A new industry known as Uber has been taking the transportation industry by storm. Uber connects passengers with drivers of vehicles for hire through a smart phone application. It utilizes the Internet and what is known as the “sharing economy” to make transportation easier, quicker, and more efficient. According to Uber’s website, the company, “By seamlessly connecting riders to drivers through our apps, we make cities more accessible, opening up more possibilities for riders and more business for drivers.”

This broader form of production and service provision, called the sharing economy, has several distinct, libertarian features. The core libertarian economic principles are the invisible hand, voluntary exchange and cooperation, autonomy, and decentralization; and they are all being put into action in the sharing economy. Uber demonstrates the essentials of libertarianism by creating a direct relationship between a profit seeking driver and a service-seeking passenger through an unregulated, voluntary, mutual beneficial market exchange.

This kind of laissez-faire interaction is only possible with the advent of modern technology and the Internet. The World Wide Web is putting power in the hands of regular individuals at ever decreasing costs (especially transaction costs). It’s making production and exchange cheaper, more efficient, and more autonomous. Uber is ultimately taking power away from state enforced taxi cartels and putting it in the hands of independent, self-directive customers and producers.

As economist Gordon Tullock explained in his influential paper, “The Transitional Gains Trap,”government created barriers to entry artificially lower the amount of taxi drivers. With the reduction in supply, price skyrockets. The barriers to entry in the taxicab business come in the form of Taxi Medallions, which are exorbitantly expensive. While the licensing restrictions are said to be about “consumer safety,” all they do is create a cartel that can reap monopoly profits in an absurdly regulated industry – making the consumers worse off.

But wait! There might be a chance for human liberty in the face of an intrusive state and politically entrenched tax companies after all! The miracle of modern technology is starting to give producers and consumers who are sick of government regulation, the ability fight the tax cartels with things like the sharing economy and Uber.

In “The Wealth of Networks,” by Yochai Benkler, it’s argued the Internet brings an alternative style of economic production. One that is networked rather than managed. One that is self ordered rather than organized. In fact this internet-enabled, alternate style of production is creating alternatives to the state and state regulated industries such as the taxicab industry. No longer do people have to pay insanely high prices for medallions in order to drive people around. Customers no longer have to get shafted by an artificially low supply of drivers. They have an alternative: Uber.

Dave Pollard writes,

“What is the reason that so many bottom-up ideas and innovations never make it into the commercial marketplace? I’m not a believer in conspiracy theories that corporations deliberately buy up and suppress more durable inventions to keep them from cannibalizing their market. I think it’s more likely that people with good ideas are just disconnected from those with the skills and resources needed to implement those ideas. And vice versa — those with commercialization skills and resources are rewarded by the market (and by shareholders) for not fixing what ain’t broke, for not changing what they’re doing until and unless they have to.

So on the one hand we have an astonishing and unprecedented flood of good ideas, made possible by the democratization of knowledge (the Internet etc.), and on the other hand we have this incredible inertia by those who could make those ideas reality, change everything.”

Uber and the sharing economy are currently playing a crucial role in giving the less well off, the less politically connected, and the more innovative and creative, a revolutionary opportunity to work around the government. Furthermore, when looking at the bigger picture, Uber and the sharing economy are vital to the libertarian cause: giving people the tools to shape their lives as they wish – according to their own volition and wishes – regardless of if the state approves. They are part of a new, liberated economy that is slowly but surely transcending government shackles.


This article was originally published at the Students For Liberty blog.