The Zero Marginal Cost Society – Jeremy Rifkin

We’re just beginning to glimpse the bare outlines of a new economic system entering onto the world stage. This is
the first new economic system to emerge since the advent of capitalism
and its antagonist socialism in the early 19th century. It’s a
remarkable historical event. It has long term implications for
every one of us our children and our grandchildren. This new economic system is the
collaborative commons. And what’s triggering this shift to a new
economic paradigm a collaborative commons economic system
is something called zero marginal cost. Marginal cost the cost of producing an additional
unit of a good and service after your fix costs are covered. The prospect
of a technology revolution so extreme in its productivity that it can reduce those marginal
cost to near zero across the value chain making goods and services essentially
priceless nearly free abundant and beyond the
market exchange economy. Then this zero marginal cost phenomena
went on to invade the entire information goods industry. Millions of consumers became prosumers and they began producing their own
information goods. If you take a look at the
newspaper industry magazines, book publishing and the recording industry they’ve never come back from zero marginal
cost. Our economists have thought well we think
there’s a firewall here. And that is even though more and more
information goods are heading toward near zero marginal cost in virtual worlds that they will not cross the firewall
into the physical world of brick and mortar goods and services. No longer. What’s happening now is that the
communication internet is now expanding to an Internet of
Things. A physical internet that allows us to go
from the world of bits to the world atoms. And when we have these three
internets embedded in one system – a communication
internet that’s interacting continually with an energy internet and a transport and
logistics internet in one platform – this Internet Of Things allows us to begin
moving near zero marginal cost from information goods to physical
goods. By 2020 IBM says we’ll be at 30 billion sensors and a recent forecast study
a few months ago says that by 2030 we will have a 100 trillion sensors connecting everything with everyone in
one global neural network. When we move from the
internet to the Internet of Things and we move from bits to atoms we begin
to see a completely new economic model that can get us to near zero marginal
cost in the production and distribution of
physical energy and physical products. Anyone of millions of prosumers will
be able to increase their productivity dramatically reduce their marginal cost
and produce consume and share their own physical
energy and manufactured goods with each other just
like we now do with information goods. The big wild card here is food and
water and climate change. Because if we can’t address climate change
and we continue on this road, if we can’t produce food and don’t have
access to water in a reliable fashion everything I’m telling you is derailed. This new system is already in place in Europe.
Let’s take energy. The moment you put up a solar panel on
your building or a wind turbine on-site, even before you
pay back the fixed cost – and that’s usually 3 to 8 years so it’s not
a long time. Immediately though your marginal costs are near-zero because the sun off your roof is free. The
wind off the side of your building is free. The geothermal heat coming up from
under the ground is free. Your garbage converted in a bioconverter to energy
in your kitchen, it’s all free. And millions of small players had joined
together in cooperatives small and medium-sized businesses, homeowners.
They’re generating the new electricity The Internet Of Things is designed to be
distributed, collaborative, peer-directed and it scales to
lateral economies of scale. Then let’s take 3D printed products. We
now have several hundred thousand hobbyists,
thousands of small and medium-sized startup companies that are printing out
their own 3D printed products. And they’re attaching their 3D printing
operation, at least in Europe, into this new Internet Of Things, this third
Industrial Revolution. You go up on the Internet, you download your software – it’s all free, open source – then you use for your
feed stock recycled plastic, paper or even using
sand and gravel and melting it down at near zero
marginal cost. Then they’re powering their 3D printing factory with green energy from their energy
internet that’s generated at near zero marginal cost. Then they’re marketing their products on
global websites with very little advertising cost, you just pay a short fee, low marginal
cost. And then we’re just beginning to put in the logistics internet. You’ll be able to power your vehicle
to send your 3D printed product to market with your own green electricity
from the energy internet, and the electric vehicles in a few years
from now will be printed out. The first printed vehicle now exists in
Canada. It runs on solar. We’ll have driverless vehicles that can
move across the system at will near zero marginal cost. This is a revolution. The question becomes this. If millions
then hundreds of millions of people can begin to produce, consume or
share their own information goods, energy and a
lot of their manufactured goods at near zero marginal cost, making them
nearly free and beyond the exchange model of the
capitalist market, what kind of new economic system do we have to envision to
organize the world the one that I’m laying out here? It’s the
social commons. What’s happening now is the social
commons, which is a venerable institution that we rely on for education
institutions that are non-profit, health services, day care centers for
our children, assisted living for the elderly, environmental organizations, cultural, sports, arts, it goes on and on. If they were eliminated and we just had the marketplace, we would not have much of a life on the planet. The social commons is ignored by economists because it doesn’t create finance capital. It
creates social capital. But it’s a big revenue player. What’s
making this social commons now more relevant than
any time in the past is this Internet Of Things. Because the Internet Of Things is a
general purpose technology platform that’s designed to be the technological
soulmate of the social commons. The whole design is
to be distributed, collaborative, scales latterally, not
vertically and it rewards collaboration across these
lateral networks. It creates a sharing community. If millions and millions of people are
producing and sharing their own energy and 3D printed products and information goods, they’re going to need less income, at zero marginal cost. They’re still going to need employment. If the marketplace doesn’t need them because we can produce the energy and the products, you know in the marketplace with just
high-technology, where will you get the employment? In the social commons. The social
commons creates social capital human beings with the other human beings,
creating communities – cultural, sports, arts, wellness, health,
quality of life. Those are the more important employments.
Making widgets is not as intellectually challenging and motivating to the young mind as it is trying to create a sense of human community, a sense of transcendence and sense of finding meaning in the world Last thought. We can get to nearly free energy. We’re already there, nearly free goods
and services, but without food and water we don’t survive. And we don’t know, if we
can even feed people and provide water for people, how do we
repopulate millions of people in the western part of the US in 30 years? So… climate change is the elephant in the room. What’s
important to acknowledge here is that the third Industrial Revolution, this Internet
Of Things allows us to move quickly out of fossil fuels.
And have millions of people begin to produce and share their own green energy. And this Internet of Things, because its
entire purpose is to increase efficiencies to reduce
marginal costs it means it shows us how to use less resources more effectively. So we don’t put a big burden
on the planet that we live in. So we have young people here not only sharing information goods and energy now
and 3D printed products, but so we have car sharing and bike
sharing and now we’re sharing apartments and homes and clothes and tools and toys. So we have a generation that’s beginning to believe it’s not about ownership, it’s access, and if more people share what they have,
less has to be produced. It does have a negative impact on
GDP but it has a positive impact on quality
of life, and that’s the way to measure a good economy. It isn’t just technology. What it does is
it democratizes the economy. And hopefully you’ll be in a world in
2050 that won’t be the 1% or the 99%. It’ll be a shared economy, a sustainable
good quality of life, where no one’s left behind. Now is it Utopia?
No. We need to change the human narrative. We
need a new story for the human race to go with the technology. We have to move from geopolitics to
biosphere consciousness in one generation. Everything we do intimately impacts some other human, some
other ecosystem some other species on this Earth. We’ve got a
young generation here that’s beginning to see we live in one indivisible community, the biosphere. So I’m guardedly hopeful. And if we can dramatically increase
efficiencies, reduce our marginal cost, and that means
using less resources more effectively and taking a less burden
on the planet, we may get to a better world by mid-century. You need to help lead this, so we
have a chance of rehealing the planet and creating a future for our children.

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