The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism

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The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of CapitalismHardcover

by Jeremy Rifkin  (Author)

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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.

http://www.amazon.com/Zero-Marginal-Cost-Society-Collaborative/dp/1137278463%3FSubscriptionId%3D0EP44N4Z8Y93MBZ1ZC82%26tag%3Ddianerehm-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D1137278463

Wednesday, April 16, 2014

Jeremy Rifkin: "The Zero Marginal Cost Society" | Authors at Google

Jeremy Rifkin's new book is The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism (2014). He is also the author of The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World (2011) and The Empathic Civilization: The Race to Global Consciousness in a World in Crisis (2009).

Rifkin stopped by Google recently to discuss his new book.

Jeremy Rifkin: "The Zero Marginal Cost Society" | Authors at Google

Published on Apr 15, 2014 


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.

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. 

About the Author: Jeremy Rifkin is the bestselling author of twenty books on the impact of scientific and technological changes on the economy, the workforce, society, and the environment. He has been an advisor to the European Union for the past decade. 

Mr. Rifkin also served as an adviser to President Nicolas Sarkozy of France, Chancellor Angela Merkel of Germany, Prime Minister Jose Socrates of Portugal, Prime Minister Jose Luis Rodriguez Zapatero of Spain, and Prime Minister Janez Janša of Slovenia, during their respective European Council Presidencies, on issues related to the economy, climate change, and energy security.

Mr. Rifkin is a senior lecturer at the Wharton School's Executive Education Program at the University of Pennsylvania where he instructs CEOs and senior management on transitioning their business operations into sustainable Third Industrial Revolution economies.

Mr. Rifkin holds a degree in economics from the Wharton School of the University of Pennsylvania, and a degree in international affairs from the Fletcher School of Law and Diplomacy at Tufts University.

This Authors@Google talk was hosted by Boris Debic.

http://integral-options.blogspot.kr/2014/04/jeremy-rifkin-zero-marginal-cost.html

AlterNet / By David Bollier

 56 COMMENTS

The New Economic Events Giving Lie to the Fiction That We Are All Selfish, Rational Materialists

The commons lies at the heart of a major cultural and social shift now underway.

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Photo Credit: AllanGregg; Screenshot / YouTube.com

April 14, 2014  |  

 

 

 

 

Jeremy Rifkin's new book, “The Zero Marginal Cost Society,” brings welcome new attention to the commons just as it begins to explode in countless new directions. His book focuses on one of the most significant vectors of commons-based innovation — the Internet and digital technologies — and documents how the incremental costs of nearly everything is rapidly diminishing, often to zero. Rifkin explored the sweeping implications of this trend in an excerpt from his book and points to the "eclipse of capitalism" in the decades ahead.

But it's worth noting that the commons is not just an Internet phenomenon or a matter of economics. The commons lies at the heart of a major cultural and social shift now underway. People's attitudes about corporate property rights and neoliberal capitalism are changing as cooperative endeavors — on digital networks and elsewhere — become more feasible and attractive. This can be seen in the proliferation of hackerspaces and Fablabs, in the growth of alternative currencies, in many land trusts and cooperatives and in seed-sharing collectives and countless natural resource commons.

Beneath the radar screen of mainstream politics, which remains largely clueless about such cultural trends on the edge, a new breed of commoners is building the vision of a very different kind of society, project by project. This new universe of social activity is being built on the foundation of a very different ethics and social logic than that of homo economicus — the economist's fiction that we are all selfish, utility-maximizing, rational materialists.

Durable projects based on social cooperation are producing enormous amounts of wealth; it's just that this wealth is not generally not monetized or traded. It's socially or ecologically embedded wealth that is managed by self-styled commoners themselves. Typically, such commoners act more as stewards of their common wealth than as owners who treat it as private capital. Commoners realize that a life defined by impersonal transactions is not as rich or satisfying as one defined by abiding relationships. The larger trends toward zero-marginal-cost production make it perfectly logical for people to seek out commons-based alternatives.

You can find these alternatives popping up all over: in the 10,000-plus open access scientific journals whose research is freely shareable to anyone and in community gardens that produce both fresh vegetables and neighborliness. In hundreds of "timebanks" that let people meet basic needs through time-barters, and in highly productive, ecologically minded commons-based agriculture.

Economists tend to ignore such wealth because it generally doesn't involve market activity. No cash is exchanged, no legal contracts signed and no measureable Gross Domestic Product is generated. But the wealth of the commons is not accumulated like capital; its vitality comes from being circulated. As I describe in my new book, "Think Like a Commoner," the story of our time is the rise of the commons as a new way to emancipate oneself from predatory markets and to collaborate with peers to protect and expand one's shared wealth. This is a story that is being played out in countless digital arenas, as Rifkin documents, but also in such diverse contexts as cities, farming, museums, theaters and indigenous communities.

One reason that so many commons arise and flourish is because they help their participants meet important basic needs in fair, responsive and socially satisfying ways. That's quite attractive to those who are otherwise held captive by conventional, predatory markets. Big agriculture is more concerned with efficiency and profit than ecological stewardship. Large transnationals are more interested in rip-and-run resource extraction (mining, fracking, timber) than in the protection of sacred lands and time-honored ways of life. "Copyright industries" like Hollywood and record labels want to treat all of culture as tightly controlled "product," not as something that is freely shared and built upon.

Nowadays the commons has a special appeal for people of the global South who are often victimized by the "enclosures" inflicted by neoliberal investment and trade policies. Enclosures are the act of privatizing and commodifying previously shared resources. For example, millions of acres of land in Africa, Asia and Latin America are currently being seized by investors in a massive international land grab. Hedge funds and even the government of South Korea, Saudi Arabia and China are enacting an eerie replay of the English enclosure movement. Commoners who have worked the land for generations as a customary right are being forced to migrate to cities in search of work, where they often end up as paupers and sweatshop employees: a modern-day replay of Charles Dickens' novels.

By the lights of modern economic theory, it's all for the best because it promotes "development" (i.e., consumerism and other market dependencies). But many commoners are now fighting the dispossession and dependencies that enclosures entail by struggling to retain some measure of dignity and self-determination through their commons. The International Land Alliance estimates that 2 billion people around the world depend upon subsistence commons of forests, fisheries, arable land, water and wild game to meet their everyday needs.

Strangely, the leading introductory economics textbooks in the U.S. virtually ignore the commons except for the obligatory warning about the "tragedy of the commons." They prefer not to recognize that the commons represents an entirely viable but different paradigm of "development" - one that can transcend the unsustainable consumerism, cultural disintegration and economic growth of our time. As the late Nobel Prize winner Elinor Ostrom showed, commons are an entirely sustainable, ecologically friendly model of resource management, contrary to the "tragedy" parable.

Commoners are not all alike. They have many profound differences in their governance systems, management practices and cultural values. And commons are not without their conflicts, struggles and failures. That said, most commoners tend to share fundamental commitments to participation, openness, inclusiveness, social equity, ecological respect and human rights.

The politics of the commons movement can be confounding to conventional observers because political goals are not the paramount priority; protection of the commons is. Commoners tend to be more focused on "prepolitical" social activity and relationships, which is why commons are embraced by such a wide variety of people. As German commons advocate Silke Helfrich notes in The Wealth of the Commons, "Commons draw from the best of all political ideologies." Conservatives like the tendency of commons to promote responsibility. Liberals are pleased with the focus on equality and basic social entitlement. Libertarians like the emphasis on individual initiative. And leftists like the idea of limiting the scope of the Market.

It is important to realize that the commons is not a discussion about objects, but a discussion about who we are and how we treat each other. What decisions are being made about our resources? Does economic activity satisfy basic human needs and honor human rights and dignity? These kind of discussions are not often heard in in conventional business and policy circles, alas.

To conventional minds, the idea of the commons as a paradigm of social governance appears either utopian or communistic, or at the very least, impractical. But a diverse, eclectic universe of commons around the world demonstrates otherwise. It is the neoliberal project of ever-expanding consumption on a global scale that is the utopian, totalistic dream. It manifestly cannot fulfill its mythological vision of human progress through ubiquitous market activity and greater heaps of private consumption, if only because it demands more from Nature than it can possibly deliver - while inflicting too much social inequity and disruption as well.

Fortunately, the Internet and indigenous peoples, the re-localization movement and hackers, community foresters and fishing cooperatives and many, many others, are showing that the commons can be an effective vehicle for social and political emancipation. Jeremy Rifkin's astute analysis of this powerful trend will help open up a much-needed discussion in the stodgy precincts of conventional economics.

David A. Bollier is an author, activist, blogger and independent scholar with a primary focus on “the commons” as a new paradigm for economics, politics, and culture. He is the founding editor of Onthecommons.org (2002-2010), co-founder and principal of the international consulting project Commons Strategy Group, and co-director of the Commons Law Project. Bollier is the author of numerous books, including "Think Like a Commoner: A Short Introduction to the Life of the Commons."

http://www.alternet.org/economy/were-about-enter-whole-new-era-economics-and-its-going-make-everyone-feel-lot-more-wealthy?paging=off&current_page=1#bookmark

The Rise of Anti-Capitalism

WE are beginning to witness a paradox at the heart of capitalism, one that has propelled it to greatness but is now threatening its future: The inherent dynamism of competitive markets is bringing costs so far down that many goods and services are becoming nearly free, abundant, and no longer subject to market forces. While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring those costs to near zero.

The first inkling of the paradox came in 1999 when Napster, the music service, developed a network enabling millions of people to share music without paying the producers and artists, wreaking havoc on the music industry. Similar phenomena went on to severely disrupt the newspaper and book publishing industries. Consumers began sharing their own information and entertainment, via videos, audio and text, nearly free, bypassing the traditional markets altogether.

The huge reduction in marginal cost shook those industries and is now beginning to reshape energy, manufacturing and education. Although the fixed costs of solar and wind technology are somewhat pricey, the cost of capturing each unit of energy beyond that is low. This phenomenon has even penetrated the manufacturing sector. Thousands of hobbyists are already making their own products using 3-D printers, open-source software and recycled plastic as feedstock, at near zero marginal cost. Meanwhile, more than six million students are enrolled in free massive open online courses, the content of which is distributed at near zero marginal cost.

Industry watchers acknowledge the creeping reality of a zero-marginal-cost economy, but argue that free products and services will entice a sufficient number of consumers to purchase higher-end goods and specialized services, ensuring large enough profit margins to allow the capitalist market to continue to grow. But the number of people willing to pay for additional premium goods and services is limited.

Now the phenomenon is about to affect the whole economy. A formidable new technology infrastructure — the Internet of Things — is emerging with the potential to push much of economic life to near zero marginal cost over the course of the next two decades. This new technology platform is beginning to connect everything and everyone. Today more than 11 billion sensors are attached to natural resources, production lines, the electricity grid, logistics networks and recycling flows, and implanted in homes, offices, stores and vehicles, feeding big data into the Internet of Things. By 2020, it is projected that at least 50 billion sensors will connect to it.

People can connect to the network and use big data, analytics and algorithms to accelerate efficiency and lower the marginal cost of producing and sharing a wide range of products and services to near zero, just as they now do with information goods. For example, 37 million buildings in the United States have been equipped with meters and sensors connected to the Internet of Things, providing real-time information on the usage and changing price of electricity on the transmission grid. This will eventually allow households and businesses that are generating and storing green electricity on-site from their solar and wind installations to program software to take them off the electricity grid when the price spikes so they can power their facilities with their own green electricity and share surplus with neighbors at near zero marginal cost.

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Cisco forecasts that by 2022, the private sector productivity gains wrought by the Internet of Things will exceed $14 trillion. A General Electric study estimates that productivity advances from the Internet of Things could affect half the global economy by 2025.

THE unresolved question is, how will this economy of the future function when millions of people can make and share goods and services nearly free? The answer lies in the civil society, which consists of nonprofit organizations that attend to the things in life we make and share as a community. In dollar terms, the world of nonprofits is a powerful force. Nonprofit revenues grew at a robust rate of 41 percent — after adjusting for inflation — from 2000 to 2010, more than doubling the growth of gross domestic product, which increased by 16.4 percent during the same period. In 2012, the nonprofit sector in the United States accounted for 5.5 percent of G.D.P.

What makes the social commons more relevant today is that we are constructing an Internet of Things infrastructure that optimizes collaboration, universal access and inclusion, all of which are critical to the creation of social capital and the ushering in of a sharing economy. The Internet of Things is a game-changing platform that enables an emerging collaborative commons to flourish alongside the capitalist market.

This collaborative rather than capitalistic approach is about shared access rather than private ownership. For example, 1.7 million people globally are members of car-sharing services. A recent survey found that the number of vehicles owned by car-sharing participants decreased by half after joining the service, with members preferring access over ownership. Millions of people are using social media sites, redistribution networks, rentals and cooperatives to share not only cars but also homes, clothes, tools, toys and other items at low or near zero marginal cost. The sharing economy had projected revenues of $3.5 billion in 2013.

Nowhere is the zero marginal cost phenomenon having more impact than the labor market, where workerless factories and offices, virtual retailing and automated logistics and transport networks are becoming more preval‎ent. Not surprisingly, the new employment opportunities lie in the collaborative commons in fields that tend to be nonprofit and strengthen social infrastructure — education, health care, aiding the poor, environmental restoration, child care and care for the elderly, the promotion of the arts and recreation. In the United States, the number of nonprofit organizations grew by approximately 25 percent between 2001 and 2011, from 1.3 million to 1.6 million, compared with profit-making enterprises, which grew by a mere one-half of 1 percent. In the United States, Canada and Britain, employment in the nonprofit sector currently exceeds 10 percent of the work force.

Despite this impressive growth, many economists argue that the nonprofit sector is not a self-sufficient economic force but rather a parasite, dependent on government entitlements and private philanthropy. Quite the contrary. A recent study revealed that approximately 50 percent of the aggregate revenue of the nonprofit sectors of 34 countries comes from fees, while government support accounts for 36 percent of the revenues and private philanthropy for 14 percent.

As for the capitalist system, it is likely to remain with us far into the future, albeit in a more streamlined role, primarily as an aggregator of network services and solutions, allowing it to thrive as a powerful niche player in the coming era. We are, however, entering a world partly beyond markets, where we are learning how to live together in an increasingly interdependent, collaborative, global commons.

Jeremy Rifkin is the author of “The Zero Marginal Cost Society.”

http://www.nytimes.com/2014/03/16/opinion/sunday/the-rise-of-anti-capitalism.html?_r=0