In this talk at Google HQ, serial big picture author Jeremy Rifkin talks about how the internet is changing our society and our economy. More specifically, how the internet surrounding information communication has radically changed how our economy functions and how this will spread into a future “Internet of Things”, doing the same thing to the economy of physical goods. In other words, a fundamental driving force that will rebalance the foundations of capitalism, potentially making it unworkable and create a world that is hard to envisage today.
The term “marginal cost” refers to the cost of producing an additional unit of a product and capitalism is all about reducing those cost to maximise profits. Unfortunately when these costs are driven down to near zero, the product can them become free. Think of the internet. It doesn’t really matter if the website serves 100 people or a million, the (relatively) fixed costs of production remain the same and each additional person served costs virtually nothing. This is having a profound impact on people’s quality of live in two ways. 1) people are able to access that service for free or very little, in theory making their lives better. But it is also 2) causing many people who were traditionally employed in that industry to not have a job anymore. Near zero marginal costs combined with the ability to easily access the related service is wiping out middlemen and this phenomenon is set to continue as it spreads from industry to industry.
Here lies the fascination in this concept, just how will the world adapt to a new economic paradigm? Will it be a bumpy road or a smooth one? Will this make our quality of life richer or poorer? Will we need to foster the creation of government or co-op organisations to provide the more critical functions (such as journalism)? It is a very big idea and is one that is worth being aware of when trying to envisage the future.
Interesting presentation. In a near 0 marginal cost society that Rifkin proposes, essentially a shared economy, does he and or his firm provide their consulting expertise at no or little charge? It would only seem appropriate to walk the walk if you talk the talk.
Well Rifkin does like his hyperbola so you do need to take it with a pinch of salt. Also he is referring to “marginal cost” of adding an extra unit of something already made, so I read it as very low cost of recreating something easily recreate-able. But the point remains that this dynamic is, and will continue to impact many of the jobs & professions that people currently depend on to support themselves. If the world increasingly becomes a case of winner takes all and the majority of us “losers” are left with very little how will the system continue to function? A living wage might be one such solution, one which might finally result in all this technological advancement in efficiency and time saving to actually result in more free time in people’s lives and the chance to work on things things that matter to us, regardless of if they are profitable or not. Maybe then Rifkin’s consulting can be free.