2014 TheZeroMarginalCostSocietyTheIn

• (Rifkin, 2014) ⇒ Jeremy Rifkin. (2014). “The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism." Palgrave Macmillan. ISBN:1137278463

Subject Headings: Zero Marginal Cost, Collaborative Commons, Civil Society.

Cited By

• http://scholar.google.com/scholar?q=%22The+Zero+Marginal+Cost+Society%3A+The+Internet+of+Things%2C+the+Collaborative+Commons%2C+and+the+Eclipse+of+Capitalism%22+2014

Quotes

Book Overview

In The Zero Marginal Cost Society, New York Times bestselling author Jeremy Rifkin describes how the emerging Internet of Things is speeding us to an era of nearly free goods and services, precipitating the meteoric rise of a global Collaborative Commons and the eclipse of capitalism.

Rifkin uncovers a paradox at the heart of capitalism that has propelled it to greatness but is now taking it to its death - the inherent entrepreneurial 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.

Now, a formidable new technology infrastructure.the Internet of things (IoT). is emerging with the potential of pushing large segments of economic life to near zero marginal cost in the years ahead. Rifkin describes how the Communication Internet is converging with a nascent Energy Internet and Logistics Internet to create a new technology platform that connects everything and everyone. Billions of sensors are being attached to natural resources, production lines, the electricity grid, logistics networks, recycling flows, and implanted in homes, offices, stores, vehicles, and even human beings, feeding Big Data into an IoT global neural network. Prosumers can connect to the network and use Big Data, analytics, and algorithms to accelerate efficiency, dramatically increase productivity, and lower the marginal cost of producing and sharing a wide range of products and services to near zero, just like they now do with information goods.

The plummeting of marginal costs is spawning a hybrid economy - part capitalist market and part Collaborative Commons - with far reaching implications for society, according to Rifkin. Hundreds of millions of people are already transferring parts of their economic lives to the global Collaborative Commons. Prosumers are plugging into the fledgling IoT and making and sharing their own information, entertainment, green energy, and 3D-printed products at near zero marginal cost. They are also sharing cars, homes, clothes and other items via social media sites, rentals, redistribution clubs, and cooperatives at low or near zero marginal cost. Students are enrolling in free massive open online courses (MOOCs) that operate at near zero marginal cost. Social entrepreneurs are even bypassing the banking establishment and using crowdfunding to finance startup businesses as well as creating alternative currencies in the fledgling sharing economy. In this new world, social capital is as important as financial capital, access trumps ownership, sustainability supersedes consumerism, cooperation ousts competition, and “exchange value” in the capitalist marketplace is increasingly replaced by “sharable value” on the Collaborative Commons.

Rifkin concludes that capitalism will remain with us, albeit in an increasingly streamlined role, primarily as an aggregator of network services and solutions, allowing it to flourish as a powerful niche player in the coming era. We are, however, says Rifkin, entering a world beyond markets where we are learning how to live together in an increasingly interdependent global Collaborative Commons.

4. Human Nature Through a Capitalist Lens

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THE ENLIGHTENMENT VIEW OF HUMAN NATURE

By the end of the soft market era in the late eighteenth century, a new cosmology had begun to emerge that would give the new man and woman of the market an overarching narrative powerful enough to push the Christian cosmology nearer to the sideline of history.

John Locke, the great Enlightenment philosopher, led the charge, presenting a spirited defense of private property, arguing that its pursuit was a more accurate reflection of man’s “inherent nature” than communal management of the feudal commons. Locke argued that each person creates his own property by adding his labor to the raw material of nature, transforming it into things of value. Although Locke acknowledged that in the primal state of nature all the Earth was held in common by human beings and our fellow creatures, he explained in Two Treatises of Government that each individual also “has a property in his own person: [and] this no body has any right to but himself.”3 Locke made the case that private property is a natural right, and therefore, any repudiation of it would be tantamount to rejecting the natural order of things and denying the laws of nature.

Locke reasoned that

whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with , and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for his labour being the unquestionable property of the labourer, no man but he can have a right to what is once joined to, at least where there is enough, and as good, left in common for others.4

Locke then used his theory of the natural right to private property to tear apart the feudal property regime based on proprietary obligations on the commons.

He, who appropriates land to himself by his labour, does not lessen, but increases the common stock of mankind: for the provisions serving to the support of human life, produced by one acre of inclosed and cultivated land, are . . . ten times more than those which are yielded by an acre of land of an equal richness lying waste in common . And therefore he that incloses land, and has a greater plenty of the conveniences of life from ten acres, than he could have from an hundred left to nature, may truly be said to give ninety acres to mankind.5

In this brief essay, Locke articulated the emerging cosmological narrative that would accompany the modern market economy. The natural order of things was no longer to be found in Christianity’s Great Chain of Being but, rather, in the natural right to create private property by the sweat of one’s own brow.

Adam Smith followed on the heels of Locke. In a final rebuff to the communal life exercised on the feudal commons, he declared that market behavior represents people’s true nature. Smith wrote that

every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society.6

The social critic R. H. Tawney would later write of the momentous change that took European society from a feudal to a market economy and from a theocratic to an economic worldview. He observed that after the fall of the Christian-centered universe, what was left “was private rights and private interests, the material of a society rather than a society itself .” Private property exchanged in the market economy was henceforth “taken for granted as the fundamentals upon which social organization was to be based, and about which no further argument was admissible.”7 Max Weber was even more harsh, arguing that the replacement of spiritual values with economic ones in the changeover from a Christian-centered universe to a materialist one represented “the disenchantment of the world.” 8

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5. The Exponential Race to a Free Economy / Extreme Productivity, The Internet of Things, and Free Energy

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And finally, what if the marginal cost of human labor in the production and distribution of goods and services were to plummet to near zero as intelligent technology substitutes for workers across every industry and professional and technical field, allowing businesses to conduct much of the commercial activity of civilization more intelligently, efficiently, and cheaply than with conventional workforces? That too is occuring as tens of millions of workers have already been replaced by intelligent technology in industries and professional bodies around the world. What would the human race do, and more importantly, how would it define its future on Earth, if mass and professional labor were to disappear from economic life over the course of the next two generations? That question is now being seriously raised for the first time in intellectual circles and public policy debates.

EXTREME PRODUCTIVITY

Getting to near zero marginal cost and nearly free goods and services is a function of advances in productivity. Productivity is “a measure of productive efficiency calculated as the ratio of what is produced to what is required to produce it.”dictionary/ productivity. If the cost of producing an additional good or service is nearly zero, that would be the optimum level of productivity. Here again , we come face-to-face with the ultimate contradiction at the heart of capitalism. The driving force of the system is greater productivity, brought on by increasing thermodynamic efficiencies. The process is unsparing as competitors race to introduce new, more productive technologies that will lower their production costs and the price of their products and services to lure in buyers. The race continues to pick up momentum until it approaches the finish line, where the optimum efficiency is reached and productivity peaks. That finish line is where the marginal cost of producing each additional unit is nearly zero. When that finish line is crossed, goods and services become nearly free, profits dry up, the exchange of property in markets shuts down, and the capitalist system dies.

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This is what President Barack Obama was trying to get at in his now-famous utterance during the 2012 presidential election campaign: “You didn’t build that.” While the Republican Party opportunistically took the quote out of context, what Obama meant was that successful businesses require infrastructure — electricity transmission lines, oil and gas pipelines, communication networks, roads, schools, etc. — if they are to be productive. 5 No business in an integrated market economy can succeed without an infrastructure. Infrastructures are public goods and require government enablement as well as market facilitation. Common sense, yes, but it was lost in the fury that followed President Obama’s remarks, in a country where the prevailing myth is that all economic success is a result of entrepreneurial acumen alone and that government involvement is always a deterrent to growth.

Public infrastructure is, for the most part, paid for or subsidized by taxes and overseen and regulated by the government, be it on the local, state, or national level. The general-purpose technology infrastructure of the Second Industrial Revolution provided the productive potential for a dramatic increase in growth in the twentieth century. Between 1900 and 1929, the United States built out an incipient Second Industrial Revolution infrastructure — the electricity grid, telecommunications network, road system, oil and gas pipelines, water and sewer systems, and public school systems. The Depression and World War II slowed the effort, but after the war the laying down of the interstate highway system and the completion of a nationwide electricity grid and telecommunications network provided a mature, fully integrated infrastructure. The Second Industrial Revolution infrastructure advanced productivity across every industry, from automobile production to suburban commercial and residential building developments along the interstate highway exits.

During the period from 1900 to 1980 in the United States, aggregate energy efficiency — the ratio of useful to potential physical work that can be extracted from materials — steadily rose along with the development of the nation’s infrastructure , from 2.48 percent to 12.3 percent. The aggregate energy efficiency leveled off in the late 1990s at around 13 percent with the completion of the Second Industrial Revolution infrastructure.6 Despite a significant increase in efficiency, which gave the United States extraordinary productivity and growth, nearly 87 percent of the energy we used in the Second Industrial Revolution was wasted during transmission.7

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THE INTERNET OF THINGS

The enormous leap in productivity is possible because the emerging Internet of Things is the first smart-infrastructure revolution in history: one that will connect every machine, business, residence, and vehicle in an intelligent network comprised of a Communications Internet, Energy Internet, and Logistics Internet, all embedded in a single operating system. In the United States alone, 37 million digital smart meters are now providing real-time information on electricity use. 9

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Connecting everyone and everything in a neural network brings the human race out of the age of privacy, a defining characteristic of modernity, and into the era of transparency. While privacy has long been considered a fundamental right, it has never been an inherent right. Indeed, for all of human history, until the modern era, life was lived more or less publicly, as befits the most social species on Earth. As late as the sixteenth century, if an individual was to wander alone aimlessly for long periods of time in daylight, or hide away at night, he or she was likely to be regarded as possessed. In virtually every society that we know of before the modern era, people bathed together in public, often urinated and defecated in public, ate at communal tables, frequently engaged in sexual intimacy in public, and slept huddled together en masse.

It wasn’t until the early capitalist era that people began to retreat behind locked doors. The bourgeois life was a private affair. Although people took on a public persona, much of their daily lives were pursued in cloistered spaces. At home, life was further isolated into separate rooms, each with their own function — parlors, music rooms, libraries, etc. Individuals even began to sleep alone in separate beds and bedrooms for the very first time.

The enclosure and privatization of human life went hand-in-hand with the enclosure and privatization of the commons. In the new world of private property relations, where everything was reduced to “mine” versus

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References

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	Author	volume	Date Value	title	type	journal	titleUrl	doi	note	year
2014 TheZeroMarginalCostSocietyTheIn	Jeremy Rifkin			The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism						2014