Could online marketplaces tackle poverty?

Attended a RSA lunchtime event on 28th January,  chaired by Matthew Taylor, but where Wingham Rowan, James Purnell MP and Jerry Fishenden of the LSE put forward the case for online marketplaces.   The basic pitch is that the Government should be encouraging the development of an online market (like eBay) but focused on the needs of the less well off and unemployed – allowing them to trade time and skills, resources and even money.  Wingham showed a good  working prototype  of the system at ‘Slivers of Time Working’ project, and there was also an excellent report handed out from the Joseph Rowntree Foundation titled ‘Could online marketplaces tackle poverty?’.

It’s an interesting space.  Many people in poverty have many different sources of income – could be a mix of benefits, informal work & perhaps other black or grey market activity.   A lot of services are difficult to market outside personal relationships.  The ‘slivers of time working’ project enables people to track reputation, build skills and potentially use these skills to enter the full time work market.   Potentially the same system could be used for trading or hiring goods, and even provide a mechanism for micro-credit services.

I see this as a great opportunity for a large company who wants to get really involved in a widespread internet project.  To make this work, the core system needs to have an extremely low cost of operation (under 2% of the revenue value traded on the market), but if you can make a system that works widely in this way then I could see it become the defacto way of trading many resources – and potentially not just confined to the less well off.  It could easily become another eBay or Craigslist if it went global.

Wingham argues (and I suspect he is right) that to make this happen widely requires government intervention.  He puts forward the idea of operating in a similar way to the National Lottery – the Government scopes the system and gives a monopoly to the successful bidder -and provides some interfaces that would not be otherwise available (for example – support of the new Independent Safeguarding Authority vetting and barring scheme to identify unsuitable people). But the national system would be funded commercially.   It’s a very low cost model for governments to innovate in areas that are very difficult to  impact effectively in other ways.  I believe that all political parties should be looking at schemes like this – and potentially has all kind of payoffs for society.

One challenge pointed out by James Purnell was that governments were driven by targets – and in the employment area the main target was about moving people from unemployment to full time employment, and were not interested in supporting schemes that didn’t have this as the major goal.

Anyway – I recommend reading the Joseph Rowntree Foundation report available in PDF form.