their own terms at times of their choosing. There is no cost to entering unlimited numbers of markets. (They will need to prove any legal requirements are met.) Reliability commands a premium.

• Bottom up economy. Instead of services being delivered through centralised organisations, local people can respond to patterns of demand and supply in any sector. The markets provide constant opportunities for providing services, bursts of formal work or volunteering.

• National competitiveness. Could officially backed e-markets succeeded on the scale of National Lotteries? If they did, national workforces would become multi-skilled, more enterprising and booked by any buyer with a few clicks.

The potency of new marketplaces, and the value of official underpinning, is a new policy topic. The JRF paper outlines the key points. Download a copy here.  Could online marketplaces tackle poverty.pdf (1124 kb)

Re-visit the launch event

The JRF paper was launched on 28th January at an event staged by The RSA. The speakers were:

• Matthew Taylor, CEO of The RSA, former Head of Policy at 10 Downing Street.
• James Purnell MP, former Minister for Work & Pensions.
• Jerry Fishenden, Founder of the Centre for Technology Policy Research
• Wingham Rowan, Project Director, Slivers-of-Time Markets.

Download audio of the event here.