By Jeremy Rifkin
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.
The Zero Marginal Cost Society 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.
An animated summary and book review:
Brett Frischman on Huff Post wrote:
"Machines are about to change what it means to be human. According to social theorist Jeremy Rifkin, they will undermine our sense of private property, take away our jobs and turn us into free agents in a new global 'sharing economy'. For good measure, they will also destroy capitalism before the middle of the 21st century. If you’re already thinking that The Zero Marginal Cost Society belongs to the genre of techno-futurism that resorts to extreme predictions to attract attention, then you’d be right. The value of this book, however, doesn’t lie in the accuracy of its specific forecasts, but rather in the extrapolations of current trends that enable Rifkin to reach them. On that measure, this is a thought-provoking read that pushes some of the most important new technologies to their logical – and sometimes scary – conclusions. [...] 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. [...] There are obvious quibbles to be had with much of this. One is that capitalism has proved pretty adaptable so far. [...] A second quibble is with Rifkin’s assumptions about how human nature will change to accommodate the new realities he describes. [...] If Rifkin’s predictions have value, however, it is in bringing home the extent of the technologically induced upheaval that may lie ahead. How we deal with the consequences is up to us."
Michael Ehret on Research Gate wrote:
"Jeremy Rifkin’s book, The Zero Marginal Cost Society, is at times thrilling, at times encyclopedic, and at times possibly hyperbolic. It is very well-written, it touches on an incredibly wide variety of modern topics, it builds on an exhaustive set of references, and most importantly it makes you think seriously about the future. You cannot possibly read this book without pausing at least a half a dozen times to ponder. There were parts of the book that presented me with completely new facts, claims, technologies, and predictions. [...] Due to space constraints, I’ll focus on one difficulty I had with Rifkin’s analysis. I strongly support the notion of building systems and developing public policies that enable and take advantage of zero marginal costs, for example in the context of various infrastructure and knowledge commons, but the first concern that arose in my mind as I began reading the book was simple and likely one that most people will raise: What about the fixed costs? Who is going to supply the infrastructures necessary for the various near zero marginal cost systems to function? Whether we are talking about knowledge or electricity or education or physical production systems, there are critical infrastructures that support, structure, and sustain the systems for participants (users, producers, consumers, prosumers). Who will bear the fixed costs and supply these infrastructures?"
Timothy Ogden on Stanford Social Innovation Review wrote:
"With this book he provides a timely blend of his previous works for a timely inspiration for anybody working in the intersection of technology, communication, politics and business. Its great contribution is the reminder of the power of infrastructures in shaping economic activities, as we have already witnessed in the domain of the internet and soon will witness in domains like transportation and manufacturing. Sadly, the book bears some fatal flaws resulting from an engineering-centred economic model and a bias towards Rifkin’s social romantic vision when he argues for his projection. [...] Rifkin misses a central feature of the exciting transformation: The rise of new business models and the unfolding of the use of 'non-ownership contracts' like renting, sharing or promising performance as a crucial element of commercial business. So readers interested in the business dimension will miss an account of the role of business-models in the rise of collaborative modes of value creation so excellently portrayed by Rifkin. With his social romanticism Rifkin also turns a blind eye on the dark side of the emerging commons build on the internet: As substantial part of the infrastructure is shaped and owned by commercial platform providers like Google, Amazon or User. With their control of the crucial technology and infrastructure they have amassed a boon of information and knowledge as well as the power to manipulate consumers and businesses in both directions along the value stream. [...] Karl Marx had predicted the end of industrial capitalism with some arguments driven by labour value theory, not too distant from Mr. Rifkin’s line. So before capitalism disappears, it almost certainly will take some further transformations. Mr. Rifkin provides a fascinating account of the transformation in the social sphere. The underlying business logic remains under the radar. Part of this is that like so many before him, Mr. Rifkin uses outdated economic models that build on cost-driven and social-physical reasoning but fails to take an account for the entrepreneurial as well as the social dimension of economic activity."
"In his new book, The Zero Marginal Cost Society, Rifkin argues that we are about to enter an era when the Internet of Things, 'free' energy, and what he calls 'the collaborative commons' will make anything and everything available for practically nothing. Together, he contends, those developments will overthrow capitalism as the world’s dominant economic model. If you think that idea sounds silly, well, you’re right. And Rifkin expounding on it for 300-plus pages of 10-point text—all of it buttressed by 770 endnotes—doesn’t make it any less so. To be fair, those 770 source notes offer a comprehensive tour of trends that will definitely shape the near future. But Rifkin’s assembly of this information into a narrative hits all the low notes that are common to 'big think' books:
- Attacking nebulous concepts that you don’t define? Check.
- Name-dropping your consulting company, which just happens to specialize in charging people to solve problems that you’ve invented? Check.
- Writing jargon-filled sentences that might mean anything (or nothing)? Check.
- Invoking historical inevitability to mask poorly supported premises? Check.
- Ignoring issues of political power and economic incentive that shape our daily lives and our future? Check.
I found Zero Marginal Cost Society to be so utterly unconvincing that I have to take seriously the possibility that I simply don’t get it. I kept going back to the book, looking for an insight that would make everything click. I never found it."
Lecture by Rifkin on The Zero Marginal Cost Society
- Rifkins' website for the book
- "Say goodbye to capitalism as we know it" - article by Rifkins on MarketWatch, 14 May 2014
- "The rise of the sharing economy" - article by Rifkins in the Los Angeles Times, 6 April 2014
- "Capitalism is making way for the age of free" - article by Rifkins in The Guardian, 31 March 2014
- "The Rise of Anti-Capitalism" - article by Rifkins in The New York Times, 6 March 2014
Table of Contents of The Zero Marginal Cost Society
- The Great Paradigm Shift from Market Capitalism to the Collaborative Commons
Part I - The Untold History of Capitalism
- The European Enclosures and the Birth of the Market Economy
- The Courtship of Capitalism and Vertical Integration
- Human Nature through a Capitalist Lens
Part II - The Near Zero Marginal Cost Society
- Extreme Productivity, the Internet of Things and Free Energy
- 3D Printing: From Mass Production to Production by the Masses
- MOOCs and a Zero Marginal Cost Education
- The Last Worker Standing
- The Ascent of the Prosumer and the Build-Out of the Smart Economy
Part III - The Rise of the Collaborative Commons
- The Comedy of the Commons
- The Collaboratists Prepare for Battle
- The Struggle to Define and Control the Intelligent Infrastructure
Part IV - Social Capital and the Sharing Economy
- The Transformation from Ownership to Access
- Crowdfunding Social Capital, Democratizing Currency, Humanizing Entrepreneurship, and Rethinking Work
Part V - The Economy of Abundance
- The Sustainable Cornucopia
- A Biosphere Lifestyle
About Jeremy Rifkin
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. His books have been translated into more than thirty five languages and are used in hundreds of universities, corporations and government agencies around the world. He has been an advisor to the European Union for the past decade. He is the President of the TIR Consulting Group LLC, comprised of many of the leading renewable energy companies, electricity transmission companies, construction companies, architectural firms, IT and electronics companies, and transport and logistics companies.