A
Technology Revolution and the Rebirth of the Commons
Jeremy Rifkin
Capitalism as a system is being dramatically undermined
by many forces today, according to Jeremy Rifkin. And despite what could be a
despairing picture of the future, he sees in many of the same forces the
outline of a new economic system that “will transform our lives if we make the journey
in time.” He calls the new system the “collaborative commons.”
Rifkin spoke at Town Hall Seattle in early April
2014 as part of a publisher’s tour for his new book, The Zero Marginal Cost Society: The Internet of Things, the
Collaborative Commons, and the Eclipse of Capitalism. Rifkin is president
of the Foundation on Economic Trends and, among other things, has been an
advisor to the European Union for the past decade.
When I walked into Town Hall that evening, my
understanding of most of the ideas in Rifkin’s book title was thin at best.
Curiosity, fuel for the novice in me, and a desire to understand more about how
work is changing put me in the audience. A long-standing interest in the
commons also made me want to know how it fits into his picture.
No room for
profit
Why do we need a new system? “A deep paradox lies
at the heart of capitalism,” Rifkin told us that night. The system has been
guided by the constant search by sellers for new technologies to increase their
productivity, to reduce their marginal costs so they can produce cheaper
products, attract consumers, beat out the competition, and bring profits home.
No one expected a technology revolution so extreme in its productivity that the
cost of producing goods and services would decline to the point that there’s
little room for profit, that is, where the marginal cost is driven to near
zero. With little or no profit, companies fail. “The triumph of Adam Smith’s
‘invisible hand’,” he said, “has led to its demise and to the need for a new
system.”
Rifkin used Napster and the suit against it as an
example and a signal of the rise of peer-to-peer file sharing on the internet.
Record companies claimed that Napster was cheating. “Kids,” Rifkin said,
“called it sharing.” Despite winning
the Napster suit, companies soon began going out of business; the rise in “P2P “sharing
led to a rapid decline in their marginal costs. He went on to say that a
similar phenomenon is happening to the publishing industry which has been “decimated”
in 12 years as expectations have grown for free online information, as people
produce their own information goods and services, and as newer companies reduce
their marginal costs, forcing out
older companies.
This is also happening in the energy world. Many
people, mostly in Europe he noted, are generating or capturing their own
energy, and the cost of the equipment it takes is going down. In 1978 the cost
of a solar watt of energy was $60, now it’s 66¢, and it will go to 6¢. A million
buildings in Germany have solar panels now, and 25% of Germany’s electrical energy
is green. This is destroying the country’s old power companies. And who’s
creating this power? “The people are.” Rifkin estimates that it may take 2-8 years to
pay back your fixed costs, but the energy you need is available at near zero
marginal cost above that. The sun on your roof is free; the wind off the side
of your building is free.
The
Internet of Things
The growing success of green energy in Europe
wouldn’t be possible without the communications internet (the “internet” that’s
messing with publishing) because it allows communication between individual
buildings and the power grid. This combined internet, communications plus
energy, is expanding to become what Rifkin and others call the “Internet of Things,”
a vast “neural network” that will allow us to generate and store our own
information, energy, and even physical goods (think 3-D printing) at nearly no
marginal cost.
The “neural network” Rifkin refers to is a
network of sensors that connect devices with IP addresses to each other in
warehouses, along roadways, in department stores, across the electricity grid,
and so on. In 2020, he says, there will be 30 billion sensors, and in 2030 the
number will reach 100 trillion in one “global neural network” serving as a
single operating platform. It’s an exciting but scary prospect, he added.
The distributed network that is the Internet of
Things will allow individuals to connect with each other directly to barter or
sell their own products and services, leaving most middlemen behind. We’re
seeing, he says, a merging of many internets: communications, energy,
logistics, transportation, and increasingly physical goods. Economies of scale
will be lateral. While acknowledging that there’s plenty to be nervous about in
all this, Rifkin expressed great faith that this Internet of Things can be a profoundly
democratizing force.
The social
commons
What economic system do we need to organize this
new world? Rifkin has an answer.
Beyond government and private enterprise, which
most economists assume are the only two ways to organize an economy, is the
social commons. It’s another system, Rifkin said, older than either and already
used everywhere. He sees the social commons in many places – nonprofit
organizations, cooperatives, and informal associations and exchanges. These groups
function without profit; they provide social capital, not financial capital. [He
overstates, I think, the commons nature of nonprofits; at a large, institutionalized
scale they can be counter-democratic in their own ways.] And he finds hope in
emerging trends among millennials, such as their move “from ownership to
access,” from owning cars to “getting access to mobility,” for instance, by
sharing them. Extensive research by Elinor Ostrom, awarded the Nobel Prize in
economics in 2009, shows that through much of history people have come together
to establish protocols of democratic management and to successfully self-manage
common resources.
Rifkin believes that if we’re not derailed by
wild cards like climate change or cyber terrorism, “it’s possible, maybe, that
by 2050 this collaborative commons will dominate because it’s just too sweet to
ignore.” The capitalist market system will definitely still play a powerful
niche role, but will be a much smaller portion of the whole. The social commons
and civil society will be more relevant than ever. He paints a fairly rosy
picture when he says the Internet of Things will “allow everyone to come
together in an open, inclusionary, distributive, collaborative network.”
Challenges:
jobs and monopoly
Our biggest challenges, Rifkin said, are
employment and control. First, like so much else, the marginal cost of labor is
also heading toward zero, with virtual retailing, workerless factories, and so
on. For 30 years or so, he said,
there’ll be jobs building the infrastructure for the Internet of Things. After
that we’ll need less income, but we’ll still need some. He anticipates another
possibility for employment in what he called a “mass migration from the
capitalist marketplace to the social commons.” He cited a Johns Hopkins study
of 40 countries indicating that the nonprofit and social enterprise sectors
(now 5% of the GDP) has grown faster in the past 15 years than the private
enterprise market. The collaborative commons requires human beings; it’s where
we explore our humanity and find meaning.
Monopoly is the second challenge. Who will
control the system? A central assumption governs the internet: everyone has the
same rights. This “network neutrality” is now being challenged, and big
companies want to charge different rates to different customers. Even though
these companies used the neutrality of the internet to create the great
infrastructure we have today, now they’re looking like monopolies.
“The oligarchs won’t just roll over,” observed
an audience member during Q&A. Indeed, Rifkin replied, “with deregulation
we unbalanced the system to favor the market.” This must be rebalanced by
government and civil society. And, in fact, big companies need a healthy
internet. We have to organize to take our data back. What happened in Germany
around green energy took a lot of old-fashioned organizing at a grassroots
level. We have to take advantage of the internet to cluster, to think and act
together to keep everyone in the mix. “Our choice now is the monopolization of
everything or the democratization of everything.”
The need for this rebalancing was echoed by a
professional colleague of mine who consults investors on community and mission
investing. She referred to a recent S&P white paper indicating that income
inequality is a risk for investors. “We have to contain capitalism somehow,”
she said. “Democracy and civil society will be important forces.”
Wild cards
The shift we’re experiencing is not just about
technology, according to Rifkin. Two wild cards could disrupt it all – climate
change and cyber terrorism, though he never quite got to terrorism. What he termed
“industrial climate change” is changing the water cycle of the earth, that is,
rising temperatures are affecting the levels of precipitation and evaporation.
The Internet of Things can help us move toward energy sustainability, but we
all need to move as fast as Germany is. And we need a new narrative. We need to
shift from “geo politics” to a “biosphere consciousness” in one generation. We
need to re-heal, create a circular economy that works with the biosphere: use
fewer resources, recycle more, etc.
•
Rifkin’s hopefulness increases as he travels.
Kids all over the world are developing a biosphere consciousness, he says. They’re
learning about their ecological footprint and are realizing that everything we
do affects another human being, another species, another ecosystem. The
Internet of Things can help us think as a whole evolutionary family.
_________________
A recording of Rifkin’s whole talk, with
audience questions is here:
<http://www.townhallseattle.org/jeremy-rifkinwhy-capitalism-is-dwindling/>
No comments:
Post a Comment