Author, 'The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism'
This post is excerpted from Jeremy Rifkin's new book, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism, published today by Palgrave Macmillan.
The
capitalist era is passing... not quickly, but inevitably. A new
economic paradigm -- the Collaborative Commons -- is rising in its wake
that will transform our way of life. We are already witnessing the
emergence of a hybrid economy, part capitalist market and part
Collaborative Commons. The two economic systems often work in tandem and
sometimes compete. They are finding synergies along each other's
perimeters, where they can add value to one another, while benefiting
themselves. At other times, they are deeply adversarial, each attempting
to absorb or replace the other.
Although the indicators of the
great transformation to a new economic system are still soft and largely
anecdotal, the Collaborative Commons is ascendant and, by 2050, it will
likely settle in as the primary arbiter of economic life in most of the
world. An increasingly streamlined and savvy capitalist system will
continue to soldier on at the edges of the new economy, finding
sufficient vulnerabilities to exploit, primarily as an aggregator of
network services and solutions, allowing it to flourish as a powerful
niche player in the new economic era, but it will no longer reign.
What's
undermining the capitalist system is the dramatic success of the very
operating assumptions that govern it. At the heart of capitalism there
lies a contradiction in the driving mechanism that has propelled it ever
upward to commanding heights, but now is speeding it to its death: the
inherent dynamism of competitive markets that drives productivity up and
marginal costs down, enabling businesses to reduce the price of their
goods and services in order to win over consumers and market share.
(Marginal cost is the cost of producing additional units of a good or
service, if fixed costs are not counted.) While economists have always
welcomed a reduction in marginal cost, they never anticipated the
possibility of a technological revolution that might bring marginal
costs to near zero, making goods and services priceless, nearly free,
and abundant, and no longer subject to market forces.
The near
zero marginal cost phenomenon has already wreaked havoc on the
entertainment, communications, and publishing industries, as more and
more information is being made available nearly free to billions of
people. Today, more than forty percent of the human race is producing
its own music, videos, news, and knowledge on relatively cheap
cellphones and computers and sharing it at near zero marginal cost in a
collaborative networked world. And now the zero marginal cost revolution
is beginning to affect other commercial sectors, including renewable
energy, 3D printing in manufacturing, and online higher education. There
are already millions of "prosumers" -- consumers who have become their
own producers -- generating their own green electricity at near zero
marginal cost around the world. It's estimated that around 100,000
hobbyists are using open source software and recycled plastic feedstock
to manufacture their own 3D printed goods at nearly zero marginal cost.
Meanwhile, six million students are currently enrolled in free Massive
Open Online Courses (MOOCs) that operate at near zero marginal cost and
are taught by some of the most distinguished professors in the world,
and receiving college credits.
The reluctance to come to grips with near zero marginal cost is understandable.
Many,
though not all, of the old guard in the commercial arena can't imagine
how economic life would proceed in a world where most goods and services
are nearly free, profit is defunct, property is meaningless, and the
market is superfluous. What then?
A powerful new technology
platform is emerging with the potential of reducing marginal costs
across large sectors of the capitalist economy, with far reaching
implications for society in the first half of the 21st Century. The
Communications Internet is converging with the fledgling Energy Internet
and Logistics Internet in a seamless twenty-first-century intelligent
infrastructure -- the Internet of Things (IoT). The IoT will connect
every thing with everyone in an integrated global network. People,
machines, natural resources, production lines, logistics networks, the
electricity grid, consumption habits, recycling flows, and virtually
every other aspect of economic and social life will be linked via
sensors and software to the IoT platform, continually feeding Big Data
to every node -- businesses, homes, vehicles -- moment to moment, in
real time. Anyone will be able to access the IoT and use Big Data and
analytics to develop predictive algorithms that can dramatically
increase productivity and reduce the marginal cost of producing and
delivering a full range of physical goods and services to near zero just
like we now do with information goods.
Lost in all of the excitement over the prospect of the Internet of
Things is that connecting everyone and everything in a global network
driven by extreme productivity moves us ever faster toward an era of
nearly free goods and services and, with it, the shrinking of capitalism
in the next half century. The question is what kind of economic system
would we need to organize economic activity that is nearly free and
shareable?
We are so used to thinking of the capitalist market
and government as the only two means of organizing economic life that we
overlook the other organizing model in our midst that we depend on
daily to deliver a range of goods and services that neither market nor
government provides. The Commons predates both the capitalist market and
representative government and is the oldest form of institutionalized,
self-managed activity in the world.
The contemporary Commons is
where billions of people engage in the deeply social aspects of life. It
is made up of literally millions of self-managed, mostly democratically
run organizations, including educational institutions, healthcare
organizations, charities, religious bodies, arts and cultural groups,
amateur sports clubs, producer and consumer cooperatives, credit unions,
advocacy groups, and a near endless list of other formal and informal
institutions that generate the social capital of society.
Currently,
the social Commons is growing faster than the market economy in many
countries around the world. Still, because what the social Commons
creates is largely of social value, not pecuniary value, it is often
dismissed by economists. Nonetheless, the social economy is an
impressive force. According to a survey of 40 nations, the nonprofit
Commons accounts for $2.2 trillion in operating expenditures. In eight
countries surveyed--including the United States, Canada, Japan, and
France--the nonprofit sector makes up, on average, 5 percent of the GDP.
In the US, Canada, and the UK, the nonprofit sector already exceeds 10%
of the workforce.
While the capitalist market is based on self-interest and driven by
material gain, the social Commons is motivated by collaborative
interests and driven by a deep desire to connect with others and share.
If the former defends property rights, caveat emptor, and the search for
autonomy, the latter promotes open-source innovation, transparency, and
the search for community.
What makes the Commons more relevant
today than at any other time in its long history is that we are now
erecting a high-tech global technology platform whose defining
characteristics potentially optimize the very values and operational
principles that animate this age-old institution. The IoT is the
technological "soul mate" of an emerging Collaborative Commons. The new
infrastructure is configured to be distributed in nature in order to
facilitate collaboration and the search for synergies, making it an
ideal technological framework for advancing the social economy. The
operating logic of the IoT is to optimize lateral peer production,
universal access, and inclusion, the same sensibilities that are
critical to the nurturing and creation of social capital in the civil
society. The very purpose of the new technology platform is to encourage
a sharing culture, which is what the Commons is all about. It is these
design features of the IoT that bring
the social Commons out of the shadows, giving it a high-tech platform to
become the dominant economic paradigm of the twenty-first century.
The
Collaborative Commons is already profoundly impacting economic life.
Markets are beginning to give way to networks, ownership is becoming
less important than access, and the traditional dream of rags to riches
is being supplanted by a new dream of a sustainable quality of life.
Hundreds
of millions of people are transferring bits and pieces of their
economic life from capitalist markets to the global Collaborative
Commons. Prosumers are not only producing and sharing their own
information, entertainment, green energy and 3D-printed goods at near
zero marginal cost and enrolling in massive open online college courses
for nearly free, on the Collaborative Commons. They are also sharing
cars, homes, clothes, tools, toys, and countless other items with one
another via social media sites, rentals, redistribution clubs, and
cooperatives, at low or near zero marginal cost. An increasing number of
people are collaborating in "patient-driven" health-care networks to
improve diagnoses and find new treatments and cures for diseases, again
at near zero marginal cost. And young social entrepreneurs are
establishing socially responsible businesses, crowdfunding new
enterprises, and even creating alternative social currencies in the new
economy. The result is that "exchange value" in the marketplace is
increasingly being replaced by "shareable value" on the Collaborative
Commons.
In the unfolding struggle between the exchange economy and the sharing
economy, most economists argue that if everything were nearly free,
there would be no incentive to innovate and bring new goods and services
to the fore because inventors and entrepreneurs would have no way to
recoup their up-front costs. Yet millions of prosumers are freely
collaborating in social Commons, creating new IT and software, new forms
of entertainment, new learning tools, new media outlets, new green
energies, new 3D-printed manufactured products, new peer-to-peer
health-research initiatives, and new nonprofit social entrepreneurial
business ventures, using open-source legal agreements freed up from
intellectual property restraints. The
upshot is a surge in creativity that is at least equal to the great
innovative thrusts experienced by the capitalist market economy in the
twentieth century.
While the capitalist market is not likely to
disappear, it will no longer exclusively define the economic agenda for
civilization. There will still be goods and services whose marginal
costs are high enough to warrant their exchange in markets and
sufficient profit to ensure a return on investment. But in a world in
which more things are potentially nearly free and shareable, social
capital is going to play a far more significant role than financial
capital, and economic life is increasingly going to take place on a
Collaborative Commons.
Jeremy Rifkin is the author of The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism
.
Rifkin is an advisor to the European Union and to heads of state around
the world, and is the president of the Foundation on Economic Trends in
Washington, DC. For more information, please go to www.thezeromarginalcostsociety.com.
No comments:
Post a Comment