Zero Marginal Cost Society

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* Book: The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. by Jeremy Rifkin. Palgrave Macmillan, 2014

URL = http://www.thezeromarginalcostsociety.com/ [1]


Contents

Description

"In The Zero Marginal Cost Society, New York Times bestselling author Jeremy Rifkin argues that the capitalist era is passing—not quickly, but inevitably. The emerging Internet of Things is giving rise to a new economic system—the Collaborative Commons—that will transform our way of life.

In his provocative new book, The Zero Marginal Cost Society, Mr. Rifkin argues that the coming together of the Communication Internet with the fledgling Energy Internet and Logistics Internet in a seamless 21st century intelligent infrastructure—the Internet of Things—is boosting productivity to the point where the marginal cost of producing many goods and services is nearly zero, making them essentially free. The result is corporate profits are beginning to dry up, property rights are weakening, and the conventional mindset of scarcity is slowly giving way to the possibility of abundance. The zero marginal cost phenomenon is spawning a hybrid economy—part capitalist market and part Collaborative Commons—with far reaching implications for society.

Rifkin describes how hundreds of millions of people are already transferring parts of their economic lives from capitalist markets to what he calls the global “Collaborative Commons.” “Prosumers” are making and sharing their own information, entertainment, green energy, and 3-D 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 even enrolling in free massive open online courses (MOOCs) that operate at near zero marginal cost. And young social entrepreneurs are establishing ecologically sensitive businesses using crowdfunding as well as creating alternative currencies in the new sharing economy. In this new world, social capital is as important as finance capital, access trumps ownership, cooperation supersedes competition, and “exchange value” in the capitalist marketplace is increasingly replaced by “sharable value” on the Collaborative Commons.

Rifkin concludes that while capitalism will be with us for the foreseeable future, albeit in an increasingly diminished role, it will not be the dominant economic paradigm by the second half of the 21st Century. We are, Rifkin says, entering a world beyond markets where we are learning how to live together in an increasingly interdependent global Collaborative Commons."


Summary

Edward Berge's interpretative summary from an integral spirituality point of view is also available here.

This review is from [2]:

In chapter 1 [The Great Paradigm Shift from Market Capitalism to the Collaborative Commons] he discusses how monopolies intentionally thwart competition and innovation so as to maintain their stranglehold. But he claims entrepreneurs will find a way around it and end up forcing competition with better tech and price reductions (6). Larry Summers 2001 paper acknowledges the emerging information economy was indeed moving to near marginal cost, but Summers didn't propose something like Rifkin, instead recommending “short-term natural monopolies” (8).

Recall Summers was Obama's pick for Director of the National Economic Council. His policy suggestions were well in line with his promotion of “natural monopolies,” as his resume attests. And we're seeing exactly this economic philosophy at play with FCC Chairman Wheeler's proposed pay-to-play rules, where the ISP monopolies will destroy internet neutrality. Recall that Wheeler was another Obama pick, and was a former, and will return to being, a cable and wireless lobbyist. While Obama claims to back income equality and net neutrality he appoints the likes of Summers and Wheeler who make no bones about their support of monopolies. And without net neutrality good bye to Rifkin's entire plan, which requires it to succeed.[1]

Chapter 2 [The European Enclosures and the Birth of the Market Economy] was about the transition from a feudal to market economy. The feudal system was based on the Great Chain of Being, a strict theological and hierarchical structure with God at the apex. Property was communally shared based on one's position in the chain. It was when property became 'enclosed' that it turned into private ownership. And with this the shift from a theological Great Chain to a more secular worldview of individual rights, at least for those that owned property. The hierarchy was retained on a societal level but now based on property instead of God. We might also say that these conditions led to the widespread emergence of egoic rationality for said individual property owners.

We can see that Wilber retains the Great Chain in its transcend and include philosophy.[2] Granted there is no longer pre-fixed Platonic forms but it does retain the morphogenetic gradient which involves from Spirit, or God by another name. Sure evolution plays its part, but it still must follow this gradient back up to Spirit. And we can directly experience Spirit via meditative techniques. We will then interpret Spirit through our evolutionary level, but given proper evolution through transcend-and-include, and proper meditative training, we can and do advance up the chain back toward God. This structure is feudal and theological to the core.

Wilber, like the transition to a market economy, retained the hierarchy but also included the shift to individual private property. Along with this came the notion that one was better than others based on their degree of private ownership, if not God. Granted those still into religion combined that into the belief that God favored those who owned more, even in secular circles this better than thou attitude prevailed. It was through one's hard work and merit that they earned a higher socio-economic status. And those without such status deserved their lot due to sloth and laziness.

Or in the case of Wilber, not evolving enough based on its own theological Great Chain structure, combined with its market-based private property rights. There too is a version of the “if you can manifest money and own more private property it's a sign of your spiritual progress.” There is no sign of evolving into the kind of commons Rifkin promotes, or the kind of consciousness that goes with it. Or any analysis of the energy-communication infrastructure that goes along with that. Wilber is still stuck in both the feudal and market economic and consciousness models.

Chapter 3 [The Courtship of Capitalism and Vertical Integration] is on the first two industrial revolutions, which required vast amounts of capital to build its infrastructure. It also required vertical integration of huge organizational structures with top-down hierarchical control which he calls not coincidentally “rationalization.” I suggest that this is the rationalized Great Chain hierarchy[3] we saw from the feudal era, where due to public education we entered the formal rational mode. All of which also saw the emergence of the legal rights of individuals.


On p. 55 Rifkin notes that while greed, deregulation and corruption certainly plays a part in what capitalism has become, he also asserts that this structure was a natural process for this sort of communication-energy-consciousness regime that provided a general increase in the standard of living for all. It's what Wilber calls the dignity and disaster of the era. For now I simply note that in the emerging Commons era the capitalist structure has reached the point where its disasters outweigh its dignities. And, as Rifkin said, its own impetus for ever-increasing productivity at lower marginal costs has made itself near obsolete.

Chapter 4 [Human Nature through a Capitalist Lens] is a quick run through of the accompanying worldviews from feudal to capitalism. He starts by noting that worldviews justify themselves as the ways things are, either by divine or natural order. The feudal Great Chain promised salvation by knowing one's place in the hierarchy and doing one's duty. In the transitional medieval market economy this shifted to one's hard labor, earnings and property as signs that one was favored by God, which shifted to a more secular notion of one's autonomy and worth as equivalent with one's property.

When the market economy transitioned into capitalism there arose much more vigorous defense of individualism tied with private property as inherent to human nature. Utilitarianism became the defining worldview justification. This led Herbert Spencer to twist Darwin's idea's into social Darwinism, a justification for “survival of the fittest.” Darwin was aghast at such a torturous distortion of his work.

Nonetheless Spencer saw the way of things thusly: “...all structures in the universe develop from a simple, undifferentiated state, to an every more complex and differentiated state, characterized by greater integration of the various parts” (64). Therefore only the most complex and vertically integrated business should survive, as this was natural to evolutionary development. All of which leads to oligopoly with its hierarchical and centralized command and control. This remains the dominant and regressive Republican view today in the US. And I might add the predominant spiritual, philosophical and economic Wilberian view as well.

Not to fret. At the end of the chapter Rifkin assures us that complexity is not synonymous with such a structure. As I've been saying, there is another kind of complexity as explored in this thread. That's where the emerging structure of the collaborative commons comes in, featured in the coming chapters.

On 71 of chapter 5 [Extreme Productivity, The Internet of Things, and Free Energy] he discusses energy as the missing factor in measuring productivity, in addition to the usual factors of machine capital and labor performance. Thermodynamic efficiencies accounted for 86% of productivity gains in the first two industrial revolutions. This figure is misleading though in that the aggregate energy efficiency at the height of the 2nd revolution was 13%, meaning “the ratio of useful to potential physical work that can be extracted from materials” (72). He asserts given the infrastructure and fossil fuel supplies involved, there will not likely be further efficiency increases.

He notes that renewable energy (RE) energy efficiency however will have dramatic increases over fossil fuels. This is because of the exponential growth in RE development, where production prices are dropping and efficiencies are increasing at an accelerating rate much like the PC industry. Plus RE resources are virtually infinite compared to fossil fuels. He estimates that RE can improve aggregate energy efficiency to 40% or more in the next 40 years (72).

There was an interesting discussion of privacy and transparency. Capitalism was the age of privacy and individual autonomy, whereas the collaborative commons there is much more sharing and openness. Throughout much of history humanity did things much more communally and publicly, like eating, sleeping and even excreting waste products. With capitalism we moved many of these functions indoors and in our own private rooms. “The enclosure and privatization of human life went hand-in-hand with the enclosure and privatization of the commons” (75).

While the Internet of Things (IoT) is opening us again to more communal sharing, it is not a return to the kind that was pre-capitalism. Instead it is a concern with the balance between individual and communal, so that one can still have control over what private information one shares in social networks. We want to collaborate and share more, be more transparent than the capitalistic individualist, but also retain our private autonomy and property to some degree. Hence having some control over what we choose to share or not is a key security issue in the emerging IoT, as well as reflecting a worldview shift.

Chapter 6 [3-D Printing: From Mass Production to Production by the Masses] on 3-D printing is astounding in the rapid developments being made. See the chapter for the voluminous details. My focus is on how it manifests in the emerging worldview. For one thing, it is based on open source software, not intellectual property. For another it is sustainable, give its additive construction process uses about one tenth the raw materials and wastes far less in the process. The materials used can also be local and re-used waste, thus eliminating high-end base materials manufactured from afar. They can even print out their own parts. The cost of 3-D printers is reducing rapidly so that the means of production will soon be in the hands of individuals and small collaborative groups. The entire process is P2P, democratic, lateral and based in local and regional communities, yet connected to the global community via the smart grid.

On 101 there are two anti-capitalist factions coming together. One is those who have been pushing for a return to more tribal culture using traditional, sustainable methods and reducing consumption. They are now merging with the high-tech nerds with the same values, but by implementing tech like 3-D printing. All of the above features of its infrastructure promote those values without regressing to a form of life that cannot change capitalism (107). Rather the new tech both transforms capitalism to the next wave and retains values from pre-capitalism, the latter also elevated in the process.

Chapter 7 [MOOC and a Zero Marginal Cost Education] on education is eye-opening. It is being transformed from the authoritarian top-down model where the teacher has all the answers to collaborative learning experiences with teachers as facilitators. Critical and holistic thinking[4] are encouraged over memorization. Previously learning was thought of as a private, autonomous experience where the knowledge was one's exclusive property, and that one had to hoard it to compete with others for grades and jobs, just as in the capitalist paradigm. In the collaborative era knowledge is something to be shared in a community of peers, thereby creating a public good for all.

Virtual, online classrooms are currently supplementing brick-and-mortar and may eventually replace them. Pedagogy is also having students provide services in their local communities, as well as engage in environmental projects. Again this encourages moving education from a private affair into seeing how one empathically relates to others, their communities and the world at large. Such online classes also cost considerably less than attending universities, sometimes even free, thereby making an education available to a much larger portion of society. One of the primary requisites for a functioning democracy is an educated, informed and active public, and this new model is 'paving the way'[5] toward that end.

Chapter 8 [The Last Worker Standing] on work highlights that automation, robotics and computer programs are taking over much of the workforce and replacing human labor at an accelerating pace. He gives countless examples which are all true. However I question when he dismisses that many job losses are due to relocation to cheaper labor markets like China (124). There is no question that it is valid. It's true that even China is slowly taking up the automation process, and that they will eventually replace their own cheap labor with such tech. But right now cheap human labor far outweigh it and is a direct reason for many US companies to ship manufacturing and textile jobs thereto. Most of Walmart's products come from China and why they make such huge profits.

Near the end of the chapter he talks about deep play replacing hard work, the former more concerned with social capital. He thinks this will come about when we are all empowered to be prosumers, both creating, consuming and sharing value as well as products. That may be, but in the meantime millions have lost their jobs and millions more will. We can social network all we want, and create/share intellectual/spiritual value all we want, but we might starve in the process without income. I guess that's one way to solve the current labor problem.

He also does not analyze another factor caused by both automation and shipping many jobs overseas. Big businesses like Walmart and McDonald's have driven wages down for what few existing jobs are still available. With 3 people for every job we take what we can get to feed our families, like it or not. Meanwhile those very same businesses are reaping record profits and just don't want to share the wealth. They'd rather see those hard-working folks have to get food stamps and other social welfare programs that cost society rather than pay them a living wage. Sure, things look rosy in Rifkin's future society but right now not so much. He doesn't deal with what we need to do now to address these problems of capitalism in the interim. I'll take Reich, Sanders, Warren and Krugman for that job.

Chapter 9 [The Ascent of the Prosumer and the Build-Out of the Smart Economy] is on the prosumer in a smart economy. A major question is how the IoT infrastructure will be financed. Should public goods be government or privately financed? Both sides agreed that public goods should maintain a natural monopoly, since competition for such services would generate waste. The US opted for the privately owned public utilities option. Now this battle is playing out over the internet, where mega-business wants to own it and everyone else wants the FCC to declare it a government owned public utility.

Rikfin argues that the internet and emerging IoT infrastructure are financed by consumers, not big business. Yes, the latter has invested large amounts in its infrastructure. But incentives like the governmental feed-in tariff guarantees a premium price above market value for early adopters of renewable energy production. When RE production's efficiency rivals traditional energy sources the tariff will phase out. Small prosumers dominate this transfer and thus finance the majority of the transition to RE through the tariff.

Which of course is coming to challenge the notion of dominant, private public utilities. And playing out with the FCC internet debate. A new generation like Yochai Benkler are promoting the Networked Commons, a third alternative to either strict government or market control. And that is just the lead-in to Part III of the book to come on its incipient rise.

Chapter 10 [The Comedy of the Commons] starts with a historical overview of commons governance structures. They have been criticized by conservatives due to the free rider syndrome. If property is held in common for grazing, for instance, the free riders will abuse the system and bring ruin to the land because of self-interest and overgrazing. Interesting argument for a capitalist. But a history of the commons shows that self-interest was indeed the exception rather than the rule, and obeying self-governing rules for the public good was the rule.

While such historical examples are generally from the feudal era, commons governance still exists in some communities today. These are democratically run in local communities where public resources are managed with definitive protocols including punishments. Since the members live in the communities they are keenly aware of the natural limitations to grazing, forestation, soil degradation and the like so manage their resources sustainably. From a wide survey of such commons governance 7 key principles were held in common (see 162 for the list).

Following are other examples of application to contemporary society. The public square was considered a shared resource for meeting, celebrating, sharing and the like. This now manifests in social media sites. The commons is also now expressing through the free genetics movement, which is trying to preserve our genetic heritage from being enclosed and privatized by big biotech. And which is just another addition to the emerging P2P meme in RE, 3-D printing, education, music and so on.

Also of note is that both Clinton in the US and Blair in the UK were part of a trend started by Reagan/Thatcher to sell off the commons to the highest private bidders via deregulation (163-64). Both of the former were held to be 'integral' leaders by Wilber.

Chapter 11 [The Collaboratists Prepare for Battle] is on the emerging ecological worldview of global consciousness, the democratization of everything. One of its expressions was the free software and open source movements, both dedicated to making information accessible to all for minimal to no cost. It was based on the notion that everyone could share, change, mix knowledge in a collaborative endeavor where no one person or company owned it. All of which transpired in the global commons of the internet beyond blood ties, religious affiliations and national boundaries, thus enacting global consciousness.

Cultural creation though is limited by the nature of the communication medium. The print revolution, and later tv and radio, favored individual authorship and copyright protection, the enclosure and privatization of knowledge. Previously in scribe cultures knowledge was shared and authorship was from divine inspiration. The internet reincorporates the sharing but replaces the theological underpinnings with global collaborative efforts. It also replaces the notion of scarcity with abundance.

This new commons needed a unifying narrative or worldview, heretofore having to navigate within the capitalist paradigm or regress to old notions of the commons. They found their theme in the ecological sciences, where the focus was not so much on individual species but how they interacted within environments. And most importantly, how all the environmental niches interacted with the biosphere as a whole.

It replaced the capitalist invisible hand, which was itself a holdover from a theological God in control to rational, self-interested individuals in control. Lacking a systems view it replaced God with the invisible force of a marginally less superstitious autonomous Market. Backed by ecological and other scientific advances, it is being replaced with the visible systems view of the global eco-social commons and redefining our place within it.

Note that the invisible hand of the market is still metaphysical in that it must posit some supernatural agency that operates on its own if we but focus on our self-interest, i.e. the market will take care of itself. Moving into systems science and ecological consciousness thus naturalizes this process, making previously supernatural agencies like Gods or markets 'visible' and understandable, and reconnecting us with ourselves, our peers and our environments, but in a postmetaphysical framework. This also applies to the sort of instrumental rationality inherent to 'enclosure' of disciplines of study rather than to interdisciplinary cross-sharing more indicative of Habermas' collaborative, communicative action. It is not by chance that Habermas' calls this latter form of rationality postmetaphysical.[6]

Chapter 12 [The Struggle to Define and Control the Intelligent Infrastructure] is on defining and controlling the IoT. The problem is that the capitalists of the earlier industrial revolutions want to own and control the new infrastructure with their centralized, top-down command and control methodology. And yet the IoT is itself structured for distributed, collaborative, lateral, peer-to-peer modes. The latter is also more ideally suited for management of renewable energies, as they also exemplify the same qualities.

Focusing on the 3 parts of the IoT Rifkin starts with the communications internet. We see the dominant ISPs wanting to use the capitalist model to end net neutrality so they can create fast and slow lanes on different fee scales. While they won't admit it, this will also create content interference as those with less money will be relegated to slower connection speeds. And likely some content providers might be eliminated access altogether if they espouse philosophies contrary to the kind of capitalist paradigm of the owners of access. The ISPs use capitalist justification that they need to continually feed the beast of ever-growing profits when in fact they already make a shitload of money selling neutral access. They are under the spell of capitalist winner take all mentality that leads inevitably to greed.

It's not just the ISPs that want to dominate the internet. Social networking sites like Facebook also have a capitalist model in which they want to dominate all member personal information as proprietarily enclosed to do with as they please. This includes selling it to third parties for advertising lists, as well as forking it over to the NSA on 'national security' grounds. It also includes the very real possibility of selling it to insurance companies which could affect one's coverage and premiums with private information not typically available. This is also a concern when employers track your personal information in making hiring or firing decisions. I've read that some employers will not even consider a candidate unless they have a comprehensive personal profile obtained from the internet.

Other areas of internet enclosure are also of concern. Google has a 66% market share in the US (much higher in other countries), Amazon 33%, eBay 99%, Facebook 72%. Twitter has 500 million registered users. They thus control access to, and the content of, information in ways conducive to their own capitalistic motives. These companies constitute an oligopoly in direct opposition to the very nature and structure of the internet. To “just hope that corporate goodwill will be sufficient to preserve the integrity of the process is at best naïve and at worst foolhardy” (203).

Big energy companies want to control the energy internet, again dominating with their capitalist structure. In some cases they are blocking the emergence of a smart grid altogether. Fortunately the EU has instituted regulations to keep it an open format, requiring them to unbundle energy production from transmission. Feed-in tariffs are also promoting local and regional green energy production. He cites the huge success story of the Tennessee Valley Authority, where the government invested in creating a huge hydroelectric plant for these rural areas previously without electricity. They empowered local electricity cooperatives through low-interest loans to build the infrastructure. And they did so much more efficiently and at lower cost than the big private companies could. The results were a boom to not only the local but the national economy.

He then devotes a section to cooperatives generally, with impressive statistics on their successes. He concludes that “cooperatives are the only business model that will work in a near zero marginal cost society” (214).

In terms of logistics, the capitalist way of handling this is incredibly inefficient and costly. Companies only have so many distribution centers, each of which must cover large areas. Thus when it comes to shipping goods drivers must take circuitous routes adding to fuel costs. Also the goods often stay in these isolated centers for far too long thus causing spoilage and/or backlogs, not being delivered in a timely fashion causing shortages on store shelves. Whereas if logistics were managed on the commons model, all of the 535,000 existing distribution centers and warehouses could be shared. This would allow the drivers to just do one leg of the journey with a full load instead of cross-regional or cross-country journeys with diminishing loads to limited distribution centers. This of course will require the logistics internet to track all the trucks and goods, and time the exchanges at the centers to arrive at their end destinations efficiently. There is considerable savings on cargo space, fuel costs and quicker delivery via these shared and distributed logistics.

Chapter 13 [The Transfer from Ownership to Access] is on the transfer of ownership to access. The automobile is the perfect metaphor for the capitalist paradigm. Therein freedom is defined as being enclosed in one's autonomy with the ability to move about at will. But this is being replaced in the sharing economy of the Commons, as car sharing is becoming increasingly common. Here freedom is defined as the right to include others. He cites voluminous statistics on the growing use of sharing which in turn if drastically reducing car ownership, thus reducing inefficient use, emissions and traffic congestion.

Sharing is also extending to other good and services, including clothing, housing, tools, toys and skills. It turns out with the economic downturn many are questioning why they needed so much stuff in the first place. It lies dormant most of the time and has put them in dire debt. People are becoming aware that they can reduce their debt while making use of their possessions by sharing, which in turn makes them feel part of a community instead of locked away in their enclosed spaces of home and car. They realize the were “sold a bill of goods” (233) that does not add to their happiness. “Reducing addictive consumption, optimizing frugality, and fostering a more sustainable way of life is not only laudable, but essential if we are to ensure our survival” (237).

The change to a Commons is seriously affecting advertising. This is the industry that got us to buy into over-consumption in the first place, equating it with success. The industrial revolution's increased production and wages led to surplus goods and disposable income, so advertising quickly set about to mate the two in a happy marriage of accumulating stuff to feed our enclosed egos. But per above we are shifting away from this and sharing our stuff and reconnecting with each other. Communicating about our stuff directly with one another has reduced the need for depending on advertisers. We now depend far more on each others review of goods and services, since we trust the opinions of peers not bent on selling us something. The rise of Craigslist and Angie's List are examples of this growing trend. And indicative of people taking responsibility to do their own fact checking and peer review on information instead of just accepting an ad on corporate media.

There was also a section on how the Commons is affecting medicine. Therein is 3-D printing's ability to 'grow' human tissue using one's own living cells to prevent rejection. So far they've achieved the creation of some liver tissue and a human kidney. They expect that growing organs and specialized tissues will be commonplace within 10 years.[7]

Chapter 14 [Crowdfunding Social Capital, Democratizing Currency, Humanizing Entrepreneurship and Rethinking Work] addresses how the Commons applies to other paradigms. After the financial crises other means of banking have been explored, crowdfunding being one. Capital is raised from the general public for one's project and a specified minimal amount must be raised for the funds to be collected. Companies like Kickstarter that organize the funding get a small cut, as does Amazon for collecting it. There are different forms of investor compensation, from future goods by the provider to shares in the profits to interest on the loan. It eliminates the banks with their usurious interest rates.

Alternative currencies is another expression. Instead of monetary exchange there is social exchange. Goods and services can be exchanged in labor time banks. One provides a good or service to another and his time is updated to a database. When that provider needs a good or service he can look up another provider and use his stored labor to obtain that service. Some of these banks do not differentiate the type of service or expertise level but others do, so not all types of time deposits are equivalent. Some even keep the time banks confined to their local or regional community, thereby keeping it 'in the family.'

The build-out of the IoT infrastructure will create a lot of new jobs in the short to mid-term. Granted when fully implemented it will have little need of jobs to maintain it, but in the interim there will be plenty. Of course many will need to be retrained to tackle the new tech, but that of course can be handled by the sort of commons education previously discussed. All of which will “give birth to a new economic order whose life force is as different from market capitalism as the latter was from the feudal and medieval systems from which it emerged” (269).

Chapter 15 [The Sustainable Cornucopia] is on the tension between scarcity and abundance. Capitalism is based on scarcity due to the limited sources used to maintain it, like fossil fuels. Whereas renewal energies are abundant. Therefore the former uses exchange value and the latter share value. The former depletes our environmental stores, the latter sustains it. It depends though on how we define abundance. It is not the sort of over consumption inherent to capitalism. Biologically humans need 2000 – 2500 calories of food per day. The average American consumes about 3700, while much of humanity on far less than what's needed. We are consuming far to much to sustain our biospheric ecology.

Part of the solution is finding the balance of what is enough to make us happy. Studies indicate that we are happiest when we have enough income, about $20,000[8] in the US, to buy the necessities. More than that has an inverse relationship on happiness. Buying more stuff feeds off of capitalism's inherent scarcity, in that we can never have enough. Focusing on individual material surplus only reinforces our dysfunctional autonomy and represses our empathy. Whereas when our focus is more on sharing surplus with each other we feel not only more connected but that enough is enough. We consume only the resources needed, transform our wants into sharing social goods, and are far happier in the process. And greatly reduces our ecological footprint in the process.

Another issue is that if we create a society of shared abundance won't we thereby continue to consume much more than is sustainable? Yes, if we were to remain in a individualistic mindset beset with scarcity. The whole point though is that the reason a commons mindset is emerging is due to the commons lifestyle. He cites studies that show youth growing up in this milieu are much more socially and environmentally conscious, thus reducing their consumption of material goods and increasing their sharing of those goods. If we implement a commons economy on a global scale, thus producing material abundance, any surplus will not be transferred into more material stuff but a better and fuller life for everyone, including sustainable environmental practices based on RE.


However two key elements can derail the entire transition into the commons era. One is climate change, the other cyberterrorism. Already the overall global warming is disrupting the water cycle causing increasingly disastrous events. Agricultural food losses due to flooding and drought are bad and will only get worse, causing severe scarcity. Vital infrastructure is being decimated by extreme weather events. Hence we need a quick, effective transition to RE to curtail climate change. Cyberterrorism's prime target is the current centralized energy grid. Take that out and you virtually destroy society. This too requires a quick transition to a distributed smart grid system that cannot incapacitate the entire society. All of which will require “a fundamental change in human consciousness” (296) from capitalism to the commons.

Chapter 16 [A Biosphere Lifestyle] is a recap of the historical eras. In forager/hunter societies our empathic drive was limited to one's family and tribe in mythological consciousness. We then moved into agricultural civilization where empathy was extended to one's religious family in theological consciousness. Next up was a steam-powered civilization that extended our empathy to those in our nation states and an ideological consciousness. Next was mass electrification and an extension of empathy to larger associations based on cultural, professional and technical affiliation via psychological consciousness. And now we are entering the commons via the internet and emerging IoT, our empathy extending to all humanity as well as the environment via biospheric consciousness.

He notes that all of the above still exist in each of us with different emphases as well as culturally is various degrees depending on context. There are also regressions and progressions depending on a variety of factors. But overall there is an unmistakable trajectory of greater empathetic embrace. And this is not some transcendent, ever-more abstract worldview detached from our basic empathetic connections. Empathy is what keeps us grounded in this body and this world as we acknowledge that this life is finite and we all die.

Somewhere around the shift from ideological to psychological consciousness we realized this via our existential crises. As we move into biospheric consciousness we use death to remind us of how precious and fragile life is in all its manifestations and take responsibility for better stewardship of that life knowing it will end. Whatever relative immortality there is lies in our contributions to a progressive biospheric culture in which we participate. And if that shift reaches enough of us in enough time then that culture just might survive the environmental devastation wrought by capitalist consciousness. That of course remains uncertain. The path ahead is being laid and it's now up to us to walk the talk, or more than just individuals will die.

In the Afterword Rifkin expresses mixed feelings for the end of capitalism. He appreciates the entrepreneurial spirit that animated it. He thinks that it is in fact the so-called 'invisible hand' and disagrees with Adam Smith that it involves pure self interest devoid of public concern. Such a spirit is driven by a need to create newer and better products and services to serve the public, which of course also serves one's own financial interests. And that capitalism was an appropriate and efficient response to the energy-communication regime of the times.

The irony is that the entrepreneurial spirit played out to its logical conclusion in creating products approaching near zero marginal cost. This Trojan horse was inherent to the system all along and created its own downward spiral toward extinction. That along with the other downsides inherent to the system, like creating monopolies, not sharing the wealth with workers and exploiting natural resources to the point of possibly disastrous climate change.

Granted the complete demise of capitalism is a long way off, it being mixed with the Commons for some time to come. The former will slowly subside as the latter rises. The second industrial revolution emerged when the first was in full swing. It took 50 years for the second to be the major economic system. It will likely take another 50 for the third revolution to be the dominant player. But the writing is already on the wall. It's here now and here to stay, so perhaps it's time to get with the program?" (http://www.integralworld.net/berge7.html)

Review

1. Richard Waters:

"The heart of Rifkin’s argument:

"If the marginal cost of producing each additional item falls to essentially nothing, then everything becomes free. In their pursuit of profit, businesses will have irrevocably undermined their own margins: capitalism will have destroyed itself. But don’t despair. Rising in its place, Rifkin argues, will be a civilisation based on a new and more fulfilling communitarianism, free of the hang-ups that have characterised the materialistic individualism of the late capitalist age.

Though only 300 or so pages, this is sometimes a dense book. Besides detours into subjects such as the economic history of the human race from earliest times, there are sections that pack in extensive descriptions of some of the key technologies. They include 3D printing; open-source software; the internet of things; the sharing economy; the online courses that are reshaping education; and the artificial intelligence enabling machines to replace many types of human labour.

An extensive bibliography shows that Rifkin has read widely and compressed the results into his latest tome – though, to be fair to his previous work, he has also written entire books himself on several of the themes that converge here. That makes this something of a grand unifying theory of his thinking over four decades. Three of Rifkin’s predictions serve to illustrate both the breadth and the finality of his arguments. One is that the “sharing economy” (think letting out your spare room on Airbnb or summoning a car on Uber) will overthrow some of the biggest companies on the planet. It will only take between 10 and 30 per cent of a particular market to shift to these self-help networks, argues Rifkin, for the thin profit margins of giant companies to shrink to nothing.

A second prediction is that a decentralised network of alternative energy sources will replace the existing vertically integrated, carbon-based energy industry. It will be made up of “prosumers” generating their own power and networked together through a smart grid that routes power to where it is needed. By the middle of this century, says Rifkin, 80 per cent of electricity will be generated this way – an estimate he claims is conservative.

A third trend is the elimination of work, as the machines take over. According to Rifkin, workers – and the profitmaking companies that employ them – can look forward to one last hurrah. This will cover the 40-year period it takes to build the world’s smart, self-replicating infrastructure. After that, it will be the end of history for labour: apart from a few people needed to programme and monitor the machines, it’s all over for the wage slaves and salarymen.

This all sounds ominous. But Rifkin reaches an optimistic conclusion. He anticipates a world of plenty where individuals will lead more fulfilling lives than they do now, with their material wants taken care of and their days of toil at an end. Fulfilment, he argues, will come from building “social capital”. Freed from the need to earn a living, people will get closer to the things that really matter: collaborating – and empathising – with other people." (http://www.ft.com/cms/s/2/7713c7fc-b07a-11e3-8efc-00144feab7de.html)


Discussion

Contra the metaphysics of the commons as anti-markets

Eric Raymond:

"Perhaps the most serious error, ultimately, is the way Rifkin abuses the notion of “the commons”. This has a lot of personal weight for me, because I have lived in and helped construct a hacker culture that maintains a huge software commons and continually pushes for open, non-proprietary infrastructure. I have experienced, recorded, and in some ways helped create the elaborate network of manifestos, practices, expectations, how-to documents, institutions, and folk stories that sustains this commons. I think I can fairly claim to have made the case for open infrastructure as forcefully and effectively as anyone who has ever tried to.

Bluntly put, I have spent more than thirty years actually doing what Rifkin is glibly intellectualizing about. From that experience, I say this: the concept of “the commons” is not a magic wand that banishes questions about self-determination, power relationships, and the perils of majoritarianism. Nor is it a universal solvent against actual scarcity problems. Maintaining a commons, in practice, requires more scrupulousness about boundaries and respect for individual autonomy rather than less. Because if you can’t work out how to maximize long-run individual and joint utility at the same time, your commons will not work – it will fly apart.

Though I participate in a huge commons and constantly seek to extend it, I seldom speak of it in those terms. I refrain because I find utopian happy-talk about “the commons” repellent. It strikes me as at best naive and at at worst quite sinister – a gauzy veil wrapped around clapped-out collectivist ideologizing, and/or an attempt to sweep the question of who actually calls the shots under the rug.

In the open-source community, all our “commons” behavior ultimately reduces to decisions by individuals, the most basic one being “participate this week/day/hour, or not?” We know that it cannot be otherwise. Each participant is fiercely protective of the right of all others to participate only voluntarily and on terms of their own choosing. Nobody ever says that “the commons” requires behavior that individuals themselves would not freely choose, and if anyone ever tried to do so they would be driven out with scorn. The opposition Rifkin wants to find between Lockean individualism and collaboration does not actually exist, and cannot.

Most of us also understand, nowadays, that attempts to drive an ideological wedge between our commons and “the market” are wrong on every level. Our commons is in fact a reputation market – one that doesn’t happen to be monetized, but which has all the classical behaviors, equilibria, and discovery problems of the markets economists usually study. It exists not in opposition to monetized trade, free markets, and private property, but in productive harmony with all three.

Rifkin will not have this, because for the narrative he wants these constructions must conflict with each other. To step away from software for an instructive example of how this blinds him, the way Rifkin analyzes the trend towards automobile sharing is perfectly symptomatic.

He tells a framing story in which individual automobile ownership has been a central tool and symbol of individual autonomy (true enough), then proposes that the trend towards car-sharing is therefore necessarily a willing surrender of autonomy. The actual fact – that car-sharing is popular mainly in urban areas because it allows city-dwellers to buy more mobility and autonomy at a lower capital cost – escapes him.

Car sharers are not abandoning private property, they’re buying a service that prices personal cars out of some kinds of markets. Because Rifkin is all caught up in his own commons rhetoric, he doesn’t get this and will underestimate what it takes for car sharing to spread out of cities to less densely populated areas where it has a higher discovery and coordination cost (and the incremental value of individual car ownership is thus higher).

The places where open source (or any other kind of collaborative culture) clashes with what Rifkin labels “capitalism” are precisely those where free markets have been suppressed or sabotaged by monopolists and would-be monopolists. In the case of car-sharing, that’s taxi companies. For open source, it’s Microsoft, Apple, the MPAA/RIAA and the rest of the big-media cartel, and the telecoms oligopoly. Generally there is explicit or implicit government market-rigging in play behind these – which is why talking up “the commons” can be dangerous, tending to actually legitimize such political power grabs." (http://esr.ibiblio.org/?p=5558)

Food and Manufacturing will never be zero marginal cost

Eric Raymond:

"There are two other, much larger, holes below the waterline of Rifkin’s thesis. One is that atoms are heavy. The other is that human attention doesn’t get cheaper as you buy more of it. In fact, the opposite tends to be true – which is exactly why capitalists can make a lot of money by substituting capital goods for labor.

These are very stubborn cost drivers. They’re the reason Rifkin’s breathless hopes for 3-D printing will not be fulfilled. Because 3-D printers require feedstock, the marginal cost of producing goods with them has a floor well above zero. That ABS plastic, or whatever, has to be produced. Then it has to be moved to where the printer is. Then somebody has to operate the printer. Then the finished good has to be moved to the point of use. None of these operations has a cost that is driven to zero, or near zero at scale. 3-D printing can increase efficiency by outcompeting some kinds of mass production, but it can’t make production costs go away.

An even more basic refutation of Rifkin is: food. Most of the factors of production that bring (say) an ear of corn to your table have a cost floor well above zero. Even just the transportation infrastructure required to get your ear of corn from farm to table requires trillions of dollars of capital goods. Atoms are heavy. Not even “near-zero” marginal cost will ever happen here, let alone zero. (Late in the book, Rifkin argues for a packetized “transportation Internet” – a good idea in its own terms, but not a solution because atoms will still be heavy.)

It is essential to Rifkin’s argument that constantly he fudges the distinction between “zero” and “near zero” in marginal costs. Not only does he wish away capital expenditure, he tries to seduce his readers into believing that “near” can always be made negligible. Most generally, Rifkin’s take on production economics calls to mind the famous Orwell quote: “One has to belong to the intelligentsia to believe things like that: no ordinary man could be such a fool.”

But even putting all those mistakes aside, there is another refutation of Rifkin. In his brave impossible new world of zero marginal costs for goods, who is going to fix your plumbing? If Rifkin tries to negotiate price with a plumber on the assumption that the plumber’s hours after zero have zero marginal cost, he’ll be in for a rude awakening.

The book is full of other errors large and small. The particular offence for which I knew Rifkin before this book – wrong-headed attempts to apply the laws of thermodynamics to support his desired conclusions – reappears here. As usual, he ignores the difference between thermodynamically closed systems (which must experience an overall increase in entropy) and thermodynamically open systems in which a part we are interested in (such as the Earth’s biosphere, or an economy) can be counter-entropic by internalizing energy from elsewhere into increased order. This is why and how life exists.

Another very basic error is Rifkin’s failure to really grasp the most important function of private property. He presents it as only as a store of value and a convenience for organizing trade, one that accordingly becomes less necessary as marginal costs go towards zero. But even if atoms were weightless and human attention free, property would still function as a definition of the sphere within which the owner’s choices are not interfered with. The most important thing about owning land (or any rivalrous good, clear down to your toothbrush) isn’t that you can sell it, but that you can refuse intrusions by other people who want to rivalrously use it. When Rifkin notices this at all, he thinks it’s a bad thing." (http://esr.ibiblio.org/?p=5558)